From the Telegraph: British household debt is highest in history.
British households are now more indebted than those of any other major country in recorded history, it has emerged.
Families in the UK now owe a record 173pc of their incomes in debts, official figures have shown. The ratio of debt to income is higher than any other country in the Group of Seven leading industrialised economies, and is sharply higher than the 129pc of incomes it was five years ago.
Michael Saunders of Citigroup warned that - at 173pc of household incomes - the debt burden is higher even than Japan's when it peaked in 1990, before more than a decade of deflation.
Let us review some basics:
Inflation is the expansion of money and credit. Deflation is the reduction of money and credit.
Can credit expand further in the UK? Possibly but unlikely.
What happens when debt is either paid back, or defaulted upon?
Thank you, that will be all.
Monday, June 30, 2008
That Decoupling Hypothesis?
Not the Chindians. Not the Brazorussians.
The Amish.
From Ohio: Amish in Ohio feel pinch of higher gas prices.
They may use horses instead of autos for transportation, but the rising cost of gasoline is still pinching the wallets of members of an Amish community in southern Ohio.
Miller, a carpenter and horse breeder who bought Keim Family Market in Adams County last July, said several items have doubled in price from 2007 to 2008.
"The care and feeding of one horse, from $1,000 to $2,000," he said. "The cost of propane we use to run our refrigerators. Diesel fuel to run our coolers at the store and the big mixers in our bakery. The fuel bills are about $8,000 a month. Last year they were $4,000. ... It all adds up."
It has sparked widespread worry.
"It feels like a little red wagon going down the hill faster and faster," Yutzy said. "You know what's going to happen."
Even so, many Amish say they will rely on what they know.
The Amish.
From Ohio: Amish in Ohio feel pinch of higher gas prices.
They may use horses instead of autos for transportation, but the rising cost of gasoline is still pinching the wallets of members of an Amish community in southern Ohio.
Miller, a carpenter and horse breeder who bought Keim Family Market in Adams County last July, said several items have doubled in price from 2007 to 2008.
"The care and feeding of one horse, from $1,000 to $2,000," he said. "The cost of propane we use to run our refrigerators. Diesel fuel to run our coolers at the store and the big mixers in our bakery. The fuel bills are about $8,000 a month. Last year they were $4,000. ... It all adds up."
It has sparked widespread worry.
"It feels like a little red wagon going down the hill faster and faster," Yutzy said. "You know what's going to happen."
Even so, many Amish say they will rely on what they know.
Sunday, June 29, 2008
Pawn Me Up, Pawn Me Down
From California: Year of the hock .
Ray Ellis, owner of Escondido Coin and Loan pawnshop, is used to customers coming in with rare or collectible coins for one of the four-month loans that is the industry standard.
Recently, customers have been seeking larger amounts, up to $50,000, Ellis said. He said one gentleman came in with a sack of gold coins in order to pay off debts on his investment properties in Orange County
But the credit crunch and economic turmoil is sending bigger fish their way.
Irene Longoria, store manager of the Oceanside Gems N’ Loans, said her shop is pricing all kinds of jewelry items as customers seek collateral for loans, or sell them outright. Belly rings, tongue rings, single earrings, dental grills and gold teeth are being brought in.
New customers are finding out a lot more than they bargained for at their local pawnshop. Martin said a woman recently expected hundreds if not thousands of dollars for the diamond ring she received as a gift, only to find out it was zirconium.
“She said, ‘It’s a diamond,’ and I said, ‘It’s not,’” Martin recalled. “Then she said, ‘That son of a b… !’”
One man came straight from the dentist, with gauze still in his mouth and blood on the tooth, she said.
“We just about screamed,” Longoria said. “I told him he should have cleaned it first. We’re seeing more and more dental scrap. We now have latex gloves to handle some of the things coming in.”
Ray Ellis, owner of Escondido Coin and Loan pawnshop, is used to customers coming in with rare or collectible coins for one of the four-month loans that is the industry standard.
Recently, customers have been seeking larger amounts, up to $50,000, Ellis said. He said one gentleman came in with a sack of gold coins in order to pay off debts on his investment properties in Orange County
But the credit crunch and economic turmoil is sending bigger fish their way.
