I think the real estate market may have finally peaked

[al_bundy]

the counties will never let your taxes go down. check your comps by Zillow or directly through the county public records and appeal your taxes to get them lowered

[al_bundy]

I think it's Springfield, exit 29 in the LIE. My sister bought it in the dotcom era and sold a few years ago for 250k.


i'll be watching the views. driving to great neck tonight.

i remember somewhere in that area there were co-ops that were 2 stories tall and 4 apartments or so per small building and there was a bunch of buildings.

[zuffy]

I don't remember the place too much but yes there are lots of small building. Basically, some of the townhouses are 2 stories, 1 floor as 1 family. I think second floor that my sister got was in the 1000-1100sq ft range - a master room, guest room, bathroom, kitchen, dining, living room.

[mllefoo]

Hey, I wasn't going to bash you for renting. However, in my experience in dealing with tenants, they tend to say things like you said, and they way they say it with such satisfaction its as though they are trying to convince themselves that they made the best decision - that is, to rent, rather than to buy, even though they seem like they really don't believe it, and would rather be buyers and dealing with today's uncertain real estate situation.

From what you say about yourself, sounds like renting is the way to go. :thumbsup:

I wish I was renting now. We bought a condo, which we could afford at the time, but this place is bleeding us dry. We could rent a place for less than half of what we pay in mortgage, and we won't be locked into squeezing blood from stones to make the mortgage payment until the housing market is strong enough for us to sell.

If we tried to sell now, we'd take a huge loss. Huge. If we could sell it at all. There are places in our building that have upgrades and new everything that are selling for $20k less than we paid for our place.

Yeah. It's definitely a case of buyer's remorse. It has been for a while now.

We don't even have the money to fix the place. If we sold, it would be "as is" and we'd be lucky to make enough out of the sale to continue paying on the mortgage.

We cannot even refinance because the place is worth less than when we bought it.

Real estate isn't always a win.

Certainly wasn't for us.

[The Bus]

I wish I was renting now. We bought a condo, which we could afford at the time, but this place is bleeding us dry. We could rent a place for less than half of what we pay in mortgage, and we won't be locked into squeezing blood from stones to make the mortgage payment until the housing market is strong enough for us to sell.

If we tried to sell now, we'd take a huge loss. Huge. If we could sell it at all. There are places in our building that have upgrades and new everything that are selling for $20k less than we paid for our place.

Yeah. It's definitely a case of buyer's remorse. It has been for a while now.

We don't even have the money to fix the place. If we sold, it would be "as is" and we'd be lucky to make enough out of the sale to continue paying on the mortgage.

We cannot even refinance because the place is worth less than when we bought it.

Real estate isn't always a win.

Certainly wasn't for us.

Sorry to hear. :( When did you buy?

A few years ago I was on the verge of moving to the LA area and was looking at houses with a friend. He was buying, I was not. The difference between what his mortgage would've been and what my rent would've been for a similar house was astounding. I guess $3000 in rent (split between roomates) would go a lot further than a $3000 mortgage, even back then.

[mllefoo]

We bought about 2 years ago, I guess right before the market started going down. We didn't know.

If I could go back in time, I'd fight tooth and nail to NOT buy into a condo. We thought we were buying into our dream, and it's only been a huge nightmare. We haven't been able to fix the place, let alone go on vacations or have disposable income. You see, at the time we could afford the payments, but when we were locked into this place, we found not only his employer had promoted him into a position that paid less than he was previously making, but he now has to shell out $300/month in gas just to get to work.

Of course it isn't all the mortgage. We've taken a huge hit on a couple of thefts. Couldn't really claim the theft on our taxes, since it wasn't even enough to claim. Plus we got some money from insurance. Not much, but some.

Not trying to get sympathy. It is what it is.

All I can say is buying real estate was one of the biggest mistakes I have ever made and given the chance I will not do it again. We were ganked hard.

I only hope we can get out of this mess with only a little damage. I'd rather not foreclose, but if it happens, it happens. I cannot wait for the market to spring back to a point where I'd at least be able to sell this place for what I paid.

[mllefoo]

At this point I don't even care about the credit rating. I can still find a place to live and I don't need credit cards or a car loan, so what's the point in having good credit? Good credit is part of what got us into this mess.

That, and our spectacular lack of intelligence. Or so it seems from reading some of the comments here. Of course at the time, we weren't buying in over our heads. Circumstances just got beyond our control.

[Tracer Bullet]

We bought about 2 years ago, I guess right before the market started going down. We didn't know.

If I could go back in time, I'd fight tooth and nail to NOT buy into a condo. We thought we were buying into our dream, and it's only been a huge nightmare. We haven't been able to fix the place, let alone go on vacations or have disposable income. You see, at the time we could afford the payments, but when we were locked into this place, we found not only his employer had promoted him into a position that paid less than he was previously making, but he now has to shell out $300/month in gas just to get to work.

Of course it isn't all the mortgage. We've taken a huge hit on a couple of thefts. Couldn't really claim the theft on our taxes, since it wasn't even enough to claim. Plus we got some money from insurance. Not much, but some.

Not trying to get sympathy. It is what it is.

All I can say is buying real estate was one of the biggest mistakes I have ever made and given the chance I will not do it again. We were ganked hard.

I only hope we can get out of this mess with only a little damage. I'd rather not foreclose, but if it happens, it happens. I cannot wait for the market to spring back to a point where I'd at least be able to sell this place for what I paid.

Couldn't he have negotiated with his employer to stay at the same salary, at least? It seems odd to me to be promoted and make the same salary, let alone a lower one.

Also, do you have an ARM?

[Lateralus]

Countrywide to Cut Up to 12,000 Jobs
Friday September 7, 5:47 pm ET
By Alex Veiga, AP Business Writer
Mortgage Lender Countrywide to Cut As Many As 12,000 Jobs As Loan Originations Slow


LOS ANGELES (AP) -- Struggling lender Countrywide Financial Corp. said Friday it will cut as many as 12,000 jobs as it struggles to deal with challenging conditions in the mortgage industry.
The company said the cuts, amounting to as much as 20 percent of its workforce, are needed because it expects mortgage originations to fall about 25 percent in 2008 from this year's levels.

"We are taking decisive action to ensure that Countrywide continues to be well-positioned for further success," said Angelo Mozilo, chairman and CEO.


This news is released AFTER the 250 point drop on the DOW today.

[Chrisedge]

...we found not only his employer had promoted him into a position that paid less than he was previously making, but he now has to shell out $300/month in gas just to get to work.

That is not a promotion. That's a demotion.

Better Title = Not a promotion
More Work = Not a promotion
Different Job = Not a promotion
More Pay = Promotion

[The Bus]

This news is released AFTER the 250 point drop on the DOW today.

