[stoney]

#2 - Still dont understand adjustable rate mortgages. Banks lose when people default on the loans. Why do they raise rates to the extent that people continue to default? Surely there is some actuarial bastard figuring out how to jack the rates up just enough to bleed people dry while still allowing them to stay in their home.

Not necessarily... It is actually profitable because the loans are often govt funded and the losses are offset by govt support of the lenders. Once the house, which was bought for $700k defaults and sells for $500k, the bank keeps the interest generated, the $500k it sold for and the tax break on the loss $200k. In all actuality, they can make money on a default.

 

[Secret Squirrel]

#1 - Sky waitresses make 60k? Why?

Mile high club tips?

 

[Pesqueeb]

Crooked mortgage lenders? How long has this been going on?!?

 

[clarkenstein]

Not necessarily... It is actually profitable because the loans are often govt funded and the losses are offset by govt support of the lenders. Once the house, which was bought for $700k defaults and sells for $500k, the bank keeps the interest generated, the $500k it sold for and the tax break on the loss $200k. In all actuality, they can make money on a default.

you're totally right.

but there's more here than meets the eye even. there is a huge amount of loans that never stay on a banks books. so they don't even care how a loan is going to perform... actually they really don't care how a loan will perform for 2 reasons.

the first reason is that most people refinance their home within 5 - 7 years of booking their first mortgage on it, so the bank doesn't really care about what happens down the road. they want their upfront fees and front loaded interest, so they get their income upfront since most people will probably end up paying off their home through moving or refinancing anyway.

the second is most banks sells their loans so they can be packaged up into... wait for it... TOXIC ASSETS (which is load of horse caca). banks book a loan, and pass off the real issue of collectability to the stock market (and other banks) by selling them to the giants of Fannie Mae and Freddie Mac, who package the loans up and sell them off as mortgage back securities. the way banks make money on this deal is that they (1) sell the loan usually for a small profit (2) get all their loaned principal back ASAP from essentially the gov't and finally (3) they service the loan - which is taking a borrowers payments, pulling in usually 25 basis points of the payment and putting in their pocket for nothing other than taking the money, and passing the rest of the payment onto the entity they sold the loan to. a borrower never will know their loan was sold unless a bank chooses to tell them, which they don't have to. so now the bank is in an awesome position of making income off of nothing but something they sold. not a bad deal right?

regulators have been trying to get on top of loan servicing (Regulation AB) but its not too easy to get their fingers into since it seems real simple from the 30,000 foot level but can get really really complicated when you get into the details.

 

[dante]

Latest from NYT: Banks are sitting on 1m foreclosed homes with another 1m more foreclosures in the pipeline...

The banks are claiming that they're not sitting on inventory on purpose, but I can only imagine what those "assets" are listed for on their balance sheets.

 

[stoney]

I'm so not buying anything, anytime soon.

 

[bizutch]

They're sitting on them b/c home values in the US are false. The values are still inflated and based off of people's buying power using pretend money.

The reason home prices rose was not b/c people made that kind of money suddenly. It's because lenders decided to qualify people to buy homes with that kind of money.

And most lenders are still using ridiculous 50-60% Debt to Income Ratios to qualify buyers. Used to it was 36% MAX...which left you money to repair, maintain and improve your dwelling out of your own pocket.

Now, people build or buy based on 60%, don't maintain their homes, let them deteriorate, then file claims on insurance. Our housing market is still in "Pretend" mode.

 

[$tinkle]

I'm so not buying anything, anytime soon.

iron too hot?

 

[Pesqueeb]

Latest from NYT: Banks are sitting on 1m foreclosed homes with another 1m more foreclosures in the pipeline...

The banks are claiming that they're not sitting on inventory on purpose, but I can only imagine what those "assets" are listed for on their balance sheets.

Are you mad? If you mark-to-market there isn't a single solvent bank in this country. Why do you hate Freedom®? Good day sir!

 

[ohio]

I'm so not buying anything, anytime soon.

Aren't you expecting hyperinflation?

 

[dante]

Aren't you expecting hyperinflation?

When hyperinflation sets in, he's just going to trade a wagonful of physical gold and silver for a mansion, kinda like that Monte Crisco movie...

 

[stoney]

Aren't you expecting hyperinflation?

Yes. But I still don't want to overpay for a house. Plus, I prefer to have tangible and movable assets. Unless of course that asset is acreage which can be self-sufficient.

 

[$tinkle]

srsly, the iron is hotter than buster poindexter

 

[Pesqueeb]

I'm lucky to have only lost 10k on the value of my home.

