Shared Top Border
sdcia_head3.jpg (14795 bytes)
SDCIA Message Board
Register Latest Topics
 
 
 


Reply
  Author   Comment   Page 4 of 21      Prev   1   2   3   4   5   6   7   Next   »
Paul

Senior Member
Registered:
Posts: 2,035
Reply with quote  #91 
My wife marches to Oprah's drum beats. I am an Oprah agnostic...I don't watch, so she doesn't exist.

But today, my wife convinced me that I would want to watch O as she was having some Nate dude fix up a house that was on the market and wasn't selling.

Long show short. Oprah had this interior designer go to Redondo Beach, along with a landscape designer, and do a $10,000 makeover job on a townhome that had been on the market for a little less than 4 months. They had a $10K budget.

Of course, in TV land, the befores and afters are very impressive and this being the Oprah show, the two designer guys hit it out of the park (one could probably hit it out of the park, literally speaking, the other...not so much...OK, maybe he could switch hit, though).

So, they come in under the $10K budget, but of course no line item for labor, so, real cost was proabably $20K. But the end result was great. Then the owners hold another open house and 65 potential buyers check it out.

No happy ending here. There were 65 potential buyers/lookyloos, yet not one offer. Now that's amazing. I gotta hand it to the Oprah folks, as they could have easily "finessed" the situation and arranged for a sale, but they didn't.

I'm getting more bearish every day.




RobertCampbell

Senior Member
Registered:
Posts: 6,812
Reply with quote  #92 

 

Paul,

 

Thanks for posting.  Great story!

 

Robert Campbell

Boombust

Junior Member
Registered:
Posts: 19
Reply with quote  #93 

Yes, you know when the market is tanking when "The Oprah Factor" (similar  to Time Magazine's front covers) kicks in.

 

There will be tears and a great gnashing of teeth.

HungryBear

Avatar / Picture

Senior Member
Registered:
Posts: 274
Reply with quote  #94 

Paul

Senior Member
Registered:
Posts: 2,035
Reply with quote  #95 
The Coming Collapse In Housing by John Maudlin. A very detailed and illustrated article anticipating a 25% decline in prices.

Lots of charts, you'll like this one, Robert Campbell.

http://news.goldseek.com/MillenniumWaveAdvisors/1163952000.php


taddyangle

Avatar / Picture

Senior Member
Registered:
Posts: 2,044
Reply with quote  #96 

Quote:
Originally Posted by Paul
The Coming Collapse In Housing by John Maudlin. A very detailed and illustrated article anticipating a 25% decline in prices.

Lots of charts, you'll like this one, Robert Campbell.

http://news.goldseek.com/MillenniumWaveAdvisors/1163952000.php


 

He also says it could be as much as 40%, where have I heard that?  Hmm....

 

Hey Robert, are you seeing an increase in book sales or newsletter subscribtions as the market decreases?  Or is it a steady flow irrespective of what the re market is doing?


__________________
------
JohnVosilla

Senior Member
Registered:
Posts: 183
Reply with quote  #97 

'Hey Robert, are you seeing an increase in book sales or newsletter subscribtions as the market decreases?  Or is it a steady flow irrespective of what the re market is doing?'

 

Great question.. I would bet over the next couple of years his sales really take off.  Few who were caught up in the mania were prepared for the 'dark side' and are going to be eager for assistance through these rough waters. 

 

On the flip side I'd bet most who made a fortune the old fashioned slow and steady way will not be his customers, are not leveraged to the hilt on exotic loans at the peak and have plenty of cushion and could care less whether the market moves down 20-30% are a bigger percentage than most people think..


__________________
John Vosilla
RobertCampbell

Senior Member
Registered:
Posts: 6,812
Reply with quote  #98 

 

 
Paul,

The Coming Collapse In Housing by John Maudlin. A very detailed and illustrated article anticipating a 25% decline in prices.

Lots of charts, you'll like this one, Robert Campbell
Thank you for the link.  Great stuff.  Gary Shilling is one of my favorite economists.  Very non-consensus, and a man who looks at the data and calls it like he sees it.  If U.S. median home prices were to fall by 25%, that would certainly bring about a significant reallocation of wealth, wouldn't it?  Whatever the ultimate % fall is, I'm betting that Shilling is closer to being right than he is wrong. 