Countrywide announced massive cuts at least a week ago, or said cuts were coming.

[grrrah]

We bought about 2 years ago, I guess right before the market started going down. We didn't know.

If I could go back in time, I'd fight tooth and nail to NOT buy into a condo. We thought we were buying into our dream, and it's only been a huge nightmare. We haven't been able to fix the place, let alone go on vacations or have disposable income. You see, at the time we could afford the payments, but when we were locked into this place, we found not only his employer had promoted him into a position that paid less than he was previously making, but he now has to shell out $300/month in gas just to get to work.

Of course it isn't all the mortgage. We've taken a huge hit on a couple of thefts. Couldn't really claim the theft on our taxes, since it wasn't even enough to claim. Plus we got some money from insurance. Not much, but some.

Not trying to get sympathy. It is what it is.

All I can say is buying real estate was one of the biggest mistakes I have ever made and given the chance I will not do it again. We were ganked hard.

I only hope we can get out of this mess with only a little damage. I'd rather not foreclose, but if it happens, it happens. I cannot wait for the market to spring back to a point where I'd at least be able to sell this place for what I paid.

daamn.. sorry to hear.. I bought around 2.5 years ago in SJ. You must have hit the peak at the wrong time. I am starting to look around freakmont as I need to be closer to bart now... hoping to break even in a move.

hang in there.

[ukywyldcat]

The market is so ripe for buyers/investors that can SOMEHOW put together deals. It isn't easy, and I'm working in it every day. But there is such distress, and no relief anywhere for anyone, its incredible.

I have no credit woes...all my notes are well seasoned...I've never had any history of derogatory accounts, not even one past due 30 days...but the chances of me getting a decent refi on one of my four homes is about zero, and that is terrifying in a sense. I don't need to refi, nor will I in the future as far as I can see.

What is terrifying is that if my credit is good, my income is good, etc., and I have no room to maneuver, then what happens to someone who has a ding on the credit...someone who loses a job or gets demoted?

People have absolutely no relief right now.

Foreclosures are bad now? Heh. I think this is just the tip of the iceberg unless somehow rates come down big time.

[al_bundy]

i don't know if lower rates will do it since investors seem to be afraid of taking on risk. the hope of lower rates is that it will make returns on safe investments so low that people will take on risk again. maybe the investors will just sit tight with their low rates without risking their capital?

[The Bus]

The market is so ripe for buyers/investors that can SOMEHOW put together deals. It isn't easy, and I'm working in it every day. But there is such distress, and no relief anywhere for anyone, its incredible.

I have no credit woes...all my notes are well seasoned...I've never had any history of derogatory accounts, not even one past due 30 days...but the chances of me getting a decent refi on one of my four homes is about zero, and that is terrifying in a sense.

Fannie's guidelines for investment properties really haven't changed. You must've been outside of them to begin with.

[X]

Fannie's guidelines for investment properties really haven't changed. You must've been outside of them to begin with.Yeah, outside the $417K loan limit.

That's the problem in California, few loans are conforming. Only 20% of my county's loans are conforming.

[The Bus]

Yeah, outside the $417K loan limit.

That's the problem in California, few loans are conforming. Only 20% of my county's loans are conforming.

I think it makes sense to lump in California with Hawaii and raise the limits considerably. $625,500 should give some people more breathing room.

[ukywyldcat]

I think it makes sense to lump in California with Hawaii and raise the limits considerably. $625,500 should give some people more breathing room.

Word.

I've been scouring several towns in OC for investments, and nothing truly worthwhile is below $500K. Nothing.

I looked at a gem of a property yesterday in Laguna Niguel. It wasn't a gem because it was all fixed up and nice...it was a gem because this house could be fabulous...gigantic view of OC from the backyard that drops off...potentially great curb appeal.

Anyway, my realtor showed me this place, and it was a real beater. The guy bought it in 1996 for $169K, and has taken out $150K notes on it each year for the last several years. Needless to say, he is tapped out. He is in default $20K (which is how I found this place, from my default listings), his notes are $669K, and the house, even if completely fixed up, is worth about $850K. I estimate it would take $100K to $125K to bring the house up. Needs to be totally gutted and rebuilt with a new roof. The numbers just don't work.

But what a gem. I'd love to take this house on as a project. As for the guy who lives there, I've never seen anyone living like such a pig in my life. The house was full of rows of shelves full of paperbacks. Rows. As in, walk in a bedroom and there are 7 rows of double sided shelves mounted to the walls and sticking out and forming aisles, just like in a library. The entire house was substandard. Every corner at the ceiling had mold and spiderwebs with spiders visible and dangling there. I've never seen anything like it. It was obvious he has never thrown anything away because of the piles of shit everywhere you turned.

Don't know why I'm typing up this experience, but it was quite a find had the numbers worked out, as the view from the back of the house is just incredible.

[X]

I think it makes sense to lump in California with Hawaii and raise the limits considerably. $625,500 should give some people more breathing room.And New York. But then it's localized within the states too. A $2 million house in a desirable area of the state could easily be a $400K house somewhere else in the state. So maybe just raising the limits overall would make sense.

The same disparity exists with capital gains taxes on the sale of a home. You can hit the $500K limit in a couple of years in expensive areas where other areas would never hit it. Even a modest house bought by people in low tax brackets in an up-and-coming area can exceed the tax-free maximum in a relatively short amount of time.

[hal9000]

The same disparity exists with capital gains taxes on the sale of a home. You can hit the $500K limit in a couple of years in expensive areas where other areas would never hit it. Even a modest house bought by people in low tax brackets in an up-and-coming area can exceed the tax-free maximum in a relatively short amount of time.

Yeah, the government needs to bump all the numbers up: capital gains minimum $800k- $1 million, especially here in the L.A. area. Also the conforming loan amount of $417k needs to be bumped up substantially. Problem is if they increase these numbers you only fool the buyers, the problem never really goes away.

But the fact of the matter is very plain and simple... people cannot afford (i.e. earn enough per year) to make the monthly loan payments and everything that comes along with owning a house: pay yearly taxes, insurance, food, gas, etc. and life in general.

Personal note: We purchased our home in 1998 for $207k and since then our neighborhood has appreciated to $600k+ and I make a "decent" living (just over $100k per year) my wife is a stay at home mom. There is no way we could realistically afford to buy the same house we live in today without being dead broke and living paycheck to paycheck. Property taxes alone on our house would be $8k a year... $8K! That's not life, that's hell!

Someone mentioned the "tip of the iceberg" and they aren't kidding... next year is going to be very scary. We had two house on our street that were on the market: one for 18 months and the other for 9 months, they both just closed escrow this month, but at a substantial mark down from what they were originally asking.

We all remember the dot com bubble, well it's 1999 all over again! Hang on to dem hats and glasses 'cause dis here's going to be the wildest rides in the wilderness!

