A wild day. Associated Press reports that U.S. stocks zigzagged throughout Wednesday, and ended lower after the Fed and other central banks around the globe cut rates to aid world economy. (Photo is from Japan where its market fell 9% today!)
The Fed’s early-morning emergency action — at 4 a.m. Pacific Time — cut its key Fed Funds rate by a half-point to 1.5%. Local reaction:
UC Irvine real estate professor Kerry Vandell: “Very scary. We know more today about the appropriateness of various intervention policies designed to control macroeconomic trends than we did in the 1930’s. But in the 1930’s our economies globally were much more loosely linked and market reactions were nowhere near as instantaneous as they are today.”
Money manager Ryan Kelly, Spectrum Asset: “‘The wise man in the storm prays to God not for safety from danger, but deliverance from fear,” Ralph Waldo Emerson wrote. Bottoms are made on fear, not optimism. We have all the classic signs and more, of panic selling and a stock market that is ripe for a bounce. Credit markets were frozen on Friday, and someone is now bringing a heater out of the house to try and thaw them out.”
Consultant Marc Berger, XRoads Solutions Group: “I don’t usually like to say I told you so but the key to getting the situation stable is directly tied to housing and foreclosures. McCain last night in the debate talked about a $300B plan to deal with foreclosures and I have to say he is on the right track. We need to take some of the pressure off and we have to initiate a “FORECLOSURE FREEZE” immediately. It does not have to be long 120-180 days to start. This will ease the panic on the consumer side and allow the bailout plan to start working. Getting the housing market to stabilize should be the immediate focus since consumer confidence is the key to getting the economy moving in the right direction.”
[ Q&A: What's it mean for savers, borrowers? CLICK HERE! ]
Says the Fed in its announcement:
Incoming economic data suggest that the pace of economic activity has slowed markedly in recent months. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit. Inflation has been high, but the Committee believes that the decline in energy and other commodity prices and the weaker prospects for economic activity have reduced the upside risks to inflation. (The Fed acted in concert with Bank of Canada, Bank of England, European Central Bank, Sveriges Riksbank (Bank of Sweden), and Swiss National Bank. with the support of Bank of Japan.)
Other meltdown news …
Two things need to happen, and I suspect they’ll both happen before the end of the week:
1) Bring back the uptick rule for shorting a stock
2) Suspend mark to market accounting
I don’t know why the president has not signed an order doing this. The market will rally when it happens.
So this is going to send the buyers out in droves. I don’t think so.
The lunatics are running the asylum.
Pending home sales up 18% in the West
http://www.realtor.org/press_room/news_releases/2008/pending_home_sales_up
Helen Highwater Says: “Pending home sales up 18% in the West”
You fail to point out that these are August numbers (before the collapse in Wall Street really started). This is old news.
By the way, how have you done investing in the Financials ETF lately? LOL Remember you told people here to buy XLF?
Even with the government banning short selling of financial stocks, it keeps going down almost every day.
The government keeps coming up with a bailout plan every morning and the market keeps going lower.
I guess we now know who was right in the assessment of the financial markets.
thank god nobody here follows Helen Highwater / Seeking Alfalfa advice
The ones who did are now in foreclosure and/or losing their 401K plans.
The Dow only dropped 1000 points since Congress passed the 700b bailout plan. Not bad….
Just imagine what this is going to do to consumer confidence. Ouch!!
Helen Highwater…..
look on the bright side
a wise man once said:
“when you got nothing, you got nothing to lose”
http://www.youtube.com/watch?v=xO0gSJGJ7Fs
Once upon a time you dressed so fine
You threw the bums a dime in your prime, didn’t you?
People’d call, say, “Beware doll, you’re bound to fall”
You thought they were all kiddin’ you
You used to laugh about
Everybody that was hangin’ out
Now you don’t talk so loud
Now you don’t seem so proud
About having to be scrounging for your next meal.
How does it feel
How does it feel
To be without a home
Like a complete unknown
Like a rolling stone?
lee gets it.
MARK TO MARKET is the key. 90% of mortgages are performing still…and of the 10% that goes thru to foreclosure they are performing at 50% of value meaning that the loss is not a complete loss of capital to the bank.
SO WHAT IS THE CHAOS…it is being DRIVEN folks…the low end is foreclosing because they are simple minded and will believe the news, so they simply walk away from their mortgages…even if they COULD have paid and stayed.
MARK TO MARKET is the greatest tool ever invented by unethical officials. It allowed the market to balloon on wall street much higher than it did on main street with crazy ASSUMED values…now it is letting them scare the booger out of the public by stating that ALL homes are WAY DOWN in value and therefore banks NEED MORE CAPITAL…must raise capital!!…why…oh, just so that the numbers look good on paper.
So you mean to tell me that your bank has the money to perform daily, you simply are being forced to revalue the asset to current as opposed to the VALUE THAT WAS ASSIGNED WHEN THE LOAN WAS SIGNED? YUP.
