The good news in the mainstream media is that delinquency rates are down year-over-year. Of course, they ignore the fact that delinquencies have flatlined since the settlement agreement in February 2012 because that fact doesn’t fit with their optimism bias. The delinquency rate is a national average, so it doesn’t reflect where the delinquencies have declined and what segments of the loan market are recovering. 
The assumption most casual observers make is that delinquencies are concentrated in poorer subprime areas and the more affluent prime areas like Coastal California are relatively free from mortgage delinquency problems. Nothing could be further from the truth.
Subprime loans became delinquent early in the housing crash because these borrowers were often given the extremely toxic 2/28 loan and only qualified based on the teaser rate, and the teaser rates on these loans were scheduled to recast and reset earlier than prime loans. Further, subprime borrowers have fewer resources than prime borrowers, so when they got in trouble, they immediately imploded. As a result, subprime borrowers were foreclosed on in large numbers in 2007 and 2008 while alt-a and prime borrowers waited their turn at the gallows. The situation got so bad that the government changed the accounting rules to allow lenders to keep delinquent loans on their books at fantasy value, and since Bernanke lowered interest rates to zero thus reducing the bank’s carrying costs, lenders allowed their more affluent delinquent borrowers to squat. The situation hasn’t changed much over the last three years.
The GSEs and the FHA don’t allow squatting in their properties. During the bubble, the GSEs lost market share to private lenders, but since the bubble burst, the GSEs and the FHA have insured 95% or more of the loans in the market. In addition, they have been the dumping grounds for banks as they picked up liability for many of their bad loans through the numerous failed loan modification programs run by the government. As a result, many bad mortgages under the conforming loan limit came under the control of the GSEs, and they have not allowed delinquent borrowers to squat. The delinquency rate at the FHA is very high, but then again, they have been issuing 3.5% down loans in a declining market. The GSEs and FHA try to modify loans, but when the modifications fail, they push the properties through foreclosure.
So where does that leave the bad loans? On bank balance sheets concentrated in affluent areas dominated by jumbo loans — think Coastal California.
Mortgage Crisis Lingers On at Citigroup and Bank of America
By BEN PROTESS and JESSICA SILVER-GREENBERG — January 17, 2013
More than four years after the financial crisis, many big banks have regained their footing. But Bank of America and Citigroup remain dogged by the past.
On Thursday, the two banks disclosed that substantial legal costs undercut their fourth-quarter earnings. The expenses, the banks said, stemmed from huge settlements involving their mortgage businesses. …
“The 2008 collapse was not the flu — it was a major debilitating disease,” said Lawrence Remmel, a partner at the law firm Pryor Cashman. “It takes time rebuilding your strength,” he said, and it is “unpredictable when some of the institutions will fully recover.” …
The too-big-to-fail institutions should have been put out of our misery in 2008.
“Litigation expenses have taken a huge toll,” said James Sinegal, an analyst with the research firm Morningstar. …
For Bank of America and Citigroup, the recent mortgage settlements are a reminder of past mistakes. During the housing boom, Citigroup, like other Wall Street firms, sold to investors billions of dollars of securities backed by subprime mortgages that later hurt its balance sheet. Bank of America largely inherited its mortgage woes through Countrywide Financial, the subprime lending giant it bought in the depths of the financial crisis.
Now, the banks are hoping to close a dark chapter in their histories. This month, Bank of America and Citigroup, along with eight other banks, signed a sweeping $8.5 billion settlement with the Federal Reserve and the Office of the Comptroller of the Currency over foreclosure abuses like erroneous fees and flawed paperwork.
The settlement allowed them to a halt an expensive review of millions of loans in foreclosure. The pact follows a $26 billion deal in February involving the five largest mortgage servicers and 49 state attorneys general, an agreement to resolve accusations that bank employees were blowing through mountains of documents used in foreclosures without checking for accuracy.
Banks may have finally stopped the bleeding from the consumer lawsuits hanging over them. They must still deal with put-back suits from the GSEs and lawsuits from buyers of their bad ABS pools, but with the consumer lawsuits out of the way, they can focus on other issues — like what to do with all the people not paying their mortgages.
It’s obvious to everyone that loan modification programs are not the answer. The first of these programs failed more than 75% of the time. The recent mortality rate in loan modifications runs at about 50% per year. 14% don’t even survive the initial three-month trial period. Loan modifications are a portrait in failure.