[ukywyldcat]

Property taxes are a killer, especially here in SoCal. The budgets 6 years ago were based on houses averaging $250K or so. Average houses have tripled to $600-800K, while the tax rate has remained the same, dramatically increasing the taxes brought in. Personally, I think tax relief is way overdue. There is no need for the tax man to collect as much as he is.

[crazyronin]

What happened to Prop 13? Was it a one time thing or was it slowly gutted?

[X]

Prop 13 sets your taxes at the price you paid for the house, not what it's worth. So if you bought a house a while ago your taxes will be low and if you buy the same house now your taxes will be high. Annual increases can't exceed 2% (other than local assessments that need to be voted on.) There are provisions that allow you to keep the same low taxes if you move to a comparable home in the same county or a reciprocating county or are over 55.

I think that's the right way to do it as it's no secret what your taxes will be when you buy the house, but quickly increasing taxes are unfair and not something you could have anticipated when buying the house.

[ukywyldcat]

I still think that it is insane to take taxes from a guy who bought his house this year in the amount of $8000 or so and the guy next door who bought 4 years ago pays $3000. I think the runup we have seen over the last 8 years should be considered for relief. When people can't afford or can barely afford the taxes on their home, nobody is content.

I rarely see any news about tax relief on real estate.

[X]

The only reason the property tax on a house you just bought can be merely 1% of its purchase price is because someone else will be buying the same house in a few years for more. The 2% per year escalator doesn't keep up with the government's spending.

Of course if you don't like it, we could go back to pre-Prop 13 days where you'd get your property tax increased so fast you couldn't even keep a house you paid off and retired in.

[ukywyldcat]

The only reason the property tax on a house you just bought can be merely 1% of its purchase price is because someone else will be buying the same house in a few years for more. The 2% per year escalator doesn't keep up with the government's spending.

Of course if you don't like it, we could go back to pre-Prop 13 days where you'd get your property tax increased so fast you couldn't even keep a house you paid off and retired in.


I'm not familiar with prop-13.

[shifrbv]

Of course if you don't like it, we could go back to pre-Prop 13 days where you'd get your property tax increased so fast you couldn't even keep a house you paid off and retired in.

That's exactly what is happening locally. We've switched to a "market trending" model and people are in an uproar. Old folks who have had their homes for 50 years are suddenly finding that they need to pay taxes on today's value. People have seen 100%+ increases in many areas and it's really hurting. Not to mention the state will be doing an annual review, so values will be going up every year (because if one house sold in the neighborhood for good money, they assume they can all sell for that even if it took 2 years) and it will be a constant fight with the assessor's office to hold the line. I feel like something is going to change because people cannot afford to add hundreds more each month to their house payments. But I am afraid that they may only reduce property taxes a little while increasing income and sales taxes thus garnering them even more money.

[foggy]

What state is this in? California?

[Jeeden]

Something similar is/was happening in Northern VA. Large portions are/were farms and then the development took off. Values and taxes went up to a point where folks had to sell portions or all of the land they own (many times had been in the family for a century or more). The real problem hit when they tried to slow the growth by limiting one house per 10 acres or so. Then they couldn't cover their taxes by selling off just part of their land since a developer couldn't put as many houses on it as before.

[Jeeden]

From the NAR: This is "healthy" and everyone should be happy the market is going to go up a bunch next year...even though we have been wrong everytime this year.... rotfl rotfl rotfl

Realtors revise sales predictions lower for year
Existing home transactions would be the lowest since 2002
The Associated Press
Updated: 2:28 p.m. ET Sept 11, 2007
WASHINGTON - A trade group for real estate agents on Tuesday lowered its forecast 2007 existing home sales for the seventh-straight month, predicting a drop of 8.6 percent from last year.

The National Association of Realtors’ revised monthly prediction calls for U.S. existing home sales of 5.9 million in 2007, down from 6.5 million last year. The forecast was below last month’s prediction of a 6.8 percent drop.

This year’s sales would be the lowest since 2002, when sales hit 5.6 million. Home sale prices this year are forecast to drop 1.7 percent to a median of $218,200.

Next year, the trade group expects existing home sales to climb to 6.3 million. It forecasts new home sales will fall 24 percent to 801,000 this year and 741,000 next year.

The forecast comes as delinquencies among borrowers with weak, or subprime, credit have risen dramatically over the past year, and other loans are showing weakness as well.

Lawrence Yun, NAR’s senior economist, said lower sales are related to the ongoing problems in the mortgage market for people with weak credit and a lack of funding for jumbo home loans above $417,000.

Those loans can’t be packaged into securities sold to investors by government-sponsored mortgage giants Fannie Mae and Freddie Mac. Lenders have been charging higher rates for these loans because they are not backed by Fannie or Freddie.

The real estate trade group described a big cutback in the construction of new homes as a “healthy trend” that will reduce inventory. The group projected construction of new homes will fall to 1.4 million this year from 1.8 million last year.


Last week, the NAR said pending sales of existing homes fell in July to the lowest level in nearly six years as borrowers struggled to finalize home purchases, particularly in expensive areas.

Investors around the world have been spooked by the U.S. mortgage market’s problems, amid uncertainty about how much they will grow. The Federal Deposit Insurance Corp. estimates that 2.5 million mortgages given to borrowers with weak credit will reset at higher rates and sometimes dramatically higher monthly payments by the end of next year.

The number of homeowners receiving foreclosure notices hit a record high in the spring, driven up by problems with subprime mortgages and heavy job losses in Ohio and other Midwest states.


© 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
URL: http://www.msnbc.msn.com/id/20725875/

[Lateralus]

Yeah the NAR is pretty worthless.

[kvrdave]

They are no different than any other professional trade group. It's always a good time to sell and it is always a good time to buy. :lol:

[grrrah]

I am looking to buy a place under construction and will be ready by next spring/summer.

is there a place to research trends of interest rates? What do you guys think will happen with rates in the next 6-9 months?

Is it a good idea to lock a rate for a long period, or a rates really high right now and surely will drop in the next 6-9 months and wait to do lock later on down the road.

Sorry if this is a lame, ignorant, etc question. Sorta new at this.

This is in overpriced California btw.

[Lee Harvey Oswald]

I am looking to buy a place under construction and will be ready by next spring/summer.

is there a place to research trends of interest rates? What do you guys think will happen with rates in the next 6-9 months?

Is it a good idea to lock a rate for a long period, or a rates really high right now and surely will drop in the next 6-9 months and wait to do lock later on down the road.

Sorry if this is a lame, ignorant, etc question. Sorta new at this.

This is in overpriced California btw.

From what I've heard they have been historically low. That's all I got.

[wabio]

I am looking to buy a place under construction and will be ready by next spring/summer.

is there a place to research trends of interest rates? What do you guys think will happen with rates in the next 6-9 months?

