I am no longer bearish. I have been an outspoken housing bear for over five years now, but based on recent developments, I have far fewer worries about another catastrophic decline in house prices. The recent changes are as follows:
- Federal reserve’s open-ended commitment to unlimited stimulus for as long as it takes no matter the consequences.
- Lending cartel’s improved control of inventory liquidation.
- Removal of most barriers for refinancing underwater loans to aid kicking the can to spread out liquidations.
These new developments when combined with some older existing policies has finally created the conditions for a manufactured bottom to form.
- Federal government’s suspension of mark-to-market accounting allowing unlimited delinquent mortgage squatting.
- Federal reserve’s zero percent interest rate to member banks reducing their expenses to zero on non-performing loans.
- Private equity funds mobilized to absorb foreclosures in key markets.
There are still many good reasons to be bearish. Keith Jurow outlines many of those reasons in the paper below. I could change my mind and become more bearish if the lending cartel loses control of its liquidations or if the federal reserve changes their mind on stimulus. Any recovery will be choppy, and where Keith Jurow is located in the Northeast, I still foresee much pain ahead, but here in the West, due to increased affordability, the low end has almost certainly bottomed, and although the move-up market will remain weak, I don’t foresee a catastrophic collapse.
Keith is one of my favorite authors on housing issues, and he told me I am one of the few writers he shared this recent paper with. He is perhaps more bearish than I am, but I don’t disagree with anything he writes. We both agree there are headwinds facing the housing market that will be with us for quite a while. In that regard, I don’t see the housing crash as being over either.
Introduction
Almost daily, the pundits are smugly proclaiming that the worst is over and housing markets around the country are bottoming. I am really the only housing market analyst in the country who continues to assert emphatically that this is pure rubbish.
What follows are ten very important charts, graphs and tables which show why the housing collapse which began in mid-2006 is far from over. The explanation which follows each graphic explains its significance so you can begin to see the big picture. I suggest that you review these graphics carefully and prepare to take action to protect your client’s assets as well as your own.
If I were writing from the judicial foreclosure areas in the Northeast, I would likely be just as adamant as Keith that the bust isn’t over. I don’t think the housing collapse is finished there. In the Northeast, prices never did correct from the housing bubble, and since they haven’t processed many foreclosures, they are just at the beginning of their liquidations. Prices probably will fall there, and in some areas, the decline may be quite substantial.
Speculative Madness During the Bubble Years
Source: CoreLogic
The housing bubble was caused by an incredible speculative mania during 2004-2006. These two charts clearly show the extent of speculative buying in the craziest markets and throughout the country. The top chart shows the speculative purchases in three of the hottest markets. The bottom chart shows the percentage of speculative purchases nationwide and in the four hottest bubble states. This speculative madness was facilitated by a total collapse in traditional underwriting standards.
Refinancing During the Bubble Years of 2004-2006
I have my own chart of refinances I like to publish. In 2006, a whopping 88% of refinances has cash out in excess of 5% of the mortgage balance.
In my daily posts, I have examples of individuals who spent their homes. It was very common.
As I explained in my latest BUSINESS INSIDER article, nearly 27 million mortgages were refinanced during these three insane years. Millions of these properties were refinanced more than once, especially in California. Many of the loans were “cash-out refis” where the owner pulled cash out of the house’s growing equity. Because of this, nearly all properties with either first or second liens refinanced during 2004-2006 are now underwater. The total amount of mortgage debt on the property exceeds the value of the property. This does not include the millions of mortgages that were refinanced in 2007 – 2009. A growing number of these mortgages are becoming delinquent. Sooner or later, the banks will have to move against these delinquent owners. This spells real trouble for all major metros.
Lenders will not give away millions of homes to squatters. That just isn’t going to happen. But how will the banks liquidate these bad loans? This year, the lending cartel demonstrated they have the discipline to stop foreclosing and force prices to move higher. It was a remarkable feat given that this is a cartel and such arrangements are inherently unstable. Lenders have had five years to learn how to manage their dispositions. A cottage industry of consultants has sprung up to help banks manage their liquidations. And with no pressures on them to speed their liquidations, it seems likely they will just meter these things out as the market is capable of absorbing them. It will cap appreciation, but as long as they can continue orderly dispositions, the market will not crash.