 Bernard,

 

He also says it could be as much as 40%, where have I heard that?  Hmm....

 

Hey Robert, are you seeing an increase in book sales or newsletter subscribtions as the market decreases?  Or is it a steady flow irrespective of what the re market is doing?

 

You ask a question that is clearly related to market psychology, now that the bull market in real estate has turned into a bear market. 

 

Subscriptions to my Timing Letter are holding steady.  Book sales are down a bit.

 

The new concern is not when to sell, but when to buy back into the martket again when the correction/crash is over.  In my view, this is the safest and most profitable way to make money in real estate -- being a bottom feeder and then riding the trend higher.  

 

As you know, because of the leverage from kooky mortgage financing that drove the mania, I think the fall is going to be hard.  Leverage magnifies gains in a bull market, and it also magnifies losses in a bear market.  A lot of inventory is going to be hitting the market in the coming years from people who really couldn't afford the property they bought, and these assets will be returned to their rightful owners ... the banks.

 

Like all market downturns, this shake-out is going to separate the men from the boys.  Until you've survived at least one market correction, you aren't a real investor ... in stocks, real estate, gold, or whatever.  History shows that those who survive and prosper in the markets over a long period of time are truly exceptional investors, and they are truly in the small minority.

 

Robert Campbell

 

PS to all:  As this bear market in housing plays out, we're going to see interest in real estate investing slowly erode to almost zero.   From what I see, this discussion board already reflects this growing lack of interest.   If you recall, SDCIA almost disbanded its operations back in 1995-96 bacause of  lack of attendance, which turned out to be the bottom of the SoCal real estate cycle.  I wouldn't be surprised to see a similar phenomenon during this down cycle.

 

AgSurfer

Avatar / Picture

Senior Member
Registered:
Posts: 227
Reply with quote  #99 

Quote:

PS to all: As this bear market in housing plays out, we're going to see interest in real estate investing slowly erode to almost zero. From what I see, this discussion board already reflects this growing lack of interest. If you recall, SDCIA almost disbanded its operations back in 1995-96 bacause of lack of attendance, which turned out to be the bottom of the SoCal real estate cycle. I wouldn't be surprised to see a similar phenomenon during this down cycle.

 

A good lesson to remember is the mad gold rush fever back in the late 70's and the crash that followed.  Gold went to $850/oz and people were actually standing in lines at coin sellers stores waiting to buy/sell.  One of the best selling books of that period was "How to Prosper During the Coming Bad Years" by Howard Ruff.  The book was published in 1979 and the gist of the book was "inflation is out of control, buy gold."   Ruff also told people to avoid stocks because inflation would destroy their value.   Anybody who followed his advice would have lost a lot of money - his timing couldn't have been more wrong. Gold prices peaked around 1980, and in mid 1982, the stock market started the biggest and longest bull run in history.  Gold became less and less interesting until 2000 when we saw a resurge in buying, right after the dot-com bust in the stock market!

 

Compare the crowd psychology of those days to the crowd psychology for San Diego real estate.  Just 2 years ago, people thought San Diego real estate prices would go to the moon.  Today, nervousness is growing because a lot of people are sensing they may have paid too much for their "investments."    Like Robert, I suspect we'll see a hard crash rather than the soft landing that many want to believe will occur.  After that, I suspect we'll see a long period where nobody will touch San Diego real estate, just like gold thru the 80's and 90's. 

 

Different markets, same psychology.  It will be interesting to see how all of this plays out.

Subcranium

Senior Member
Registered:
Posts: 718
Reply with quote  #100 
Six years of falling last time around. And you'd think people would remember that. Not so long ago...

http://piggington.com/before_and_after_rents_prices_payments

AgSurfer

Avatar / Picture

Senior Member
Registered:
Posts: 227
Reply with quote  #101 

Quote:

Six years of falling last time around. And you'd think people would remember that. Not so long ago...

 

I'm not sure that last drop was sufficient to really rattle many people.   Judging from the data that I've seen, it looks like SD real estate, on average, lost about 15% from the peak.  Given that the median price for a home at the last peak might have been around $250,000, a 15% drop would have meant a loss of $38k from peak to trough - and that assumes buying right at the very peak.  Most people probably found themselves in a worst case situation of breaking even.  Not good, but not something to lose sleep over either.  And once the housing prices started to rebound, everyone just shrugged it off and forgot about it. 