Is it a good idea to lock a rate for a long period, or a rates really high right now and surely will drop in the next 6-9 months and wait to do lock later on down the road.

Sorry if this is a lame, ignorant, etc question. Sorta new at this.

This is in overpriced California btw.

The only thing I know is interest rates generally follow inflation rates. So start tracking how much you're spending on that Cheeseburger :)

[al_bundy]

Alan Greenspan in his new book says rates will go back up to like 10% sometime between now and 2030

[mapasu]

My house lost 8% of it's value over the weeked, that is according to zillow. I'm close to the original value. On this market I believe it is considerable. There's too many houses up for sale on my development and they're selling cheap, depreciating everyone's value.

[Jeeden]

My house lost 8% of it's value over the weeked, that is according to zillow. I'm close to the original value. On this market I believe it is considerable. There's too many houses up for sale on my development and they're selling cheap, depreciating everyone's value.

Your house didn't loose or gain anything since your not selling it (your not selling it right?).

Maybe this isn't you, but I'm amazed at how people track the value of their house day to day. The only value that ever matters is the value when you try to sell it.

People boast about the value of their house and how high it is and all I can think is "yea for you, your taxes just went up." Speaking of which...you should challenge your property tax bill if you have it

[Jeeden]

Foreclosures are up a smidge last month....

U.S. home foreclosures soared in August
New data suggest homeowners can’t make mortgage payments
The Associated Press
Updated: 11:08 a.m. ET Sept 18, 2007
LOS ANGELES - The number of foreclosure filings reported in the U.S. last month more than doubled versus August 2006 and jumped 36 percent from July, a trend that signals many homeowners are increasingly unable to make timely payments on their mortgages or sell their homes amid a national housing slump.

A total of 243,947 foreclosure filings were reported in August, up 115 percent from 113,300 in the same month a year ago, Irvine, Calif.-based RealtyTrac Inc. said Tuesday.

There were 179,599 foreclosure filings reported in July.

The filings include default notices, auction sale notices and bank repossessions. Some properties might have received more than one notice if the owners have multiple mortgages.

August’s total represents the highest number of foreclosure filings reported in a single month since the company began tracking monthly filings two years ago.

The national foreclosure rate last month was one filing for every 510 households, the company said.

“The jump in foreclosure filings this month might be the beginning of the next wave of increased foreclosure activity, as a large number of subprime adjustable rate loans are beginning to reset now,” RealtyTrac Chief Executive James J. Saccacio said.

The mortgage industry has been rocked by a surge in defaults, particularly among borrowers with subprime loans and adjustable rate mortgages that initially had attractive “teaser” interest rates but then can adjust upward, resulting in a payment shock.

Many of the loans, some of which adjust in as little as two years, were issued in 2005 and 2006 during the height of the housing boom.

Lagging home sales and flat or decreasing home prices have also left homeowners unable to make their mortgage payments hard-pressed to find buyers.

The latest figures also reflect an increase in the number of homes going into foreclosure that are not being picked up in estate sales and are ending up going back to lenders.

The number of bank repossessions jumped to 42,789 in August, compared with 20,116 a year earlier, the RealtyTrac said. In July, there were 26,842 bank repossessions.

Nevada, California and Florida had the highest foreclosure rates in the country last month, the firm said.

Nevada reported one foreclosure filing for every 165 households — more than three times the national average. The state had 6,197 filings in August, an increase of 21 percent from July and more than triple the year-ago figure.


California’s foreclosure rate was one filing for every 224 households. The state reported the most foreclosure filings of any single state with 57,875, up 48 percent from July and an increase of more than 300 percent from August 2006.

Florida had one foreclosure filing for every 243 households. In all, the state reported 33,932 foreclosure filings, up 77 percent from July’s total and more than twice the year-ago total.

Georgia, Ohio, Michigan, Arizona, Colorado, Texas and Indiana rounded out the 10 states with the highest foreclosure rates.

© 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
URL: http://www.msnbc.msn.com/id/20829849/


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[BadlyDrawnBoy]

nice 1/2% Drop in the Fed Rate cut

N HIS FIRST BIG test since replacing Alan Greenspan at the helm of the Federal Reserve nearly 20 months ago, Ben Bernanke blinked. Taking a page out of his predecessor's memoir the Fed chairman surprised the Street with an aggressive rate cut. Stocks soared as soon as the move was announced Tuesday afternoon.

After three months of dealing with the subprime mortgage mess, a subsequent credit crunch that required injections of billions of dollars into the economy and a jittery stock market that had fallen off as much as 9% from its all-time high earlier this year, investors of every stripe were calling — or, in the case of Jim Cramer, screaming — for Bernanke to lower rates. If he didn't, they warned, there would be dire consequences.

In the end, he didn't disappoint. After holding the target on the federal-funds rate steady at 5.25% for almost 15 months the Federal Open Market Committee, in a unanimous vote, trimmed it by a half percentage point to 4.75%, a level not seen since March 2006 and the first cut in four years. The central bank also lopped a half point off the discount rate that it charges banks for overnight loans. Equities reacted positively to the generous easing: The Dow Jones Industrial Average jumped 336 points to finish at 13,739.

"It's very encouraging that the Fed is doing what they need to do as opposed to doing what they think would look right, meaning that the Fed has to admit a little bit that they were wrong, that they should have cut a little while ago if they're being this aggressive now," says Art Hogan, chief market strategist at Jefferies & Co. "A lot of market participants have been saying that the Fed was behind the curve, but you can get caught up on monetary policy pretty quickly."

[mapasu]

Your house didn't loose or gain anything since your not selling it (your not selling it right?).

Maybe this isn't you, but I'm amazed at how people track the value of their house day to day. The only value that ever matters is the value when you try to sell it.

People boast about the value of their house and how high it is and all I can think is "yea for you, your taxes just went up." Speaking of which...you should challenge your property tax bill if you have it


Not selling right now, but you've given me something to take action upon.

[hal9000]

People boast about the value of their house and how high it is and all I can think is "yea for you, your taxes just went up."

Not here in California, prop 13 took care of that. Taxes are based on 1% of the assessed value of the property (at the time of purchase) and can only increase 2% max every year.

[The Bus]

Housing starts slump to lowest in 14 years
Down 10.2% in September; building permits also tumble
By Greg Robb, MarketWatch
Last Update: 11:52 AM ET 10/17/07

WASHINGTON (MarketWatch) -- Construction on new homes plunged in September to the lowest level in 14 years, clear evidence that the turmoil roiling financial markets has sent the nation's housing sector into a tailspin.

Housing starts fell 10.2% to a seasonally adjusted annual rate of 1.19 million, the lowest level since 1.32 million in March 1993, the Commerce Department reported Wednesday.