Home Equity Line of Credit (HELOC) Disaster
During those three crazy bubble years — 2004-2006 — millions of homeowners took out these second mortgages to tap the equity in their home. Some refinanced them one or more times to pull still more cash out of their property. In California, it was not uncommon for banks to provide HELOCs of $200,000 and up. This graph from Equifax shows that while the number of outstanding HELOCs has declined, there are still more than 11 million of them. It is safe to estimate that at least 95% of properties with HELOCs are now underwater. Growing numbers of these underwater homeowners are walking away from their mortgages. The banks cannot indefinitely put off taking some kind of action against them. This will also put tremendous downward pressure on home prices.
So far the banks have shown they can indefinitely put off taking action against properties with HELOCs and seconds. It’s been six years, and so far they have done little or nothing, and until they have the balance sheet strength to absorb the losses, I believe they will continue to do nothing. Particularly now that they believe prices are rising again, the longer they wait, the more likely they are to recover something when they do foreclose. It makes no sense for them to rush to foreclosure today and endure a 100% loss when they can foreclose five years from now and recover some of not all of their capital as the loan will be backed by collateral value again.
15 Worst Major Metro Housing Markets
Serious Delinquency Percentage (through March 2012)
Metro Area In Default (NOD) 90+ Days Delinquent Total Miami 18.70% 4.30% 23% Tampa/St. Pete 16.30% 3.80% 20.10% Orlando 15.70% 4.30% 20% Las Vegas 10.70% 8.40% 19.10% Jacksonville 12.50% 4.70% 17.20% Memphis 8.60% 6.80% 15.40% Cleveland 8.40% 4.30% 12.70% Chicago 9% 3.40% 12.40% New York City 8.20% 3.50% 11.70% New Haven 7.70% 3.30% 11% Atlanta 5.40% 4.90% 10.30% Philadelphia 6% 3.70% 9.70% Phoenix 5.80% 3.70% 9.60% Seattle 3.50% 5.90% 9.40% Los Angeles 4.80% 3.70% 8.50% Source: foreclosure-response.org using LPS Applied Analytics data
This table shows the extent of the shadow inventory in the worst 15 major metros. It includes both first liens in default and those delinquent more than 90 days but not yet in formal default. For the full picture, you need to add roughly an additional 5% for those mortgages delinquent less than 90 days. There is good historical data which shows that – except for modifications — very few of these seriously delinquent loans will become current again. That spells major trouble down the road for all of these metros.
Shadow inventory is at the heart of the bearish argument — and there is a lot of it. The only bullish answer to the issue of shadow inventory is that these liquidations will be orderly and not cause prices to crash. I used to reject these arguments because I know cartels are unstable, but the surprising success of their efforts in 2012 to restrict supply have forced me to rethink this conclusion. It’s clear that the cartel lost control in markets like Las Vegas and Phoenix from 2008 to 2011, but the fact that they regained control in nearly every market since then is something bears cannot ignore.
90-Day Pre-foreclosure Notices Filed with NYS Dept. of Financial Services
February 13, 2010 – June 30, 2012
County Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q Q1 2012 Q2 2012
Totals Bronx 741 2,330 2,660 2,545 3,918 2,849 2,906 2,537 3,645 2,466
26,597 Kings 1,681 5,526 6,393 5,863 8,874 6,901 6,473 5,774 7,683 5,959
61,127 Nassau 2,201 6,992 7,804 6,945 11,739 9,851 8,321 7,110 10,051 7,270
78,284 New York 453 1,260 2,140 2,105 2,453 1,848 1,647 1,678 1,715 1,587
16,886 Queens 2,349 7,743 8,622 7,729 11,973 9,396 8,473 7,663 10,368 7,227
81,543 Richmond 741 2,373 2,577 2,270 3,979 3,030 2,798 2,488 3,332 2,383
25,971 Suffolk 3,245 10,219 11,293 9,843 18,225 13,054 12,159 10,320 15,653 10,737
114,748 Total for 7 Counties 11,411 36,443 41,489 37,300 61,161 46,929 42,777 37,570 52,447 37,629
405,156 State Total 22,001 69,529 73,254 66,627 113,891 83,880 84,144 72,178 98,571 70,848
754,923 This shocking table shows the number of seriously delinquent owner-occupied properties in all of NY City and Long Island. These are confirmed numbers from the NYS Division of Banking. They reveal that roughly 24% of all first liens in New York City and nearly 30% of those in Nassau and Suffolk Counties on Long Island are seriously delinquent. Exceptionally few have been foreclosed. Keep in mind that these figures do not include investor-owned properties. When the banks finally begin to take action against the owners (in the not-too-distant future), prices will really plunge.