As a result of failed loan modifications and a slow foreclosure rate, delinquency rates have remained about 10% at the major banks since 2009. They are making almost no progress toward solving their delinquency problems.
Another way to look at the delinquency rate is to look at its inverse, the percentage of current loans. Currently, the rate of current loans in the United States is 83.7% with the bulk of performing loans being in flyover country. By definition, that means 16.3% of all loans are not current. That’s nearly one in five.
We’ve known since 2010 that jumbo loans are defaulting at higher rates than conforming loans. Perhaps it isn’t the subprime borrowers who are the deadbeats after all.
Nationally, 6.3% of jumbo loans are delinquent. These delinquent loans are largely concentrated on the coasts. The jumbo loan delinquency rate in California is 8.4%.
Orange County California has a jumbo loan delinquency rate higher than the national average, and since our market is historically so inflated, we have a lot more jumbo loans than other markets across the country.
It should be clear from the charts above that the much of the problem with shadow inventory and long-term delinquent mortgage squatting is concentrated in coastal California housing markets, particularly in the jumbo loan sector. These markets have been performing well lately causing many to tout their strength. This strength is an illusion created by allowing large numbers of jumbo loan owners to squat for years on end. Right now, the banks who hold most of this toxic paper are content to let them squat hoping they can liquidate at higher prices. Perhaps they will be successful, but the segment of the housing market most in danger of future declines is the coastal California jumbo loan market.
Why are banks allowing high-end squatting?
Basically, there are many, many more bad jumbo loans than there are prudent and well-qualified borrowers to assume them. If lenders were to foreclose on all their delinquent jumbo loanowners and sell the properties, the carnage would be as bad as the subprime disaster of 2008. Banks know this, so instead, they allow a lot of squatting, and hold many properties on their books for better days. Five years later, they are still waiting.
Today’s featured properties is one of the first REOs I’ve seen priced over a $1,000,000 this year. Banks are ready to foreclose on properties under $800,000 because with today’s super-low interest rates and high conforming limit, they have a buyer for it. For properties over $800,000, they don’t have as many buyers, particularly now that they can’t use a DTI greater than 43% or use interest-only loans (each restriction eliminates 15% of the jumbo loan market). So what lenders have been doing is trickling these properties out one-by-one testing the market to see if they have any demand. So far, the slow rate of processing shows the demand in this segment is still very weak, particularly when compared to the market under $800,000 eligible for government insurance.
- This property was purchased for $797,000 on 5/19/1998. The former owners used a $637,600 first mortgage, a $79,700 second mortgage, and a $79,700 down payment.
- On 2/1/2000 they obtained a $180,300 HELOC.
- On 10/31/2001 they refinanced with a $775,000 first mortgage and obtained a $344,000 HELOC.
- On 3/6/2004 they refinanced with a $765,500 first mortgage.
- On 6/3/2003 they opened a $735,000 HELOC.
- On 6/8/2006 they refinanced with a $1,500,000 Option ARM and obtained a $435,000 HELOC. Countrywide was so stupid. Who underwrites a $1,500,000 Option ARM, and who then puts a $435,000 HELOC on top of it? BofA deserves the losses they are enduring for buying that portfolio.
- On 7/3/2007 they refinanced with a $1,950,000 first mortgage and a $450,000 HELOC from Washington Mutual. I guess there was a bank even less intelligent than Countrywide.
- This gets worse. On 12/20/2007 they got Washington Mutual to refinance them with a $1,980,000 first mortgage, then they took a $300,000 loan from their own IRA.
- Total property debt was $2,280,000, and total mortgage equity withdrawal was $1,542,700. That’s a lot of money!
Given the size of the losses lenders must take on stupid loans like these explains much of why they are in no hurry to foreclose. So how did the lenders play this one?
JP Morgan Chase foreclosed on 9/27/2010. They sat on the property for two and half years. They just put it on the market this week.
