Friday, March 16, 2007

SL's Water Cooler - March 2007 (part 3)

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Lander said...

Angelo Mozilo, CEO of Countrywide Financial:

"When you cut that first-time home buyer out, there's a ripple effect."

You've said that you've never seen a soft landing in housing.

"Never seen it. That's right."

"It's no different than the equity markets and tech booms. Any kind of bubble like that creates irresponsible behavior. And we did have a bubble in real estate."

"Historically, housing has led the country in and out of recessions. But there's an argument that the economy is so big today that housing is not as important as it was. I don't believe it."

Business Week

Perfect Storm said...

MOSCOW (Reuters) - Commodities investment guru Jim Rogers stepped into the U.S. subprime fray on Wednesday, predicting a real estate crash that would trigger defaults and spread contagion to emerging markets.

"You can't believe how bad it's going to get before it gets any better," the prominent U.S. fund manager told Reuters by telephone from New York.

"It's going to be a disaster for many people who don't have a clue about what happens when a real estate bubble pops.

Perfect Storm said...

Word on the street:

Accredited laid off about 40% of the their retail staff(Home Funds Direct) in the form of branch closings and more to come on Monday , along with a
30% cut of Inzura employees, a wholly-owned title company of AHL.
That along with a cut of 50% of Loan Operations in San Diego, CA. This has not been announced buy the company and Regional Managers along with their supervisors, Divisional Managers, are conducting the lay-offs personally. These managers have been told to keep this as quiet as possible. Accredited Home Lenders is not offering any severence to any employees and is not sure to compensate employees earned paid time off either.

Housing market is gettimg worse no government bailout.

Cmyst said...

I browsed the Bee MLS listings ( and go under "homes" tab) for the Curtis/Land park area to see if prices are moving any. I browse 3bd/2bath homes, and above.
There were some homes in the 400k range, but most are still way overpriced at 600k to 900k. And many of the overpriced homes don't look a damn bit different from the 400k ones. I didn't check this zip for repo's or short sales, but I don't recall seeing any.

I also browsed the Carmichael zip.
250-300k = 12 homes, 6 are bank-owned and 1 is a short sale.
300-325k = 20 homes, 3 bank-owned and 1 short sale.
325 - 350k = 28 homes, 2 bank-owned and 1 short sale.
In addition, a lot of homes are blurbed in a way that indicates the owner is getting increasingly anxious to sell the property.
One of the bank-repos has been for sale for at least a year, because I was looking at it when I sold my condo a year ago. It wasn't a repo back then.
One of the properties in the Curtis/Land Park zips has been on the market at least a year,too. Most homes tend to blend into one another, but this one has a rotunda and plaster angel heads above the doors leading out of it, so there's no mistaking it.

Perfect Storm said...

From the Implode-Meter

Quote Of The Week
"The markets may have over-reacted. Only businesses significantly exposed to subprime will be hurt. Mortgage repayment problems aren't as widespread as we are led to believe. If most people were having trouble paying the mortgage, it would lead to declining consumer confidence and we haven't seen that." — John Lonski, Moody's, in The Economist

"You have to cast some doubt on the assembled wisdom after reading [the above] - consumer confidence just plunged to a six month low this morning." — Tim Iacono (of Iacono Research), at TheMessThatGreenspanMade blog.

These guys will lie until the very end.

Perfect Storm said...

From Barrons

According to Goldman's Hatzius, ARMs that aren't subprime are going down the tube even faster than riskier loans. Prime ARM delinquencies are above their worst levels of the 2001 recession, he points out. By contrast, Subprime fixed-rate delinquencies are well below their recession levels.

But here's a key point: prime-quality and so-called alt-A mortgages (middling credits, lower than prime but better than sub-prime) have longer reset periods -- two years or more -- than subprime. That means we haven't seen the full impact of the sharply borrowing higher costs on many ARMs yet.

As teaser rates on ARMs get adjusted, Hatzius suggests the teaser-rate problem could turn out to be bigger than the subprime problem. Clearly, lenders didn't take care whether their borrowers would be able to shoulder the higher costs once the teaser rates ended.

Patient Renter said...

I've been thinking about possibly bailout stuff and getting worked up about it. A quote from Roubini sums up any bailout from a corporate perspective:

"privatize the profits in good times and socialize the losses in bad times"

This is pretty terrible, mostly because it's true.

Patient Renter said...

My wife just called me to tell me about an ad she heard just now on the radio on her way home. The ad was for Shay Homes and was such such that the speakers were giving reasons why now is a good time to buy a Shay home.

Why is not a good time to buy a shay home?

"So my cat can have its own room, not just a couch."

I can't make this stuff up.

Lander said...

San Diego NODs breaks 1990's record. Population-adjusted figure near record high.


Gwynster said...

Rueters opens with a coming foreclosure in Folsom

a_builder said...

Hey guys- listen up:

Big corruption scandle brewing in Lincoln "quid-pro-quo" California!

What city official received the deed to a DelWebb home without a sub-prime mortgage, actually NO MORTGAGE AT ALL hmmmmm

Certain employees of a LARGE grading contractor are being questioned by private detectives (FEDS??) regarding "special" requirements for the priviledge of working in Lincoln....

Ooooh whats this? A $6,000 ATV was purchased to allow a certain city official to "inspect a pipeline" hmmm OK but after the 1 hour "inspection" why is said quad now located in city officials garage???

Enquiring minds want to know... Unless Lander doesnt want to know..

Lander said...

The Economist: Cracks in the facade