Aug282015
Do realtors care if buyers sustain home ownership?
realtors lobby for the same foolish policies that caused the housing bubble and ended with millions of families losing their homes.
realtors care primarily about obtaining a large check from escrow after closing. What happens after that is not their concern. I assume most of them wish their commissions clients well, and if they think about these people for a nano-second after closing, they imagine them living happily ever after in their newly acquired properties. However, in the real world, if those buyers face challenges because the buyers believed the realtor’s sales pitch, well… that’s not as important to the realtor as closing the deal and getting paid.
The evidence of a realtor’s lack of concern for buyers was clear during the housing bubble. realtors shamelessly pushed people into transactions that benefitted the realtor, but left the homeowner in a hopelessly untenable position after grossly overpaying for the property — you know, the property that only goes up in value.
Today’s featured article is a look inside the mind of a realtor. After reading it, you tell me if you see any concern for the future well being of the realtor’s client.
Millions are returning to the homebuying market — here’s what you should know
It’s our responsibility to educate potential buyers
Nabil Captan, Jul 30, 2015
Takeaways:
- Millions of people who lost their homes in the recession are now ready to buy again.
- Boomerang buyers now have more loan options.
- Rebuilt credit is the most important part of the homebuying equation.
There are many who defaulted on their mortgages because of a job loss or personal disaster, who otherwise would have paid responsibly. These defaulted mortgages resulted in short sales or foreclosures. These defaults were the product of decisions made by homeowners in distress — they aren’t representative of the homeowners’ character.
Really? I think he has this exactly backward. Isn’t distress the true test of a person’s character?
These former homeowners are in the millions, and many want to — and are ready to — become homeowners again.
The Boomerang buyer myth refuses to die because realtors need false hope of future earnings to stay motivated, so they work to keep this story alive even when all evidence points to a complete absence of boomerang buyers.
According to the most recent U.S. Census figures, around 12 percent of all U.S. households — more than 14 million people — rented a single-family home in 2011 alone.
Three-fifths, or 8.4 million, of people who lost their homes to short sales and foreclosures in the past seven years ended up renting, with many others not even being able to afford to pay rent.
If they can’t afford to pay rent, how are they supposed to save for a down payment? How does buying help them? (See: Will Millennials be forced to rent for life?)
Subprime lending is back and very much alive
Yes, it is. But Will subprime mortgage lending 2.0 be a disaster? And will realtors care?
With the gradual but surely rebounding real estate market, some private equity firms are now willing to take higher risk for greater yields to accommodate this discounted market.
Many lenders have sprung up to meet this demand. Some are approving borrowers in as little as weeks after a foreclosure.
That’s just what we need, right? These borrowers proved their failure in the most uncertain terms possible: they endured foreclosure. Why would anyone loan them hundreds of thousands of dollars at the peak of their disgrace? What could go wrong?
Credit profile is not an issue; however, a higher down payment is required with an expected above-market interest rate.
Because the guidelines are looser and fall outside of the Consumer Financial Protection Bureau’s “qualified mortgage” rule, loans are kept by these firms for future securitization.
New Penn Financial LLC, a lender based in Plymouth Meeting, Pennsylvania, and Drop Mortgage in Encinitas, California, are some of today’s players in a field that will soon become increasingly crowded.
The money is about to pour into toxic mortgages — the behavior that inflated the housing bubble and lead to millions of foreclosures — and this guy can barely contain his excitement.
Boomerang buyers have more loan options
Most victims who lost their homes in the recent recession are unaware of the waiting periods for a new loan secured by Fannie Mae, Freddie Mac, FHA and VA following a mortgage default or bankruptcy.
Victims?
They suspect that they don’t qualify for a mortgage today. Fannie and Freddie waiting periods are similar: For a short sale, deed in lieu or bankruptcy, it’s four years, while foreclosure is seven years.
FHA is little different: For a short sale, deed in lieu or foreclosure, it’s three years, and only two years for bankruptcy.
VA waiting periods are even shorter: two years for all mortgage defaults and Chapter 7 bankruptcy. Rebuilt credit is a prerequisite by all to qualify for a new loan.
Furthermore, many people today also are taking advantage of FHA’s Back to Work program.
In as little as one year, people who experienced periods of unemployment or other severe reductions in their household income and were forced into a mortgage default or even full-blown bankruptcy could be approved with as little as a 3.5 percent down payment.