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Proprietary OC Housing News home purchase analysis
616 POPPY Ave Corona Del Mar, CA 92625
$2,394,303 …….. Asking Price
$797,000 ………. Purchase Price
5/19/1998 ………. Purchase Date
$1,597,303 ………. Gross Gain (Loss)
($191,544) ………… Commissions and Costs at 8%
============================================
$1,405,759 ………. Net Gain (Loss)
============================================
200.4% ………. Gross Percent Change
176.4% ………. Net Percent Change
7.5% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$2,394,303 …….. Asking Price
$478,861 ………… 20% Down Conventional
4.01% …………. Mortgage Interest Rate
30 ……………… Number of Years
$1,915,442 …….. Mortgage
$457,908 ………. Income Requirement
$9,156 ………… Monthly Mortgage Payment
$2,075 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$599 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$11,829 ………. Monthly Cash Outlays
($1,517) ………. Tax Savings
($2,755) ………. Equity Hidden in Payment
$668 ………….. Lost Income to Down Payment
$619 ………….. Maintenance and Replacement Reserves
============================================
$8,844 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$25,443 ………… Furnishing and Move In at 1% + $1,500
$25,443 ………… Closing Costs at 1% + $1,500
$19,154 ………… Interest Points
$478,861 ………… Down Payment
============================================
$548,901 ………. Total Cash Costs
$135,500 ………. Emergency Cash Reserves
============================================
$684,401 ………. Total Savings Needed
The property above is available for sale on the MLS.
Contact us for a comparative market analysis, a cost of ownership analysis, or information on how you can make an offer today!
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CFPB Announces Rules for Appraisals and Higher-Priced Loans
Starting in January 2014, mortgage lenders will work under new rules governing the handling of appraisals and other home value estimates.
The Consumer Financial Protection Bureau (CFPB) announced Friday the adoption of a new rule intended to improve consumer access to appraisal reports. While borrowers are typically charged for the costs related to conducting an appraisal, current laws do not require that consumers receive a copy of the appraisal unless they request it. Lenders are also not currently required to provide copies of any other estimates of a home’s value.
The new rule implements requirements under the Dodd-Frank Act that state that lenders must give consumers a copy of each appraisal (or other estimate) free of charge. A lender generally may still charge a reasonable fee for the cost of conducting the appraisal.
“This rule will guarantee consumers can receive important information on how a lender determines the value of the home,” said CFPB director Richard Cordray. “Having this information available promptly makes it easier for loan applicants to make informed decisions.”
The rule also requires that lenders inform consumers with three days of receiving a loan application of the borrower’s right to
receive a copy of all appraisals. Creditors are then required to provide those reports promptly, or three days before closing, whichever is earlier.
The rule will applies to first-lien mortgages, CFPB said.
In addition, CFPB (in partnership with five other federal regulatory agencies) issued a rule establishing specific appraisal requirements for higher-priced mortgage loans (defined under Dodd-Frank as loans that “are secured by a consumer’s home and have interest rates above certain thresholds”).
According to a joint release, the new rule implements amendments to the Truth in Lending Act (TILA), which was made to establish disclosures on the costs and terms of consumer credit.
For higher-priced loans, creditors will be required to use a licensed or certified appraiser who prepares a written appraisal report based on a physical visit to the property interior. The rule also requires lenders to disclose to applications information about the appraisal’s purpose and to provide consumers with a free copy of any appraisal report.
There are a lot of new rules that were announced over the last several business days. I’m starting to lose track of them; qualified mortgages, appraisal, private loans, risky mortgages, and jumbo mortgages. Some one need to publish a comprehensive cheat sheet.
Sounds like a good post for next Saturday.
Maybe I need to create a table. Mortgage rules are becoming like tax laws.
Analytics Firm Expresses Skepticism Toward Home Price Recovery
As home prices continue to increase, spectators and analysts have concluded the housing market is now in recovery mode. But, one analytics firm has remained unconvinced and expects to see a trend where prices rise and fall periodically as investor demand waxes and wanes.
“Some commentators suggest that investor-driven home price appreciation could spur demand among housing consumers, which will in turn bring about a broad-based and sustainable recovery in the nation’s housing markets,” wrote Quinn W. Eddins, director of research at Radar Logic. “Maybe, but we are skeptical of this theory.”
The analytics firm explained investors have not been buying significant volumes of homes from builders and households. Instead, they seem to buying from two sources: financial institutions that sell REOs and investors who are trading distressed properties bought earlier in the crises.
And, traditional homebuyers still seem to be locked out of the market.
“Thus, it is hard to see a direct connection between the current increase in institutional demand and future gains in household demand, especially at a time when traditional buyers are faced with high down payment requirements and tight standards for mortgages,” Radar Logic stated.
Furthermore, as institutional investors purchase foreclosures with the purpose of renting them out, prices will eventually increase to a point where “the economics of buy-to-rent strategies no longer work,” the firm explained.
