Housing Bubble, credit bubble, public planning, land use, zoning and transportation in the exurban environment. Specific criticism of smart growth, neotradtional, forms based, new urbanism and other top down planner schemes to increase urban extent and density. Ventura County, California specific examples.
Friday, August 31, 2007
Section 8,000,000,000
Bush: FBs, I hear ya.
Dawg: The moral hazard unintended consequences are gonna be huge.
One of the key elements of Bush's plan would allow homeowners with a good credit history, but who cannot afford their mortgage payments, to refinance into mortgages insured by the Federal Housing Administration to keep from defaulting.
That a couple of very indeterminate indeterminates, to paraphrase someone.
W asked that he get a bill already put forward passed. Nothing new.
Most likely a smoke screen so Karl Rove can slip out of dodge quietly (or at least try, I see the staffers wrapped his car in saran wrap in the WH parking lot).
Of more importance is what about temporary removing tax implications of mortgage debt forgiveness by the IRS. I will be pissed if Snowflake gets to walk away after all the the grief he caused for so many.
Man, what's the point of having good credit to get lower rates if when you make a dumbass move they lwoer the rates for ya?
Can they extend this to credit cards, car loans, and what the hell, student loans? I can't afford my student loans at 4.5% (gotta keep buying bling ya know) so can they lower it to like .1 % for me?
I saw an advertisment for a house for sale, the first three months mortgage is pre-paid. I can afford those first three months payments its the following payments that I cannot afford. Hey Bush can you dumb asses at the Government give me a loan similar to the first three months mortgage?
I bet you assholes can and will. This is so wrong, can we say Corprate Wellfair. So now all those bonds that should explode are going to have a lot of the bad debt transfered to the tax payers. The Bonds might actually be worth having if you can dump enough of this toxic stuff on the US Tax payers.
Losing $3000/mo on a median home. Just exactly what kind of bailout will it take to get people to stick with house they bought last year? Cramer is right, every single buyer in Phoenix who bought last year with 20% or less down is smart to mail in the keys now that there will be no tax consequence.
Nah. What Bush really said is "no bailout". The FHA proposal is to refi only those nudnicks who were too stupid to get the home loan they really qualified for with normal underwriting.
It's a way to force back the political cry for a bailout. This proposal would help only those who would normally get a workout if they had gotten a GSE loan in the first place. That is dependent on ability to pay the loan.
You all know how few of the FTHB in areas like CA over the last few years could really afford to pay an amortizing loan on the principal amount.
Oh, and the short-term adjustable ARMS are now about equivalent in rate and costs to the good old fashioned 30 year fixed, so another exit door has been closed. To boot, FNMA is instituting lower maximum LTVS at the end of October and yet another 50 bps loan premium for high LTV loans in December(max then being 97/95 with a good FICO).
Dawg, you need to try to come up with a name for the 2008 spring selling season. It's going to be the worst yet.
The bottom line is that another chunk of borrowers just lost their ability to refi. The downward spiral on this thing is getting tighter and tighter. This would all be funny if it weren't for those poor jerks who bought using a prime loan and a nice downpayment and are now sitting in Flippersville with brown lawns and green pools popping up all around them. No one can really help them if they lose a job or get divorced or have other bad luck. No one.
Dawg - there's a macro-economic reason for the IRS step. We need to avoid the next depression (a four year decline of at least 4% in GDP). Depressions are produced by the overhang of debt from booms on top of sharply reduced incomes.
In the last few weeks, the top guys have all really been saying that we won't have a depression, rather than we won't have a recession. They seem to be moving to try to forestall a depression, so you can bet they are worried about one.
And as you noticed, such a move is anti-creditor in the extreme. If the borrower knows that he won't have to pay taxes on income he didn't get, he is way less likely to stay in a home that he can't really afford.
Both of Bush's announcements are anti-creditor and pro economic growth. It's a decision to sacrifice irresponsible financial companies and banks and preserve growth capacity for the economy at large.
Dawg, you need to try to come up with a name for the 2008 spring selling season. It's going to be the worst yet. St Valentine's Day Massacre?
So you're saying this is Bush window dressing? The people who will be helped will turn out to be a few who got stitched up with ARMs when they could have got straight fixed within Fanny Mae Freddie Mac (whatever they are called, I'm English, we don't have such things) guidelines. Everyone else will "tragically" not qualify so the government won't be able to help. (Read, won't need to pay out the cash)
MOM, the markets agree with you: Bankrate: 30 yr fixed mtg 6.09% 5/1 ARM 6.12%
MOM, I'm aware of the intent of containment. It is just that I think we are about to induce massive moral hazzards that are not correctly modelled.