Someone owes the bank 1 million and is paying on time…that would appear a good loan, yes? WRONG…with the goofy accounting, the bank has to state that the home is now 500k and therefore they are over reaching the amount they are allowed to lend…INSTANT CREDIT CRUNCH…INSTANT MARKET FEAR…INSTANT MANIPULATION.
go after this rule, remove it…go after those that created it…LOCK THEM UP NOW!!!!
if you remove mark to market, you live in a fantasy world, removed from reality…… you don’t fix the problem…… you can believe a piece of dog doo is worth a million dollars…. mark it to a million dollars…. everyone knows it’s a piece of dog doo….. in fact removing mark to market just makes banks trust eachother even less…… it will exacerbate the credit crunch…. but go ahead do it… doesn’t matter… just understand what it means….
if you remove real capital requirements you increase risk
mark to market is not the problem….. the over leverage into toxic assets is the problem….
Helen the big space indicates a big space!
Regarding the pendings for August:
—”The National Association of Realtors Pending Home Sales Index, based on contracts signed in June, rose 7.4 percent in August to 93.4 from an updwardly revised index of 87.0 in July.
The August reading was 8.8 percent higher than a year earlier, and the highest level since 101.4 in June 2007.
Economists polled by Reuters ahead of the report were expecting pending home sales to drop by 1.8 percent.—”
The “experts” missed this one by a mile…
Whether we’re passing a bottom right now or it’s still years away, it’s time for potential buyers to start getting their “ducks in a row” for the bottom that we all know will eventually come.
It just so happens I’m teaching a two hour buyers’ seminar for Lakewood’s Community Services Department this Saturday morning, It’s only $5, whether you live in Lakewood or not. My colleague Blair Newman and I will be giving an overview of everything from buying and borrowing basics, market trends, and foreclosures to special break-out sessions for move-up buyers and investors. I’ve been teaching this course on and off for Lakewood for years, but never in economic circumstances like the present.
It’s not that bad of a drive from most of OC, we don’t sell CDs or books, & you can’t beat the price. We still have seats available, but the room capacity is 50, so advance registration is recommended. For more details and a link to city’s online registration click here.
RealtorDavE, it’s time that people start saving money in case they lose their job.
Let’s be real here.
mav is getting it, but is applying good ethical accounting principals as opposed to the corrupt unethical true implementation that has been practiced for 6+ years now.
In theory the rule COULD work.
in practice, the banks used it to OVERLEVERAGE and to create derivative markets that actually allowed them to sign a loan at 500k…then revalue the loan to 1 million…this gave them more money to lend…heck lets make that same loan 1.5 in value now, I THINK that is a reasonable MARKET value bob…and now that bank with 1.5 million realizes that the asset value is at best 500k…what is missing with this insane equation? It is valuation only.
INSTANT MEGA SUPER PROBLEM…BUT ONLY ON PAPER.
Remove the rule and the bank can continue.
The rule that is missing, the rule that is needed is simple and is the crux of the entire free enterprise capitalist democraticish republic that we live in…MORALS and ETHICS…sadly those cannot be written into any books.
Loans that come up short are truly the issue, but currently it is only 10% of the flow at best and of those 50% of the amount is recouped…by no means the DOOMSYDAISY that the powers would like us to believe.
The powers are trying to squish us into a depression like you would squish 2 weeks of clothes into a 2 day carry on bag.
Look beyond and read between…it is the only way that we avoid what is being slammed into us.
I could see value in the black box rule for the FED while it was going in our favor. But that is simply catering to the belief that what is good for the US will work for the world.
FIAT (made up) money is a necessity, never lose sight of that. We simply must have morals and ethics and since that is not possible with law, the closest you get is with oversight…by a LOT of eyeballs.
We are entering an age where we should all put down what we are doing for a moment and focus on one thing…the dollar.
If we are to remain sovereign…if we are to have a chance to remain intact…if we will ever have a day that we can remove some of the greedy infrastructure that has been put in place within our financial systems in the future it relies on us truly demanding from the politicians that we elected one thing…accountability.
IDEA#1 - WE MUST demand that we create a new oversight group…for the next 10 years this nation should hire 500,000 people ALL US CITIZENS to analyze the books, to go thru the trash and to see what the FNSHIZNIZZ just happened!!!!
Duh, what happened was idiots bought homes for too much…as true as that is, it is still just idiots being idiots…let us please get passed that…this is much bigger and needs focus mr and mrs attention deficit.
These not so clever, albeit completely corrupt banking so called elites have really overdone themselves this time.
When we had little ole enron fiasco, the gov went crazy analyzing and lookylouie into every aspect of that company…
this is so much bigger and is inclusive of corrupt politics and is so massive that we MUST address this now.
The FED is fixing the problem they created…you hear this everywhere…sometimes when a news story is told enough times it begins to sound like craziness…this is the goal.
Slow things down for a second and breathe…the FED created, is told to fix, and will undoubtedly create again, this problem…Stay with the FIAT system, but revamp it completely…NOW.
RealtorDaveE Says: “Whether we’re passing a bottom right now or it’s still years away, it’s time for potential buyers to start getting their “ducks in a row” for the bottom that we all know will eventually come.”
