Patterico's Pontifications

3/28/2013

What Could Possibly Go Wrong?

Filed under: General — JD @ 1:45 pm

[Guest post by JD]

What could possibly go wrong?

The Federal Housing Finance Agency, which oversees mortgage finance giants Fannie Mae and Freddie Mac, announced that borrowers who are more than 90 days late on their mortgages will become automatically eligible for a modification to the terms of the home loan. The goal is to reduce monthly payments.

In the past, to be eligible for a mortgage modification, borrowers had to provide documentation they had a financial hardship. They will no longer be required to do so — though providing such documentation will make borrowers eligible for more substantial monthly savings.

Apparently, government doesn’t learn that their interference in the market leads to some pretty perverse incentives.

In this instance, why bother going through the normal process of refinancing, just skip a few payments and be automatically qualified for refinancing.

Brought to you by the community-organizer-in-chief who sued banks to force them to make loans to people that could not afford them.

—JD

102 Responses to “What Could Possibly Go Wrong?”

  1. Facepalm

    JD (b63a52)

  2. My ball just landed in that moral hazard by the tree over there.

    daleyrocks (bf33e9)

  3. The relief would come in the form of a reduced interest rate, extended timeline for payments, or other measures.

    that is so vague as to be useless

    this story wasn’t ready at press time but they ran it anyway I think

    happyfeet (4bf7c2)

  4. Mrs. carlito does the mortgages for cops. She can’t count the number of calls she’s received that “Obama said” they could re-work their underwater mortgages.

    This kind of stuff makes me sad about the human condition. We now have middle-class citizens walking away from mortgages, and no one rides them out of town on a rail, or chases them around until they go to Bolivia or whatever. How can we shame these people, and help honest borrowers at the same time?

    carlitos (49ef9f)

  5. So judgemental, JD.

    mojo (8096f2)

  6. Mr. Feets – Here is the linkage to the FHFA announcement yesterday which hopefully will dispel some of your vagueness.

    daleyrocks (bf33e9)

  7. Bingo, everyone will now be 90 days behind.

    What a pack of morons.

    SPQR (768505)

  8. Self-reliance and responsibility is becoming a lost art form… instigated and and propelled by our very own government. It’s breathtaking.

    Dana (292dcf)

  9. Under the Streamlined Modification Initiative, many borrowers who are at least 90 days delinquent will be sent a Streamlined Modification Solicitation Offer that includes a Trial Period Plan specifying the dollar amount of the new mortgage payment based upon a fixed interest rate, extending the payment terms to 40 years, and providing principal forbearance for certain underwater borrowers.

    I guess after the hyperinflations hit their payments will be pretty negligible is the idea

    happyfeet (4bf7c2)

  10. carlitos:
    “Obama said” they could re-work their underwater mortgages.

    If I recall, “Obama said” that the police acted stupidly, too.

    Another Anon (f43943)

  11. I have to ask: why the push to get everyone to keep “their” home (really, the bank’s home)? Wouldn’t some people be better off renting?

    Banks lose money on foreclosures, but if they can convince the person to clean the place up, make it presentable, and do a normal sale, the bank would get most of its money back, the home buyer could walk away, and someone could get a house at a not-hyper-inflated price.

    Call me crazy, but if you haven’t put much money into a house, if you’ve only paid interest, and if you aren’t making payments, you’re really a tenant and not a homeowner, right?

    bridget (55e4a2)

  12. In my humble opinion, if you sign, initial on the side of 30 pages, sign and sign again that you are “buying” a home, then you have signed a contract with society. You own it.

    carlitos (49ef9f)

  13. The more they legislate, the less likely it becomes I pay my mortgage.

    Rodney King's Spirit (951136)

  14. I suppose they really wanted to give mortgage modifications (lower interest rates) to everybody, but that would cost too much money.

    And it’s not really guaranteed.

    FHFA said Fannie and Freddie would use existing “screening measures to prevent strategic defaulters.”

    What could that be? Income tax returns? social security taxes paid? Bank account levels? High credit score?

    It could be anything the requester would not have to personally provide, other than by giving permission for records to be made available.

    “Existing screening methods” means something they are doing now anyway. Till now this was evidently only a double check. Now it will be the only screening. They just won’t ask people to make up a budget etc. This probably makes a lot of sense.

    It also says that if more information is provided, the savings could be greater.

    And they still probably are not changing anything about the degree to which the house may be underwater, or any other requirements. They are just using a quick and dirty method of determining financial hardship: 90 days behind, and no obvious disqualifications.

    Sammy Finkelman (d22d64)

  15. In my humble opinion, if you sign, initial on the side of 30 pages, sign and sign again that you are “buying” a home, then you have signed a contract with society. You own it.

    This. And rather than the govt stepping in to save people from their own choices, and Obama’s failed economic policies, we will apparently do quite the opposite.

    JD (b63a52)

  16. Two other requirements:

    It must have a pre-modified mark-to-market loan-to-value ratio (the gross unpaid principal balance of the mortgage loan divided by the current value of the property), greater than or equal to 80%;

    What’s the MAXIMUM?

    This says if there is 20% equity or more, there’s no loan modification. I’m sure there’s a maximum too. 105% 120%. Something. So there are certain things not being mentioned here.

    It also must be a first-lien mortgage loan, and the borrower didn’t fail a previoous trial period in the last 12 months, or the mortgage was alreday modfified twice or more etc.

    The modification goes into effect if 3 modified payments are made. And once the borrower reaches applies, it can go back down from 90 days to 30 days behind.

    Sammy Finkelman (d22d64)

  17. This is aimed at people who can’t take advantage of lower interest rates. If they are in good financial shape, they can.

    Sammy Finkelman (d22d64)

  18. Sammy – do you get the problem with this?

    JD (b63a52)

  19. If I’m late on my payment, I’m automatically eligible to pay a late fee. Guess I’m signed up with the wrong mortgage company.

    Dave Surls (46b08c)

  20. ==I suppose they really wanted to give mortgage modifications (lower interest rates) to everybody, but that would cost too much money.==

    Oh Sammy. “costing too much money” is never a deal killer for something “they” really want to do, now is it?

    elissa (920973)

  21. 18. Comment by JD (b63a52) — 3/28/2013 @ 3:18 pm

    Sammy – do you get the problem with this?

    The only problem is that they might not be able to pay even the modified mortgage.

    This is all for houses underwater, or nearly underwater. The big problem that happened with real estate is that people paid too much.

    I suppose you could say a problem is that it is stopping prices from dropping further.

