US Housing Market Faggotry

[dorian gray]

@ you guys

 

[NAD]

I have zero recollection of starting this thread.

 

[NAD]

My Mom's Taurus break constantly. Actually, all cars do. From an engineering standpoint, they are pieces of shit. Disgrace in design. If they made bridges like they made cars....oh wait

Nearly lost me sodie onto the monitor with this one, good show old man.

Work less, save more, give away more, do something other than spend several thousand dollars a month on something in which you watch TV and take shits.

hahaha fuckin' brilliant.

+42985u24087u56 to everything else you said.

i pay $12K per year on property tax!!!

Refinancing right now is going to suck, so many lenders have either gone under or have tightened their regulations to über-Jew proportions.

Best sites for reading about this kind of shit:

http://www.patrick.net/
http://jameshowardkunstler.typepad.com/
http://www.ml-implode.com/
http://www.thehousingbubbleblog.com/

As with most mainstream news outlets concerning politics, the same can be said about them with this whole mess: Fucking Clueless.

This economy is on the verge of dying an ugly death. I've yanked half my investments and put them into NCUA savings. That won't help if the dollar takes a shit (or a bigger one that it already is), but at least it can buy some $0.10 cheeseburgers like in 19-diggity-2.

http://www.gold-eagle.com/editorials_01/seymour062001.html

 

[NAD]

Also, this is a simplified answer to why it is such a mess:

Despite making only $14,000 a year, strawberry picker Alberto Ramirez managed to buy his own slice of the American Dream. But his Hollister home came with a hefty price tag, $720,000. A year and a half later, Ramirez has defaulted on his loan, and he’s hoping to sell the house before it’s repossessed.

So how did Ramirez, with an annual income of just $14,000, purchase a $720,000 home without any money down? He had help, for one thing. Although Alberto Ramirez was the only one to sign the purchase agreement and the only one named on the loan documents, he actually bought the house with his wife Rosa Ramirez, as well as their friends Jesus Martinez and his wife.

However, even in a good month, the Ramirezes and Martinezes together don’t earn much more than a combined $6,500, and their official monthly payments were around $5,200.

The Ramirezes said Rancho Grande real estate agent Maria Avila promised they could refinance their home in three to six months to an affordable rate; until then, Rosa Ramirez said, Avila said she would pay for whatever they couldn’t afford.

Avila did supplement the mortgage payments on the Hollister home, paying about $2,200 per month for nine months.

But the refinance never happened, and Martinez said Avila stopped helping with the payments at the end of 2006. A notice of default has been filed on the home, but no foreclosure date has been set, and the Ramirezes and the Martinezes are hoping they can sell the house before they lose it in a repossession.

Cebrero said the Ramirezes' and Martinezes' situation is an unfortunate one, but he said Rancho Grande was only trying to help the two families buy the home they wanted.

"We feel we have done as much or more than we can do for these clients," he said.

Who do you blame? The idiot buyer or the lying lender? Two years ago I went into a mortgage broker to discuss buying a house for $325,000 in a pretty meh area, which would have required one of the so-called creative loans. It didn't take more than about 10 minutes to realize the whole think suspended on bullshit, but they had the demeanour of used car salesmen, and I know they duped countless people into buying their schtick.

I think the dumbest thing is that people treat mortgages like they do car payments. "Well, I can't really afford that, but I'll just go broke for 60 months," which they gladly do and about two years in cannot wait for the halfway mark to head down the slope. The main difference is a mortgage is for THIRTY FUCKING YEARS.

 

[JayKeeley]

Refinancing right now is going to suck, so many lenders have either gone under or have tightened their regulations to über-Jew proportions.

So what shall I do? Stick with my mortage lender, E*Trade? Perhaps I can renegotiate my terms with them once I lose my fixed 4.625% APR next March. Perhaps they wouldn't want to lose me as a customer...?

I suppose I should speak with my bank manager and see what he suggests. If my mortgage goes up to 7% then I just need to figure out what my monthly costs will be.

Look at this. Making the BBC headlines right this minute -> http://news.bbc.co.uk/2/hi/business/6938072.stm

Thing is, I'm not earning $10K a year and living in a million dollar mansion, so maybe with luck I won't be affected to much by this impending crash. I just hope property prices don't slump because then I lose equity.

 

[dorian gray]

NAD: did the guy tell you you could eeeaaasily afford a $325,000 house? Recently the wife was on the phone with a mortgage lender and he gave her a certain monthly figure while I was calculating the same myself. Guess which one was lower?

Also: I think your comment on people treating mortgages like car loans is spot-on.

Ali: you havent refinanced yet dude? Try countrywide. Type in some numbers and shit and see what it's going to cost. The longer you wait, the higher interest rates are going to be.

 

[JayKeeley]

Ali: you havent refinanced yet dude? Try countrywide. Type in some numbers and shit and see what it's going to cost. The longer you wait, the higher interest rates are going to be.