Irene Longoria, store manager of the Oceanside Gems N’ Loans, said her shop is pricing all kinds of jewelry items as customers seek collateral for loans, or sell them outright. Belly rings, tongue rings, single earrings, dental grills and gold teeth are being brought in.
New customers are finding out a lot more than they bargained for at their local pawnshop. Martin said a woman recently expected hundreds if not thousands of dollars for the diamond ring she received as a gift, only to find out it was zirconium.
“She said, ‘It’s a diamond,’ and I said, ‘It’s not,’” Martin recalled. “Then she said, ‘That son of a b… !’”
One man came straight from the dentist, with gauze still in his mouth and blood on the tooth, she said.
“We just about screamed,” Longoria said. “I told him he should have cleaned it first. We’re seeing more and more dental scrap. We now have latex gloves to handle some of the things coming in.”
How do you say puta in English?
From MSN: Single mom selling Fla. home, heart online.
After a year of trying to sell her four-bedroom home and eight years of singledom, Deven Trabosh is offering her South Florida home and a shot at marrying her on the Internet.
"I figured let's combine the ad because I'm looking for love and I'm looking to sell the house," said Trabosh, who teeters around the nearly 2,000 square-foot house in patent leather heels.
And now, you gave your name out so that plan is working out real well.
Ideally, Trabosh hopes a European man will close the deal and says she's willing to move overseas.
Because only those furriners are so stupid.
Her 21-year-old daughter Haley says she just wants her mom to find love.
How about a two-for-one combo deal?
After a year of trying to sell her four-bedroom home and eight years of singledom, Deven Trabosh is offering her South Florida home and a shot at marrying her on the Internet.
"I figured let's combine the ad because I'm looking for love and I'm looking to sell the house," said Trabosh, who teeters around the nearly 2,000 square-foot house in patent leather heels.
Pimp me"I'm struggling...I don't want to lose my house and I want to find somebody," said Trabosh, who changed her name in the ad to Traboscia to keep people from finding her in the phone book.
Pimp me
Pimp me, bay-bee
Till I lose control
Pimp me with your love
Till I lose control
And now, you gave your name out so that plan is working out real well.
Ideally, Trabosh hopes a European man will close the deal and says she's willing to move overseas.
Because only those furriners are so stupid.
Her 21-year-old daughter Haley says she just wants her mom to find love.
How about a two-for-one combo deal?
Academics Reveal the Obvious
From CEPR, a pretty-good academic paper: The Housing Crash and the Retirement Prospects of Late Baby Boomers.
This paper extrapolates from data from the 2004 Survey of Consumer Finance to project household wealth, by wealth quintile, for the cohort that will be between the ages of 45-54 in 2009 under three alternative scenarios. The first scenario assumes that real house prices fall no further than their level as of March 2008. The second scenario assumes that real house prices fall an additional 10 percent as a 2009 average. The third scenario assumes that real house prices fall an additional 20 percent for a 2009 average. The projections show that the vast majority of families in these age cohorts will have little or no wealth by 2009 in any of these scenarios and that the cohorts just approaching retirement will have very little to support themselves in retirement other than their Social Security. The projections also show that a large number of families in these age cohorts will have little or no equity in their homes in 2009. Finally, the projections show that the renters within the same wealth quintiles in 2004 will have more wealth in 2009 than homeowners in all three scenarios.
This paper extrapolates from data from the 2004 Survey of Consumer Finance to project household wealth, by wealth quintile, for the cohort that will be between the ages of 45-54 in 2009 under three alternative scenarios. The first scenario assumes that real house prices fall no further than their level as of March 2008. The second scenario assumes that real house prices fall an additional 10 percent as a 2009 average. The third scenario assumes that real house prices fall an additional 20 percent for a 2009 average. The projections show that the vast majority of families in these age cohorts will have little or no wealth by 2009 in any of these scenarios and that the cohorts just approaching retirement will have very little to support themselves in retirement other than their Social Security. The projections also show that a large number of families in these age cohorts will have little or no equity in their homes in 2009. Finally, the projections show that the renters within the same wealth quintiles in 2004 will have more wealth in 2009 than homeowners in all three scenarios.