The decline was larger than expected.

Meanwhile, building permits dropped 7.3% in September, clocking in at a seasonally adjusted annual rate of 1.23 million. This was the lowest seen since July 1993 and less than the 1.28 million pace expected by economists surveyed by MarketWatch. See Economic Calendar.

Economists were clearly shaken by the accelerating weakness in housing starts.

"There is no end in sight to the drop," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

He noted that housing starts fell 66% from 1978 to 1981. "This episode will likely be worse. The housing hit is intensifying," Shepherdson said.

Housing starts are down 30.8% in the past year, while permits have fallen 25.9%.

The seasonally adjusted housing market index fell to a record low of 18 in October from 20 in September, the National Association of Home Builders reported on Tuesday. It's the lowest reading in the index since its inception in 1985.

In addition, a new forecast from the Mortgage Bankers Association said it expects originations to fall 18% in 2008 and another 6% in 2009 before the market shows signs of recovering.

<hr>

Haven't had an update on one of these in a while.

I went to hang out with a friend of mine recently and saw that a lot of houses in his neighborhood were for rent through the same rental agency. The builder was not able to sell all of them. He moved in about a year or year and a half ago.

[atlantamoi]

I still haven't seen a house sell in my subdivision for many months. The previous four years were fine. Just watched someone adjust down the price of their home by 10% (yuck!!).

[X]

I heard the other day that foreclosures are turning around and showing an improvement trend. Can't find the figures though.

[4KRG]

I still haven't seen a house sell in my subdivision for many months. The previous four years were fine. Just watched someone adjust down the price of their home by 10% (yuck!!).


I just saw a house (my sisters neighbor actually) adjust from $689k to $589k. It sat at $689 for a 14 months or so with no takers, it is now at $589 for 2 months and still no takers (only one person even looked at it during the last open house).

There is nothing wrong with the house and in 2006, they were selling for $689k without any problem, would be sold in 3-4 weeks. Seems some areas are hit much harder than others.

[al_bundy]

the question is how many people that live around your sister can afford a $600,000 house

[kvrdave]

I heard the other day that foreclosures are turning around and showing an improvement trend. Can't find the figures though.

That would be interesting. We've had almost no foreclosures in the area in the past 2 years, but are starting to see them now. But we tend to trail the national market by a bit.

[4KRG]

the question is how many people that live around your sister can afford a $600,000 house

It would look like now, no one can, but somehow in 2006 everyone could :)

Her neighbors moved into an $800k house (about 25 miles away) thinking they would have no problems selling the old house. :lol: Now they have both houses up for sale as they are months away from bankrupcy if one of them doesn't sell.

I would offer them $400k, but I don't want to live next to my sister at any price ;) and I think they owe $500k on their current mortgage.

The only local job disaster was AOL, I think they laid off 700 people in the area. Nothing else major has closed down or laid off.

Maybe it is just loans are much harder to get for more than $417k these days?

http://www.fanniemae.com/aboutfm/loanlimits.jhtml?p=About%2BFannie%2BMae&s=Loan%2BLimits

[The Bus]

the question is how many people that live around your sister can afford a $600,000 house

I would bet that the whole jumbo loan shake up hasn't helped.

[Jeeden]

It would look like now, no one can, but somehow in 2006 everyone could :)

Her neighbors moved into an $800k house (about 25 miles away) thinking they would have no problems selling the old house. :lol: Now they have both houses up for sale as they are months away from bankrupcy if one of them doesn't sell.

I would offer them $400k, but I don't want to live next to my sister at any price ;) and I think they owe $500k on their current mortgage.

The only local job disaster was AOL, I think they laid off 700 people in the area. Nothing else major has closed down or laid off.

Maybe it is just loans are much harder to get for more than $417k these days?

http://www.fanniemae.com/aboutfm/loanlimits.jhtml?p=About%2BFannie%2BMae&s=Loan%2BLimits

I assume your in the Northern VA. There are a LOT of people here who can afford 600K with no problem. Like 4KRG said though, there are a lot who can't either.

We just lost out on a house offer because the bank renegotiated with the owners (probably got them out of whatever bazillion percent interest rate they had).

As a general rule though, things here are not as bad as other parts of the country (unfortunately for me). Unemployment is consistently near zero here.

I am interested to see if the AOL thing opens up some housing opportunities, but from what I have heard, most of those getting laid off have other jobs lined up already and I guess they are giving out 4 months severance.

[4KRG]

Yep stuck in traffic in NO. VA :)

most of the $600k and up homes you see out in the loudoun county area were financed to the max. You have a lot of two income households where each adult is earning $85k-$120k, but they had almost nothing to 0 down payment.

68%, or more scary to say 68 out of 100 new home contracts with builders in loudoun county were cancelled by the buyers. Leaving a glut of new homes that the builders have no idea what to do with.

You should be able to find something near the AOL facility cheaper, no matter what the AOL employees do

[Jeeden]

Yep stuck in traffic in NO. VA :)

most of the $600k and up homes you see out in the loudoun county area were financed to the max. You have a lot of two income households where each adult is earning $85k-$120k, but they had almost nothing to 0 down payment.

68%, or more scary to say 68 out of 100 new home contracts with builders in loudoun county were cancelled by the buyers. Leaving a glut of new homes that the builders have no idea what to do with.

You should be able to find something near the AOL facility cheaper, no matter what the AOL employees do

Yea, I'm out a little further in the Leesburg/Hamilton/Purcellville area. The house we offered on was in Round Hill, not our first choice because they are having water pricing issues.

Khovanian is in Purcellville. They had their "sale" a few weeks ago, but didn't sell much. They are bringing much to the table right now and there are hundreds of houses for sale that were built two years ago in that development.

Ryan homes is in Lovettsville. They have dropped their prices like 100K, but the problem is there is NOTHING in Lovettesville like supermarkets, etc. There are all one lane roads out there too. I like the country (grew up in Purcellville when it used to be "the country"), but if I'm going to put up with the traffic and development I figure I should get the benefits of having the grocery store 5 minutes away.

[Lateralus]

I heard the other day that foreclosures are turning around and showing an improvement trend. Can't find the figures though.

There were 8.4% fewer foreclosures in September in August but up 115% since last August... it is just a blip. We will only hit rock bottom with sub-prime in March of next year when ARM sub prime resets hit 100 billion which is 50% more than now.

[al_bundy]

I would bet that the whole jumbo loan shake up hasn't helped.


i've heard that the banks kept jumbo rates the same as before only if you go straight through them and not the mortgage broker.

[drmoze]

Surprisingly (or maybe not), RE prices here in Manhattan are staying steady or even still rising slightly. Then again, the minimum you can get away with is a 10% downpayment on a condo, or 20-30% on a co-op with detailed evidence of significant assets after closing. There's nothing like a "zero-down" deal here, and the market here is more resilient than most, so I'd imagine there are far fewer foreclosings etc.