Everyone in the real estate industry decries tight lending standards. Due to this endless complaining, it’s become conventional wisdom that lending standards are tight. Given the facts above, does the spin about tight lending standards ring true? (See: Despite industry spin, mortgage lending standards are not tight)
Major lenders consider this program risky. They believe it puts them at greater risk to buy loans back.
Thank goodness. The threat of buy-backs is the only thing keeping lending sane today.
Still, there are a number of lenders who are delivering limited numbers of these loans.
Hopefully, they will go bankrupt after a flood of buy-backs erode their margins.
realtors learned nothing from the housing bubble. They lobby for the same foolish policies that caused the housing bubble and ended with millions of families losing their homes. realtors don’t care about the long-term well being of their clients.
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Salespeople want churn. They want you to buy a new car from them every couple of years, regardless of necessity or the financial ruin it brings.
Some need to feed their drug habit…
Charges dropped against realtor accused of stealing drugs from home for sale
RICHMOND, Va. (WRIC) — A Richmond realtor caught on camera allegedly stealing prescription drugs from a home for sale had a charge against her dropped Thursday in court.
Sarah Reeves had her charge of petite larceny dismissed this morning in Henrico General District Court. Her charge of possession of a controlled substance was nolle prosequi back in May, meaning the charge was dropped but could be brought back to court at any time.
According to a prosecutor, Reeves admitted she took the medication to fuel her drug addiction. Reeves has since gone to rehab.
Some realtors have more balls than brains.
Miami Beach Realtor Arrested for Trying to Extort $800,000
Real estate is a game of bravado, especially in Miami Beach, where multimillion-dollar penthouse suites fly off the market every week to a dizzying swarm of overseas investors. Kevin Tomlinson, a 48-year-old with One Sotheby’s International Realty, knew how to play that game as well as anyone, bragging on his website that he doesn’t “tolerate mediocrity well” and promising “style, substance, results.”
But in addition to selling SoBe condos, Tomlinson allegedly decided to go for a big score by trying to extort a pair whose real-estate bona fides need no introduction in Miami: Police say the realtor cooked up a scheme to extort $800,000 from the Jills, arguably the most famed house-selling pair in a city full of property flippers.
When police moved in to arrest him in his South Beach penthouse Saturday, Tomlinson tried to grab one officer’s weapon and screamed, “Fuck Jill, fuck the Hertzbergs!” according to cops. His reward for all of that trouble: a gnarly-looking mugshot and charges of extortion and resisting arrest with violence.
http://images1.miaminewtimes.com/imager/u/745xauto/7815567/kevin_tomlinson.jpg
realtors are pillars of society, right?
San Clemente Realtor Guilty in Massive Ponzi Scheme
The San Clemente co-owner of a now-defunct Southland real estate firm was convicted today of a Ponzi scheme that involved flipping distressed apartment buildings during the Great Recession’s housing collapse, costing hundreds of investors up to $169 million.
Michael J. Stewart, 68, who had been free on bail, was taken into custody after jurors found him guilty of 11 counts of mail fraud.
U.S. District Judge Cormac Carney granted a motion by federal prosecutors to dismiss charges related to bank and bankruptcy fraud.
Before the trial, prosecutors estimated the company’s 647 investors lost $91.6 million, but trial testimony indicated that the losses were actually $169 million, according to Assistant U.S. Attorney Joshua Robbins.
When Stewart’s company declared bankruptcy in June 2009, the banks were owed about $96 million in outstanding principal, according to the prosecutor.
Jurors took about five hours to reach their verdicts.
“We’re pleased to see justice done,” Robbins said. “I’m happy for the many victim investors. Even though they won’t see returns on their investments, they’ll at least some measure of justice and someone held accountable.”
Stewart’s attorney, Ken Miller, said, “We’re terribly disappointed in the verdicts.”
Stewart faces a maximum sentence of 220 years, but prosecutors expect the defendant will receive much less time behind bars. The fine could be $7 to $9 million.
Miller asked Carney to let his client stay out of custody until sentencing, but the judge said he found the defendant a flight risk due to his age and the length of time he faces behind bars.
Bubbles Don’t Correct, They BURST!
it’s time to put the word out that the second greatest bull march in history is finally coming to an end. It’s done.