Thing is, I'm on 4.625% until next March. I should keep it until it runs out and then make the switch once I get hammered at 7%.

Either way, it's going up so I might as well stick to what I have until it expires.

 

[dorian gray]

Oh, I thought it was sooner than that

 

[NAD]

4.625% to 7% might be a huge jump in payments. I would start talking to people now so that, at the very least, you'll know what the payments will be come March. 6 months ago anyone could refinance. Today, not so much.

The Fed met the other day and didn't lower interest rates like so many (stupidly) called for, which makes sense because interest rates are still at extremely low levels. If they get any lower, inflation will probably go gonzo. More gonzo than it already is. I'm having a custom bass built for me in Scotland right now, the exchange rate is pissing away my Sale o' the Fuckin' Century.

I clicked on one of those $599,000 for only $1,926 / month!!! ads the other day, and read everything. Basically, they allow you to make that payment for 5 years, BUT, after a bit over 3 years, you are paying so little into the loan that it becomes higher than your initial loan, and when your loan reaches 115% of the initial value, by law, you automatically default into the higher payment of over $4,500 / month. These loans are still being given out! It's like when Kathy Lee Gifford went on TV and said "I'M SO SORRY ABOUT THE SWEATSHOPS" signed a bunch of shit, and what happened? NOTHING. :zombie:

This shit is such a mess. I'm glad I'm "throwing my money away" with rent every month.

 

[NAD]

This is now a global issue by the way:

http://rocktrueblood.blogspot.com/2007/08/frances-biggest-bank-halts-run-on-3.html

Aug. 9 (Bloomberg) -- BNP Paribas SA, France's biggest bank, halted withdrawals from three investment funds because it couldn't ``fairly'' value their holdings after U.S. subprime mortgage losses roiled credit markets.

The funds had about 1.6 billion euros ($2.2 billion) of assets on Aug. 7, after declining 20 percent in less than two weeks, spokesman Jonathan Mullen said today. The bank will stop calculating a net asset value for the funds, which have about a third of their money in subprime securities rated AA or higher.

BNP's announcement sent its shares down as much as 5.5 percent, pulled the benchmark European stock index lower by more than 2 percent, and helped U.S. Treasuries rally for the first time in four days. Investors are shunning bonds backed by home loans after late mortgage payments by borrowers with poor credit histories rose to the highest since 2002.

``The complete evaporation of liquidity in certain market segments of the U.S. securitization market has made it impossible to value certain assets fairly regardless of their quality or credit rating,'' BNP Paribas said in a statement.

The French bank joins Bear Stearns Cos. and Union Investment Management GmbH in stopping fund redemptions. Dutch investment bank NIBC Holding NV said today that it lost at least 137 million euros on U.S. subprime investments this year.

:wtf:

 

[dorian gray]

I checked out some of those blog links you posted above. Funny stuff.

 

[JayKeeley]

4.625% to 7% might be a huge jump in payments. I would start talking to people now so that, at the very least, you'll know what the payments will be come March. 6 months ago anyone could refinance. Today, not so much.

We've actually submitted a request to Lending Tree. Let's see.

 

[NAD]

haha, Lending Tree is where that bullshit loan I talked about above came from.

Not like it matters who you get it from, just rather what the terms are. I think it's funny to watch huge "safe" banks lose their reputation. Makes me understand why so many who grew up in the 1930's keep money in a safe in their closet, not some bank.

 

[dorian gray]

Word. I've actually thought about doing this. I mean, have you ever tried to withdraw a large sum of money? The tellers are like, "hmmm.....well.....let me get my manager." It's like your money only exists in a computer somewhere.

 

[NAD]

I came to that realization just the other day. Money is not money, it's just some calculator read out. Unless you're directly buying stuff, switching digits to another domain and getting a widget in return, nobody wants you to have your own "cash."

I am *this* close to being debt-free and cash only, for the first time in 7 years.

EDIT: well, except the car payments, if you count that. Still two years left on that, god dammit.

 

[lurch70]

I came to that realization just the other day. Money is not money, it's just some calculator read out. Unless you're directly buying stuff, switching digits to another domain and getting a widget in return, nobody wants you to have your own "cash."

I am *this* close to being debt-free and cash only, for the first time in 7 years.

EDIT: well, except the car payments, if you count that. Still two years left on that, god dammit.

was just talking about this with my g/f last night ... how she brings home a few hundred bucks part time after college and when she counts the cash in front of me it feels and looks like a hell of a lot more than what I make.

when you do all electronic transactions ... money becomes almost ... well like you said ... not money.