Wow, Mr Buy Buy Buy Dave came back to the blog. Once again he is trying to trick people into buying depreciating homes so he can keep the lease on his Mercedes. And now, he is even promoting a $5 seminar on “how to lose money buying real estate in 2008″
Just disgusting!! You should be ashamed of yourself.
You have enough shame for us all Bubbs…
Perhaps next time the government will stay out of the real estate business. Fannie and Freddie’s government backing is what caused this mess.
My favorite part of all this is the Credit Default Swaps. Who owns the contracts on these? The same companies that we are handing $700 Billion of our future taxes?
I am looking forward to hearing how the $5 seminar goes. Wow, that is practically free! What a deal. $5 to hear how we should use Realtor Dave as our buyer’s agent because he knows so much about the market. What a joke. Scumbag. Go peddle your garbage somewhere else.
RealtorDavE, thanks for the video clip from your last seminar
you and your son in law really put together
a good $5 seminar
on how to make money buying real estate
right smack at the start
of the first deflationary period
since the 1930s
http://www.youtube.com/watch?v=Myowm_PqXRA
please divulge your expertise on how to perserve capital in a deflationary period
atlernatively i will accept the answer: “hey we need the $5 tuition to feed our families”
Hello … they better change the accounting rules quickly. Message to Bush, Paulson and Cox, NO MORE MARK TO MARKET!
The short sellers are now pointing their knives at the property & casualty insurance co’s. They’re going after Allstate.
Isn’t this a reason to get back on the gold standard? These things would not happen. Get ready for hyper inflation.
RealtorDaveE: Offering a class on buying I see. Hmmmmm..
I am very curious as to the process you tell potential buyers, that have never borrowed more than $50K in their lives, how to determine the correct price point, loan amount, and type of loan to use.
It is precisely these buying classes that many folks went to in 2004 and 2005 where they learned the use of affordability products - and most walked away only with knowledge on how to find a loan that would allow them to get into a house based on monthly payment alone, regardless of principle. Which is precisely part of the reason we are in this mess.
This is a perfect time to restore confidence in our local realtor community by exemplifying the integrity and knowledge many agents claim agents to have. I am very curious to see if you even discuss risk assessment.
Something tells me that the class involves reassuring folks that the possibility of refinancing in the future is something they should count on and leverage. Please prove me wrong here - I would love to be. Something tells me that I am not.
If you state, “Well I only handle the realtor portion, there are lenders we bring in that handle the lending portion,” then just simply state, “NBI - you are very correct.”
No reply would be the same.
Marketing is an agents job.
Presenting that marketing in a classroom format is now treading on those integrity issues - unless the THE HIGHEST EMPHASIS is placed on teaching how to PROTECT ONESELF In a deflationary market and contingencies they should be planning for.
I would bet money that is not the intent of the class - protecting the buyer by teaching them how to make decisions that avert risk first.
NBI: There is a reason no RE Agency CEO or owner has needed to testify before the panel on the hill…they were not the root cause of any of this mess. But since you all cannot get to THOSE people, the agent is a fine punching bag. We all know it was a lending bubble…not an agent bubble, not even a housing bubble. Your expectations are simply unrealistic for an agent to travel down the path of deflationary market contingencies and risk assessment. That is the job of a financial adviser. And this step should be taken care of PRIOR to looking for homes with an agent.
Half point and we’re supposed to get excited?
I don’t think so pals.
The economy in the state that it’s in, it will take a lot more then a half point to motivate people.
RealtorDave’s classes remind me of the “day-trading” classes some thieves were offering during the dotcom boom to teach people how to buy and sell high-tech stocks.
We all know how that worked out.
By the way, if you attend RealtorDave’s class on top of paying the $5 for somebody to teach you how to become a knife catcher, good luck getting out of that class without giving your email address and phone number so Dave can make sure he’ll be your realtor and his buddies will be your mortgage brokers.
Mulli,
You seem to shed any responsibility for realtors. My question to you and other RE agents is, why are there no charge backs for loans gone bad? The agent, broker and underwriter should be responsible to pay the commission or bonus back for defaults. This is a standard practice for many sales environments.
Testing… Spam filter doesn’t like me today.
Lansner,
Why are my posts being blocked?
Lee is absolutely correct.
Mark-to-market is killing us because it’s so open to manipulation. Short sellers can sense that this rule is crippling financials and they’re taking full advantage of it.
Here’s the thing. Valuing a mortgage is easy. It’s the same as valuing a bond. You have 30 years of cash flows and principal repayment.
The agency that sets the GAAP accounting rules can adopt a uniform standard for expected default that ALL banks must follow. After that, you’ll have no room for manipulation.
Read more from Newt Gingrich:
http://www.forbes.com/2008/09/29/mark-to-market-oped-cx_ng_0929gingrich.html
(click skip this welcome screen to view article.)
blaming mark to market accounting is like blaming flies for Sh!t…
… you can swat the flies away, but the sh!t remains….
…. if you were to elimante mark to market accounting….
… banks balance sheets would increase in value…
… but everyone would know it was just a lie…
…. why? because the banks are on the front lines and understand these assets are not worth much….