Wall Street thinks this is a correction – a 10% drop, maybe 20% at worst, followed by more gains. They think we’re just six years into a 10 if not 20 year bull market. This is just a healthy breather.
Of course they think that! It’s the same “bubble-head” logic you find at the top of any extreme market in history!
Every single time – without exception – we delude ourselves into believing there is no bubble. We think: “Life’s good, why should we argue with it?”
And every time, we’re shocked when it’s over. Only in retrospect do we realize, yes, that was clearly a bubble, and oh, how stupid we were for not seeing it.
Bubbles don’t correct. They burst. They always do. And if anyone is still doubting whether this is a bubble, they need to get with the program – now!
China’s stock market will also keep crashing – it’s already down 42%. When it does, its real estate will follow – with devastating consequences to real estate in the U.S. and the globe. And over the next several years, we’ll see the greatest global crash in real estate in modern history.
Stockman. Nice. About as credible as everything on Fox News.
It’s from Stockman’s website, but the author is Harry Dent. People either love him as a fortune teller or ridicule him for his famous misses.
BTW, based on that post, I conclude that Harry Dent sees things the same was as Lee in Irvine.
I certainly do agree with Harry. He’s been mostly right about deflation, gold, China and the US Economy.
the dollar is strengthening for all the wrong reasons. It is unsustainable, just as any adjustable rate debtor.
But you and Harry will appear correct in the short term.
Does anyone expect the Fed and Fed Gov to choose conservative monetary and fiscal policies? The system is inherently reckless.
The US$ got stronger mainly because of 2 things:
1) Global Currency Reserve
2) Best House on a shitty street
Maybe this will change in the future, I don’t know, but for now it is the way it is.
“Does anyone expect the Fed and Fed Gov to choose conservative monetary and fiscal policies? The system is inherently reckless.”
You say that as though nobody believes the FED will come to their senses and realize that they’re pushing a string with more QE. This is precisely the problem with the inflationist. With that said, it is contrarian to believe the opposite.
I am not saying the FED won’t do more QE, but what I am saying is they will not do enough to create hyper-inflation like many believe.
Inflation vs. Deflation … Who’s been right?
https://youtu.be/pSOGwthC_JQ
As most people know, the word ‘bubble’ gets thrown around a lot these days, but nobody seems to have a solid definition for it. (awgee actually pointed that out.)
To me, a bubble is characterized by two things:
1. Irrational fervor or exuberance for an asset class
2. A parabolic price move that looks like a rocket ship when compared to the long term price trend on a financial chart.
Are stocks in a bubble?
1. Most people still have a healthy fear of stocks after the prior two bear markets. If you remember how investors were in 1998-2000 compared to now, there’s no comparison. The reason things crashed so hard this week is because people were nervous and waiting for a sign to pull out. From 2000-2002, nobody believed tech stocks were going to stay down and many people “dollar cost averaged” all the way down, convinced they were getting a bargain.
2. The stock price chart isn’t parabolic like the late 90’s. In fact, the market is only a little bit higher than the 2007 peak pricing.
Based on both of those facts, the claim that stocks are in a bubble is unsubstantiated. Stocks are no doubt overpriced due to ZIRP, but a condition of being overpriced is not the same as being in a bubble.
P.S. If you want other examples of parabolic price charts, look at real estate from 2004-2007 and gold from 2008-2011. In both of those instances you had an unending stream of positive sentiment, and you were deemed a heretic if you said anything negative. That isn’t the case with stocks today.
Problem is, the current/biggest bubble of all time is in the money, aka USD.
You heard it here first 😉
Have a great weekend amigo.
More single women are 1st-time homeowners
Single women are buying homes at nearly twice the rate of single men.
They now account for 23% of first-time buyers and 16% of repeat buyers, according to the 2014 National Association of Realtors Profile of Homebuyers and Sellers. Single men make up 15% of first-timers and 8% of repeats.
“You’re in the suburbs of Manhattan, so you’ve got highly capable women who are working in the city and are looking to invest, and real estate is still a great investment for people,” said Denise Friend of Better Homes and Gardens Rand Realty in White Plains, N.Y.