Saturday, June 28, 2008
Relativity
From the Mississippi Clarion Ledger: Miss. mortgage bust unlikely.
The Mortgage Bankers Association report showed nearly 10 percent of mortgages in Mississippi were delinquent in the first quarter of 2008.
"(But now) be glad you're not in Florida, because that's a disaster," said Bill Emmons, a senior economist with the Federal Reserve Bank of St. Louis, which serves northern Mississippi.
So 10% of foreclosures are normal?
Aah, wondrous economists who've never held a real job.
The Mortgage Bankers Association report showed nearly 10 percent of mortgages in Mississippi were delinquent in the first quarter of 2008.
"(But now) be glad you're not in Florida, because that's a disaster," said Bill Emmons, a senior economist with the Federal Reserve Bank of St. Louis, which serves northern Mississippi.
So 10% of foreclosures are normal?
Aah, wondrous economists who've never held a real job.
Friday, June 27, 2008
Containment : A Timeline
February 21, 2007: "I'm waking up less at night than I was [over the slowdown in housing]. So far, there's been remarkably little effect [from housing] on the rest of the economy."
- San Francisco Fed President Janet Yellen (Source: MarketWatch)
March 28, 2007: "At this juncture...the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained."
- Federal Reserve Chairman Ben Bernanke (Source: AFX News)
April 5, 2007: "The damage from the subprime market has been largely contained."
- Dallas Fed President Richard Fisher (Source: Dallas News)
April 20, 2007: "I don't see (subprime mortgage market troubles) imposing a serious problem. I think it's going to be largely contained."
- US Treasury Secretary Henry Paulson (Source: Reuters)
April 20, 2007: "We do see some stabilization of demand in the housing market ... there is some indication that the market could be bottoming out."
- Federal Reserve Governor Frederic Mishkin (Source: Reuters)
Nothing to see here, folks. It's all contained.
- San Francisco Fed President Janet Yellen (Source: MarketWatch)
March 28, 2007: "At this juncture...the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained."
- Federal Reserve Chairman Ben Bernanke (Source: AFX News)
April 5, 2007: "The damage from the subprime market has been largely contained."
- Dallas Fed President Richard Fisher (Source: Dallas News)
April 20, 2007: "I don't see (subprime mortgage market troubles) imposing a serious problem. I think it's going to be largely contained."
- US Treasury Secretary Henry Paulson (Source: Reuters)
April 20, 2007: "We do see some stabilization of demand in the housing market ... there is some indication that the market could be bottoming out."
- Federal Reserve Governor Frederic Mishkin (Source: Reuters)
Nothing to see here, folks. It's all contained.
Tuesday, June 24, 2008
Gay Marriage & Falling Knives
From US News & World Report: The Gay Marriage Home-Buying Discount.
From wellsfordrealty.com (fist pound, Zillow Blog):
They have forgotten just one thing. Homos can do math in roughly the same proportion as the rest of the population so if they haven't been suckered into the RE market by now, this abomination won't exactly make them "catch a falling knife".
Or to translate it in terms that even the dumbest California Realtor™ can understand:
BWAHAHAHAHHAHAHAHHHHHHHHHHHHHHH!!!
From wellsfordrealty.com (fist pound, Zillow Blog):
Whether choosing to make California their primary or secondary residence by buying a home in San Diego, domestic partners seeking to take advantage of the new Same Sex Marriage Law in California can now get their wedding reception or a honeymoon getaway compliments [of] Wellsford Realty. With the purchase of a condo or home using their services, Wellsford Realty is rebating 33% back on the commission which can be used to celebrate their wedding day or plan that long awaited perfect honeymoon.Wow, this latest ploy is quite desperate. It's also awesomely hilarious.
They have forgotten just one thing. Homos can do math in roughly the same proportion as the rest of the population so if they haven't been suckered into the RE market by now, this abomination won't exactly make them "catch a falling knife".