    Sammy Finkelman (d22d64)

  22. Comment by Sammy Finkelman (d22d64) — 3/28/2013 @ 3:15 pm

    Except when you’ve been making your current mortgage, but the ratio’s are wrong, and they won’t readjust to a lower rate, even though that would make your payment to debt ratio better.
    Trust Me!

    askeptic (b8ab92)

  23. If you are in good financial shape, you can pay off the loan with a loan from another bank or something.

    Sammy Finkelman (d22d64)

  24. Indeed, what could possibly go wrong?

    NYT: Mortgages’ Future Looks Too Much Like the Past

    Let’s begin with the status quo. The taxpayer rescue of Fannie and Freddie in September 2008 has cost $137 billion so far. While this has been paid down from an initial $187.5 billion, taxpayers aren’t likely to get their money back anytime soon. Last fall, the regulator charged with overseeing Fannie and Freddie estimated that the taxpayer bill for the companies could be $200 billion by the end of 2015.

    Still, Washington has shown little interest in winding down Fannie and Freddie. The ostensible reason is that there would be no mortgage market without them; private lenders are still unwilling to make home loans that they want to hold as investments, so Fannie and Freddie still have to buy or guarantee them.

    But doing nothing also serves other interests. Since 2011, any increase in the guarantee fees the companies receive when backing a mortgage goes to the Treasury, not to repay taxpayers. The companies, therefore, have become a government piggy bank.

    There is another group that would prefer Fannie and Freddie to remain as is: the former executives who still receive benefits from the companies and the taxpayers who own them.

    Had the companies not been rescued and instead filed for bankruptcy, the former executives’ pensions would be the obligation of the Pension Benefit Guaranty Corporation, financed by corporations whose plans it backs. Instead, taxpayers have been on the hook for five years.

    Among the retirees receiving pensions courtesy of the taxpayer are Franklin D. Raines, Fannie Mae’s former chief executive; J. Timothy Howard, the company’s former chief financial officer; and Leland C. Brendsel, former chief executive of Freddie Mac.

    All three men were ousted from their companies amid accounting scandals…

    … These details differ from the broken system that the commission aims to replace, but there are many similarities.

    For example, the plan requires the government to be sophisticated at pricing the risk in the mortgages it will back. If it isn’t, the premiums it receives will be insufficient to pay future loss claims.

    This sophistication is not a given. Neither Fannie nor Freddie has been adept at setting an appropriate price for their guarantees — that’s why they’re choking on more than $100 billion in losses. Why would a new public guarantor do the job any better?

    Steve57 (be3310)

  25. I detect no sympathy here for many of those who found themselves underwater following the Bush Great Depression. Many of these people were victims, some brought it on to themselves.

    Also please note well, from the link JD used:

    FHFA said Fannie and Freddie would use existing “screening measures to prevent strategic defaulters.

    To me, this program, which permits victims to take advantage of the very low current mortgage rates, makes a lot of sense.

    Obviously, none of you commenters were seriously negatively impacted by this great recession, an event which really did not have to happen, but for laxity by the government and greed by the lenders. These failures, then, constitute the creation of victims.

    Some of the victims, those who knew, or should have known that they were not really qualified for the huge mortgages they received, created their own victimhood.

    On the other hand, those who had been in stable jobs with appropriate mortgages, those people deserve help. No feelings exist so far here on this blog for them.

    Perry (23796f)

  26. How do you know someone is “in good financial shape”, Sammy? The literature is rife with examples of people in terrible, dire, financial shape still valiantly struggling to pay their mortgages because they believe it’s what they agreed to do– and it is the right thing. There are also plenty of examples of people with jobs and healthy bank accounts who just arbitrarily decide to walk away from their mortgage because they changed their mind about owning that house at the price they initially contracted for.

    elissa (920973)

  27. Perry, did all that victimology nonsense you are spouting come from freshman Victimology 101 or have you moved on to the graduate level Victim Studies course?

    elissa (920973)

  28. ==Obviously, none of you commenters were seriously negatively impacted by this great recession, an event which really did not have to happen,==

    You’re wrong. I’m quite sure more than a few of us who comment here have been negatively affected by the eternal Obama non-recovery/depression which was elongated by porkulous, Obamacare, and bad energy policy from the unelected prog bureaucrats.

    elissa (920973)

  29. Perhaps they will abandoned those annoying website popups that so many newspapers have that begin “The President Has Waived Refinance Requirements …” Of course, this is likely a major revenue source for said newspapers so perhaps they’ll keep running them with a few minor editorial changes like: “The President Says You Don’t Have to Repay Your Mortgage”. But this is perhaps too truthful and so won’t be appropriate for this administration. Whatever they decide to do, they’ve got an important constituency in the press and it is unlikely they’ll leave them in the lurch revenue-wise.

    I’ve always wondered where it says that Hte One can modify contracts, beginning with GM and Chrysler. But without some push back by the opposition, there’s no reason to limit your actions to what was formerly considered proper. The good old days, when everyone was guaranteed a chicken in every pot, certainly seem quaint. Mark Twain would have field day with this material.

    bobathome (c0c2b5)

  30. 25. On the other hand, those who had been in stable jobs with appropriate mortgages, those people deserve help. No feelings exist so far here on this blog for them.

    Comment by Perry (23796f) — 3/28/2013 @ 3:59 pm

    Then help one of them refinance and cosign for their loan. You’ve done well in the “Obama wreckovery;” you’ve talked about your stock gains.

    Put your money where your mouth is and not the taxpayer’s.

    Steve57 (be3310)

  31. To me, this program, which permits victims to take advantage of the very low current mortgage rates, makes a lot of sense.

    Victims? The Bush depression ended 4 years ago with recovery summer. Feel free to underwrite those loans yourself, if they are such a great investment.

    JD (b63a52)

  32. We could not make Perry up.

    JD (b63a52)

  33. I’m still over 5% because the bank says the new rules have tightened things up and just because I’ve never been behind 1 day in the last 15+ years (ever, actually) I don’t qualify.

    MD in Philly (3d3f72)

  34. Obviously, none of you commenters were seriously negatively impacted by this great recession…

    Perry, I did fine under Bush. Been unemployed going on six months under your man Obama. I’ve kept current on my mortgage payments, though.

    No feelings exist so far here on this blog for them.

    Right. None at all. And I expect none from you.

    beer 'n pretzels (6ef50f)

  35. Of course after N. Korea invades it won’t make any difference.

    MD in Philly (3d3f72)

  36. I repeat,
    The only Perry I pay attention to has a duck bill, a beaver tail, and webbed back feet with poisoned claws,
    that is, the cuddly one ;-)

    MD in Philly (3d3f72)

  37. Sometimes bad things happen to good people and sometimes good things happen for bad people. That’s life. The number of people like Perry that seem to go through life wanting and always expecting “someone” to fix their and everybody else’s little boo boos and mistakes of judgement boggles the mind. Do not get me started on the student loan fiasco and fraud– much of which is apparently now being forgiven for the poor little dears.

    elissa (920973)

  38. Elissa – that is graduate level victimology.

    JD (b63a52)

  39. Once again those of us that planned ahead and are responsible are essentially screwed, and will be paying the bill for this.