…. inflating them over current market value is not the answer…
… if you do the credit problem will get worse…
… LIBOR rates will increase further…
Who stopped the bubble? Why? Who created this bubble? Why?
Who profited from the bubble? How? How much profit? Where is that money today? How many rules were broken along the way? and by whom?
The real profiteers are the ones that MOVED THE MONEY…not the ones holding the bag today.
From the johnny come lately Loan Agents lucky enough to work in 2004 and 2005 to the JPMorganses of the world…the money, the true money was in the movement of the money.
The ability to move the money came from the ability to MARK TO MARKET these assets to unreal values. This gave more ‘money’ on paper to lend out in derivatives…this gave these shiesters the ability to keep moving and moving money making MASSIVE commissions.
They left institutions that they created or that they manipulated holding the bag with this crap and now the gov is trying to put this together without stating as concisely has I am that this is happening.
They…whoever They are have left the building folks…Untold of fortunes tucked away into companies you NEVER hear of amigo.
The truly super duper wealthy are so super duper wealthy that the game has lost a lot of the fun…they have the power to make or break markets at a whim…they have the power to influence ANYONE with weak skin (aka politicians) any day of the week.
Someone tell me something I don’t know…please.
mav-
I’m starting to think you’re rooting for a Great Depression.
Mark-to-market isn’t a good valuation tool when there is no market. An income producing asset has intrinsic value and it doesn’t matter if nobody’s buying right now. The security derives it’s value from the income it produces, not from what some other bank is willing to pay for it.
The authorities agree with me also:
http://en.wikipedia.org/wiki/Mark-to-market
“On September 30, 2008 the SEC issued clarifications regarding the implementation of fair value accounting, to help address concerns regarding the impact of fair value measurement on financial institutions holding mortgage backed securities (MBS). This guidance helps clarify that forced liquidations are not indicative of fair value, as this is not an “orderly” transaction. Further, expected cash flows from such instruments are an appropriate means of valuation, subject to applicable adjustments for default risks.[6]
Under FAS 157, many companies had been forced to deeply mark-down (reduce) the value of MBS due to their inability to sell them, resulting in margin calls from investors, even when cash flows from the securities suggested a much higher value. In short, the SEC has acknowledged the market for MBS is not “orderly” and fair value standards should be more liberally applied to reflect the expected cash value.”
* You are now entering posting to blog issue hellzone *
Liar is correct.
Also, the further issue is that we missed the party, the mark to market was used to increase the assessed value to lend more money…this means that even if we mark down just to what the actual base LOAN value is, we have a severe leverage issue for the banks.
what we can do by changing the mark to market is atleast know what the bottom truly is and get to it to make better decisions.
otherwise we chase a theoretical number down the toilet…I have not had my head in a toilet since that last bachelor party…
If there is no market for an asset.
You should not be using that asset to increase your leverage capabilities.
Well whatever, let’s just suspend reality…. let the banks mark the asset to their fantasy book value…. great…… problem solved… i’m sure credit will start flowing like milk and honey… because everyone will believe that the assets are worth what the banks say they are worth…. can i have my unicorn and gum drop forest too?
…. the only solution here is the inevitable deleveraging….
…. it’s going to happen no matter what the laws are….
….. DigDoug is right that it’s all about trust and morals….
…. suspending mark to market accounting will increase the lack of trust that already exist…
* The posting errors are exhausting - someone please fix this site [arghhhh] *
performing loans are the true asset of a bank.
the underlying asset for a loan that is to a reputable person is irrelevant…whether it goes up or down…
think about a credit card…not held by what you buy…just by your signature.
mark the banks to the value of the loans they have issued.
no more of the derivative markets for the mark to market nonsense that only works (because nobody is bitchiiin) when the value goes up.
why do you think that investment banks are going away? they are gone or are converting to traditional banks.
this way they have depositors that put money in and they leverage out loans…
the investment firms new this circa 2000+ and took advantage.
us simpletons are getting to know this now…but my point in my ramblings is that THEY knew this then.
this is more corruption on more levels than 1000 Enrons.
we need investigations, we need trials, we need oversight, we need help folks…SELECT THE RIGHT politician for the house and senate the next time you have a chance…no more CAREER politicians.
the presidential vote is a complete throw away at this point.
Well… valuing the MBS’s and CDO’s fairly would allow banks to start lending instead of hoarding all this cash that the Fed is printing.
You know that lending is the key to avoiding another Depression. Deleveraging can still happen in a sensible way. We can deleverage the areas of the economy that are ineffecient with capital, while still preserving some semblance of order in the rest of the economy.
Anyway, neither of us will change the mind of the other, so that’s all I’ll say on this.
Oh well, another day and another drop of 200 points in the Dow. So much for the coordinated rate cuts.
Expect more “doom and gloom” in the media this evening, further depressing consumer confidence.
It looks like some of us were right on and tried to warn people. Hopefully some of you listened.
Or you can just believe Mulli and go buy a house. I’ll buy it back from you in a couple of years for 20% less.