Or to translate it in terms that even the dumbest California Realtor™ can understand:
BWAHAHAHAHHAHAHAHHHHHHHHHHHHHHH!!!
Sunday, June 22, 2008
Slogan Shouting on Sunday
From the North Country Times: High-end neighborhoods also suffering.
Several homes in one of North County's ritzier regions, the San Diego neighborhoods of Rancho Penasquitos and Rancho Bernardo, have tumbled 30 percent in value.
Further, foreclosures are rising, leading some real estate agents to believe the depreciation will spread and worsen.
The two neighborhoods were particularly desirable communities during the housing boom, boasting a central location, with a short commute to either the ocean or downtown San Diego, strong schools and a bevy of brand-new, 4,000 square-foot homes with $1.5 million price tags.
Now, some of those homes are selling for $1 million, if the homeowner is lucky.
"All across the board, the market's been hit," said Eric Elegado, a real estate agent based in Mira Mesa. "Homes that sold for a million, they're going for $600,000."
The drop in prices has drilled gaping holes into a theory that the higher-end market could be immune to the housing recession.
Oooh, that stinger oughta leave a mark.
But, but, but, it's SLOGAN time.
The government made me do it.
No, that doesn't quite work.
It's ALWAYS a good time to buy a house.
Is it now?
The Guvernator will help.
The Goober-nator is a girly-man. He vill do nuzhing, and you vill like it.
McSame will lower taxes and save the market.
No, no, no, that doesn't work either.
Yomama will send checks to everyone, and save the day.
Not quite working out either.
Shaq is coming.
Shaq-A-Laqa-Boom Boom, baby! It's gone Boom-Boom.
The Boomers are coming.
The Bust is already here.
It's different here.
It sure as hell is.
Thank you, thank you, the EE will be here all week.
Several homes in one of North County's ritzier regions, the San Diego neighborhoods of Rancho Penasquitos and Rancho Bernardo, have tumbled 30 percent in value.
Further, foreclosures are rising, leading some real estate agents to believe the depreciation will spread and worsen.
The two neighborhoods were particularly desirable communities during the housing boom, boasting a central location, with a short commute to either the ocean or downtown San Diego, strong schools and a bevy of brand-new, 4,000 square-foot homes with $1.5 million price tags.
Now, some of those homes are selling for $1 million, if the homeowner is lucky.
"All across the board, the market's been hit," said Eric Elegado, a real estate agent based in Mira Mesa. "Homes that sold for a million, they're going for $600,000."
The drop in prices has drilled gaping holes into a theory that the higher-end market could be immune to the housing recession.
Oooh, that stinger oughta leave a mark.
But, but, but, it's SLOGAN time.
The government made me do it.
No, that doesn't quite work.
It's ALWAYS a good time to buy a house.
Is it now?
The Guvernator will help.
The Goober-nator is a girly-man. He vill do nuzhing, and you vill like it.
McSame will lower taxes and save the market.
No, no, no, that doesn't work either.
Yomama will send checks to everyone, and save the day.
Not quite working out either.
Shaq is coming.
Shaq-A-Laqa-Boom Boom, baby! It's gone Boom-Boom.
The Boomers are coming.
The Bust is already here.
It's different here.
It sure as hell is.
Thank you, thank you, the EE will be here all week.
Saturday, June 21, 2008
Come back, Samuel Langhorne Clemens!
From the Dallas News: Eight arrested, three others indicted in North Texas mortgage fraud.
One of the defendants is Eric Farrington, 55, of Irving, a real estate investor, motivational speaker and convicted felon.
RE investor, motivational speaker, and convicted felon?
Or in Mark Twain's words, "... but the journalists seem to be repeating themselves."
One of the defendants is Eric Farrington, 55, of Irving, a real estate investor, motivational speaker and convicted felon.
RE investor, motivational speaker, and convicted felon?
Or in Mark Twain's words, "... but the journalists seem to be repeating themselves."
Thursday, June 19, 2008
Who's Divine Now?
From the Sun Sentinel in Florida: Thousands in Orlando want Shaq to help with mortgages.
Shaq is used to facing down the NBA's most intimidating players, but is Orlando's mortgage mess too much for him?