 

 

HungryBear

Avatar / Picture

Senior Member
Registered:
Posts: 274
Reply with quote  #102 

This guy may be OK right now but when those arms adjust, barring a miracle, he's toast.

 

 

"Hey Casey. I know your time frame is ridiculously short, but don’t listen to these jugheads on this blog who tell you to go bk. Doing that will put you out the game for about 7-10 years. If you’re able to salvage the situation, you’ll just be out the game for 2-5 years max while you reboost your fico. I know a little about this stuff, I’m a 24yr old mortgage broker in CA who has purchased 7 properties in the last year.

The difference with the way i did it (perhaps a lucky vision) was that 3 of the 7 I partnered with folks and used their credit. 6 properties are in LA county, and 1 (which is perhaps the nicest structure) is in San Bernardino. NON OF THESE PROPERTIES WERE CASH FLOWING AT PURCHASE. Also, 5 of 7 are all within a few blocks of each other, which enabled me to control my investments hands on.

Here’s the deal, I haven’t been late on anything thus far. But what has kept me afloat was BUSINESS LINES OF CREDIT, whereby the outstanding debt is attached to the C Corporation. This cushion enabled me to bump my head(and bump it i did!) but still remain liquid while I learned how to rent, rehab, and figure ways to get rich.

At this point (roughly 13 months later), 5 of the 7 properties are refinanced into the option arm, and are cash flowing about $100-250 per month (when you factor expenses and vacancy, I’m really breaking even).

It hasn’t been easy at all…After the purchases, my fico went down over a hundred points! which basically slowed my progress from refi’ing quick, or adding 2nds, etc.

I’m consistenltly 15-29 days late on my mortgages while i catch up in a slowing market. Luckily I’m not in a bubble neighborhood, and every few months new appreciation is being added to my balance sheet.

Here’s what I suggest. Do your little plan to get the 50K, from anywhere. Rent out your props. Find some friends or family, or whoever, who has a 680 experian fico and up. Start a C Corporation(about $400 bucks to get a professional to file one.) Get the business listed with 411, and go to city hall and get a bizness license for the corp. Now, find a company that can help you “fund” your Corp. There are plenty of them out there(just goggle “business loans or funding”), but they’ll want either a large upfront fee of a few thousand, or they’ll want 5-10% of every line of credit you get approved for. Hell, start 2 or 3 C corps and get all of them funded whereby one person per corp will sign on as the “Owner” and vouch their good as the way they do business(whcih means they won’t default).

This will work man, I have three Corps, and they have about $50K-100K each. Give yourself about 2-3 months from finding the people w/ credit, and finding the company to start the process before you start receiving money. Understand? "

resuccess

Member
Registered:
Posts: 5
Reply with quote  #103 

I get asked alot, " Can I get a grant for real estate investing?

 


__________________

JustinWilliams


DO YOU WANT TO CHANGE YOUR LIFE? OUR REAL ESTATE INVESTMENT TRAINING CAN HELP.

The Business Success Group



resuccess

Member
Registered:
Posts: 5
Reply with quote  #104 

My answer would have to be yes, from both the government and private foundations.


__________________

JustinWilliams


DO YOU WANT TO CHANGE YOUR LIFE? OUR REAL ESTATE INVESTMENT TRAINING CAN HELP.

The Business Success Group



HungryBear

Avatar / Picture

Senior Member
Registered:
Posts: 274
Reply with quote  #105 

Amazing this guy was able to borrow $87 Million with 2 years experience.  With a 16 years track record, I don't think I could borrow anywhere near $87 Million, although I can't say I have ever tried.