Home prices in 20 U.S. cities dropped in March to the lowest level since 2003, showing housing remains mired in a slump almost two years into the economic recovery.

The S&P/Case-Shiller index of property values in 20 cities fell 3.6 percent from March 2010, the biggest year-over-year decline since November 2009, the group said today in New York. At 138.16, the gauge was the weakest since March 2003.

A backlog of foreclosures poised to reach the market means prices may stay depressed, dissuading builders from taking on new-home construction projects. Unemployment at 9 percent and stricter lending conditions are signs that any recovery in housing may take years.

“With the foreclosure pipeline still full to bursting, it’s hard to see this downward pressure on prices abating,” said Paul Dales, a senior U.S. economist at Capital Economics Ltd. in Toronto. “I wouldn’t be surprised to see prices continue to fall this year and maybe into next year.”

Economists surveyed by Bloomberg had forecast a 3.4 percent decline from a year earlier, according to the median forecast of 27 economists surveyed. Estimates ranged from declines of 4.9 percent to 2.8 percent.

Nationally, prices decreased 5.1 percent in the first quarter from the same time in 2010, and were down 4.2 percent from the previous three months, the biggest one-quarter decrease since the first three months of 2009. At 125.41, the index was the lowest since the second quarter of 2002.

“This month’s report is marked by the confirmation of a double-dip in home prices across much of the nation,” David Blitzer, chairman of the Case-Shiller index committee at S&P, said in a statement.

Further declines in home prices are likely to constrain the consumer spending that makes up 70 percent of the economy, as homeowners feel less wealthy and have little home equity to borrow against.

Reports earlier this month showed the housing market remains depressed as the broader economy slows.

Pending sales of previously owned homes plunged 12 percent in April from the prior month, the National Association of Realtors said last week. The gauge measures contract signings, which typically lead closings by one to two months, a sign existing purchases will slow.

Sales Fall
Sales of previously owned homes, based on closings, fell 0.8 percent in April to a 5.05 million rate, with demand for distressed properties accounting for 37 percent of the total, NAR said last May 19.

The overhang of unsold housing inventory will probably remain an issue for builders and buyers alike. CoreLogic Inc. in March estimated about 1.8 million homes were more than 90 days delinquent, in foreclosure or bank-owned, a so-called “shadow inventory” set to add to the unsold supply of 3.87 million previously owned homes on the market at the end of April.

Builders are gloomy and project demand will remain depressed into next year, Bill Wheat, chief financial officer of D.R. Horton Inc., told a housing conference in New York on May 11.

“We still see housing demand at very weak levels,” Wheat said. “It could still be a struggle in 2012.”

http://www.bloomberg.com/news/2011-05-31/home-prices-in-20-u-s-cities-decline-to-eight-year-low-case-shiller-says.html

 

[$tinkle]

dude, there's plenty of new-ish homes in the black forest (~2 wooded acres), 15 min from mt herman consistently under $300k. we're looking now to get positioned for a possible move next summer. given our equity & a VA loan, i'd have payments around 800/mo.

#vulture

 

[Pesqueeb]

dude, there's plenty of new-ish homes in the black forest (~2 wooded acres), 15 min from mt herman consistently under $300k. we're looking now to get positioned for a possible move next summer. given our equity & a VA loan, i'd have payments around 800/mo.

#vulture

Yea, we've been talking about something similar, but if we stay where were at = no mortgage when I'm 40. Hard to give that up, even for a place on land.

 

[$tinkle]

it's all about pain points: suffer now, or suffer later?

assuming one's income significantly outpaces inflation, looks like getting in/upgrading in the next 12-18 mos can be justified, esp if you can put at least 1/3 down

 

[dante]

dude, there's plenty of new-ish homes in the black forest (~2 wooded acres), 15 min from mt herman consistently under $300k. we're looking now to get positioned for a possible move next summer. given our equity & a VA loan, i'd have payments around 800/mo.

#vulture

Just careful catching that falling knife...

I'm lucky to have only lost 10k on the value of my home. :twich:

We're in about the same boat (according to Zillow), but the math I did a couple months ago still holds true: it would have cost us ~$8k more to rent the same house over the last 3.5 years than to have bought. Obviously we could've rented an apt instead and saved more money, but then we would've lost out on actually living in a house this whole time which we think of as "quality of life".

I'm just amazed that I still have friends who refuse to believe in the reality of the situation. Some are still holding on to houses refusing to sell because "the market will come back"...