    I still remember sitting at a financial planning talk at work when some rep from Fidelity or other similar company came in, late 2000 early 2001. They talked about how no one in their right mind put down 20% on a house anymore. That, if you were smart, you’d get an 80/20 or 90/10 loan and if you had the money for a down-payment, you’d put that into the market or other investment. Then so many that did that “smart” thing took a bath when the bubble finally burst and I was sitting just fine as I took to heart what I’d been taught growing up and had done a 20% down with 30-year fixed mortgage.

    Now I see this kind of stuff and wonder why should I bother to continue to actually be responsible? If they’re going to just keep rewarding stupid, why not take advantage of it?

    Miguelito (13e5f8)

  40. The victim here is the honorable person living in a neighborhood with the slimeballs who break their promise to pay as agreed.

    Dustin (73fead)

  41. the Bush Great Depression

    that’s weapons grade st00pid right there…

    redc1c4 (403dff)

  42. Can we be sure Perry isn’t actually Debbie Wasserman-Schultz?

    Reuters: Little hope seen for millions priced out of health overhaul

    (Reuters) – Millions of Americans will be priced out of health insurance under President Barack Obama’s healthcare overhaul because of a glitch in the law that adversely affects people with modest incomes who cannot afford family coverage offered by their employers, a leading healthcare advocacy group said on Tuesday.

    …In its rule making, or final interpretation of the law, the IRS said affordability should be based strictly on individual coverage costs, however.

    That means that, even if family coverage through an employer-based plan far exceeds the 9.5 percent cutoff, workers would not be eligible for the tax credits to help buy insurance for children or non-working dependents.

    It’s not a glitch. It’s by design. I’ve already linked to articles detailing how Medicaid-style “spend down” provisions were deliberately written into the law. This was baked in the cake so Perry/DWS can then come back to the trough and call conservatives “heartless” if they don’t raise taxes to pay for defusing all the bombs that are designed to explode.

    “It’s an issue. It needs to be fixed,” Ron Pollack, executive director of Families USA, an influential healthcare advocacy group said on Tuesday, referring to what he called “the family glitch problem.”

    …”The tax credit subsidies are a game changer. They will help make health coverage affordable for huge numbers of uninsured families in Florida who would have been priced out of the health coverage and care they need,” Pollack said.

    He had no estimate for the number of people in Florida affected by the affordability question and IRS policy. But he said there was little hope for a legislative fix in Congress, where the House is controlled by Republicans still bent on repealing Obamacare.

    …Pollack was joined on the teleconference by Florida Representative Debbie Wasserman Schultz, a congressional champion of healthcare reform who also chairs the Democratic National Committee.

    …”I think one only has to look at the budget the Republicans crammed through the House last week, with the repeal of the Affordable Care Act attached to it, to know that the odds of adding coverage and improving coverage in Obamacare in this Tea Party-infused House of Representatives is very unlikely,” she said.

    “The way to improve this law and to address concerns that have come up with it is not to repeal it, not to throw it out, but to simply make modifications to it. It would be wonderful if we had Republican colleagues in our chamber, on the other side of the aisle, who were willing to sit down and do that.”

    Perry/Debbie, you’re a broken record.

    The Democrats break things, then their “fix” is to spend more money on an even bigger, worse “solution.”

    Steve57 (be3310)

  43. Some of the victims, those who knew, or should have known that they were not really qualified for the huge mortgages they received, created their own victimhood.

    Wow.. so even though who knowingly signed for a mortgage they couldn’t afford are still somehow victims in your book? Where’s the personal responsibility in any of this?

    On the other hand, those who had been in stable jobs with appropriate mortgages, those people deserve help.

    How many of those do you honestly think exist? I know plenty of people that had issues trying to refi and none of them were due to things completely out of their control. They were all either over-committed with investment properties or bought using incredibly dumb setups like a 90/10 with the 10 being an ARM that re-adjusted on them. Nearly all of these that I know admit that they made bad choices, in hindsight at least.

    The houses I’ve seen in my area go into foreclosure are almost all ones that clearly were HELOC’d to the max (huge remodels, brand new and very expensive cars in the driveway, etc before the bubble burst).

    Miguelito (13e5f8)

  44. Hello Sir

    I’m wondering if i can schedule an interview with you via email about Kimberlin and his associates. Im trying to write a article on the terrorist.

    Larry Lease (e2eacd)

  45. CBO: America Will Never See Full Employment Under Obama

    That would make Obama the only American president during the post-World War II era who never presided over a year in which the U.S. economy offered full employment to the American people.

    The CBO defines “full employment” to be when the national unemployment rate is at or below what it calls the “natural unemployment rate.”

    …In fact, baseline data CBO released last month indicate that the “natural unemployment rate” will be 5.5 percent through the rest of Obama’s presidency and that actual unemployment will never drop below 6.0 percent in any quarter between now and the end of 2016.

    …Thus, according to CBO’s projections, America will never see full employment under Obama even though the CBO has increased what it considers to be the natural unemployment rate during Obama’s tenure. From the first quarter of 1999 through the first quarter of 2008, CBO calculated that the natural unemployment rate was 5.0 percent. Thus, for the economy to achieve full employment during that nine-year span, actual unemployment had to fall to 5.0 percent or lower.

    Despite this higher standard, the economy did achieve full employment on a number of occasions from 1999 through 2008. This included, on average, the entire years of 2000, 2001, 2006 and 2007.

    And what’s the refrain from Perry Wasserman-Schultz? “Raise taxes, more (stimulus) spending!”

    Sebelius: Well, yeah actually, ObamaCare is causing insurance premiums to rise

    Under the Affordable Care Act, medical claim costs, the largest driver of health insurance premiums, are expected to increase by 32 percent for individuals, a new study by the Society of Actuaries finds.

    Though some states might see declines in cost-per-person medical claims, the report found “the overwhelming majority will see double-digit increases in their individual health insurance markets, where people purchase coverage directly from insurers,” the Associated Press reports.

    California’s claim costs are estimated to increase by 62 percent by 2017. In Ohio, it’s expected to be 80 percent. Florida costs are expected to grow 20 percent and in Maryland, 67 percent. The higher claim costs are related to the increase in sick people expected to join the pool, according to the report.

    … Some people purchasing new insurance policies for themselves this fall could see premiums rise because of requirements in the health-care law, Health and Human Services Secretary Kathleen Sebelius told reporters Tuesday.