Liar…
there are 2 ways to fix the economy…the first is truly what everyone yaps about…take money out of the fed and pay interest (side note…to whom exactly, but that is for a different discussion) on that money, give it to banks to balance books as we just did with the 700billion, or perhaps some of that will find its way to consumers and businesses in the form of new DEBT for them to grab onto..WHEEE, that is just what i want, less work and more debt please.
OPTION 2: Infrastructure. Hire companies and make sure to hire a LOT of individual companies to do a LOT of things. Build roads, bridges, buildings, monuments, whatever…either way the money goes into the economy, but in option 2 it is not filtered thru mega rich bungholios.
And lastly i will add that if you would spend some of that money on the mom and pop shop instead of the WallyWorlds, you can begin to breathe in a sense of improvement in our economic worlds.
My choice for President. (Please have sound turned up)
http://www.rleeermey.com/
What a bunch of McSh!t when he states that we’ll just buy up all the bad loans. What about the people who saved their money and worked hard and bought a house the could afford, is he going to re-work their loan? Hell, no. Eat Sh!t McCain.
Liar Loan,
Last time I checked market value is a pretty fair way to judge value.
Let’s say someone bought a million dollar home in 2006.
Let’s say the market value is now $600K.
Do you want that person to be able to borrow money as if the home was worth a million dollars?
Suspending mark to market accounting is an attempt to do just that.
Lending is all about risk.
Market values impact risk.
You are suggesting that leverage should be based on some “fair value”, i’m not sure you even know what that means…. it sounds to me like you think leverage should be based on some fantasy future value that negates default risk based on liquidation values. My guess is you would not lend money on the terms you are suggesting. I sure as heck would not.
What you don’t get is that even if that debtor was able to say his home was worth a million dollars….. nobody would lend to him anyway…. do you get that?
The FASB is not composed of unethical criminals trying to steal your money, DigDoug.
Mark-to-market is sound policy, and it has just exposed how worthless these assets are. GAAP is intended to present the most accurate picture of an organization’s financial standing, and mark-to-market eliminates much of the potential for manipulation. Obviously, virtually every rule involves some compromise, but if a bank has junk on its books, it should be valued as junk. If they can eventually write it back up, then so be it.
Should I value my stocks at today’s market price, or what I think they should really be worth? If you were loaning me money, which would you rather see on my balance sheet — truth or wishful thinking?
This is like the argument that firms shouldn’t have to expense options that we went through a few years back. They argued that they wouldn’t be competitive, that we would lose out to the Chinese, etc. The real reason was that they didn’t want to lower their EPS to a MORE CORRECT number.
Any suspension of mark-to-market is not a band-aid, but an eyepatch, and it will just prolong the pain.
mav and josh simply have the crosshairs on the scope off a few ticks…
mark to market has nothing to do with you buying a home…NADA.
it is a method that allows banks to create fake value on their sheets during good times (aka Bubble makers)
and to create fear during down times (that would be today) to show that the loans they have are based on assets that would sell for less today…SO WHAT!!!!!!!
If the loan is being paid, it DOES NOT MATTER…if the loan is being paid…It does not matter.
mark to market WILL go away, it was a tool by corrupt groups (that knew clearly what they were doing)
Josh’s comparison to stocks is a non starter.
Here’s what fair value means:
http://en.wikipedia.org/wiki/Bond_valuation
“As with any security or capital investment, the fair value of a bond is the present value of the stream of cash flows it is expected to generate.”
The difference between a home debtor and bank, is that a home debtor doesn’t have to maintain a minimum capital ratio. So if the federal government forced the home debtor to raise an additional 400k because his home lost that much in value, then your example might make sense. It would bankrupt the home debtor who’s perfectly capable of paying his loan.
if the credit market is so frozen- how the hell did
“pending sales” go up last month? someones lying—
either the sales didnt go up or there was no credit freeze
if doing away with mark to market was anywhere near
feasible dont you think the geniuses in charge would
have already done it ?????????? hellloooooo
bottom line is this
our nation lived beyond its means- with borrowed money
and now the rest of the world has figured out that …
we cant pay them back
you guys still don’t get it….
… it’s not about the current loan in that example…
… it’s about future loans….
… basing future loans off of current assets….
DigDoug understands part of it…. that is that the basis of lending is trust…… any time you attempt to eliminate trust and transparency from lending the market reacts…..
…. do either of you honestly think that eliminating mark to market accounting would have a positive impact on the interchange bank rates…… banks would certrainly price in the risk now that it has been identified as a risk… the price on the balance sheet doesn’t matter…. that’s the part i’m trying to get you both to understand… banks would still hoard cash…. and banks and lenders would still be adverse to lending because they understand the root problem…. the root problem is the assets are crap….
now liar loan wants to artifically inflate the capital ratio requirements…. that sounds like a sure fire way to a full blown depression….