A week after Shaquille O'Neal told the Orlando Sentinel that he's working on a plan to rescue Central Floridians facing foreclosure, he has learned just how widespread the problem is.
People like Belinda Petroccia.
"There are so many shysters out there who take advantage of you financially and emotionally," said Petroccia, who saw her income dip with the tumbling real-estate market and now faces foreclosure on her Wedgefield home in east Orange County. "When I saw this, I thought, 'That's what I need -- maybe Shaq can help.'"
Wow, the tone of her wistful prayer is quite something, huh?
We've seen sweet plaintive missives to the Sweet Baby Jeebus, St. Joseph, Hanuman the Mighty Magic Monkey, Thor, Ra, and ... now, Shaq?
Welcome to the Pantheon of the Gods, Shaq, baby!
Shaq is used to facing down the NBA's most intimidating players, but is Orlando's mortgage mess too much for him?
A week after Shaquille O'Neal told the Orlando Sentinel that he's working on a plan to rescue Central Floridians facing foreclosure, he has learned just how widespread the problem is.
People like Belinda Petroccia.
"There are so many shysters out there who take advantage of you financially and emotionally," said Petroccia, who saw her income dip with the tumbling real-estate market and now faces foreclosure on her Wedgefield home in east Orange County. "When I saw this, I thought, 'That's what I need -- maybe Shaq can help.'"
Wow, the tone of her wistful prayer is quite something, huh?
We've seen sweet plaintive missives to the Sweet Baby Jeebus, St. Joseph, Hanuman the Mighty Magic Monkey, Thor, Ra, and ... now, Shaq?
Welcome to the Pantheon of the Gods, Shaq, baby!
Tuesday, June 17, 2008
Bashing Boredom
Top ten phrases inducing boredom in the EE related to the housing bubble.
10. "it's all contained".
9. "do something urgent to address the problem"
8. "new urbanism"
7. "it's a buyer's market"
6. "the Baby Boomers are moving here"
5. "it's different here"
4. "we didn't know what we were getting into"
3. "we bought it for the children"
2. "foreclosure due to illness"
and the top candidate:
1. "dream house"
Boring. NEXT!!!
10. "it's all contained".
9. "do something urgent to address the problem"
8. "new urbanism"
7. "it's a buyer's market"
6. "the Baby Boomers are moving here"
5. "it's different here"
4. "we didn't know what we were getting into"
3. "we bought it for the children"
2. "foreclosure due to illness"
and the top candidate:
1. "dream house"
Boring. NEXT!!!
Monday, June 16, 2008
Deploying Deflating Double-D's
From CNN: Is America's suburban dream collapsing into a nightmare?
When Shaun Yandell proposed to his long-time girlfriend Gina Marasco on the doorstep of their new home in the sunny suburb of Elk Grove, California, four years ago, he never imagined things would get this bad. But they did, and it happened almost overnight.
"It is going to be heartbreak," Yandell told CNN. "But we are hanging on."
Yandell's marriage isn't falling apart: his neighborhood is.
In Elk Grove, some homeowners not only cut their own grass but also trim the yards of vacant homes on their streets, hoping to deter gangs and criminals from moving in.
Other residents discovered that with some of the empty houses, it wasn't what was growing outside that was the problem. Susan McDonald, president of a local neighborhood association aimed at saving the lost suburban paradise, told CNN that around her culdesac, federal agents recently busted several pot homes with vast crops of marijuana growing from floor to ceiling.
And only a couple of weeks ago, Yandell said he overheard a group of teenagers gathered on the street outside his back patio, talking about a robbery they had just committed.
When they lit a street sign on fire, Yandell called the cops.
In Shaun Yandell's neighborhood, this has already started to happen. Houses once filled with single families are now rented out by low-income tenants. Yandell speculates that they're coming from nearby Sacramento, where the downtown is undergoing substantial gentrification, or perhaps from some other area where prices have gotten too high. He isn't really sure.
But one thing Yandell is sure about is that he isn't going to leave his sunny suburban neighborhood unless he has to, and if that happens, he says he would only want to move to another one just like it.