    Ms. Sebelius’s remarks come weeks before insurers are expected to begin releasing rates for plans that start on Jan. 1, 2014, when key provisions of the health law kick in. Premiums have been a sensitive subject for the Obama administration, which is counting on elements in the health law designed to increase competition among insurers to keep rates in check. The administration has pointed to subsidies that will be available for many lower-income Americans to help them with the cost of coverage.

    The secretary’s remarks are among the first direct statements from federal officials that people who have skimpy health plans right now could face higher premiums for plans that are more generous. …

    “These folks will be moving into a really fully insured product for the first time, and so there may be a higher cost associated with getting into that market,” she said. “But we feel pretty strongly that with subsidies available to a lot of that population that they are really going to see much better benefit for the money that they’re spending.”

    By “skimpy” they mean people who formerly only paid for coverage tailored to their needs. “Really fully insured product” is Obama-speak for being forced into a one-size-fits-all-system where everyone must buy coverage for things they’ll never need and subsidizing other people’s health care. And “better benefit for the money” means they’ll conduct polling (like the EPA did when it decided to regulate green house gases and drive electricity producers bankrupt) and ask them questions like “what would living three years longer be worth to you?” Then add up all these never-to-be-seen benefits and say the total outweighs the very real costs of their regulations.

    But when these regulations don’t produce the benefits we all know the Perry/Wasserman-Schultz refrain: “Raise taxes, more spending!”

    Note again for the record that Sebelius refers to those non-existent subsidies, by the way. A subject we’ve already addressed.

    Steve57 (be3310)

  46. ” Wouldn’t some people be better off renting? ”

    I think anyone buying a house now is making a very big bet with not very good odds.

    Mike K (dc6ffe)

  47. Comment by Mike K (dc6ffe) — 3/28/2013 @ 5:44 pm

    In spite of the low interest rates and the still relatively depressed housing values?
    I thought it was more of a buyers market than a sellers market.

    MD in Philly (3d3f72)

  48. MD – for the most part, depending on where you are, I would agree with you. However, in commercial real estate, it doesn’t seem to have bottomed out yet. And in residential sales, with the banks just sitting on a surplus of foreclosed homes, many question if they reached a false bottom.

    JD (b63a52)

  49. Bingo, everyone will now be 90 days behind.

    What a pack of morons.

    I won’t be, of course. But I fear that makes me a moron, too.

    Kevin M (bf8ad7)

  50. I think that they need cover the cost of this by taxing people who’ve paid off their mortgages. Call the lack of a mortgage payment “income” and tax it.

    This way we can really screw over responsible people, which seems the hallmark of this administration.

    Kevin M (bf8ad7)

  51. in residential sales, with the banks just sitting on a surplus of foreclosed homes, many question if they reached a false bottom.

    Yes, but not ever neighborhood has that glut of forclosures; the concentrations are in less desirable areas, and some neighborhoods might never come back (e.g. Detroit).

    Kevin M (bf8ad7)

  52. Comment by JD (b63a52) — 3/28/2013 @ 6:06 pm
    Comment by Kevin M (bf8ad7) — 3/28/2013 @ 7:54 pm

    Thanks for the comments and edumacation.

    Commercial I know nothing about. We’re fortunate that Philly RE never inflated like some areas, and we bought early enough before things really inflated as well, so we’ve never been in the dire circumstance of owing more than it was worth, though I’m sure how we do when we sell the place in inflation adjusted dollars will not be very impressive.

    MD in Philly (3d3f72)

  53. 37. Evidently banks have just written down $8 Billion in defaulted student loans. Fortunately for them the Fed and Sallie Mae is taking over the industry.

    Despite the fact one can essentially delay default forever, $300 Billion in loans are past due, 90 days or more in arrears.

    Then there’s the crew of smart kids who promise to be doctors in ghettos or community organizers, contracting to have their bondage terminated and simply walk.

    Yeah, no worries, people are buying our debt for nothing.

    Brazil and China just agreed to do away with dollar valuations in their mutual trade. Reserve currency slip slidin’ away.

    gary gulrud (dd7d4e)

  54. 53. Over at Ace’s the number put on outright defaults, e.g., community organizers that don’t care to make a few calls, is $85 Billion.

    Basically a year of squeester frugality.

    If you’re a Dept. Chairperson of say Ethnic Studies or Geography, with a couple dozen majors,
    you’re generating a per capita debt adding to the total every year.

    gary gulrud (dd7d4e)

  55. Investment with no prospect of tangible return.

    http://www.whitehousedossier.com/2013/03/29/biden-vacation-year/

    gary gulrud (dd7d4e)

  56. Mike K wrote:

    I think anyone buying a house now is making a very big bet with not very good odds.

    I’d say that’s exactly wrong, unless you are looking at buying a home for the short-term and selling quickly.

    Housing prices are low in most places, and unlikely to go much lower; your exposure to value loss is minimal. Interest rates are as low as you’ll ever see again. If you are looking to buy a house for the long term, this is exactly the time to buy.

    The biggest problem in the housing market right now is the lack of entry-level home buyers: lenders are requiring more creditworthiness (something the Obumble Administration is trying to change), and the lack of entry-level home buyers creates problems for people who are already in entry-level homes who want to upgrade: they are afraid to buy a bigger home because they are afraid that they’ll not be able to sell their current home quickly. Right now, if you have a starter home, and you want to upgrade, my advice is to sell first, plan on renting for a year, and start looking for your new home after you’ve sold your old one.

    And even though I make my money through new construction, I’d say that the value is in existing homes; new construction is roughly 30% higher.

    The Dana who supplies concrete to homebuilders (3e4784)

  57. Existing homes may be better value, and you are clearly closer to the situation than I due to your profession, Dana. But do not many first time buyers choose a new, unpreviously owned/mortgaged home in order to avoid the well publicized problems with bad bank records and extreme former owner foreclosure mess-ups and liabilities?

    elissa (572ec5)

  58. Right. I could afford the monthly payment on a condo in some parts of the city I would be happy to live in … but I can’t get together the down payment.

    aphrael (24797a)

  59. Hurray! Finally, a way I can buy an expensive California home!

    FHA loan based on inflated income, strategic default, modification!

    Patricia (be0117)

  60. Its tough, even in the fact of Podhoretz’ admonition, to conclude that anyone in the Obama administration is “serious”.

    SPQR (768505)

  61. elissa asked:

    But do not many first time buyers choose a new, unpreviously owned/mortgaged home in order to avoid the well publicized problems with bad bank records and extreme former owner foreclosure mess-ups and liabilities?

    Perhaps they should, but I don’t think that many of them do: first time home buyers are inexperienced in buying, and usually have a lot of other concerns on their minds. Mortgages have to go through a title search anyway, so that should alert everyone to the problems. Foreclosure homes may have more messed up records.