U.S. Foreclosure Activity Increases 7 Percent in July as Bank Repossessions Reach 30-Month High
Foreclosure Starts Decrease to Lowest Level in Since November 2005;
Atlantic City Posts Top Metro Foreclosure Rate, Activity up in 13 of 20 Largest Metros
IRVINE, Calif. – Aug. 20, 2015 — RealtyTrac® (www.realtytrac.com), the nation’s leading source for comprehensive housing data, today released its July 2015 U.S. Foreclosure Market Report™, which shows a total of 124,910 U.S. properties with foreclosure filings — default notices, scheduled auctions and bank repossessions — in July, up 7 percent from the previous month and up 14 percent from a year ago. July was the fifth consecutive month with a year-over-year increase in overall foreclosure activity following 53 consecutive months of decreases.
“The increase in overall foreclosure activity over the last five months has been driven primarily by rapidly rising bank repossessions, which in July reached the highest level since January 2013,” said Daren Blomquist, vice president at RealtyTrac. “Meanwhile foreclosure starts in July were at the lowest level since November 2005 — a nearly 10-year low that demonstrates the recent rise in bank repossessions represents banks flushing out old distress rather than new distress being pushed into the pipeline.
“This clearing of old distress is evident in the fact that properties foreclosed in the second quarter had been in the foreclosure process an average of 629 days, the longest in any quarter since we began tracking in the first quarter of 2007,” Blomquist continued. “It’s also evident that the recent surge in REOs is in fact clearing out more of the bad bubble-era loans from the so-called shadow inventory. RealtyTrac data now shows 61 percent of loans still in the foreclosure process were originated during the housing bubble years of 2004 to 2008, down from 68 percent last year and 75 percent two years ago.”
Disparity between home prices and what’s affordable
C.A.R. analysis finds significant disparity between home prices and what buyers can truly afford
Dearth of housing supply at affordable prices exacerbates housing affordability issue.
– Only seven of 32 reporting counties in California had a home price that a typical median-income household in the counties can afford.
– Less than one-third of the state’s housing inventory was at or below the home price a typical household earning the median income can afford.
– San Francisco’s second quarter median home price was 225 percent higher than what a typical median-income household in that county can purchase.
LOS ANGELES (Aug. 20) – Only seven of California’s counties are affordable to home buyers who earn the areas’ median household income, while homes in 25 counties were out of reach for the typical household, according to analysis by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). Furthermore, less than a third of the state’s inventory of available single-family homes, condominiums, and townhomes for sale was at or below the home price that a household earning the California median income of $60,244 can afford.
“The significant disparity between what home buyers can realistically afford and actual home price is discouraging, especially in the San Francisco Bay Area,” said C.A.R. President Chris Kutzkey. “While housing is affordable in some regions of the state, California lacks an adequate supply and mix of affordable housing in locations where the majority of the state’s workforce resides.”
In the second quarter of 2015, the statewide median price of $446,980 was nearly 50 percent higher than what a California household with the median income of $60,244 could afford to purchase.
St. Louis Fed official: No evidence QE boosted economy
The Federal Reserve is putting some of its post-crisis actions under a magnifying glass and not liking everything it sees.
In a white paper dissecting the U.S. central bank’s actions to stem the financial crisis in 2008 and 2009, Stephen D. Williamson, vice president of the St. Louis Fed, finds fault with three key policy tenets.
Specifically, he believes the zero interest rates in place since 2008 that were designed to spark good inflation actually have resulted in just the opposite. And he believes the “forward guidance” the Fed has used to communicate its intentions has instead been a muddle of broken vows that has served only to confuse investors. Finally, he asserts that quantitative easing, or the monthly debt purchases that swelled the central bank’s balance sheet past the $4.5 trillion mark, have at best a tenuous link to actual economic improvements.
Williamson is quick to acknowledge that then-Chairman Ben Bernanke’s Fed, through liquidity programs like the Term Auction Facility that injected cash into banks, “helped to assure that the Fed’s Great Depression errors were not repeated.”
But as for spurring inflation, reducing employment or otherwise generating sustained economic activity, the results, particularly for QE, are “at best best mixed.” In addition to muted inflation, gross domestic product has yet to eclipse 2.5 percent for any calendar year during the recovery, while wage gains, and consequently living standards, have been mired around 2 percent or less.
“There is no work, to my knowledge, that establishes a link from QE to the ultimate goals of the Fed—inflation and real economic activity. Indeed, casual evidence suggests that QE has been ineffective in increasing inflation,” Williamson wrote.