Treasury Dept. new design for the $1 Dollar Bill
http://appraisalnewsonline.typepad.com/photos/uncategorized/2008/10/06/dollar_poor_george.png
even using the most halfassed site - wiki as your example…let’s roll with this, you have solved your own conundrum…
nobody is talking about the home debtor here by the way.
relative to the bank or let us just say lending institution to cover all bases…if we mark to actual where we are marking to the loan that was signed by the person that now owes the money…backed by tangibles or not, then the value of the loan is clearly stated, amortized and expected to return value over the length of the loan
when we then play the game of mark to market we can play with numbers…for our gain in the bubble or for the fear we face today.
the fear right now could be stated simply as ‘oh my gwarsh, what if we had to collect all of the mortgages today by selling all of the homes today at the current assessed value? DUH? That is the same fear my youth had when they heard of the Halon Collider was going online or if we want to get totally crazy, what if the sun was to fizzle tomorrow???? OH MY GOODNESS the sun is fizzling tomorrow???
get it? There is a downturn due to the bubble and the resulting foreclosures…
This side tangent still does not answer how we get the economy going again…I am a conservative that at one time would have been happy to say republican…even with that I know when it is time to introduce public works jobs. We need to invest a trillion or two into massive projects to get things done…desalinization plants…nuclear facilities…dams for reserviours…the list goes on…also a massive group of people to analyze the no good that has taken place.
McCain will just crank up the war machine and Obama will simply do the same, just tax me more while he does it…nobody will solve this for us…not until we VOTE them into congress that is.
ok Mav, you are pushing it with the reference to interchange bank rates…this is the issue, we have trusted a group to keep things stable…it was a blind faith that they would…we do our job, they do theirs…they failed…bigtime.
we truly MUST have a new way of this…not today, i have no clue when, but it must begin and be structured and become a central focus of a new economic system.
not based on some tangible like gold, that make me just chuckle to think that even some good hearted, well intentioned people (can we say ron paul people) would back a gold standard. That game was abandoned and can now NEVER be returned to.
we need FIAT money, we just need a good FIAT money system.
We truly must ferret out the weasels that make disgusting sums of money between 2002 and current…these are the crooks we look to first.
……….”the beatings will continue, until morale improves”.
Mulli: “…they were not the root cause of any of this mess. But since you all cannot get to THOSE people, the agent is a fine punching bag”
Mulli - you and I get along for the most part. No name calling here, but i am sorry I do not see the corelation between your reply to my comment and my comment itself.
I simply asked for RealtorDaveE to divulge what type of information a first time buyer is being afforded in this class they must pay $5 for - and to be very specific as to the most relevant of questions!!! How do they determine price point, loan type, and risk evaluation for themselves? Look - we all can agree that buying is a very difficult decision to make. There are several aspects of the buying process that are critical - the first of which is making sure the buyer knows how to determine risk in this current market and decide on how much home is right for them.
Now, anyone would be LYING if they stated that lending information is not provided at these seminars - more specifically, lending information that would lead buyers to “affordability products.” Hell, we all know many buyers first find out about the existence of these products at these meetings. IN NO WAY AM I ACCUSING ANYONE OF WRONGDOING IN THE PAST IN MY COMMENTS HERE. If you choose to infer that, well, then you may have your own internal issues to deal with. I am simply trying to prevent certain tactics that exposes buyers to opportunties that they decide to leverage and LEARN LATER AFTER THE FACT WHAT THE RISKS WERE WHEN IT WAS TOO LATE!!!!
Off topic: Try and purchase a Porsche GT today without having to sign a disclosure that simply states you can be killed driving it. Not happening. Why do you think that exists? YOU GOT IT!!! Enough schmucks whined about it after they almost killed themsleves or someone else. They then filed the frivolous lawsuits and viola!!! You have the response the public wants from the MFG. Correlate that to today. We have thousands of people claiming - “well I did not know it was possible for this to happen” (say it like scooby doo to make it accurate) and what do you have today - everyone is blaming everyone but themselves. BUT THE WORSE PART IS THAT WE ALL ARE PAYING FOR IT NOW.
Look at it this way - if you are going to tell them what their options are for buying - you had better explain to them what the real risks are in a MANNER THAT AN IDIOT CAN UNDERSTAND!!! Anything other than that and all those comments you read about people hating agents become more valid.
Point taken I hope.
Now let me make something perfectly clear.
If I was a broker instructing agents to hold the seminar. You had better be sure that there would NOT BE ANY INFORMATION divulged that would deflect a buyer’s decision to buy - all within the limits of the law. They would not be disclosing risks when they do not have to. When they do, you had better believe it will be in a language that will allow the level of risk to be misconstrued - play it down, if you will. Anyone here ever read “they had every right to think they could refinance at a later date” from anyone else here on the blog? Where do you think that came from?
Yep - you got that right. You’re probably wondering - what is he thinking?
Look folks - an agent’s job is to sell. Its not to educate (as you can see they still want payment for that part). Its not to be your friend. And it sure as hell is not to look after your best interests other than the fact you were aware of certain documents and certain rights - that is FRICKIN’ IT!!! They must make sure you know your rights and you use the standard CAR docs - there really is nothing more than that - other than showing homes and acting friendly. Selling is a skillset - so they leverage that skillset for you or ON YOU.
Their interest is to sell you a frickin’ house and maybe earn a few extra bucks or KUDO’s (i.e.: dinner, free golf, etc.) to help secure a loan for the schmuck thru a “buddy.”