 

[lurch70]

and also this makes the HC donations thread null and void

 

[lurch70]

EVERYONE thinking of buying a home needs to download this template into EXCEL

http://office.microsoft.com/en-us/templates/TC010566201033.aspx?pid=CT101172751033&ofcresset=1

its a reality check and then some

as you can see ... on a $500K loan at 6% in a matter of 30 years ... you will actually pay more than double of the original loan

Loan principal amount $500,000.00
Annual interest rate 6.000%
Loan period in years 30

Annual loan payments $35,973.00
Monthly payments $2,997.75
Interest in first calendar year $29,832.99
Interest over term of loan $579,190.00
Sum of all payments $1,079,190.00

 

[NAD]

EVERYONE thinking of buying a home needs to download this template into EXCEL

http://office.microsoft.com/en-us/templates/TC010566201033.aspx?pid=CT101172751033&ofcresset=1

its a reality check and then some

Yeah. Whenever I do mortgage calcs on my own, I just take the price of the house, double it, then round up a bit. Then don't forget about property taxes, HOA fees, and the lovely upkeep to fend off the shanty from falling apart before your eyes. I won't buy a house until I can find one for under $200,000 that I don't fear for my life every time the sun goes down (on me).

Buddy of mine, his wife and him just bought a house against my perilous warnings of pending doom. It will cost them $900,000 over 30 years (just for the loan), and it's an okay house in an okay area. Oh well, at least now I get to rent their primo condo from them. :Spin:

 

[NAD]

This is one of my favourite stories to refer back to:

Joe and Mary

Ages: 29 and 28

Professions: Joe - Senior Account Executive (lender), Mary - Real Estate Agent

Location: Orange County

Yearly Income Combined: $130,000 Gross

Net Monthly Income (After Taxes): $8,200

Automobiles: Mercedes E350 Sedan ($599/33 month Lease), GL 450 Suv Purchase ($56,000)

Monthly Auto Fuel Cost (Filling up Once Per Week): $350

Home Purchase: Costa Mesa 4/2 Home, Bought Late 2004 for $675,000

Credit Card Debt: $25,000

Monthly Food Budget (Including Dining Out): $700

So this should give you a nice snapshot of the couple. Since they were sophisticated investors in the know, they decided to jump into the home with a 2/28 loan, interest only with no money down. After all, someone making $130,000 a year can clearly sustain pretty much anything right? And as we all know, no money down was no longer simply a thing of late night infomercials but a mainstream way of buying a home. Here is the monthly budget below with the teaser rate loan (they had it for 2.75%):

2004 Budget

House Payment (PITI – at 2.75% interest only/2 years): $2,249

Auto Cost (monthly payment/lease/loan/fuel): $1,749

Dining: $700

Credit Card Payment: $500

Total: $5,198

Monthly Net: $8,200

Disposable income: $3,002

Keep in mind we are not factoring in medical insurance, cell phone cost, utility bills, retirement accounts, and many other items. These are things that I am aware regarding their budget since I was privy to the information. Well, more like them showing off to me, but I made mental notes on these items as I would with a past client showing me their monthly budget. So even with that said, $3,002 a month in disposable income is a pretty nice chunk of change to pay the remaining monthly items. But again, this was a teaser 2/28 loan. Unfortunately, they didn’t factor in one of them losing their job, a rate reset, and a slumping housing market. Let us take a look at the late 2006 monthly budget:

2006 Budget

House Payment (PITI – amortized fully over 28 years/full rate of 6.25%): $4,962

Auto Cost (monthly payment/lease/loan/fuel): $1,749

Dining: $700

Credit Card Payment: $500

Total: $7,911

Monthly Net: $8,200

Disposable income: $289

Suddenly the jump in the rate creates a crunch on the household income. Keep in mind the above still doesn’t factor in other monthly cost. In addition, this was in late 2006 before, Joe lost his Senior Account job because the company went under. They were already feeling the pinch since the housing industry was already showing signs of weakness and their income being variable with commissions, was also taking a hit. Joe jumped to another mortgage outfit but they were only able to give him $30,000 a year base plus any commissions. Of course with the tightening of the housing market business is not going so well since both of their careers are tied directly to the housing industry. Their combined income is no longer $130,000 a year but approximately $80,000 a year. So let us run the numbers again with the new household income:

2007 Budget

House Payment (PITI – amortized fully over 28 years/full rate of 6.25%): $4,962

Auto Cost (monthly payment/lease/loan/fuel): $1,749

Dining: $700

Credit Card Payment: $500

Total: $7,911

Monthly Net: $5,804

Disposable income: $-2,107

Now we are running massive monthly budget deficits. It may come to a shock to many people that a household earning $130,000 a year actually may have financial difficulties. But looking above, you can see how easy and quickly someone can go into financial ruin. Statistically, this couple was in the top 10 percent of household incomes in the country. Yet they spent way beyond their means. California living is very expensive. You’ll also notice that being in the industry they are in, they felt that they needed symbols of affluence to keep up with the Joneses. So now that you can see that not only folks that make $14,000 a year purchasing $720,000 go into mortgage trouble, even those that are considered the most affluent also have financial problems. The next phase of this case study is the foreclosure process.

What the hell are you doing buying luxury cars with $25,000 in credit card debt?!?!?