“For example, in spite of massive central bank asset purchases in the U.S., the Fed is currently falling short of its 2 percent inflation target,” he added. “Further, Switzerland and Japan, which have balance sheets that are much larger than that of the U.S., relative to GDP, have been experiencing very low inflation or deflation.”
Computers are the new Dumb Money
You want the box score on this latest weekly battle in the stock market?
No problem: Humans 1, Machines o
Because if you think it was human beings executing sales of Starbucks (SBUX) down 22% on Monday’s open, you’re dreaming. And if you believe that it was thinking, sentient people blowing out of Vanguard’s Dividend Appreciation ETF (VIG) at a one-day loss of 26% at 9:30 am, you’ve got another thing coming.
By and large, people did the right thing this week. They recognized that JPMorgan and Facebook and Netflix should not have printed at prices down 15 to 20% within the first few minutes of trading and they reacted with buy orders, not sales. They processed the news about the 1200+ individual issue circuit-breakers and they let the system clear itself.
Rational, experienced people understood that an ETF with holdings that were down an average of 5% should not have a share price down 30%.
Conversely, machines can only do what they’ve been programmed to do. There’s no art, there’s no philosophy and there’s no common sense involved. And volatility-shy trading programs have been programmed to de-risk when prices get wild and wooly, period. Their programmers can’t afford to have an algo blow-up so the algos are set up to pull their own plug, regardless of any qualitative assessment during a special situation that is obvious to the rest of the marketplace.
Warren Buffett once explained that “Paradoxically, when ‘dumb’ money acknowledges its limitations, it ceases to be dumb.” Ordinary investors, in the aggregate, have learned their limitations the hard way over the last few decades. This is why 25% of all invested assets are in passive investment vehicles and Vanguard is now the largest fund family on the planet. Retail players gave up on the fever dream of Mad Money long ago; Mom and Pop are now investing in the missionary position from here on out.
Software, on the other hand, has not learned this lesson. The problem with computers is that they can’t be programmed with humility.
Opinion: Now’s the right time for Yellen to kill the ‘Greenspan put’
The Federal Reserve says the timing of its first interest rate hike in nine years depends on the data, but that doesn’t mean the Fed will be digging through the jobs, growth and inflation reports for the all-clear signal.
Instead, the Fed will be doing what millions of people have been doing for the past couple of weeks: Watching the stock market.
Many investors have assumed that the recent selloffs in markets from Shanghai to New York meant that the Fed definitely won’t pull the trigger on a rate hike at its Sept. 16-17 meeting. Many prominent talking heads – from Suze Orman to Jim Cramer – are explicitly begging the Fed to hold off on higher interest rates as a way to protect stock prices.
It seems they still fervently believe in the “Greenspan put.” They assume that the Fed will always come riding to the rescue of the markets, as Fed Chair Alan Greenspan did so many times.
You can’t blame them for believing that, because from 1987 to today, the Fed has reacted to nearly every market hiccough and tantrum by flooding markets with liquidity and reassurances. They’ve given the markets rate cuts, quantitative easing and promises that easy-money policies will continue for a long time, if not forever.
This “Greenspan put” means investing in the stock market is a one-way bet.
I believe the market selloff has made a September rate hike even more compelling than it was before, because it gives Fed Chair Janet Yellen the opportunity she needs to kill the “Greenspan put” once and for all.
Reminder: since margin debt is a function of the stated value of underlying collateral, expect the forced sale of assets to reduce the value of said collateral triggering additional margin calls, and those margin calls will trigger more selling that will generate even more margin calls, and so on…
Hence, the next financial ‘consolidation’ event is spawned.
Do car salesmen care about the future transportation needs of current car buyers? HAHAHAH!!! Have you ever heard of a car salesman saying to a customer, “Bob that car looks great, but you need to think more practically about the long-term needs of your family. A lower cost car will be just as reliable and better for your finances in the long term.” HAHA
The Labor Dept. is going to change the rules for 401K investment plans so that now the “investment advisors” (HA!) that offer these plans actually have to think about what is best for their customers! Shocking…wait…my sales commission is not the top priority? Wall Street is fuming about this…can you imagine…having to think of what is best for our customers? Having to consider costs and fees?
The key is something called “fiduciary obligation” – the obligation to think of what is best for the customer. Realtors, car salesmen, jewelers, stock brokers, etc., do not have this obligation. Doctors, accountants, attorneys (whatever you think of them) have this obligation and can be sued when they fail to consider it.