Mulli and RealtorDave - I know brokers. I have friends that are brokers. I am not even asking if this is not the mentality that is fueled in the back office. I know it is. It’s about the sale. “Get that signature!!” Everything that is done up to that point is to lead to THAT ONE GOAL ONLY!!!
Does that make an agent “the sap that we scrape from our feet?” Hell No!!! By them selling - that sector of the economy keeps on rolling around.
Keep in mind - the brokers that I am closest to are the very ones that have leveraged their people to MAKE ME and themselves MONEY in the process. Did someone come out on the bottom end of the deals? HELL YEAH!!! We know when to buy and when to sell - in that kind of environment and by our standards - someone is always coming out on top and someone always gets the shorter end of the stick.
But STOP PORTRAYING THAT IT IS ANYTHING OTHER THAN THAT!!!
And others - stop complaining about these agents that are actually doing their job well. ITS THEIR FRICKIN’ JOB!!! I would only ask they leave it off the blog since it will most definitely gather the unintended responses.
NBI: You and I do get along here…pretty much. I think our society has become ambulance chasers.
Someone always has to pay….
I did not know this could happen….
McDonald’s has to disclose health aspects of their products? Why doesn’t the average person know that fries and burgers daily will make you obese and hinder your health? Stupid government waste…how much did this study cost?
The tobacco industry is STILL under scrutiny even after they put a label on their product that states using this product could lead to lung cancer, emphysema, or death. How much clearer does it have to be?
I believe America is feeling sorry for the consumer and wants big business to be held accountable for EVERYTHING. This is the precise problem in America today. Consumers do not take responsibility for their own actions. Jurys are punishing big business and feeling sorry for the little guy. Is it right? Maybe…maybe not.
Look, if you are going to play football, you will take reasonable precautions to protect yourself prior to engaging in the activity. You cannot sue Riddell unless there is proof, beyond reasonable doubt, that their equipment malfunction was the primary cause of the injury. Let’s get Riddell! They are huge! It is the chasing mentality that I have problems with here.
Someone signing a 80/20 with a two year teaser 300 basis points below market HAD to initial and sign a page that stated this rate was temporary and it will adjust in the future. Did they hope to refinance? Sure. They gambled and lost. Were they talked into it? Maybe…maybe not. My hunch is you cannot talk someone into spending $600,000…they have already done that themselves. But it is irrelevant. The problem here is Wall St. and the underwriters were loose with their risk assessment. Were they responsible, we would not have had a million plus deadbeats walking from their homes. Pretty simple really…
mav-
I’m not disagreeing about the poor quality of lender assets. Just that we don’t need to punish the lenders needlessly by undervaluing those assets. That’s our fundamental disagreement.
The interbank lending rate will lower if the risk of banks going bankrupt lowers. That risk would lower using the discounted cash flow model, because it’s not subject to the whims and emotions of a panicked market.
I say lets make sure all the prisoners in CA have good access to healthcare and all the kids of Anaheim have free breakfast and lunch and also lets make sure all the anchor babys and their illegal parents are comfortable lets make all these tax payers start paying more and on and on and on……………………………..
Tracy, you have just described a large part pf the problem. We are the fraud, prison and welfare system for another country. Illegal immigrants occupied every foreclosure in North West San Juan Capistrano, and I’ll bet Santa Ana too.
How DID they get those loans?
Who were the agents and mortgage brokers involved in those sales?
Realtor Dave, you will probably make money because there is one born every minute.
Let it burn, the new plants that come from the carnage are beautiful!
Mulli: I agree - I could not care less about the consumer - honestly.
An opening statement for the class almost should be: “Anyone that is NOT 100% sure they want to buy a home today should go to the back of the room, take your $5 back and go home.”
Personally, I would fire the agent that does that if I was the boss.
Hence, the predicament, if you will.
People in the general public rarely take responsibility for themselves if they can find an out by playing “the sheep.”
I wonder if Bubbs thinks that is shameful and disgusting…
Mulli: anything other than the truth is the most damaging
Telling the truth, however negative it may be to some, is never a bad thing. Period
Shame and disgust is an opinion.
I could not care less about anyone’s opinion on this matter.
LiarLoan,
Our disagreement is over the impact of what happens when you remove mark to market accounting.
You think that magically…other banks and investors will think the troubled bank is in good shape…. they will just ignore the toxic assets and go back to business as usual…. this could not be further from the truth.
What is more…. you think that the risk of bankruptcy will actually decrease by allowing an over leveraged bank with bad assets to leverage up even more…….again, this could not be further from the truth.
These banks are crippled because they over leveraged into “assets” that had much higher default risk than they anticipated. What is more… it has been found that the depreciation of the hard asset directly impacts default risk. Ignoring this is a big mistake. Don’t you think they would have done this already if it had any chance of working?
Agreed NBI…I am certain you saw where I was going with that…
Here is my problem with the realtors not having skin in the game. I guarantee, if the buyer wants to buy a house, and the realtor pushes the buyer in any way to creatively finance the loan, to “get into it”, then we all know the outcome and who is going to ultimately pay for the creative financing. If you are going to tell me that you didn’t push creative financing, to get the loan, to get into the one the family loves, you are just not being honest.