As demand from investors for foreclosures diminishes and there becomes a swelling of REOs in banks’ inventory, foreclosures will see a price decrease again. When this happens, institutional investors will be back in business and purchase foreclosures, which will drive up prices for distressed inventory and reduce demand again. As demand for distressed inventory weakens, sales of non-distressed homes will increase as a share of total sales and drive up prices as well, Radar Logic explained.
This will continue “until consumer demand recovers and drives a real recovery in housing values,” Radar Logic stated.
CFPB’s New Rules Ban Incentives for Risky Mortgages
While the foreclosure crisis has more than one culprit, the Center for Responsible Lending (CRL) pointed to the significant role of predatory lending practices in a report on the state of lending.
According to data from CRL, among hybrid or ARM option loans originated between 2004 and 2008, 24.7 percent are either seriously delinquent or have become completed foreclosures as of February 2012. On the other hand, only 11.3 percent of fixed rate or standard ARMs originated during the same time period have gone into foreclosure or are seriously delinquent.
To prevent loan originators from directing borrowers toward risky mortgages with features such as higher rates and prepayment penalties, the Consumer Financial Protection Bureau (CFPB) issued new rules Friday to ban incentives for selling risky mortgages.
“Before the financial crisis, many mortgage borrowers were steered towards risky and high-cost loans because it meant more money for the loan originator,” said CFPB director
Richard Cordray. “These rules will hold loan originators more accountable by banning the incentives that led so many of them to direct consumers toward disaster.”
One of the rules prohibits higher compensation according to loan terms. With the new rule, brokers and loan officers are prevented from receiving higher pay if a borrower takes out a loan with a higher interest rate, a prepayment penalty, or higher fees. In addition, originators are no longer able to receive more money if a borrower decides to purchase title insurance from the lender’s affiliate.
The bureau also established a rule to place a ban on dual compensation, which occurs if a loan originator gets paid by both the borrower and another person, such as the creditor.
“In the run-up to the crisis, too often consumers incorrectly assumed that their loan originators were looking out for the consumer’s best interest,” the CFPB stated.
Higher qualification standards were also established for loan originators. Qualification standards may differ depending on whether the originator works for a bank, thrift, mortgage brokerage, or nonprofit, but the bureau outlined a few general rules.
The rules require originators to be screened for felony convictions, to receive training on rules governing the types of loans they originate, and to meet character, fitness, and financial responsibility reviews.
The rules will take effect in January 2014.
The CFPB also established a rule for mortgage and home equity loans that generally prohibits mandatory arbitration of disputes and the practice of increasing loan amounts to cover credit insurance premiums. Those rules will take effect in June 2013.
Home Sales Plummet 4.9% in December
While home sales in December dropped 4.9 percent month-over-month (following the standard holiday pattern), RE/MAX’s data shows a 3.8 percent year-over-year increase. This marks the 18th straight month in which sales improved on a yearly basis.
Of the 52 markets tracked for the report, 34 posted higher sales than in December 2011, and 16 of those markets saw double-digit gains.
Prices gave an even stronger performance as 2012 came to a close. According to RE/MAX, the median price for homes sold in December was $166,250, 1.8 percent up from November and 7.6 percent up from December 2011. December was the 11th consecutive month to see year-over-year price improvement.
Forty-eight of the 52 tracked markets experienced yearly price gains, and 21 posted double-digit increases, according to the report.
RE/MAX attributes 2012’s housing turnaround to a combination of record low interest rates, affordable prices, and a shrinking inventory, which together “created opportunities that many consumers could not resist.”
“We can finally say that the worst of the housing crisis is now behind us, as 2012 saw dramatic increases in both sales and prices, with home buyers and sellers coming back to the market in numbers we’ve been anticipating for years,” said RE/MAX CEO Margaret Kelly. “The market started 2012 with a great surge, and we’re hoping that 2013 will be even stronger. We’re not completely out of the woods, but we’re well on the way to a solid and sustainable recovery.”
The biggest issue leftover from 2012 is inventory, which in December saw its 30th straight monthly decline. RE/MAX’s report shows the total number of homes for sale in December was down 11.8 percent from November and 29.1 percent from December 2011.