In the big picture, housing prices had a bump up over the past few years. So even a drop of 10-20% in prices wouldn't really affect the average homeowner in the long run, right? (Those who are staying in their homes for a while) It would mainly set the value back a few years at worst. The problem seems to be with people who really stretched themselves or maxed out their home equity at or near the height of the market, Right? (Does this make sense?) :shrug:

[X]

It's generally not a real long commute for people who live in Manhattan to get to work, is it?

That's become one of my primary indicators of value retention and appreciation.

[The Bus]

Surprisingly (or maybe not), RE prices here in Manhattan are staying steady or even still rising slightly. Then again, the minimum you can get away with is a 10% downpayment on a condo, or 20-30% on a co-op with detailed evidence of significant assets after closing. There's nothing like a "zero-down" deal here, and the market here is more resilient than most, so I'd imagine there are far fewer foreclosings etc.

In the big picture, housing prices had a bump up over the past few years. So even a drop of 10-20% in prices wouldn't really affect the average homeowner in the long run, right? (Those who are staying in their homes for a while) It would mainly set the value back a few years at worst. The problem seems to be with people who really stretched themselves or maxed out their home equity at or near the height of the market, Right? (Does this make sense?) :shrug:

I've seen plenty of NY Times articles about outlying areas (such as Newark, NJ) that have had problems. My understanding with the Manhattan market is that a lot of it moves depending on how well Wall St. is doing. If there's a year with a lot of bonuses, there will be a lot of purchases. If that's actually true, I have no idea.

[drmoze]

It's generally not a real long commute for people who live in Manhattan to get to work, is it?

That's become one of my primary indicators of value retention and appreciation.

Most office-heavy areas are within 15-30 minutes of residential places by subway. This includes nearby areas of Queens, Brooklyn, and Jersey (PATH). And not having to drive makes it a much easier and more predictable commute.

Although housing prices in convenient neighborhoods in and around Boston have dropped quite a bit recently.

[Deftones]

I was reading an article in my local paper about this suburb of Phoenix. The median house prices have consistently risen, despite the overall downward trend. Sucks because it's where I wan my next house to be. :(

[al_bundy]

I've seen plenty of NY Times articles about outlying areas (such as Newark, NJ) that have had problems. My understanding with the Manhattan market is that a lot of it moves depending on how well Wall St. is doing. If there's a year with a lot of bonuses, there will be a lot of purchases. If that's actually true, I have no idea.


it's partly true, but the market didn't tank back in 2001 and 2002. 2001 saw a small drop after 9/11 and then up it went again.

[X]

I was reading an article in my local paper about this suburb of Phoenix. The median house prices have consistently risen, despite the overall downward trend.What is that suburb?

[The Bus]

Home prices falling at record pace in August
Down 4.4% over the past year in 20 major cities, Case-Shiller says
By Rex Nutting, MarketWatch
Last Update: 10:03 AM ET 10/30/07

WASHINGTON (MarketWatch) -- Home prices in 20 major U.S. cities fell 4.4% in the 12 months through August, according to the Case-Shiller price index released Tuesday by Standard & Poor's Corp.

Prices fell 0.7% in the 20 cities between July and August, marking the fastest monthly decline recorded in the seven-year history of the 20-city index.

Prices in the original 10-city index had fallen 5% since August 2006, the fastest annual decline since 1991.

Including the latest data, prices have been down on a year-over-year basis for eight straight months. <a href="http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html">Read more.</a>

"The fall in home prices is showing no real signs of a slowdown or turnaround," said Robert Shiller, co-creator of the index and chief economist for MacroMarkets.

"With supply overhang growing and mortgage financing tougher to obtain, home prices are going to soften considerably further in the quarters ahead," wrote Joshua Shapiro, chief U.S. economist for MFR Inc.

<b>The last time prices fell so much, it took more than eight years for home prices to return to their peak level.</b>

The Case-Shiller index, which tracks multiple sales of the same homes, is considered by many observers to be the best gauge of national and metropolitan-area real-estate values.

Falling prices make it more difficult for homeowners to tap the equity in their homes or refinance their mortgages. Millions of homeowners who took out adjustable-rate loans in 2005 and 2006 face sharply higher mortgage payments this year and next, with foreclosures having already soared as the result of payment resets.

<b>The biggest declines are the Rust Belt and in the former boom towns along the coasts. Prices are up in the Pacific Northwest and in areas of the South, but they're rising at a slower pace.</b>

Fifteen of the 20 cities tracked in the index have seen prices fall in the past year, led by Tampa, Fla., with a 10.1% decline, followed by Detroit with a 9.3% loss. Indeed, eight of the 20 cities recorded their largest-ever year-over-year price declines in August.

Detroit had held the top spot among the 20 cities in previous months. A year ago, prices in Tampa had been rising at an annual rate of 14.3%.

<b>Prices were up in five cities, led by Seattle with a 5.7% increase and Charlotte, N.C., with 5.6%.</b>

Here are the year-over-year price changes for the 20 cities covered by the index:

Tampa, down 10.1%; Detroit, down 9.3%: San Diego, down 8.3%; Phoenix, down 8%; Miami, down 7.8%; Las Vegas, down 7.6%; Washington, D.C., down 7.2%; Los Angeles, down 5.7%; San Francisco, down 4.2%; Cleveland, down 4.1%; Minneapolis, down 4%; New York, down 3.8%; Boston, down 3.6%; Chicago, down 1.3%; Denver, down 0.4%; Dallas, up 0.5%; Atlanta, up 0.8%; Portland, Ore., up 2.8%; Charlotte, up 5.6%; and Seattle, up 5.7%.

<hr>

Mind you Case-Shiller concentrates more on metropolitan areas. I wonder why Pilly isn't covered.

A NY Times article from a few days ago also mentions that there's been no real drop in the market in Fla. condos that are well above $1MM. So the very, very expensive properties still have a good market.

[Lateralus]

That is what I like to hear! The only places that are still going up are places that are super cheap anyway (Dallas, Atlanta, Charlotte) and places that have nowhere left to build and the closer you get the more expensive it is.(NY city, San Francisco, Seattle)

[VinVega]

I'm glad the housing prices are falling in Tampa. My parents are looking to jump into the market and with prices dropping, the houses they are targeting are becoming more affordable every day.

[LurkerDan]

Denver only down .4%, and I think Boulder is still up. :banana:

[Jeeden]

I say that these prices are a reflection of the banks selling short sale or foreclosure properties at lower prices.

I still don't see a lot of private sellers dropping their prices around here, they are still in denial.

Good news for me though, prices are getting better around here.

I'd like to see if the builders start some more sales now like they did a couple of months ago.