If you are in the industry, and have no regard for the rest of us bailing your client out, then I do have a problem with you and your horrendous business ethics.
For all of the loans that failed, you the realtor are eating off of our money, which is nefarious! You were clearly paid in full, for an unresolved debt.
Where do you draw the line fiber? Do you ask the auto salesman to give his commission back when someone skips town on paying the note? How about when your financial adviser on your investment accounts recommends something and it tanks…he got paid…should he pay the cash back when the deal goes sour? Or are we going to single out people who happen to make very sizable commissions after working with people sometimes for 6 months, 12 months, and longer?
What about the knife-throwers during the boom years? Nobody ever addresses this component…it is like good for them! An agent took 50% of the deal on the seller’s side…after all it is CO-OP. Hence the term…
Do the lenders give back their money? Does the broker return their 15%-30% of the commission the agent earned?
Should we ask the appraisers to return their cash?
Tell you what - let’s start with Mozilo and his brethren…that is where the real money is. You take 90% of what they earned during the boom years and forward that to hosed investors and then you can come talk to an agent who worked during that time.
one way to look at this is that we are dealing with the aftermath of an industry that was ripe with innovation - and when allowed to grow unabated, was overly successful in what it set out to do
Apparently some of the bears on this blog can’t even accept my revised thesis that eventually there will be a bottom?
Let alone the theory that people who don’t own a home should spend two hours of their time now figuring out what they’ll need to do to position themselves to actually qualify for a loan with the new requirements, or how to avoid common buyers’ mistakes.
Is the $5 that Lakewood charges to cover their facility and administrative costs is a little too steep for some of our bears?
I’ve been teaching buyer and seller classes like this for about 25 years as a community service. The overwhelming majority of those attending already know an agent they’ll use and are just looking for unbiased information in a neutral, classroom setting.
Sadly, there are many agents (and posters here?) who don’t grasp the concept of giving back or of community service.
There are others who judge a class they’ve never attended simply by the fact it’s being taught by a Realtor they’ve never met.
Of course we go into protective steps buyers should take, from how to select an agent to how many homes to see before they buy to what sort of loan is right for them. The whole class is about consumer protection.
Tell you what, Bubble, Mav, & company. If Lakewood’s still got room in the class, which they probably do, go ahead & register (info here), come to the class, & if you think it’s a completely worthless, biased sales pitch in stead of valuable information, I’ll reimburse you Lakewood’s $5 out of my pocket at the end of the two hours.
Just don’t condemn someone you’ve never met because of wild distortions of what I’ve posted over the last year or because I’ve chosen a career of helping people buy and sell real estate. There are good people and bad people in virtually all legal professions.
RealtorDaveE Says: “Is the $5 that Lakewood charges to cover their facility and administrative costs is a little too steep for some of our bears?”
Sure, we are going to give you $5 bucks so you can tell us how great real estate is and that it can never go down. And then after that, you are going to get our email address so you can spam the hell out of us and of course, you’ll put us in touch with a mortgage broker (from whom you’ll get a kickback later on)
If I’m lucky enough to go into escrow on one of the overpriced homes you are going to sell me, you’ll also get a commission from the guy who does the home inspection and most likely from the escrow company that you’ll gladly recommend.
All this sounds wonderful. I can’t wait.
RealtorDaveE Says: “Apparently some of the bears on this blog can’t even accept my revised thesis that eventually there will be a bottom?”
That is like saying that it will eventually rain in SoCal…
What’s new about saying that the market will bottom at some point?
Of course it will but we are not even close to a bottom yet.
What we needed to hear from you in the last couple of years is that anybody who bought in the last 2 years was in a very high risk of being underwater because they were buying at the peak. I didn’t hear you say that. I didn’t hear you say that it they only waited a little bit longer, they would be able to get a much better home for their money.
What you should be telling people now is that buying in OC is still very risky because prices have not come down enough and because the economy is moving into a recession and that is usually the worst time to buy a home. Once we see employment go up again, that might be an okay time to buy, but definitely not now that we are barely starting to go into a recession. Are you crazy?
That’s what we needed to hear from you.
“Sadly, there are many agents (and posters here?) who don’t grasp the concept of giving back or of community service. ”
Why don’t you go feed the hungry in Long Beach if you want to give back to the community instead of shamelessly promoting your business?
You have completely lost it NB…why don’t you ask the Exxon CEO to go ahead and promote solar technology over oil.
Dave’s biz is to sell homes…and there is nothing shameful about it. People will always buy homes….always.
“Dave’s biz is to sell homes…and there is nothing shameful about it”
There is if you claim that you are providing a service to the community.
We all know the kind of service you realtor have provided to the community in the past couple of years.
Seek help bubbs…quickly. you are inching closer to the edge…just how powerful do you think a Realtor is???
Why is it that nobody from a RE agency has been called to testify before the committee on the Hill? Since they are responsible for all of this you know….