New York is going to get crushed. Las Vegas was on the extreme of what happens when foreclosures and liquidations get out of control. New York is on the extreme of what happens if you don’t foreclose on anyone and allow them all to squat.
California – The Current Option ARM Delinquency Rate
These were the most dangerous of all the nonprime mortgages issued during the bubble years. They enabled those living in bubble areas to afford the soaring home prices. More than 40% of all these mortgages were originated in California. This map shows the high very delinquency rate in nearly all California counties. The delinquency rates would be much higher if the banks had not put nearly 30% into mortgage modifications. Together with interest only mortgages, they became known as Alt A loans. There are still nearly $300 billion of these mortgages outstanding. When the banks finally act on these delinquent loans — either foreclosing them or allowing a short sale — this is very bad news for the California housing market.
Many if not most of these loans have already defaulted. The true shadow inventory of delinquent mortgages not yet served notice is populated with toxic loans from the housing bubble. The wave of foreclosures these delinquencies should have created have instead been stored in the reservoir known as shadow inventory. Lenders are slowly draining this reservoir, and they will continue to do so for many years to come. Just as engineers create flood control reservoirs to regulate stormwater flows, lenders have created shadow inventory to regulate the flow of REOs onto the MLS.
Re-Default Rate for Modified Mortgages
Nearly 17 million mortgage modifications and other so-called workout plans have been put in place since the end of 2007. Because they become “current” loans and are no longer considered delinquent, this has caused the delinquency rate to be much lower than what they would have been. This chart shows how more than half of all modified loans in non-Agency mortgage-backed securities (MBS) have re-defaulted. The banks will have to either foreclose on them or put them up for a short sale.
Loan modifications are simply can-kicking. They serve the banks two ways. First, it gets a few more payments out of non-performing loans. Any income is better than none at all. Second, it delays the ultimate loss recognition and postpones the liquidation date to a time when they may lose less and there is not such a large backlog. In other words, it smooths the flow of bad loans into the shadow inventory reservoir and further assists regulating the liquidations.
Growth of All-Cash Home Purchasing
This graph from Morgan Stanley shows all-cash purchases in 10 major metros as a percentage of the three main types of sales – REOs, short sales, and non-distressed sales. The percentage was fairly flat until the collapse of the housing bubble in 2007. Then the percentage of purchases that were all-cash sales began to rise sharply. You can see that the greatest percentage increase in all-cash transactions was for REO sales. But the percentage of cash buying for non-distressed sales rose sharply also.
Whenever there is a credit crunch, the loan financing dries up, and cash sales become far more common. When prices get low enough, cash buyers step up in large numbers because the cap rates on these properties become an attractive investment. That’s why billions of dollars is flowing into the REO-to-rental space right now.
Declining home prices have decimated the trade-up market and buying with a mortgage as well. This trend continues and the trade-up market will not return.
The move-up market will be dead for quite some time. An entire generation has lost their equity for a move-up. This is one market segment I am still bearish on.
Phoenix – Percentage of Home Sales That Are REOs
Pundits point to Phoenix to support their case that the housing market has bottomed. This chart shows the plunge in the percentage of homes sold in the Phoenix metro since the spring of 2009 which were repossessed homes. Early in 2009, in the midst of the credit crisis, 2/3 of all properties sold there were repossessed homes. Then the banks sharply curtailed their sale of REOs. Yet even a year ago, nearly 40% of all homes sold were foreclosures. Since then, banks have slowed the number of REOs on the active MLS to a mere trickle. This has artificially pushed up the median price and fooled analysts into believing that the worst is over. It’s not.
There is no question the restriction of inventory is voluntary and artificial. I am shocked that lenders pulled it off. But is it sustainable? Only time will tell. At this point, there is so much private equity money ready to buy in these markets that even if REOs were to increase, there is significant demand at the low end to absorb them.
Continued Decline of Home Prices Throughout New England
SINGLE-FAMILY HOME PRICES IN NEW ENGLAND
Year-to-Date (January Through July 2012)
Location Avg. Price Per Square Foot Change from 2011 Connecticut Entire State $194 down 7.5% Fairfield County $297 down 7.9% City of Hartford $82 down 4.6% City of New Britain $76 down 19% City of Stamford $251 down 2.9% Shelton $143 down 11.2% New Canaan $394 down 8.3% Redding $187 down 12.2% Stratford $145 down 7.3% Madison $206 down 11.6% Massachusetts Framingham $169 down 3.7% Worcester $109 down 2.9% Rhode Island Warwick $123 down 5.6% Pawtucket $99 down 14.5% New Hampshire Nashua $116 down 5.4% Concord $106 down 3.5% Source: Wm. Raveis & Co. – raveis.com
This table is very important. It shows the year-over-year decline in average price-per-square-foot for single-family homes sold in four New England states. This is the best way to compare home prices over time. These are actual, raw figures, not an index like Case-Shiller. Prices are still dropping in just about every town/city in Connecticut. This is the real housing market. The pundits can’t spin these figures.