.....gonna be a long hard winter for sellers. I have time :)

[DVD Josh]

I'm actually okay with the situation. I know it will take YEARS for the market to return (8 according to the article Bus posted). I'm in a 3/2/2 townhouse (bed/full/half) in a great area 1 mile from Metro and they are putting in a major shopping center down the street, 7 public schools w/in 2 miles, etc. However, this is a starter home for me and my wife, and we will be looking again in 3 years. I think there will be plenty of inventory in bigger houses that we want to move up to at reasonable prices and we should be able to sell our home in a decent amount of time (our neighbors have sold their houses in our neighborhood quite rapidly).

Not only that, I hope to refi as rates go down.

[wabio]

I read a report recently that said that ~2 million subprime loans have yet to reset. These are the so called, "riskiest of the risky" made in late 2005 and 2006. Analysts are predicting 25%+ will foreclose. If that happens the inventory may skyrocket.

[Lateralus]

I read a report recently that said that ~2 million subprime loans have yet to reset. These are the so called, "riskiest of the risky" made in late 2005 and 2006. Analysts are predicting 25%+ will foreclose. If that happens the inventory may skyrocket.

Very true, Jan - May 2008 is going to be hell for ARM resets for the last year we have been averaging 50 billion a month in resets between Jan and May 2008 I believe the number goes to 80 - 100 billion in resets.

[DVD Josh]

The market is really bad for this guy

http://i162.photobucket.com/albums/t272/7uperman/newspaper/149.jpg

[Jason]

The market is really bad for this guy

http://i162.photobucket.com/albums/t272/7uperman/newspaper/149.jpg

Yeah, he can't even afford a photobucket account.

[4KRG]

surprise surprise, forclosures up

http://www.msnbc.msn.com/id/21551909/


By John W. Schoen
Senior Producer
MSNBC
updated 5:14 a.m. ET, Thurs., Nov. 1, 2007


John W. Schoen
Senior Producer



As Congress and the White House continue to work toward solutions to help embattled homeowners, home foreclosure filings took a big jump in the third quarter, according to the latest data from real estate Web site RealtyTrac.

Foreclosure actions were reported on more than 446,000 properties the three months ended Sept. 30, up 30 percent from the second quarter and double last year’s third quarter. That brings the overall foreclosure rate to one in every 196 U.S. households.

The rise in foreclosures was widespread, with 45 out of the 50 states reporting higher levels than last year. But the highest concentrations were a handful of housing markets; California Arizona, Florida, Nevada, Ohio, Texas and Michigan made up more than half of the total

The rise in foreclosures comes as millions of homeowners face sharp increases in their mortgage payments from low “teaser” rates as the housing market remains mired in a slump.

Home prices in 10 markets tracked by the S&P/Case-Shiller housing index slid 5 percent in August, the eighth straight monthly drop, according to figures released Tuesday. Some economists expect home prices to fall by 10 percent before the market finds a bottom sometime late next year, barring a further economic downturn. The pullback follows one of the strongest housing booms on record that sent median prices up more than 50 percent earlier in the decade.

Because the low initial rates on many mortgages typically last for two or three years, the housing market faces further pressure next year from loans that were written when the housing market was still rising and lenders were offering easy terms to borrowers with less-than-stellar credit.

“Given the number of loans due to reset through the middle of 2008, and the continuing weakness in home sales, we would expect foreclosure activity to remain high and even increase over the next year in many markets,” said James J. Saccacio, chief executive officer of RealtyTrac

In Nevada, there was one foreclosure filing for every 61 households, the highest rate in the nation. That’s up 23 percent from the previous quarter and more than triple the number reported in the third quarter of 2006.

California saw one filing for every 88 households, the second highest; the rate was up 36 percent from the previous quarter and nearly quadruple the third quarter of 2006.

Florida’s foreclosure rate, the nation’s third highest, rose from a year ago to one filing for every 95 households, an increase of more than 50 percent from the previous quarter.

Other states with foreclosure rates among the top 10 included Michigan, Ohio, Colorado, Arizona, Georgia, Indiana and Texas.



Though widely followed since the housing market began slumping a year ago, RealtyTrac has only been issuing reports on foreclosure data for two years. Some critics of the reporting have said that it may overstate the problem because it counts filings at various stages of the default and foreclosure process. The company says that beginning this year, it has begun publishing data that counts a property once, even if there were multiple foreclosure actions are filed on a the property.

With foreclosures rising, federal state and local officials are looking for ways to try to head off the process that will keep people in their homes, avoid adding more unsold inventory to the housing market and save lenders the legal expenses and losses they typically incur foreclosing on home in a falling market.

Homeowners at risk of default are being urged to contact their lenders and try to work out alternatives. But many of those who do so confront a dense thicket of lending regulations and other red tape. During the first nine months of the year, only 1 percent of subprime home loans at risk were rewritten, according to Moody's Investors Service.

Earlier this month, Treasury Secretary Hank Paulson said an industry coalition was working to help homeowners head off foreclosures and keep their homes. Paulson said the plan was for the government to coordinate efforts by lenders to help rework loans for borrowers in trouble and head off default. Paulson said 11 of the largest mortgage service companies, which together handle 60 percent of all mortgages in the country, had agreed to join the new coalition. Other members will include mortgage counseling agencies, investors and large trade organizations.

One proposal would be to simply freeze the introductory rates for homeowners who are still current on their mortgages to help them avoid defaulting when their monthly payments jump.

On Tuesday, the House Judiciary Committee heard testimony on a proposal to make changes to the U.S. bankruptcy code that could help stem the rising ride of mortgage defaults. Among the proposals is a provision that would give bankruptcy judges greater leeway to restructure debts for people unable to meet sharp increases in monthly payments. Under current law, judges have the authority to modify other types of borrowing, including credit cards or car loans.

"Residential mortgage loan defaults and foreclosures are surging and without significant policy changes will continue to do so through 2008 and into 2009," said Mark Zandi, chief economist at Moody's Economy.com in West Chester, Pennsylvania, who broadly endorsed the plan.

Two million homeowners will have their property seized between this year and next, Zandi said, and the bankruptcy reform plan is needed to confront that crisis.

[The Bus]

Originally posted June 2005

Just give me 2 more years and I'll have my $50k down payment sitting in the bank waiting for the bubble to burst.

Well...?

[wabio]

surprise surprise, forclosures up

http://www.msnbc.msn.com/id/21551909/


Where's the surprise? :mad: :p

[The Bus]

I just got an email from a lender advising about certain "Soft Counties" where they would be especially stringent regarding appraisals, both for refinances and for people buying homes. In effect, if these additional guidelines would not be met, you can't borrow as much as you want.