Say you bought in Aug '06 in Phoenix for the median $339k, 10% down. As of today you have paid $25k PITI and have lost $34k equity. Your mortgage is $2000 and OER is $1000. Stop paying immediately and hide the $8000 for the next 4 months until evicted. Walk. Rent. Smile. Cash flow improved by $700/month. $8000 in the matress. $12,000 in depreciation sent to the lender. Make $20 grand in 4 months and improve cash flow and stop the bleeding? What's the problem?
MOM asks me to name Spring 2008 because I have been prescient for the last two years. The massive unexpected volume decline in Spring 2006 was my call with "Silent Spring."
Spring 2008: "Withering Heights."
Last spring the collapse in the low end/entry level market kept medians high on lower volume. 2008 will see a small rebound in the low end and a volume implosion in the 4th quintile. The result will be some scary headlines about median prices in the bubblezones.
I'm not ready to predict on the top quintile, (The Stratosphere) so give me a little time on that.
The so-called "bailout" is just typical government PR bullshit. All fluff and no substance. He is merely placating to the voters. Nothing more.
Even if some level of "forgiveness" is extended to a small percentage of home owners, it would be too marginal to make a difference. And it will do nothing to stop the trend of home price depreciation since lending standards are tightening and prospective new home buyers cannot afford the loans to purchase homes. Ergo, prices have to drop until such a point where they are in line with affordability. Simple as that. Those that were potentially "bailed out" will most likely simply go bankrupt or get foreclosed upon in the end anyway. Any token gesture from the government will simply marginally delay the inevitable.
@Tom I agree, it's like giving a gambler one last twenty dollar bill. It's just going to reward him for his stupidity, and the end result is still inevitable, complete and total meltdown...except in this case, you just wasted your last twenty bucks as the government is already broke.
19 comments:
Do I hear VIVA Bush around here first ?
He's the murst preznit in history.
NR
One of the key elements of Bush's plan would allow homeowners with a good credit history, but who cannot afford their mortgage payments, to refinance into mortgages insured by the Federal Housing Administration to keep from defaulting.
That a couple of very indeterminate indeterminates, to paraphrase someone.
Why do I always think of Mayor Quimby(?) of Springfield when I read one of Bernanke's quotes?
There has got to be the possibility of the dollar taking a kicking on international markets now, surely?
W asked that he get a bill already put forward passed. Nothing new.
Most likely a smoke screen so Karl Rove can slip out of dodge quietly (or at least try, I see the staffers wrapped his car in saran wrap in the WH parking lot).
Of more importance is what about temporary removing tax implications of mortgage debt forgiveness by the IRS. I will be pissed if Snowflake gets to walk away after all the the grief he caused for so many.
H.
Man, what's the point of having good credit to get lower rates if when you make a dumbass move they lwoer the rates for ya?
Can they extend this to credit cards, car loans, and what the hell, student loans? I can't afford my student loans at 4.5% (gotta keep buying bling ya know) so can they lower it to like .1 % for me?
this is such fucking bullshit!
I saw an advertisment for a house for sale, the first three months mortgage is pre-paid. I can afford those first three months payments its the following payments that I cannot afford. Hey Bush can you dumb asses at the Government give me a loan similar to the first three months mortgage?
I bet you assholes can and will. This is so wrong, can we say Corprate Wellfair. So now all those bonds that should explode are going to have a lot of the bad debt transfered to the tax payers. The Bonds might actually be worth having if you can dump enough of this toxic stuff on the US Tax payers.
I was looking at the Phoenix region.
http://housing-watch.com/regionview.aspx?city=Phoenix
Losing $3000/mo on a median home. Just exactly what kind of bailout will it take to get people to stick with house they bought last year? Cramer is right, every single buyer in Phoenix who bought last year with 20% or less down is smart to mail in the keys now that there will be no tax consequence.
This isn't going to fool international markets.
Couple this giveaway with a fed rate cut, and we'll all have to plan on spending $2 for a Euro by the end of the year.
As well as seeing signs in Toronto "U.S. dollar at par"
Nah. What Bush really said is "no bailout". The FHA proposal is to refi only those nudnicks who were too stupid to get the home loan they really qualified for with normal underwriting.