    Right now, the higher end home builders, the Toll Brothers and the like McMansion builders are doing a lot better, but they’ve done it by overlooking some of the same things that got ignored during the last housing bubble.

    The construction Dana (3e4784)

  62. Aphrael: Depending on your credit history, you might be able to get a mortgage without too big a down payment. In order to move properties, some of the same things that happened ten years ago are happening again.

    That’s bad for people who might buy more house than they can afford, but if your income and job seem pretty stable, this is the time to buy.

    However, I would never, ever, ever buy a condominium! Housing association fees, etc, keep going up, which makes your housing costs subject to their own form of inflation. Nor do I believe that condos will appreciate in value the way single-family homes will. Get thee to the suburbs!

    The mortgage banker Dana (3e4784)

  63. elissa, ignore the news, buying a foreclosed home is not going to present any issue regarding title. That’s what title insurance is for.

    SPQR (768505)

  64. Yeah, no worries, people are buying our debt for nothing.

    Comment by gary gulrud (dd7d4e) — 3/29/2013 @ 4:17 am

    That’s true if by “people” you mean Ben “printing press” Bernanke.

    He’s buying almost all of it and, considering how he’s devaluing the currency, for nothing.

    Steve57 (be3310)

  65. Aphrael: Go ahead and buy, because my lunchtime fortune cookie I hereby give to you: The road to success is often a lonely one.

    Maybe I should have given that one to Kman instead? :)

    The Dana who loves Chinese food (3e4784)

  66. —JD

    Brought to you by the community-organizer-in-chief who sued banks to force them to make loans to people that could not afford them.

    Obama didn’t do it (although he was a “community organizer” for a while. but this concerned didfferent things. You could say maybe he was allied with such people, maybe even a lawyer for some people like it.

    But not only he didn’t do that, nobody did that.

    What the pressure was on banks was to stop redlining. Now that used to go on because neighboirhoods got worse – higher crime rates, and property values would or could decline with time. This was denied, of course. It was doubnly denied that this was associated with race. (not instrinsically, but in mid to late Twentieth Century Amnerica it was)

    That all became irrelevant by the mid or late 1990s because the crime rate was declining – nationwide – because of the AIDS virus. (I disagree with the Freakonomics people – it wasn’t abortion. HIV caused drug addicts to gte sick and die, thus reducing the crime rate and enabled law enforcement to catch up. Even after new infections with HIV started declining, enough progress had been made so that crime did not continue to rise. Especially in places that tried to push the rate down. The principla cause of crime is what friends or acquaintances somebody has and what they teach people and what they tell people. It’s different among different groups and subgroups because of differential association.

    So loans were being made anyway, everywhere.

    Sammy Finkelman (d22d64)

  67. The statement that people bought houses they could not afford is a lie by the real estate industry. No, that was not the problem. the problem was THEY PAID TOO MUCH.

    There was some fraud too, but it hadn’t reached such proportions, so that it accounted for the principal part of the problem.

    Another factor was the way the real estate industry evaluated whether somebody coould afford a loan. They evaluated whether someone could pay the first year’s payments. Which is fine, which is in fact all you can really do, except that people got loans at teaser rates. Adjustable rate mortgages.

    Now the theory was, they could always refinance, ioor at worst, sell. But interest rates went up, and sometimes people didn’t qualify for the refinancing.

    For a while house sales simple froze. But then we got too many foreclosures. Houses were sold at a loss – which was something people thought could not happen for technical reasons. Yes it couldn’t happen – except if there was a foreclosure. Prices dropped.

    Now as far as housing credit – now the truth is, a 45 years old man is not going to stay employed for 30 years. So how is he granted a 30-year mortgage?

    Well, the answer is, it is no problem. The house can be sold. And the record is that only 3 things matter:

    1) Credit score

    2) Income

    These two matter mostly for the first year,

    The third and most important thing (assuming someone is not a dishonest deadbeat etc, which the credit score usually takes care of) is:

    3) The value of the house compared to the amount owed on it.

    If there is substantial equity in the house, all is right (for the bank, not so much maybe the homeowner)

    If the house is underwater, there will be a considerable amount of defaults, even among people with the best creedit scores.

    So the whole problem is apprasals, and not recognizing that housing prices can drop and that there was a bubble. House prices proppped up byu creative financing, and exploitation of loopholes in the standard formulas for credit.

    Some also of course were put into higher interest loans than they had to be, and the creative financing involved not asking questions. But the truth is, no questions were neede3d. Only one question was needed. What is the house worth? And the entire real estate industry got this wrong.

    Sammy Finkelman (d22d64)

  68. But not only he didn’t do that, nobody did that.

    Go study your Obama history. Boycotting and threatening suits were part and parcel of their arsenal of community organizer tactics.

    JD (3cbfc7)

  69. The statement that people bought houses they could not afford is a lie by the real estate industry. No, that was not the problem. the problem was THEY PAID TOO MUCH.

    WTF Sammy?

    JD (3cbfc7)

  70. 18 Comment by JD (b63a52) — 3/28/2013 @ 3:18 pm

    Sammy – do you get the problem with this?

    Refinancing is a problem for the bank, unless the borrower would otherwise default. It reduces income for the bank. If payments would be made anyway, the bank has no reason to refinance, unless maybe the loan would be paid off otherwise.

    Sammy Finkelman (d22d64)

  71. Ok, so you don’t get the problem with this.

    JD (3cbfc7)

  72. 64. Indeed, but with a nitpick. Ben is buying like 80-90% of debt maturing in periods greater than 7 years.

    But 70% of the debt matures in 7 years or less.

    Details subject to change.

    gary gulrud (dd7d4e)

  73. 69. I see you are missing the subtle, nuancy distinction sammy is drawing for us here, JD.

    elissa (572ec5)

  74. 63. We got a foreclosure handled by BofA, I think beginning of 2010. We’re still underwater but prices have picked up a scosh.

    Refinanced in the last year, not quite as low as JD but about what my student loans were priced at in the early ’70s.

    3 million homes in foreclosure overhang today’s market. You could hope for lower prices and lower rates but when the RESET hits ownership will count for everything.

    If you can put 20% down, what are you waiting for, SMOD?

    gary gulrud (dd7d4e)

  75. His sooper sekrit decoder always seems to find a cause other than the actual cause.

    JD (3cbfc7)

  76. My small town branch of a western bank made good money on us twice. They turned around and sold the loan to Freddie Mac in weeks both times, but goodwill is something we’re collecting expecting a return.

    gary gulrud (dd7d4e)

  77. Dana – I live in NYC and will do so for at least three years. Standalone properties are either nonexistent or outside my price range. Condominiums (which could be, for example, just a single half floor of a six story building) are about the only way to go, here.

    aphrael (24797a)

  78. Moving to the suburbs would mean an unreasonable commute, not just for work/school but also for social occasions. My friends are in the city; if we’re going to be able to tolerate living here, that means we need to be in the city … and we’d both much rather be in the city than in the suburbs anyhow. :)

    aphrael (24797a)

  79. SF: Te statement that people bought houses they could not afford is a lie by the real estate industry. No, that was not the problem. the problem was THEY PAID TOO MUCH.