 

Michael Tringali is having trouble making payments on the massive real estate-related debt he accumulated with help from his former partner, Neil Mohamed Husani. The 44-year-old developer and home builder missed several installments on a $7.3 million loan from Clearwater-based Mercantile Bank and a $4.9 million loan from Bradenton's Coast Bank, prompting both lenders to start foreclosing. Mercantile is going after a 158-acre tract off Fruitville Road in eastern Sarasota County, while Coast Bank's target is 254 acres near Myakka City. Tringali faces deadlines on three more loans, totaling nearly $34 million, payable in the next three months. The pending foreclosures are the first sign of financial trouble resulting from the series of multimillion-dollar transactions by Husani and Tringali during the last two years -- deals that, to some observers, typified the excesses of the boom-boom real estate market of 2004-05. They also represent the strongest example to date of the potential risks that the region's lenders put themselves in by assigning so much value to the properties when market prices were much lower. Husani and Tringali inflated land values through property flips. They then used values that were way above what the market was paying to get bank loans that not only covered the original cost of the land but provided Tringali with more money to finance development. Despite his current problems, Tringali believes he will emerge with his assets intact. "I'm working diligently with all the banks to get the loans refinanced and extended with interest reserves," he said. "I am very confident that we are going to work out a solution." Husani left the country in March after the FBI began investigating the presentation of false documents to at least one bank that lent Tringali money. Though Tringali says he knows nothing about the false documents, he is suffering the consequences of his relationship with his former partner. Attempts to sell his land to other developers or to get more financing have fallen through. In the meantime, Tringali has not been able to sell houses fast enough to pay a debt that now amounts to nearly $87 million. The ones most to blame for the situation are the banks that lent Tringali all that money, says Jack McCabe, a real estate industry consultant based in Deerfield Beach. They should have known better, especially because Tringali had been developing land and building houses in Southwest Florida for only two years before he applied for tens of millions of dollars in loans, McCabe said. "I don't know of any other builder in the state that got that kind of credit with minimal assets and experience," McCabe said. "He is a perfect example of the recklessness on the part of developers, appraisers and bankers that permeated the recent housing boom." Bankers, which made huge profits during the rising real estate market, now stand to lose millions because of "their over-overexuberant desire to ever increase their bottom lines," McCabe said. The Husani factor Tringali entered the Florida residential development business by buying 40 acres off Verna Bethany Road in Myakka City in 2002. He did not have good credit at the time. It took him months to get financing. But the first phase of his Golden Verna development sold out quickly, allowing him to pay down his debt, open a line of credit from Bank of America and buy more land off Verna Bethany as well as lots in other parts of Manatee and Sarasota counties. But when Tringali met Husani in May 2004, he abandoned his conservative approach to development and home building and went on a whirlwind buying spree. Between July 2004 and January 2006, Husani spent $42 million for about 1,900 acres of land. He then sold the property to Tringali in cashless transactions for $98 million, and Tringali used the high purchase prices and accompanying appraisals to obtain $83 million in loans from seven banks. If real estate demand had remained strong, Tringali might have been able to keep making payments on this debt. But the market slowed dramatically in 2006, especially in the Myakka City area that is home to two of Tringali's active developments, Golden Verna and Steeplechase. "It's been a horrible year," said Jim Schmitt, a Realtor who formerly worked for Tringali's real estate company, La Vista Homes. "There are so many homes on the market." More than a dozen customers have opted out of contracts, causing Tringali's inventory of unsold homes at Golden Verna to swell to 19. "The big hook was that they were only asking for $2,500 deposits for houses," said Mark Pierson, who bought several homes in Golden Verna. "Now everyone has gotten buyer's remorse. Mike is sitting on a bunch of houses and the market is dead." In spite of market conditions, Tringali has managed to sell 16 homes at Golden Verna since May, raising $5.3 million. Together with bank reserves he set up when he negotiated loans, Tringali was able to keep making interest payments through August. But Tringali missed the September and October payments on his $7.3 million loan from Mercantile, prompting the bank to begin foreclosure proceedings Oct. 24. A month later, Coast Bank began foreclosure proceedings after Tringali missed payments on a $4.9 million loan. Last week, Tringali also faced a deadline on a $3 million line of credit from Bank of America originally due in July. Another $14.5 million loan from Orion Bank is payable Dec. 30, while a $16.25 million loan from Fifth Third comes due on Jan. 12. Representatives from the banks declined to comment, citing client confidentiality. But Tringali said he should be able to pay the Bank of America loan, and he is negotiating with both Mercantile and Orion. "It's a matter of staying power," Tringali said. "The banks are working with me. They understand what the market is doing." As to the Fifth Third loan, Tringali said he has a contract to sell land on Tamiami Trail in downtown Sarasota, where he and two partners had planned to build a $125 million condo tower. The deal is expected to close before the end of the year and the proceeds will be used to repay the bank, Tringali said. Other problems Even as Tringali struggles to renegotiate his debt, he is facing other problems at his Golden Verna and Steeplechase developments. Residents at Golden Verna are worried that Tringali is not going to have enough money to build the clubhouse and pool he promised. "There's a lot of very unhappy people out here," said Larry Bartgis, who owns a Golden Verna house. "They charge us $500 a year for a pool and it hasn't been built yet. That's not right." Tringali says construction delays are not entirely his fault. He did not realize that the clubhouse and pool required a commercial permit, and he did not expect to have to make as many revisions to his plans. "I know they want a clubhouse and believe me I want to give it to them," Tringali said. "We have the money set aside. We are just waiting for the permit." Manatee County planner Patricia Allen said permits could be granted by the end of the year. Tringali thinks county approvals for his 183-lot Steeplechase subdivision will come through at the start of 2007. When that happens, he will be able to start selling the lots and recouping the hundreds of thousands of dollars he has spent to build roads and extend water lines. So far, the delays have caused three builders -- Avalon Homes, Mark Cahill Homes and Eslinger Homes -- to either postpone or cancel their plans to build in the subdivision. These builders want projects where they can begin building right away, said Mary Smedley, who is the head of sales for Tringali's La Vista Homes. "It's a soft market and they don't want customer deposits sitting around," she said. Tringali remains confident that the market will pick up once home buyers realize the values he is offering. "In the long run, the market will turn around. Don't forget that baby boomers want to move here and they will have to have somewhere to live."