"It's the American dream, you know," he said. "The American dream."
Welp, y'all all heard it here first a long time ago.
Take away those double-D's, and whatdya have left?
Yeah, yeah, yeah, bitches.
"It's the American ream, you know," he said. "The American Ream."
When Shaun Yandell proposed to his long-time girlfriend Gina Marasco on the doorstep of their new home in the sunny suburb of Elk Grove, California, four years ago, he never imagined things would get this bad. But they did, and it happened almost overnight.
"It is going to be heartbreak," Yandell told CNN. "But we are hanging on."
Yandell's marriage isn't falling apart: his neighborhood is.
In Elk Grove, some homeowners not only cut their own grass but also trim the yards of vacant homes on their streets, hoping to deter gangs and criminals from moving in.
Other residents discovered that with some of the empty houses, it wasn't what was growing outside that was the problem. Susan McDonald, president of a local neighborhood association aimed at saving the lost suburban paradise, told CNN that around her culdesac, federal agents recently busted several pot homes with vast crops of marijuana growing from floor to ceiling.
And only a couple of weeks ago, Yandell said he overheard a group of teenagers gathered on the street outside his back patio, talking about a robbery they had just committed.
When they lit a street sign on fire, Yandell called the cops.
In Shaun Yandell's neighborhood, this has already started to happen. Houses once filled with single families are now rented out by low-income tenants. Yandell speculates that they're coming from nearby Sacramento, where the downtown is undergoing substantial gentrification, or perhaps from some other area where prices have gotten too high. He isn't really sure.
But one thing Yandell is sure about is that he isn't going to leave his sunny suburban neighborhood unless he has to, and if that happens, he says he would only want to move to another one just like it.
"It's the American dream, you know," he said. "The American dream."
Welp, y'all all heard it here first a long time ago.
Take away those double-D's, and whatdya have left?
Yeah, yeah, yeah, bitches.
Ya know it, ya know it.
Ya always wanna show it...
"It's the American ream, you know," he said. "The American Ream."
Thursday, June 12, 2008
WOOOOOOOOOOOOO!!! Party On, Garth!
From the Press Enterprise: Inland foreclosure auctions draw more sales as lenders get more flexible about prices.
Investors bought more foreclosed homes on the courthouse steps in California last month, reflecting a growing willingness of lenders to accept more deeply discounted bids, ForeclosureRadar, a Web site that tacks foreclosure auctions, reported Wednesday.
It was the first significant surge in investor activity at trustee sales since Foreclosure-Radar began tracking them in 2006, said its founder, Sean O'Toole.
Despite more than 97 percent of the foreclosed properties being returned to the lender after auction, there was a 34.6 percent increase in properties purchased by third parties, which most likely were investors, the report said.
Percentage returned (failed auction) = 97%
Percentage sold = 100 - 97 = 3%
This was a 34.6% increase from previous auctions.
Percentage previously sold = 3/1.346 = 2.23%
Percentage previously returned = 100 - 2.23 = 97.77%
You've gone from 97.77% failure to 97% failure.
Fuckin' A, Daddy-O!!! Crack open the Veuve Cliquot!
Investors bought more foreclosed homes on the courthouse steps in California last month, reflecting a growing willingness of lenders to accept more deeply discounted bids, ForeclosureRadar, a Web site that tacks foreclosure auctions, reported Wednesday.
It was the first significant surge in investor activity at trustee sales since Foreclosure-Radar began tracking them in 2006, said its founder, Sean O'Toole.
Despite more than 97 percent of the foreclosed properties being returned to the lender after auction, there was a 34.6 percent increase in properties purchased by third parties, which most likely were investors, the report said.
Percentage returned (failed auction) = 97%
Percentage sold = 100 - 97 = 3%
This was a 34.6% increase from previous auctions.
Percentage previously sold = 3/1.346 = 2.23%
Percentage previously returned = 100 - 2.23 = 97.77%
You've gone from 97.77% failure to 97% failure.
Fuckin' A, Daddy-O!!! Crack open the Veuve Cliquot!
Thursday, June 05, 2008
Camp Granada
From the LA Times: Hard lessons on getting home loans with no money down.