    Comment by JD (3cbfc7) — 3/29/2013 @ 12:44 pm

    69.

    69. WTF Sammy?

    Sayinbg that people bought houses they could not afford implies that there was a proper “price” that a house had. The price of the house was right, but the people who bought it were the wrong people.

    Saying THEY PAID TOO MUCH means that the price of the house was wrong, and we would have had a problem no matter who bought it.

    There came a time and place when houses were selling for too high a price – for years.

    There should have been more price resistance.

    You could say mortgage lenders facilated people paying too much for houses.

    The fundamenbtal problem is that housing prioces were inflated, not that the wrong people bought the houses.

    Sammy Finkelman (d22d64)

  80. Surreal

    JD (b63a52)

  81. “The fundamenbtal problem is that housing prioces were inflated, not that the wrong people bought the houses.”

    Sammy – Or that people borrowed more money than they could reasonably afford, meaning they paid too much because of the easy availability of money.

    daleyrocks (bf33e9)

  82. Sammy – As Fannie and Freddie lowered down payment requirements and moved into subprime loans, either directly or indirectly, which caused that market to explode, that’s what caused defaults to begin accelerating.

    You can look it up!

    daleyrocks (bf33e9)

  83. 79. Sayinbg that people bought houses they could not afford implies that there was a proper “price” that a house had. The price of the house was right, but the people who bought it were the wrong people.

    Saying THEY PAID TOO MUCH means that the price of the house was wrong, and we would have had a problem no matter who bought it.

    …The fundamenbtal problem is that housing prioces were inflated, not that the wrong people bought the houses.

    Comment by Sammy Finkelman (d22d64) — 3/29/2013 @ 1:38 pm

    Luv ya, man, but it’s always possible for the wrong people to buy the wrong house at the wrong price.

    If you can only afford the house if you can exaggerate your income to get a 0% down interest only ARM banking on the hope that the bubble will keep growing and not burst, you’re the wrong people for that house at that price.

    It doesn’t mean that it “no matter who bought it.” It would be a problem for them, but not someone who’d be able to take the hit if the gamble didn’t pay off.

    Which it didn’t, I’m sorry to say, for the people I told were crazy if they were buying in that market. But they had dollar signs in their eyes and thought a big pay day was guaranteed. That in a couple of years they’d have enough equity to refi, then really score when they moved.

    Sammy, they bought a house they couldn’t afford because they couldn’t afford to take the hit.

    Steve57 (be3310)

  84. “The fundamenbtal problem is that housing prioces were inflated, not that the wrong people bought the houses.”

    Sorry, I’ve lost track of who said what, but let me throw in a few things here:

    Many people, no matter the price, have no business buying a house. Unless you are able to handle the out-of-pocket costs for a variety of house-related disasters (e.g. roof repairs, a new furnace, a kid’s baseball that went through the window, a tree that falls through the house), then you have no business buying a house.

    One of the virtues of renting is that you pay the exact same amount of money every month, no matter what happens to the place. Essentially, the landlord takes on the risk of rare, but not extraordinary, high costs; you pay the same exact amount of money every single month.

    So yes, the “wrong” people bought houses – those who couldn’t afford to fix a furnace and pay a mortgage, no matter what the mortgage is.

    Anyone who is not going to be settled in one area for many, many years is also a lousy candidate for homeownership: their ability to make good on the mortgage depends on them being able to sell the thing when their job moves them six states away. For them, being underwater by a hundred thousand dollars may be the most costly mistake they will make in their lives.

    But yes, people also paid the wrong price for homes: we don’t have another baby boom, nor a huge set of people who are ready to buy homes. For many people, the ‘investment’ in their homes will never, ever materialise, as there will not be buyers willing to pay them what they want for their home.

    Now, my motto is “everything I know about economics, I learned in engineering school,” so someone can tell me where I went wrong in this.

    bridget (55e4a2)

  85. SLO Leaks

    I actually started this blog in February 2011. I wish I had started back in August 2009 when Judi and I first decided to build a new house. But since August 2009 I kept every email, every letter, every report, and every drawing so I have been able to recreate all that happened. I also used the California Public Records Act to try to get all its relevant emails from the San Luis Obispo County Planning Department. From here on I will post things as they happen – because after over two years of effort I am still far, far away from securing my permit.

    To someone who doesn’t live in San Luis Obispo County (SLO) all of this must seem crazy. After all, how much more difficult could it be to get a building permit in SLO than the rest of the state, or the country? The answer is, sadly, a lot more difficult.

    …Archive for January, 2013

    The summary of events leading up to my Coastal Commission hearing

    January 1st, 2013

    I have spent a long time detailing in my blog all the ins and outs of my attempt to get a permit to build my house at Avila Beach. Here is a quick summary of the most important events:

    …This is the chronological list of all most important events during the years leading up to a California Coastal Commission hearing on the appeal of my minor use permit to build my single family house in Avila Beach, CA. This represents over three years of effort and hundreds of thousands of dollars in costs.

    « December 2012 | Home | February 2013 »

    Archive for January, 2013

    The summary of events leading up to my Coastal Commission hearing

    January 1st, 2013

    I have spent a long time detailing in my blog all the ins and outs of my attempt to get a permit to build my house at Avila Beach. Here is a quick summary of the most important events:

    Summary of Events

    The Coastal Commission Votes 7-3 to Deny My Minor Use Permit

    January 10th, 2013

    January 10th, 2013 was my hearing in front of the full Coastal Commission, three years after my wife and I originally applied for a minor use permit to build a house at Cave Landing. The hearing was in the Veterans Hall in Pismo Beach, about 2 miles from our current house in Avila Valley, and a little further from the proposed house at Cave Landing.

    It was an interesting, if not particularly fun experience. Judi and I sat in the audience, along with Dave Watson, Bonnie Neely, Greg Sanders, John Flynn, Rick Gorman, Lenny Grant, Robert Malone, Jeff Emrick, and Todd Smith.

    Leading up to the start of the hearing we were doing some fast horse trading with Dan Carl of the Coastal staff. The horse trading was over public access to my property – which hadn’t been an issue with the Coastal staff at all until two weeks ago. One edge of my property is on Cave Landing Road, and that is fenced with a locked gate and marked “No Trespassing”. Bob Howard originally put up the fence (he thinks) about 35 years ago. Recently people have been jumping over the fence on the lot next to mine, crossing to my lot, and then hiking up the very steep cell phone company easement road to the top of Ontario Ridge (which I also own).