http://www.heraldtribune.com/apps/pbcs.dll/article?AID=/20061201/BUSINESS/612010469

 

taddyangle

Avatar / Picture

Senior Member
Registered:
Posts: 2,044
Reply with quote  #106 
Quote:
Originally Posted by resuccess

My answer would have to be yes, from both the government and private foundations.

 

WHAT!!??!!

 

 


__________________
------
Gekko

Avatar / Picture

Senior Member
Registered:
Posts: 776
Reply with quote  #107 

 

Tales from the end of the great real estate boom

SANTA ROSA, Calif. -- In a laid-back kind of way, the Flamingo Resort Hotel and Spa, where I am staying, is centrally located. Drive in one direction and you're less than a mile from downtown. Drive in another and you're at a casual shopping center. Drive in still another and you're on your way to Glen Ellen and wine country.

Almost immediately my son Ollie, who lives in Santa Rosa, tells me that real estate values are down. A day later, the Press Democrat has an article observing that the median price is down 4.2 percent -- to $565,000.

Worse, prices have fallen for four consecutive months. This means that many of those who bought at the top -- which the Press Democrat identifies as August 2005, when the median home price in the area peaked at $619,000 -- are now upside down. With virtually no down payment and creative financing, recent buyers now owe more than their house or condo is worth.

This may be a good time for Californians to talk to Texans who went through the Texas real estate crash in the late '80s and early '90s.

Back then I wrote about Dallas "condo slaves." These were people who had bought overpriced condos in a rising market. They bought them with buy-down mortgages that would reset to a higher interest rate in a year or two. They bought them with very low down payments, often less than 5 percent.

Then the market turned.

Prices slipped. Inventory ballooned. Thousands of homeowners and condo owners walked away from their mortgages. Prices plummeted. Then the condo lenders disappeared. Condo prices fell some more.

Those who tried to tough it out found themselves in an odd position. They could rent identical units around them for less than they were paying on their mortgage because the other units had been sold to speculators who paid cash. But they could not refinance to a lower interest rate because their condo was now worth less than their mortgage balance. They were "condo slaves." They were indentured to their depreciated property.

Well, it's starting to happen here.

Over lunch at Monti's Rotisserie, a friend tells me her Tale of Two Transactions.

Now a renter, she sold her townhouse in the mid-$400s, nearly three times what she had paid for it seven years earlier. Today she rents a smaller townhouse for less than $1,000 a month.

Her shelter expenses are way down. The equity from the townhouse, after paying off her credit cards, has been invested. To celebrate, she replaced her decrepit early '90s Honda with a mature but beautifully maintained Lexus.

She is a happy camper. She believes the sale of her unit in August was the last sale in her entire complex.

But the next-to-last sale was to a speculator. The speculator, a woman my friend knows, made a $50,000 down payment on another mid-$400s unit.