Two years ago, Patricia Prado worried that she would never be able to buy a house.
Property values in this Central Coast farm town had been rising sharply, and Prado and her husband were burdened by $18,000 in debt from their credit cards and the loan on their Jeep Grand Cherokee.
A few weeks later, Prado bought a $412,000 house with a so-called 80/20 mortgage. Those mortgages are actually a pair of loans -- one for 80% of the purchase price and another for the remaining 20%.
Property values, of course, began falling sharply last year. And that left people such as Prado, who bought near the top of the market, owing more in loans than their homes were worth. Her home is set to be sold in a foreclosure auction next week.
She acknowledged that she stated her monthly income as $7,500 on the loan application -- nearly double what she was actually earning in her job as a clerk at a food processing company and a second part-time job.
With their income down after her husband's layoff, Prado said they made their last three house payments with a credit card. In February, they stopped payments altogether.
Her biggest challenge, she said, was trying to keep her children, a 10-year-old boy and 7-year-old girl, from figuring out what happened.
"They pick up on a lot of what's going on," she said. "They say, 'Why are you fighting with Dad? Why are we moving; we already have a house?'"
Dear Children,
Mommy and Daddy are complete and utter fuckups. One might even say that they are some of the biggest fuckups in town.
They bought a house they couldn't afford, and they were speculating even though they claim they're not.
Now, that they've got their financial clock completely and utterly cleaned, they're lying to you because they can't handle the truth themselves.
Love,
Your Friendly Neighborhood Banker.
Two years ago, Patricia Prado worried that she would never be able to buy a house.
Property values in this Central Coast farm town had been rising sharply, and Prado and her husband were burdened by $18,000 in debt from their credit cards and the loan on their Jeep Grand Cherokee.
A few weeks later, Prado bought a $412,000 house with a so-called 80/20 mortgage. Those mortgages are actually a pair of loans -- one for 80% of the purchase price and another for the remaining 20%.
Property values, of course, began falling sharply last year. And that left people such as Prado, who bought near the top of the market, owing more in loans than their homes were worth. Her home is set to be sold in a foreclosure auction next week.
She acknowledged that she stated her monthly income as $7,500 on the loan application -- nearly double what she was actually earning in her job as a clerk at a food processing company and a second part-time job.
With their income down after her husband's layoff, Prado said they made their last three house payments with a credit card. In February, they stopped payments altogether.
Her biggest challenge, she said, was trying to keep her children, a 10-year-old boy and 7-year-old girl, from figuring out what happened.
"They pick up on a lot of what's going on," she said. "They say, 'Why are you fighting with Dad? Why are we moving; we already have a house?'"
Dear Children,
Mommy and Daddy are complete and utter fuckups. One might even say that they are some of the biggest fuckups in town.
They bought a house they couldn't afford, and they were speculating even though they claim they're not.
Now, that they've got their financial clock completely and utterly cleaned, they're lying to you because they can't handle the truth themselves.
Love,
Your Friendly Neighborhood Banker.
That Deflating Feeling
From Yahoo!: Household net worth drops by $1.7 trillion.
Americans saw their net worth decline by $1.7 trillion in the first quarter - the biggest drop since 2002 - as declines in home values and the stock market ravaged their holdings.
Meanwhile, the amount of equity people have in their homes fell to 46.2%, the lowest level on record.
The net worth of U.S. households fell 3% to $56 trillion at the end of March, according to the Federal Reserve's flow of funds report, which was released Thursday.
Americans saw their net worth decline by $1.7 trillion in the first quarter - the biggest drop since 2002 - as declines in home values and the stock market ravaged their holdings.
Meanwhile, the amount of equity people have in their homes fell to 46.2%, the lowest level on record.
The net worth of U.S. households fell 3% to $56 trillion at the end of March, according to the Federal Reserve's flow of funds report, which was released Thursday.
Wednesday, June 04, 2008
"Heeeeeeeeeeeeeeere's Foreclosure!"
The Wall Street Journal reports: Ed McMahon May Lose Beverly Hills Home.