In future writings, I will show how this is occurring in other major metros around the country.
Keith is right. The Northeast is getting whacked, and it will continue to do so. While the rest of the country enjoys a modest recovery, the Northeast will “inexplicably” continue to decline. Of course, we all know the reason is because they delayed their foreclosures, but the general public will continue to be mislead by a clueless media regurgitating NAr spin. I am bullish on low-end properties in the West. When it comes to move-up properties in the Northeast… not so much.
Good for one family, bad for another
In a stable real estate market, timing wouldn’t matter much. In most of the country prior to the housing bubble, markets would appreciate slowly at the same rate as local wage inflation. It didn’t matter much when you bought a house as it would cost the same portion of your income to get the same quality house. That is no longer the case.
Now, it becomes very important to time the housing market well. If you do, you get rewarded with a windfall of free money from the appreciation fairies. If you don’t, you end up with a millstone around your neck or a foreclosure on your credit report. Today’s featured property is the story of two families. One that owned for 17 years and nearly tripled their money. The other bought at the peak and lost everything. That’s not how the system is supposed to work.
- This property was purchased for 175,000 on 10/12/1989. The original loan amounts are not available, but it was likely a 20% down purchase.
- On 10/23/2003 they refinanced with a $208,000 first mortgage.
- On 1/26/2004 they refinanced with a $250,000 first mortgage.
- On 8/25/2004 they refinanced with a 306,000 first mortgage.
- On 6/6/22005 they refinanced with a $384,000 first mortgage.
- On 4/13/2006 they sold the property for $427,5000.
They didn’t get much of an equity check at the closing table because they spent most of it, but they did escape with a profit and their credit intact. You have to imagine they planned on repeating this behavior in their next house. Why wouldn’t they? It worked well last time.
The owner who bought in 2006 didn’t make it. She quit paying in early 2009 and squatted for three years, so she has little to complain about, but it didn’t work out as planned for her.
Wouldn't you be embarrassed to overpay by $100,000? Only fools buy houses without knowing neighborhood values. Don't be a fool. Don't suffer the pain of an underwater mortgage. The surest way to lose your house is to overpay for it. Our reports identify overvalued and undervalued neighborhoods. Use it to broaden or narrow your search area. Savvy buyers work with us to find bargains. We've saved thousands from financial ruin. Let us save you too. If you want peace of mind while shopping for your next home, sign up for our monthly market newsletter.
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Proprietary OC Housing News home purchase analysis
12922 VILLAGE Rd Garden Grove, CA 92841
$427,500 …….. Asking Price
$175,000 ………. Purchase Price
10/12/1989 ………. Purchase Date
$252,500 ………. Gross Gain (Loss)
($14,000) ………… Commissions and Costs at 8%
============================================
$238,500 ………. Net Gain (Loss)
============================================
144.3% ………. Gross Percent Change
136.3% ………. Net Percent Change
4.0% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$427,500 …….. Asking Price
$14,963 ………… 3.5% Down FHA Financing
3.44% …………. Mortgage Interest Rate
30 ……………… Number of Years
$412,538 …….. Mortgage
$106,289 ………. Income Requirement
$1,839 ………… Monthly Mortgage Payment
$371 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$107 ………… Homeowners Insurance at 0.3%
$430 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$2,746 ………. Monthly Cash Outlays
($272) ………. Tax Savings
($656) ………. Equity Hidden in Payment
$16 ………….. Lost Income to Down Payment
$127 ………….. Maintenance and Replacement Reserves
============================================
$1,961 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$5,775 ………… Furnishing and Move In at 1% + $1,500
$5,775 ………… Closing Costs at 1% + $1,500
$4,125 ………… Interest Points
$14,963 ………… Down Payment
============================================
$30,638 ………. Total Cash Costs
$30,000 ………. Emergency Cash Reserves
============================================
$60,638 ………. Total Savings Needed
The property above is available for sale on the MLS.