While the shrinking inventory has likely played a role in the ongoing trend of price increases, it has also created difficulties for potential buyers. RE/MAX recorded a 5.7 month supply in December, meaning it would take 5.7 months for all homes on the market to sell at the current monthly sales volume (a balanced supply between buyers and sellers is six months). However, many markets—particularly those in the hardest-hit states—are still reporting months supply levels in the one-, two-, and three-month range.
I know a lot of high class squatters with toxic jumbos. Many are trying to see a teen through high school before giving up the ghost. Some are moving to another state. Some are moving overseas. Many, many have borrowed from parents (bye bye inheritance). Others have drained 401ks.
Like the owners of this REO, most plowed many $100ks into plush renovations. Most of the HELoC or 2nd money (plus some ready cash) went into marble baths fit for Roman emperors. This generation is so screwed.
Oh, and their siblings hate them because the bank of mom and dad is belly up. Divorces and suicides in this group are rampant, as are depression and alcoholism. Not a pretty picture.
Yeah – like you say, a lot of this spending is coming at the expense of inheritances, as most incomes can’t even begin to cover these lavish expenses. Plus easy money from HELOCs is gone. So it comes to mommy and daddy to fork over their savings. If you have siblings, you’re putting them in a tough spot. Of course the mommys and daddys could just say no. Instead, many of them think this money is an “investment” that will see high returns when their kids sell for a massive gain.Our parents’ generation benefitted greatly from real estate, and the kool aide intoxication still runs strong. I truly believe that “this time it’s different.”
With the new rules enacted by the government regulating mortgages, I think it will be different this time. We will reflate a mini reaction bubble from the super low interest rates, but the new rules make it much less likely we will reflate an unsustainable bubble were values are no longer tethered to local incomes. That’s a good thing.
Less unsustainable.
Is the bond bubble that much harder to see than the real estate bubble?
The bond bubble creating low interest rates is an outside factor. The bond bubble may burst taking interest rates to double digits. That would cause the housing market to crater because the only thing sustaining current pricing is cheap money. However, the way that cheap money is being channeled is much safer and more sustainable than it was during the bubble when huge sums were dumped into Option ARMs.
I hope we get a few more stories about neighbors and acquaintances living the “good life.”
The false boom, with its primary cause being centrally planned interest rates, creates a much more painful fall from entitlement. Higher highs, lower lows positively correlate with the level of central planning and lack of sound money.
It’s sad to see the people spend foolishly on the way up, but even worse to see the financial, familial, and societal effects on the way down. The fallout from the bond bubble bursting will create multiples more broken families, alcoholics, and suicides. I see no greater argument for sound, conservative fiscal and monetary policy than this.
IR,
It does strike me over and over again reading your HELoC abuse stories (and man, they are GOOD) that SoCal is its own alternate universe. In your world, people lived off their houses. In my world (I’ve owned in DC and Chicago) people traded up from one house to another, plowing profits into bigger, more prestigious places.
Here was the pattern: husband was in finance, wifey oversaw the tasteful remodeling of an aging dump in classy neighborhood. Most of these places were 50-100 years old and hadn’t been redone in many decades. Stories of water pouring down the inside walls and kitchens from the 50s were the norm.
Live in a construction zone for a year, then showcase it for another, then flip for a tidy profit. I know people who did this twice, then decided to go pro–hooked in outside partners, bought several investment props near the top, then got hammered by the downturn.
I know a guy who did this in a big way: bought a huge yacht, threw outrageous parties. Everyone hated him but he seemed very successful. Sold a couple start ups for millions. But he spent every penny of that and more on houses–in Chicago and Cape Cod. Turned out he drained his wife’s trust fund nearly dry to sustain his illusion of wealth and power. Had to move to Vermont to escape the stigma. Many others fled to Arizona or Florida.
I wonder if any other readers from outside SoCal have similar stories. Bottom line: in most of the country houses didn’t fuel expensive lifestyles. At best they paid their own way. Now they are simply a drag. I guess all real estate bubbles, like politics, are local.
A former director at the company where I work, lives/lived the good life. He’s a serial entrepreneur, which if you’re cynical is just “someone who doesn’t want to work and just wants to get rich quick”; but if you’re not, then it’s “someone understands working 9-5 in most jobs is not only unpleasant but never going to make you rich.”
Anyway, despite being in his 50s, he rocks the designer jeans, Affliction shirts, spikey hair, and trendy glasses all around the CDM scene. He recently lost his years-long battle to modify the mortgage on his multi-million dollar Newport home, and lost it to foreclosure. He’s selling this foreclosure as a business decision, of course.