Ed McMahon, the longtime sidekick to television star Johnny Carson, faces the possible loss of his Beverly Hills home to a foreclosure action initiated by a unit of Countrywide Financial Corp.
ReconTrust, a unit of mortgage lender Countrywide Financial, on Feb. 28 filed a notice of default on a $4.8 million Countrywide loan backed by Mr. McMahon's home. The notice was filed with the Los Angeles County Recorder's Office but hasn't previously come to light. According to the filing, Mr. McMahon was then about $644,000 in arrears on the loan. It isn't clear whether Countrywide still owns the loan or is acting on behalf of investors who acquired it. Public records also show that Mr. McMahon had a separate home-equity line of credit from Countrywide of up to $300,000 secured by the same house.
Ed McMahon, the longtime sidekick to television star Johnny Carson, faces the possible loss of his Beverly Hills home to a foreclosure action initiated by a unit of Countrywide Financial Corp.
ReconTrust, a unit of mortgage lender Countrywide Financial, on Feb. 28 filed a notice of default on a $4.8 million Countrywide loan backed by Mr. McMahon's home. The notice was filed with the Los Angeles County Recorder's Office but hasn't previously come to light. According to the filing, Mr. McMahon was then about $644,000 in arrears on the loan. It isn't clear whether Countrywide still owns the loan or is acting on behalf of investors who acquired it. Public records also show that Mr. McMahon had a separate home-equity line of credit from Countrywide of up to $300,000 secured by the same house.
Tuesday, June 03, 2008
Sunday, June 01, 2008
Sunday School
From Business Week: The Lowdown on Libor.
Financial institutions the world over use Libor—short for the London interbank offered rate—to set the interest paid on everything from mortgage loans to complex financial instruments.
What's the recent controversy about?
With the aftereffects of the credit crunch lingering, a high Libor, especially relative to U.S. Treasuries, would set off alarm bells that capital-starved financial institutions are still at risk for further meltdowns, says market research firm Global Insight's Brian Bethune. Some industry insiders have accused the banks of quoting falsely low rates for the surveys in order to force down Libor and paint a rosier picture of the lending environment. It's more likely that the banks are simply reporting their best rates, not the rate at which they're most commonly lending, Bethune says. The BBA is conducting what it calls "a regular review," with results due May 30. In the meantime, proposals have been offered to ensure Libor's accuracy, from surveying more banks to ditching Libor in favor of an alternative rate.
The EE isn't quite sure when LIBOR turned into Libor (maybe the limp-wrist journalists have trouble writing capital letters?) but since he was, many moons ago, educated in a Catholic school, he will explain this supposed "paradox" in the form of a "parable".
"If the EE sold you the first burrito for $0.01, and all subsequent ones for $1,000, and you ABSOLUTELY had to eat 4 burritos or die, would you say that the burrito cost you $0.01, or was the true cost closer to $750?"
Financial institutions the world over use Libor—short for the London interbank offered rate—to set the interest paid on everything from mortgage loans to complex financial instruments.
What's the recent controversy about?
With the aftereffects of the credit crunch lingering, a high Libor, especially relative to U.S. Treasuries, would set off alarm bells that capital-starved financial institutions are still at risk for further meltdowns, says market research firm Global Insight's Brian Bethune. Some industry insiders have accused the banks of quoting falsely low rates for the surveys in order to force down Libor and paint a rosier picture of the lending environment. It's more likely that the banks are simply reporting their best rates, not the rate at which they're most commonly lending, Bethune says. The BBA is conducting what it calls "a regular review," with results due May 30. In the meantime, proposals have been offered to ensure Libor's accuracy, from surveying more banks to ditching Libor in favor of an alternative rate.
The EE isn't quite sure when LIBOR turned into Libor (maybe the limp-wrist journalists have trouble writing capital letters?) but since he was, many moons ago, educated in a Catholic school, he will explain this supposed "paradox" in the form of a "parable".
"If the EE sold you the first burrito for $0.01, and all subsequent ones for $1,000, and you ABSOLUTELY had to eat 4 burritos or die, would you say that the burrito cost you $0.01, or was the true cost closer to $750?"
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