    There are five problems with unfettered public access to all of my property at Cave Landing Ranch:

    1. Privacy. I do not want people hiking up and down on my driveway, or anywhere else at all they might want to go on my property, without me being able to restrict them at all. Nobody would want that at their house. I own 37 acres – surely the Coastal Commission would let me keep some of it private?

    2. Fencing. I need to be able to fence at least part of my yard. My wife has two dogs, and they will run away without a fence, and then my wife will be inconsolable. This is not good.

    3. Dangerous Trail. Once past my 500 ft. long driveway, the cell phone easement road (that the Commission wants as a public trail) turns into a steep climb for about 800 ft. that is very dangerous. I don’t want people to be hurt on this steep hillside, especially when there are good alternate routes nearby.

    4. Liability. I am legally liable for anyone who gets injured on my property. Because of the steep trail this is a very real possibility.

    5. Potential new visual impacts. This is actually the biggest problem. Right now the Coastal Commission claims that I need to hide my house from anyone on public trails, public roads, or the proposed (but nonexistent) public parking lot. I am afraid that this will be expanded to include my own driveway, since the Coastal Commission wants that as a public trail. It is impossible to hide a house from it’s own driveway.

    We ended up making a deal with Dan Carl we could live with and support right before the actual hearing started. I am told that is is very normal to do. So going into the hearing both sides were satisfied with the additional ”Special Conditions” to my permit that the Coastal staff was recommending that the Coastal Commission approve. And then the actual hearing started a few minutes later …

    First we did the Vested Rights issue with my access to CSA 12 for water. The Commission hated our argument, and we lost completely. However, I think my legal argument is actually really good, and I will probably pursue it in court. Here is my post about this Vested Rights argument. Losing this meant that I had to use my water well instead of CSA 12 for my house. OK – I can live with that, but it isn’t ideal.

    Next the Commission took up the appeal of my minor use permit. The Coastal staff gave a pretty reasonable presentation of the overall issues, and then Dave Watson gave a short presentation about how I wanted to use 8600 sq. ft. for the building pad, and the Coastal staff wanted us to use 5500 sq. ft. instead. If I could use the 8600 sq. ft. then I could build the house pretty much as it was designed and permitted by SLO County. The smaller 5500 sq. ft. pad meant that I would have to extensively redesign (which is a big problem).

    It was about 12:30 pm by then, so the Commissioners broke for about 40 minutes for lunch.

    After lunch then there was a public comment period. 15 people spoke, each for 2 minutes or less, some supporting me, some talking about the public trail issue, and some comments made about Indian rights, and the spiritual essence of the native land, and then some people were just confused about what we were talking about. Dave gave a very short rebuttal (less than 2 minutes) and then it was the Commissioners turn.

    The Commissioners spent a lot of time on the public trails issue, and they had a hard time understanding my position. That is partially my fault, and I didn’t make my argument clearly, but it is also the fault of the Coastal staff, since this issue had only been raised by the staff two weeks ago.

    The Commissioners seemed to be angry that I had even brought up the earlier vested rights argument, and they spent some time complaining about that.

    Commissioner Steve Blank had read my blog http://www.sloleaks.com, and he didn’t like that I had criticized the Coastal Commission and the staff publicly. He read portions of my blog into the record, and he spent some time lecturing me about my intellectual and ethical inferiority. He may be right, but I personally disagree.

    Commissioner Esther Sanchez asked the staff if there was a way to force me to give my property up for a public trail. The Coastal staff explained that I was willing to give my part of my property for a public trail, but that I was unwilling to give my my driveway, and that there was no legal way for the Commission to force me to give up my property if I didn’t do it voluntarily. Ms. Sanchez then lectured me on my lack of public spirit. I honestly think that she didn’t understand the situation in full, and had I had a chance to explain she would realized that what I am doing is entirely reasonable. Unfortunately the way the Coastal process works I could not respond to her.

    Commissioner Wendy Mitchell also criticised my understanding of the Coastal Commission process, saying that the Commissioners represent all the people of California, and thus my narrow legal property rights had to be balanced against her more complete understanding of the interests of the public. Ironically, while she was lecturing me about my understanding, she was making the point about the Dunning-Kruger effect. I think after a short, calm, quiet conversation between Wendy and me could have been able to understand each other’s point of view, and her issues would have been resolved.

    My lawyers were sitting right behind me, and I could hear them gasp during the Commissioners various lectures of me. Afterwords they couldn’t believe how composed and unaffected I was by the unjudicial conduct of the Commission. Personally, I couldn’t care less if the Commissioners want to call me names. I just want to build my house and live there quietly. If I have to be called names in public to get a permit then so be it.

    I said nothing during the entire 2 1/2 hour hearing.

    The Commissioners voted 7-3 to deny the permit (mostly citing the size of the house), and we left the hearing. We went to a local bar and had a few drinks, even though it was only 3:00 pm, and I don’t normally drink alcohol. It had been a very hard day.

    I am now waiting for the formal Coastal staff “Findings”, which could take quite a long time for them to produce. Until then I don’t know the actual legal reason that my permit was denied, although I am sure it will have something to do with visual impact and the size of the building pad.

    I thought that the Coastal staff did a very professional and a pretty fair job, all things considered. Dan Carl was trying a fashion a deal that would work for both sides and was reasonable. I spoke to Daniel Robinson for the first time ever, and he seemed like a very nice young man that had been put into a difficult situation. I wish both of them well. The Coastal legal staff was particularily smart and professional, and I would love to talk to them off the record someday when this is all over.

    Of course I am discouraged, but I have so much financially at stake that I must continue on trying to get a permit. Because of the Coastal process I now have to start back at step one and re-apply to the SLO Planning Dept for a minor use permit. The first time though it took three years, so who knows how long it will take, and if I can ever even get a permit. If I can’t eventually get a permit then I will have lost about $3 million (and counting).

    After me was the hearing for Vaughn and Mary Ann Koligian, who have been trying to get a permit to build a house on their lot in Pismo Beach for the last 8 years. And no, that is not a typo. Eight years just trying to get a permit!

    Had this guy just bought a house for $1.5M in La Jolla which when the bubble burst was only worth $500k it wouldn’t have been a problem. He’d probably have come out ahead as opposed to trying to build in SLO and spending hundreds of thousands of dollars unsuccessfully trying to just get permission from various fascist government agencies to even begin prepping the ground to lay his foundation.

    Saying THEY PAID TOO MUCH means that the price of the house was wrong, and we would have had a problem no matter who bought it.

    No, not no matter who bought it.

    By the way I recommend you read his blog just to find out why Kali is circling the bowl.