It's a way to force back the political cry for a bailout. This proposal would help only those who would normally get a workout if they had gotten a GSE loan in the first place. That is dependent on ability to pay the loan.
You all know how few of the FTHB in areas like CA over the last few years could really afford to pay an amortizing loan on the principal amount.
Oh, and the short-term adjustable ARMS are now about equivalent in rate and costs to the good old fashioned 30 year fixed, so another exit door has been closed. To boot, FNMA is instituting lower maximum LTVS at the end of October and yet another 50 bps loan premium for high LTV loans in December(max then being 97/95 with a good FICO).
Dawg, you need to try to come up with a name for the 2008 spring selling season. It's going to be the worst yet.
The bottom line is that another chunk of borrowers just lost their ability to refi. The downward spiral on this thing is getting tighter and tighter. This would all be funny if it weren't for those poor jerks who bought using a prime loan and a nice downpayment and are now sitting in Flippersville with brown lawns and green pools popping up all around them. No one can really help them if they lose a job or get divorced or have other bad luck. No one.
Dawg - there's a macro-economic reason for the IRS step. We need to avoid the next depression (a four year decline of at least 4% in GDP). Depressions are produced by the overhang of debt from booms on top of sharply reduced incomes.
In the last few weeks, the top guys have all really been saying that we won't have a depression, rather than we won't have a recession. They seem to be moving to try to forestall a depression, so you can bet they are worried about one.
And as you noticed, such a move is anti-creditor in the extreme. If the borrower knows that he won't have to pay taxes on income he didn't get, he is way less likely to stay in a home that he can't really afford.
Both of Bush's announcements are anti-creditor and pro economic growth. It's a decision to sacrifice irresponsible financial companies and banks and preserve growth capacity for the economy at large.
Oh, and the cries of disgust from mortgage brokers prove my point. Link here
Dawg, you need to try to come up with a name for the 2008 spring selling season. It's going to be the worst yet.
St Valentine's Day Massacre?
So you're saying this is Bush window dressing? The people who will be helped will turn out to be a few who got stitched up with ARMs when they could have got straight fixed within Fanny Mae Freddie Mac (whatever they are called, I'm English, we don't have such things) guidelines. Everyone else will "tragically" not qualify so the government won't be able to help. (Read, won't need to pay out the cash)
MOM, the markets agree with you: Bankrate:
30 yr fixed mtg 6.09%
5/1 ARM 6.12%
MOM, I'm aware of the intent of containment. It is just that I think we are about to induce massive moral hazzards that are not correctly modelled.
Say you bought in Aug '06 in Phoenix for the median $339k, 10% down. As of today you have paid $25k PITI and have lost $34k equity. Your mortgage is $2000 and OER is $1000. Stop paying immediately and hide the $8000 for the next 4 months until evicted. Walk. Rent. Smile. Cash flow improved by $700/month. $8000 in the matress. $12,000 in depreciation sent to the lender. Make $20 grand in 4 months and improve cash flow and stop the bleeding? What's the problem?
MOM asks me to name Spring 2008 because I have been prescient for the last two years. The massive unexpected volume decline in Spring 2006 was my call with "Silent Spring."
Spring 2008: "Withering Heights."
Last spring the collapse in the low end/entry level market kept medians high on lower volume. 2008 will see a small rebound in the low end and a volume implosion in the 4th quintile. The result will be some scary headlines about median prices in the bubblezones.
I'm not ready to predict on the top quintile, (The Stratosphere) so give me a little time on that.
I tend to agree with Tanta's take on the situation.
The so-called "bailout" is just typical government PR bullshit. All fluff and no substance. He is merely placating to the voters. Nothing more.
Even if some level of "forgiveness" is extended to a small percentage of home owners, it would be too marginal to make a difference. And it will do nothing to stop the trend of home price depreciation since lending standards are tightening and prospective new home buyers cannot afford the loans to purchase homes. Ergo, prices have to drop until such a point where they are in line with affordability. Simple as that. Those that were potentially "bailed out" will most likely simply go bankrupt or get foreclosed upon in the end anyway. Any token gesture from the government will simply marginally delay the inevitable.
@Tom
I agree, it's like giving a gambler one last twenty dollar bill. It's just going to reward him for his stupidity, and the end result is still inevitable, complete and total meltdown...except in this case, you just wasted your last twenty bucks as the government is already broke.
Oh and if Bush does go ahead with this plan, I'm not voting for him in 2008 dadgum my bubblegum.
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