The coming financial crisis

[Rome]

I did seven foreclosure appraisals for FNMA last week.  I'll say that again. . . SEVEN.

Horrendous is too generous a word for what the real estate market is going to look like in 6-12 months.

[Butchers Bill]

I did seven foreclosure appraisals for FNMA last week.  I'll say that again. . . SEVEN.

Horrendous is too generous a word for what the real estate market is going to look like in 6-12 months.

Tip of the iceberg man...my firm cannot sell IO's (interest only's) for anything right now.  I tried to dump some this morning and got laughed at. 

I have a couple friends in the mortgage biz, and they told me that people with bad or even on the low end of decent credit cannot get a mortgage right now.  No one will fund sub prime now.  So if your plan was to go interest only and re-fi a couple years later you had better have awesome credit or you could be in trouble.

[Geowhizzer]

I did seven foreclosure appraisals for FNMA last week.  I'll say that again. . . SEVEN.

Horrendous is too generous a word for what the real estate market is going to look like in 6-12 months.

Saw something on the news that Florida was leading the nation in foreclosures.

Damn glad I stayed in my hovel.

[ice grillin you]

when the market hits rock bottom and if you have top notch credit would that be the ultimate time to buy a house (like romey said in like six months)

[Rome]

I can buy whatever I want right now.  There are 7,000 active residential listings in just the tiny Daytona Beach market alone at the moment and a lot of people are choking to death on debt.

BTW: All seven foreclosure appraisals were in Palm Coast, IGY.  Houses that were selling in the mid 250's 18 months ago are in the 175-190K range and falling and those prices are for brand spanking new houses that have never even been lived in.

[Butchers Bill]

when the market hits rock bottom and if you have top notch credit would that be the ultimate time to buy a house (like romey said in like six months)

Assuming you know when rock bottom is, yes.  Many a person have lost fortunes guessing the wrong rock bottom.

I think the bottom in real estate won't come for another 24-36 months though.  This whole thing has to play itself out first.  I personally feel there will have to be a homeowner bail-out at some point (similar to the S&L's of the 1980's).  Bush actually mentioned the word bail-out today for the first time, saying he wouldn't support one, but he'll be gone when one becomes necessary.

[ice grillin you]

im not trying to move but im always looking for good deals and if i can find one id buy...im actually going this weekend to look at a place that looks great for the money

of course i currently own a house so even if i find a great buy at the most rock bottom time my house is going to be an equally bad sell for me

[Eaglez]

Bill, so you're saying that the Fed needs to buy some Treasury bonds and inject some liquidity into the market?

If you think the problem is that bad, hopefully the Fed will act. I just hope it doesn't set in motion inflationary pressures.

[Butchers Bill]

Bill, so you're saying that the Fed needs to buy some Treasury bonds and inject some liquidity into the market?

If you think the problem is that bad, hopefully the Fed will act. I just hope it doesn't set in motion inflationary pressures.

A buy back at this point would be OK, but I would prefer a rate cut of 25 bps.  You can't reverse a buy back and it can cause (as you mentioned) inflationary pressure, so the prudent thing to do would be a rate cut.  They had a chance to do it at a regualar time just a few days ago (which is why I said they are asleep at the wheel in my first post) and to do one now may cause more harm than good (panic). 

I think the Fed will let this ride for a couple more weeks unless things get drastically worse (Countrywide going under may do it).  Bernake seems like a hands off Fed chair so we'll have to wait and see. 

[Rome]

Countrywide can swim in its own feces for all I care.  They're the worst of a bad bunch in terms of applying pressure to appraisers to get us to inflate appraisal values.  I've told more than a few of their reps to go farg themselves over the years because of their lousy business practices.

[Butchers Bill]

Countrywide can swim in its own feces for all I care.  They're the worst of a bad bunch in terms of applying pressure to appraisers to get us to inflate appraisal values.  I've told more than a few of their reps to go farg themselves over the years because of their lousy business practices.

Countrywide is one of the worst in a scummy industry, but they are critical to the real estate market, especially with American Home going under last Friday.

More credit news:

So you think you have a low fixed rate credit card?

[Eaglez]

Yeah Bernanke seems more like his predecessor as a guy that is worried primarily about inflation and won't do much unless he feels there might be impending inflation well above his targets.

24-36 months huh? I'll be in the market for a house then once I'm out of law school so it might work out for me. I hope it doesn't have to come to a "bail-out" because mortgagors will continue to have the mentality that the Federal Government will just continue to be there if they make horrible financial decisions that are well within their means to avoid (how anyone would think an interest-only mortgage is a sound financial decision is beyond me).

It's that "I'll have it now and worry about it later" mindset that frustrates the hell out of me.

[Diomedes]

Who takes out an interest-only mortgage?

More to the point, what idiotic bank extends credit to the kind of idiot who would take such a loan?  It takes two to tango.  If you want to get the personal responsibilty umbrage cranking, make sure to direct at least half your energy against avaricious, short sighted idiotic banks.

[PhillyPhanInDC]

Who takes out an interest-only mortgage?

More to the point, what idiotic bank extends credit to the kind of idiot who would take such a loan?  It takes two to tango.  If you want to get the personal responsibilty umbrage cranking, make sure to direct at least half your energy against avaricious, short sighted idiotic banks.

Ha. You guys should visit the D.C. burbs one day. The boom was so big here, people were making money hand over fist. Banks were falling all over themselves to give people credit they didn't deserve, because homes down here were appreciating 30% in a year. It was farging rediculous. People were making offers in a line at open houses with phrases like: "Home inspections for information purposes only!".

I remember sitting in a doctor's office waiting room listening to the guy across from me convince his wife that taking a second mortgage out to buy a $750,000 townhome to rent and then resell in a year or two was absolutely farging foolproof. "The market in D.C. will never flop..." I think it was about three months later, all the markets went to shtein. I wish I could see that dude now.

People had ARM's and interest only mortgages, and were farging horrified when the banks began adjusting there rates, or the rent market flopped and their rent incomes began to dry up. It was great because the boot was on the other foot, and it was time for me to buy. The house we bought was vacant, and the ass that lived here prior had pulled out all the equity he had in the place, used that to go buy a new 700+k custom home, moved out, then put it on the market. When we came to look it had been sitting on the market for over 60 days. Assclown was drowning in debt, and practically begged us to take it.

[Philly Crew]

So easy credit isn't out there for people who shouldn't be buying a home anyway?  That's fine by me.  I lose no sleep over these idiotic loans coming home to roost.  And the stupid hedge funds need to go under too.  These magic black boxes need to be shown what Bill says they are....some excel spread sheets with no assets.  Live by the derivative, die by the derivative.

As for the real economy, you know the guys that actually make stuff, inflation is tame and interest rates are low.  Employment looks good and China is sabre rattling.  I love it when the market overreacts.  Good time to buy.