 

[$tinkle]

Just careful catching that falling knife...

while the bubble may still be popping, it'll never have a dead cat bounce

 

[Pesqueeb]

We're in about the same boat (according to Zillow), but the math I did a couple months ago still holds true: it would have cost us ~$8k more to rent the same house over the last 3.5 years than to have bought. Obviously we could've rented an apt instead and saved more money, but then we would've lost out on actually living in a house this whole time which we think of as "quality of life".

I'm just amazed that I still have friends who refuse to believe in the reality of the situation. Some are still holding on to houses refusing to sell because "the market will come back"...

This is definitely true for us. Rent here has always been high, I believe mostly due to the large number of military folks, and rents are only increasing due to the number of people who are being foreclosed upon. I couldn't touch a similar place to rent without forking over at least another 300 bucks a month.

 

[KavuRider]

I've lost quite a bit more than $10K, but it doesn't really concern me. I bought this place to live in, not as an investment. My payments are locked and its still FAR cheaper right now than renting a place.

On the other side, my neighborhood sucks and is getting worse. We'll see what happens with all of this.

 

[manimal]

Just careful catching that falling knife...



We're in about the same boat (according to Zillow),

zillow puts my house at $20k over what i paid in '06....sure wish i could get that much for it!

we've been considering renting out my house instead of just hoping it sells when we move. a coworker of mine had his house on the market for nearly a year with no interest in it but rented it within 2 weeks of putting it out for lease. he just put in the contract that he could sell it at any time and would give the tenant x number of days notice.
what say you RM experts? good idea?

 

[Pesqueeb]

zillow puts my house at $20k over what i paid in '06....sure wish i could get that much for it!

we've been considering renting out my house instead of just hoping it sells when we move. a coworker of mine had his house on the market for nearly a year with no interest in it but rented it within 2 weeks of putting it out for lease. he just put in the contract that he could sell it at any time and would give the tenant x number of days notice.
what say you RM experts? good idea?

Were I in the market to buy, I wouldn't even give somebody the time of day if they weren’t willing to take 20 grand less then asking price, give or take for city, local market, etc. Zillow says 20k over purchase price, I'd think you'd be real lucky to get someone to pay what you paid. That said, its a great time to be a slum lord with the number of people who have been kicked out of, or will be kicked out of their current home due to foreclosure. As discussed earlier, rents are entering their own bubble like climb as a result of the mortgage implosion. The other thing to consider of course is dealing with the renter, possible damage and upkeep of the house, insurance, the fact that you might be violating the terms of your mortgage by renting it out, collecting on rent if the renter turns deadbeat, kicking them out, much harder to get another mortgage for yourself, etc, etc. Too much hassle IMHO.

 

[jimmydean]

zillow puts my house at $20k over what i paid in '06....sure wish i could get that much for it!

we've been considering renting out my house instead of just hoping it sells when we move. a coworker of mine had his house on the market for nearly a year with no interest in it but rented it within 2 weeks of putting it out for lease. he just put in the contract that he could sell it at any time and would give the tenant x number of days notice.
what say you RM experts? good idea?

If you can rent it through an agency so you don't have to deal with tenants and still come out in the black, I say it would be a good optional at least.

 

[Pesqueeb]

.....

U.S. home prices fell to new, post-bubble lows in March, according to the latest Case-Shiller home price numbers. And with the wave of foreclosures continuing, it's hard to see an end to the housing bust.

Foreclosures and short sales are a key driver of falling home prices. They contribute to the glut of houses on the market, and tend to sell at discounted prices.


There are still nearly two million houses in the foreclosure pipeline, according to RealtyTrac.

"At the first-quarter foreclosure sales pace, it would take exactly three years to clear the current inventory of 1.9 million properties already on the banks' books, or in foreclosure," RealtyTrac's CEO said in a statement last week.

What's more, the percentage of homeowners who are underwater — who owe more on the mortgage than their house is worth — is still rising. Of all single-family homes with outstanding mortgages, 28 percent were underwater in the first quarter of this year, according to Zillow.

People who are underwater are at higher risk of being foreclosed on, or being forced into a short sale. So the high percentage homeowners who are underwater suggests more foreclosures are likely. And all those foreclosures will continue to put pressure on home prices.