The speculator immediately found a tenant at about $1,400 a month. That's nice, but it doesn't cover the monthly expenses. Figure a $400,000 mortgage at 6 percent, interest only, and you've got a $2,000 monthly payment. Add real estate taxes, insurance, and homeowner association dues, and you've got another $700 a month, at least.

So the speculator is paying about $1,300 a month, and the tenant is paying $1,400. The place will have to appreciate at nearly 4 percent a year just to cover the monthly losses.

Worse, if the unit was sold at a loss of 6 percent plus a 6 percent agent's commission, the speculator would be looking at losing her $50,000 down payment and, maybe, bringing a check to the closing to cover the remaining loss. The website http://www.trulia.com, which tracks real estate prices by ZIP code, shows average and median sales price declines of 7 percent and 6 percent, respectively.

The speculator is between a rock and a hard place.

Does this mean a great real estate crash is coming? One is certainly coming for speculators who don't have deep pockets. For others it's a question of how great the collateral damage will be. The only clear thing is that the great real estate party is over, so over.

HungryBear

Avatar / Picture

Senior Member
Registered:
Posts: 274
Reply with quote  #108 

http://seattletimes.nwsource.com/html/businesstechnology/2003459108_merit03.html

taddyangle

Avatar / Picture

Senior Member
Registered:
Posts: 2,044
Reply with quote  #109 

Is this the doom and gloom thread?

 

So far San Diego is down about 10%.  I suspect we will see about a 10% decline in 2007, and then another 10% in 2008.

 

I know that nobody knows what will happen, but to me this seems like a logical path.


__________________
------
scprofessor

Junior Member
Registered:
Posts: 23
Reply with quote  #110 

With yesterday's downgrade by Fitch of Ameriquest's parent company, and the closing of Ownit Morrgage (see http://www.ownitmortgage.com) you are seeing the beginning of the end for sub-prime mortgage companies.  With them and their products out of the market, the direct result will be a reduction in the buyer pool through the elimination of the ability of challenged borrowers to obtain conventional financing.

 

This fact alone will have a resulting effect of a smaller pool of buyers.  With a smaller buyer pool, the real estate market will continue to collapse.  I think at least a 10% per year reduction in residential real estate prices over the next few years is more a probablility than a possibility.  The phrase "catching a falling knife" seems to fit the situation.

 

SCProfessor

RobertCampbell

Senior Member
Registered:
Posts: 6,812
Reply with quote  #111 

 

 

So far San Diego is down about 10%. I suspect we will see about a 10% decline in 2007, and then another 10% in 2008.

 

If you are correct, there are going to be a lot of weak hands who will not be able to deal with both the negative cash flow and the negative mindset of being upside down on the real estate they own.

 

I know lots of people with big paper profits that are now getting eatin' alive by negative cash flow.  They're "rich" on paper - at least for now - but they can't pay their bills. 

 

Welcome to the new reality folks.  Inflation is raising the cost of living, wages are flat to down, ARMs are getting repriced, and people are getting squeezed. 

 

And as the good professor from SC says - I'm from your rival school across town, if SC = USC - if credit availability begins to dry up, people are going to quickly become reacquainted with the fact that "cash is not trash" again.  This massive leverage in the housing market will prove lethal to most investors who got into the game late.

 

Just some opinions ...

 

Robert Campbell

 

PS:  If anyone wants to know what my predictions are for the fall in CA housing prices, send me an email and I'll send you the math and economic calculations from the Nov 15, 2005 issue of The Campbell Rea; Estate Timing Letter.  This will be my Christmas present before I leave for Hawaii on December 14. 

 

Email is Robert@RealEstateTiming.com

Gekko

Avatar / Picture

Senior Member
Registered:
Posts: 776
Reply with quote  #112 

-

 

This guy got $1.5M in credit cards to finance his real estate operations.

 

http://www.fatwallet.com/forums/messageview.php?start=0&catid=52&threadid=662972

 

 

taddyangle

Avatar / Picture

Senior Member
Registered:
Posts: 2,044
Reply with quote  #113 
Quote:
Originally Posted by RobertCampbell
 

This massive leverage in the housing market will prove lethal to most investors who got into the game late.