I’m not sure his lifestyle has changed much. You never know with most people what their financials really look like…
Funny! Maybe it’s just the smallness of the town I lived in but I was amazed at the amount of dirty laundry I had access to, and I was never in the “in” crowd (that required private jet money), nor did I live there that long (five years). People just talk, but only to neighbors, never to outsiders.
Wife-beating, wife-swapping, murder, big-time theft, embezzlement, suicide, drug abuse, and, yes, mob connections–I saw or heard about it all. And at the center of it all was real estate. You were a nobody until you had a big place by the lake and could throw a blowout party on the cocktail circuit.
Good times! Really miss that Peyton Place sometimes.
Funny how that change in the Mark to Market account rule allow some of this happen. If they had that rule in place banks would have to record some of these loans as losses.
“The GSEs and FHA try to modify loans, but when the modifications fail, they push the properties through foreclosure.”
So, most of the squatting comes from private mortgages? I didn’t realize that. I thought it was up to the bank not the GSE or FHA to push through the foreclosure.
Warning this comment is not about today subject. I have been reading this blog for a very long time. And while it is interesting to read about the “bankers”, “government”, and “squatters” I would like to see more articles about people like myself who are trying to make real estate decisions.
For example, I have no mortgage on my home and am trying to decide if I should by another house for myself or a rental property. I understand the cash flow analysis of rental property but what would be the property tax (currently protected by the Jarvis tax inititive ) and/or income tax consequenes of these two choices.
In short, could we have more discussions about what people can do to build their real estate portfolios given the current circumstances in the market.
Just a suggestion. Thanks, Amelia
Many of those questions are property specific. You can see the cost of ownership including the tax consequences in my cost of ownership calculations for daily posts, and if you work with Shevy to buy a home, he prepares those calculations for any property you’re looking at.
Borrowing money against a primary residence is usually not a good idea, but with interest rates so low, it does make sense today to borrow at 3.5% and buy an investment property where the returns are higher.
Proposition 13 locking in property tax rates does tend to make investing in California cashflow properties more advantageous because properties taxes won’t rise faster than rents, which is the case without a limit on future increases.
I have discussed many of these issues in posts over the last six years, perhaps it’s time to revisit some of them.
Thanks, I will have to talk to Shevy.
Figure real estate still has some downside, albeit limited due to the fact they will print money to inflate real estate values.
Ask yourself how much of your wealth is allocated to tangible, income producing assets. For most people, the answer is “not much”.
Don’t leverage more than 50%. If we have a pullback in rents, which may happen as the bond bubble causes a host of problems, at least you will still have decent positive cashflow. Many people buy properties where they break even every month. Over time, rents and values do not rise as fast as their realtor predicted, expenses present themselves, and the asset seems more like an anchor than a well oiled machine.
If the government is able to wave its magic inflation wand and rents/valuations rise, this will be icing on the cake; but dont count on it.
Do you think the bond bubble will as affect rents? I am seeing some bigger homes in Fullerton going for $3,000. I do remember the 2008 rent dive.
the economy is treading water because of ZIRP and debt monetization.
the pain of the 2008 RE/banking crisis has only been transfered to the backs of the government (IE taxpayer).
ZIRP is setting us up for a crisis bigger than 2008. The bill will come due. The pain has been and continues to be created. The FED will be forced by bond vigilantes to raise the fed funds rate. The people will demand it because even the dumbest will be able to clearly see the effects of inflation at the gas pump and grocery store.
What would 2% fed funds rate do to our current smoke and mirrors recovery?
I think there is a good chance rents will fall again. I hope they don’t.
Before the implosion of the bond bubble, we will likely see continued mini-bubbles in several other asset classes as the flood of cash sitting idle looks for a new home.
[...] dance is most prevalent at prices above the conforming limit. As I demonstrated on Monday, Delinquent jumbo loans in Coastal California pollute bank balance sheets. Today’s featured property was purchased by some Ponzis back in 2002. The extracted about [...]
[...] I pointed out last week, Delinquent jumbo loans in Coastal California pollute bank balance sheets. But it’s not just Coastal California that will feel pain in the jumbo market. The jumbo [...]
[...] I pointed out last week, Delinquent jumbo loans in Coastal California pollute bank balance sheets. But it’s not just Coastal California that will feel pain in the jumbo market. The jumbo [...]