Home prices, which peaked five years ago, have now fallen to where they were in 2002. Over the past year, prices fell in 19 out of the 20 metro areas tracked by Case-Shiller. Here's the complete list:

http://www.npr.org/blogs/money/2011/05/31/136816268/housing-bust-no-end-in-sight

 

[Pesqueeb]

http://www.corelogic.com/uploadedFiles/Pages/About_Us/ResearchTrends/CoreLogic_Q1_2011_Negative_Equity.pdf

 

[$tinkle]

NV + AZ for teh lulz

maybe mike tyson's pigeons can finally have a coop of their own

 

[jimmydean]

Yahoo sayz Why It's Time To Buy

Despite all the gloom, however, there are growing indications that it is a good time to buy. Mortgage rates, which fell to 4.55% for the week ending June 2, according to Freddie Mac, are near 50-year lows. Homes have become more affordable than they have been in years: According to Moody's Analytics, the ratio of home prices to income is now 20.9% lower than the 15-year average through 2010, and 12.5% lower than the 1989-2004 average. A historic glut of homes, meanwhile, has created a buyer's market: There were about 15 million vacant homes in the U.S. last year, according to John Burns Real Estate ConsultingInc.—some 3.1 million more than normal.

I'm going shopping!

 

[KavuRider]

Woohoo, go AZ!!!
Oh wait...

Half of my condo complex is empty right now, or will be soon. Most of them are owned and being rented out, but are currently vacant.

 

[Westy]

Yahoo sayz Why It's Time To Buy



I'm going shopping!

Did Brian HCM write the article?

 

[dante]

Whoa! Bye bye ~$16k.....

Zillow's estimate of our house just plummeted by ~$16k thanks to a "new algorithm". Not only that but it changed everything retroactively for the past couple years as well, so our instead of us buying it below the Zestimate back in 2007, now it thinks we overpaid by ~$10k. Looks like they might still have to work some of the kinks out.

 

[Pesqueeb]

^^^^^^^^^^That sucks.

Zillow says my place is now worth 1300 more than I paid for it. 2 weeks ago when I checked last we were 10k below. Something don't jive, seemed like it was pretty accurate for my hood before.

 

[manimal]

^^^^^^^^^^That sucks.

Zillow says my place is now worth 1300 more than I paid for it. 2 weeks ago when I checked last we were 10k below. Something don't jive, seemed like it was pretty accurate for my hood before.

i bought my house in 2006 for $127k...zillow has it valued at $150k now ?!! something's not right. i'm just hoping to get back what i owe on it if i move this fall.

 

[jimmydean]

Zillow says may old place is now worth $159,900, I paid $176k in 2009. It sold for $265k new in '06. I thought I had gotten a good deal, too.

 

[$tinkle]

unless you view your house as an investment, who cares about the value fluctuation? we met w/ an agent last night, and we're getting positioned to upgrade some time next year, so there's a good deal more of a value range above us.

our house gets only 90% of FMV? so what? we'll pay 80% when we move up to the next pricepoint or 2. and we'll only have to get a loan for 30%.

stoney, you paying attention?

 

[stevew]

Yea, we've been talking about something similar, but if we stay where were at = no mortgage when I'm 40. Hard to give that up, even for a place on land.

but you will still be in the springs, correct?

 

[SkaredShtles]

but you will still be in the springs, correct?

That's what I was thinking... spending your 20s/30s some place you're not really thrilled about just to be mortgage free when you're old is a bad move, IMO.

Then again, I have three kids, so my opinion is suspect.

 

[stoney]

unless you view your house as an investment, who cares about the value fluctuation? we met w/ an agent last night, and we're getting positioned to upgrade some time next year, so there's a good deal more of a value range above us.

our house gets only 90% of FMV? so what? we'll pay 80% when we move up to the next pricepoint or 2. and we'll only have to get a loan for 30%.

stoney, you paying attention?

Yep. Houses are not an investment, they are a means of providing a location in which to live in old age with no overhead debt.

As for selling at a loss to buy a more valuable 'security' as a discounted price, you are still looking at it as an investment. That being said, if it's an equal trade ($$) for a larger home, you offset the loss (sort of).

 

[Pesqueeb]

but you will still be in the springs, correct?

That's what I was thinking... spending your 20s/30s some place you're not really thrilled about just to be mortgage free when you're old is a bad move, IMO.

Then again, I have three kids, so my opinion is suspect.

Yea, I go all Romney and flip flop on this probably every other day. Still not sure what I'm going to do with this place. If the zillow figures are even close to correct though it does push me closer to putting the house on the market. Just need another job opening in PDX. Its worth pointing out, that to me the security of not having a mortgage when I'm older is worth a fair bit. Also, If I'm gonna sell its not going to be for something bigger up the street, I want out of the area entirely.

 

[$tinkle]

portlandia? who needs a job to live there?