 

Yes, you are correct.  We are already seeing this with those that bought primary residence.  Give it time and the investors come lately are going to be screwed.  I read that about 1/3 of home sales in 2005 were investment or second homes. 

 

Robert, have a good Christmas holiday.


__________________
------
Gekko

Avatar / Picture

Senior Member
Registered:
Posts: 776
Reply with quote  #114 

 

2005 = 100

2006 = 90 (-10%)

2007 = 81 (-10%)

2008 = 72.9 (-10%)

 

100 - 72.9 = -27.1% Decline?

 

I think we are looking at much, much bigger declines in the biggest bubble areas.

 

 

taddyangle

Avatar / Picture

Senior Member
Registered:
Posts: 2,044
Reply with quote  #115 

Ya, I am trying to be optimistic.

 

Do you think the lower we go the more money we will make on the upside? 


__________________
------
Gekko

Avatar / Picture

Senior Member
Registered:
Posts: 776
Reply with quote  #116 

-

 

i believe in "reversion to the mean".  i think when markets correct, they tend to overshoot both the upside and the downside, and over the long term, they always revert back to the long-term historical average.

 

Shiller says that's about 3.5%.

 

 

 

nswaby

Senior Member
Registered:
Posts: 167
Reply with quote  #117 

Though these mortgage company closings are very high profile right now, they don't reflect an end to subprime lending...they represent the high level of mortgage fraud that exists in the industry.  Originators are only forced to buy back loans if the loan defaults within a certain period of time, typically six months, sometimes three.  Additionally fraud is usually demonstrated in the file.

 

For a mortgage company to have to buy back so many loans it folds isn't a function of loan quality, it's a function of fraud.  Some of the requirements for these loans are so generous that faking applications to qualify is a recipe for disaster.

 

I hope that one of the outcomes of this downturn is increased regulation in the mortgage industry.  These hucksters and fraudsters with their misleading marketing and fraudulent activity not only steal business from legitimate brokers, but give us all a bad name.

 

A few years ago, Utah led the nation in bankruptcy, foreclosure and mortgage fraud.  By creating a licensing system for mortgage brokers, those statistics have changed dramatically.  Additionally, when a defaulted mortgage is investigated, auditors pay close attention to the title company, real estate agent and appraiser in the transaction.  Over half of existing mortgage brokers left the business due to failure to meet background check standards or pass the licensing exam.  And any real estate applicant can forget about falsifying an application.  If you get caught, and you will, your name gets plastered in the Commissions newsletter and online with the reason your application got rejected.  You can take a look at some of the disciplinary action here.

 

Despite these restrictions, people still commit mortgage fraud or lie on their licensing materials.  I just don't get it.

 

Salt Lake Mortgage Guy

Gekko

Avatar / Picture

Senior Member
Registered:
Posts: 776
Reply with quote  #118 

 

we have seen just the tip of the iceberg.

 

 

RobertCampbell

Senior Member
Registered:
Posts: 6,812
Reply with quote  #119 

 

Originators are only forced to buy back loans if the loan defaults within a certain period of time, typically six months, sometimes three. 

 

If you look at the 50 or so provisions regarding "buy-backs", you'll find that there is no time limit for such items as misrepresentation, fraud, neglience, etc, etc for loans that go bad.

 

Originators who think they have successfully off-loaded toxic-waste loans to investors are in for a rude awakening.  Just wait until the lawyers "open the hood" of these defaulted loans and see what's really lurking there ...

 

Gekko is right that the demise of several subprime lenders is just the tip of the iceburg.  Going forward, I don't see how the volume of subprime lending can avoid falling off a cliff.  Guess what that does to buyer "demand?"

 

Robert Campbell

pasadena

Senior Member
Registered:
Posts: 113
Reply with quote  #120 
Quote:
Originally Posted by RobertCampbell

If you look at the 50 or so provisions regarding "buy-backs", you'll find that there is no time limit for such items as misrepresentation, fraud, neglience, etc, etc for loans that go bad.



Quite right...quite a lot of California real estate was purchased with stated income loans (I'm talking 2005 & 2006).  There was a recent article that stated that around 50-60% of those loans had, err, shall we say, 'fibs' and 'embelishments' on the loan application.  Interesting times we live in.

Previous Topic | Next Topic
Print
Reply

Quick Navigation:

Easily create a Forum Website with Website Toolbox.

Policy