These were the "Softest" counties in the US:

AZ: Maricopa, Mohave, Pima, Pinal, Yavapai
CA: Imperial, Monterey, Riverside, San Bernardino, San Joaquin
CO: Mesa
FL: Charlotte, Collier, Manatee, Miami-Dade, Sarasota, Volusia
MI: Genesee
NJ: Atlantic
NV: Carson City, Clark, Storey, Washoe
UT: Washington

The full list is a lot longer, and covers a LOT of counties in CA, FL, and NY (anything surrounding NYC, including Long Island).

[JimRochester]

A friend of mine here on LI is in the business and he says half of his deals are getting killed by the lender over appraisals. If thee is a property anywhere nearby with a low value it kills every appraisal for miles.

[al_bundy]

i was reading the fatwallet bubble thread and there are reports of banks selling off foreclosures for close to half off last year's prices in Woodbridge, VA. might have to look at moving there.

NY Newsday had a map of queens/brooklyn and LI subprime hotspots. as expected anything south of I-495 is worse than the north shore

i checked out the NYC public records and in my area prices are up around 20% or so YoY.

[DVD Josh]

i was reading the fatwallet bubble thread and there are reports of banks selling off foreclosures for close to half off last year's prices in Woodbridge, VA. might have to look at moving there.



Woodbridge isn't too far from me. What it is too far from is a major city or reasonable traffic into it.

You come down here let me know, I'll take you out for some great BBQ in the area.

[kneijst1]

My inlaws live in Woodbridge... I'll have to check out FW site and see if they have links. It's new to my ear.

FYI, Woodbridge is out of the "DC metro" area a bit. They do have a Wegmans coming in though... (and a nice Costco). It's just a bit too far of a commute for me and the wifey.

Ah, just checked out FW. Here's a link to one of the houses that had a 61% price drop in over a year...

http://www.businessweek.com/the_thread/hotproperty/archives/2007/11/case_study_of_w.html

There is a reason that house sat the market so long, and it's NOT how a good representation of how the housing market is in DC. Most likely, the house has some kind of MAJOR issue(s). The information was orginally taken by a guy around here who does a website called NOVA housing bubble fallout... Definitely not a biased guy in the least... -rolleyes-

[al_bundy]

http://novabubblefallout.blogspot.com/

[DVD Josh]

My inlaws live in Woodbridge... I'll have to check out FW site and see if they have links. It's new to my ear.

FYI, Woodbridge is out of the "DC metro" area a bit. They do have a Wegmans coming in though... (and a nice Costco). It's just a bit too far of a commute for me and the wifey.

Ah, just checked out FW. Here's a link to one of the houses that had a 61% price drop in over a year...

http://www.businessweek.com/the_thread/hotproperty/archives/2007/11/case_study_of_w.html

There is a reason that house sat the market so long, and it's NOT how a good representation of how the housing market is in DC. Most likely, the house has some kind of MAJOR issue(s). The information was orginally taken by a guy around here who does a website called NOVA housing bubble fallout... Definitely not a biased guy in the least... -rolleyes-

I read the thread at FW too, and those seem to be outliers. In fact, I just read an article that predicts a slight rebound in 2008 for NOVA and DC. Honestly, it wouldn't surprise me, with an election around the corner and likely dem gains.

[JimRochester]

After 34 pages isn't it time we started a new thread titled "I wonder if the real estate market has bottomed out yet?"

[grundle]

http://www.nytimes.com/2008/01/13/business/13view.html?_r=3&scp=1&sq=Tyler+Cowen&oref=login&oref=slogin&oref=slogin

By TYLER COWEN

Published: January 13, 2008

IT’S NOT JUST THE LENDERS There has been plenty of talk about “predatory lending,” but “predatory borrowing” may have been the bigger problem.

As much as 70 percent of recent early payment defaults had fraudulent misrepresentations on their original loan applications, according to one recent study.

The research was done by BasePoint Analytics, which helps banks and lenders identify fraudulent transactions; the study looked at more than three million loans from 1997 to 2006, with a majority from 2005 to 2006.

Applications with misrepresentations were also five times as likely to go into default.

Many of the frauds were simple rather than ingenious. In some cases, borrowers who were asked to state their incomes just lied, sometimes reporting five times actual income; other borrowers falsified income documents by using computers. Too often, mortgage originators and middlemen looked the other way rather than slowing down the process or insisting on adequate documentation of income and assets. As long as housing prices kept rising, it didn’t seem to matter.

In other words, many of the people now losing their homes committed fraud. And when a mortgage goes into default in its first year, the chance is high that there was fraud in the initial application, especially because unemployment in general has been low during the last two years.

[ernestrp]

http://www.nytimes.com/2008/01/13/business/13view.html?_r=3&scp=1&sq=Tyler+Cowen&oref=login&oref=slogin&oref=slogin

By TYLER COWEN

Published: January 13, 2008

IT’S NOT JUST THE LENDERS There has been plenty of talk about “predatory lending,” but “predatory borrowing” may have been the bigger problem.

As much as 70 percent of recent early payment defaults had fraudulent misrepresentations on their original loan applications, according to one recent study.

The research was done by BasePoint Analytics, which helps banks and lenders identify fraudulent transactions; the study looked at more than three million loans from 1997 to 2006, with a majority from 2005 to 2006.

Applications with misrepresentations were also five times as likely to go into default.

Many of the frauds were simple rather than ingenious. In some cases, borrowers who were asked to state their incomes just lied, sometimes reporting five times actual income; other borrowers falsified income documents by using computers. Too often, mortgage originators and middlemen looked the other way rather than slowing down the process or insisting on adequate documentation of income and assets. As long as housing prices kept rising, it didn’t seem to matter.

In other words, many of the people now losing their homes committed fraud. And when a mortgage goes into default in its first year, the chance is high that there was fraud in the initial application, especially because unemployment in general has been low during the last two years.


Well, care to ad to the conversation or are you just padding your Dvdtalk account?

_______
http://www.rr-bb.com/images/smilies/hat.gif

[General Zod]

Obviously we need to follow Hillary's plan of over-taxing the rich to help out the liars.

[greg9x]

Wonder how many of those fraudulent buyers will get a bail out of some sort....

[VinVega]

Well, care to ad to the conversation or are you just padding your Dvdtalk account?
Don't sell grundle short, he might write a wikipedia article about it. :D

In response to his article, I think it takes two to tango. There were predators on the lending side, just looking to make a quick buck and there were ignorant and even downright greedy borrowers on the other side looking to buy way more house than they could afford or looking to flip property with nothing down, a pretty risky proposition. I personally think they should all suck on it because that would bring housing prices back to normal for people who you know, need a roof over their head, not someone looking to flip property.

[VinVega]

Cripes, I just realized we're way over 800 posts. Closing for length. Please see Part II (http://forum.dvdtalk.com/showthread.php?p=8438682#post8438682). Thanks.