    Steve57 (be3310)

  86. I’ve been to Avila Beach (and Pismo, too). It’s a great coastal area to visit. I can definitely see why he wants to live there and is willing to fight for his right to do so.

    Sea lions like it, too. Beautiful sunsets. Excellent restaurants.

    Thanks for posting that, Steve57.

    elissa (572ec5)

  87. Steve57 – Thank you for the Wall o text.

    daleyrocks (bf33e9)

  88. there’s a LOT of fascist caltarded people here in government but the Coastal Commission is really something special

    happyfeet (8ce051)

  89. elissa, the central coast of Kali is gorgeous.

    The only problem is it’s full of Californians who think they’re what makes the place special and, well, you just don’t meet their standards. So go away.

    The Coastal Commissioner Steve Blank mentioned above?

    Coastal Commissioner Steve Blank’s house also got appealed to the Coastal Commission

    Unlike me, Steve’s appeal to the Coastal Commission went pretty smoothly. He had his hearing in only 8 months – start to finish. It has taken me a year and a half, after waiting a year and a half for SLO County to issue the permit in the first place. And there were no onerous “Special Conditions” imposed on Steve by either San Mateo County or the Coastal Commission.

    …Superficially Steve’s house and my house are similar. I have a main house and a barn on 37 acres, Steve has a main house, two barns, and a farm labor house. But Steve’s house is 15,780 sq. ft., with a swimming pool, and a 2,500 sq. ft. barn, and another 3,040 sq. ft. barn 31 ft. high, and a 1240 sq. ft. farm labor house all on 261 acres. So Steve’s house is around 3 times larger than my proposed house (and much taller). Steve also got to have a fence and there was no requirement for public access. And Steve was able to build his house to look anyway he wanted. No “rural agricultural theme” architecture for Steve, that’s for sure. Steve can also plant in his yard pretty much any damn thing he wants.

    …According to the Coastal Commission staff, my house and my barn must fit within a 5,000 sq. ft. oval ring that is roughly the size of Steve’s pool and and surrounding deck, as you can see here.

    I don’t know anybody on the Coastal Commission or the staff. I have no political “pull” at all. There is not a chance in hell that I would ever be appointed to be on the Coastal Commission – and the Coastal Commission staff knows all this. I am just a local guy trying to build a pretty house with an ocean view.

    But there is a slim chance that Steve Blank will recognize that my retirement dream is very similar to his retirement dream, only on a much smaller scale. And maybe, just maybe, he would see that these “Special Conditions” imposed on me are deeply unfair. I can hope.

    Otherwise I believe I will have to spend the next few years waiting for a court date instead of building my dream house in the place I grew up.

    As we can see from the results of the January hearing, there wasn’t even that slim chance.

    San Mateo ain’t the central coast of Kali, but he’s the type I’m talking about. And the thing is there’s lots of nice people there. But it only takes a couple of Steve Blanks to ruin your day.

    Steve57 (be3310)

  90. Stop complaining.
    That couple owns too many acres on the coastline. What the world needs is more fairness. And shame on us of we don’t bring more fairness to the world. Or whatever.

    Signed,

    Barry Obama

    P.S.
    My wife and daughters are loving their vacation in the Bahamas Sun Valley, Idaho !

    Elephant Stone (a5acfc)

  91. 87. Steve57 – Thank you for the Wall o text.

    Comment by daleyrocks (bf33e9) — 3/29/2013 @ 2:52 pm

    You’re welcome. What little I can, I do.

    Steve57 (be3310)

  92. Aphrael wrote:

    Dana – I live in NYC and will do so for at least three years. Standalone properties are either nonexistent or outside my price range. Condominiums (which could be, for example, just a single half floor of a six story building) are about the only way to go, here.

    Sorry: last time I knew – assuming that Old Timers Disease hasn’t set it – you were living in Jersey.

    The Dana who might have forgotten (af9ec3)

  93. Mr Finkelman wrote:

    The fundamenbtal problem is that housing prioces were inflated, not that the wrong people bought the houses.

    This is hardly the first time this has happened; we had the same thing happen in the late 1980s, and a bunch of people found themselves underwater. There were plenty of stories about people just walking away from such properties back then, but those that didn’t, and didn’t panic sell, pretty much recovered their value by the early 1990s.

    We bought our current house in 2002. It’s possible that the crash had our house worth less than we paid for it, but, having put 20% down, I doubt we were ever “underwater.” Since we weren’t planing on selling, I never bothered to check.

    The Realtor® Dana (af9ec3)

  94. By the way, if you ever think about using zillow.com as a resource to figure out how much your home is worth, don’t. Zillow has our house as being worth 30% more than the identical other half of the duplex, and worth 30% more than I would ever think the local market would bear.

    The Realtor® Dana (af9ec3)

  95. Bridget wrote:

    Now, my motto is “everything I know about economics, I learned in engineering school,” so someone can tell me where I went wrong in this.

    Engineering school is a good place to learn about economics, probably better than an actual economics major. Paul Krugman has his PhD, is a professor of economics, won a Nobel Prize in the discipline, and still doesn’t understand economics in the slightest. Oh, he can put together all kinds of fancy charts and graphs — or, at least, get his TAs to do it for him — and produce a tremendous statistical analysis, but he still doesn’t understand the subject in the slightest.

    The highly edumacated Dana (af9ec3)

  96. plus he is an arrogant repulsive midget

    elissa (572ec5)

  97. 96.elissa – Don’t you mean vertically challenged?

    mg (31009b)

  98. 95. Engineering school is a good place to learn about economics, probably better than an actual economics major. Paul Krugman has his PhD, is a professor of economics, won a Nobel Prize in the discipline, and still doesn’t understand economics in the slightest.

    Comment by The highly edumacated Dana (af9ec3) — 3/29/2013 @ 5:30 pm

    +1. You’ll learn more about economics than Krugman ever will when you’ve got to build something on a budget.

    How much titanium, exactly, will we need for this batch of fighters?

    Steve57 (be3310)

  99. Now elissa and mg, that isn’t nice. After all, he’s still taller than Robert Reich. :)

    The 6' 2" Dana (af9ec3)

  100. Dana – ah, no, I haven’t lived in Jersey since I was 6. I have an office in Jersey I commute to sometimes (mostly I work from home).

    We thought about this, but honestly the commute for my husband to get to school (he’s a phD student at Columbia) would be painful, and if we’re going to be out here, we’d both rather be in the city.

    aphrael (b57693)

  101. Yes, I am so far behind on the news front. But this helps explain the sudden increase in share price for freddie mac. Now, more and more money will be shoveled into fmcc – happy days are here again!/sarc

    felipe (3243af)

  102. Damn, I wish that I had known about this 90 days ago. I could have saved a ton of money.

    Max Entropy (90d1b8)


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