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60 Responses to “Why the housing crash is far from over”
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There are problems for the ‘bottom is in’ crowd…
1) all of the data being dispersed is essentially being formulated in reaction to artificial stimulus, NOT fundamentals; massive debt-monetization, deficit spending, bureaucratic intrusions into the market and speeches delivered by an emperor who represents banks, not the populous.
2) most of the rental parity models are flawed because they haven’t factored-in price depreciation as an additional monthly cost vs renting.
More to follow
You’re correct to point out that all of it is artificial. However, surprising at it seems, it appears to be working.
A movie called ‘The Truman Show’ provides the answers people seek.
Thanks to Larry for posting my article. I sent it to only a few analysts and media types who can understand the significance of what I’ve been reporting for more than 2 years.
He and I agree on so much concerning the housing bubble and collapse. The difference essentially is whether the servicing banks can “control” the liquidation of the growing distressed properties. If you take a really careful look at the delinquency charts and tables in my article, the numbers are truly mind-boggling.
I emphasize more than Larry that this pipeline is continually growing as real prices slide lower. It’s as if you had a bathtub which is draining very slowly but where the faucet is still open and letting in water at a faster pace. Eventually it will overflow the tub.
Take another good look at the NYC and Long Island delinquency table. It’s the most accurate and complete in the nation. I will get the 3d quarter update from my contact at the NYS Division of Banking in a few days and it will be higher than ever in each of those seven counties.
Though I can’t show it yet, my bet is that this is also happening in other major metros. Disregard the delinquency stats from the Mortgage Bankers Association, Core Logic or LPS. I no longer trust them at all. The serious delinquency table I posted for the 15 worst major metros is more accurate than any of them.
I guess it boils down to whether or not you believe — as Larry apparently does — that the banks can indefinitely dribble out few foreclosed properties for sale in an “orderly” way. Wall Street thought it could control the post-1929 decline of stock prices in an orderly way. Gee, that didn’t work, did it?
Bernanke thinks he can contribute to this orderly liquidation with his low rates and QE3 etc. He’s the biggest and most dangerous fool of them all.
If you are a worried homeowner, think carefully about what Larry and I are saying. If Larry is right, that’s good. But what if I am right? Then you have a window of perhaps a year at most to decide what to do with your house.
Yes, the key difference between Keith’s view and mine is whether or not lenders can manage the flow of their liquidations. I didn’t used to think it was possible because of what I was witnessing in markets like Las Vegas or Phoenix where they lost control. The restriction of supply lenders engineered in 2012 has changed my mind.
Lenders have no pressure to liquidate. They can borrow unlimited money from the federal reserve at no cost, and they aren’t being forced to recognize their losses by regulators who are allowing them to mark their loans to fantasy values. With those two circumstances, lenders can take as long as they want to liquidate.
The change that really pushed me over the edge was Bernanke’s pledge to buy mortgage backed securities with an unlimited budget for as long as it takes to make house prices go up. Interest rates will remain low until the banks complete their liquidations. Now the banks have customers who are capable of bidding prices up to the insane levels of the housing bubble due to low interest rates. And since this stimulus is committed to be in place until the mess is mopped up, I don’t think prices will go down much.
All that being said, the problems in the Northeast where Kieth is located are much worse than ours here in the West. If there are going to be big price drops, it will happen in the Northeast. Their prices are still too high, and they have a far larger shadow inventory than we do here in the West.
I have two friends who are prospective strategic defaulters. We have all talked about it in detail for five years, yet none has pulled the trigger (it’s an option with no expiration). After Bernanke’s announcement, both of them are looking forward to 3% 30-year mortgages and both are now very likely to bring cash to the closing to cover the underwater portion.
The underwater refinance program was a substantial gamble with taxpayer funds, but it may be paying off. If they get rates low enough, many of these borrowers may not redefault in the long run because their payments are below comparable rentals. That was always the hurdle that prompted most strategic defaults.
IR – I would assume you may have seen the HW article this morning equating California’s new foreclosure law to a “nuclear weapon” for trial lawyers. It’s official now. California is a judicial foreclosure state and there will be no mass liquidation of properties. That dream is dead.
I believe you are giving banks too much credit for their “self control” and not enough credit to this type of sweeping legislation that changes the game overnight
You saw it first hand in Vegas. One day there were more deals than you knew what to do with, the next day nothing. The only big change was Nevada’s foreclosure law that put a halt to non-judicial foreclosures by threatening banks with criminal prosecution for minor paperwork errors.
California’s law goes even further by prosecuting banks for unfairly denying modifications. You can bet ANY mod denial will be deemed unfair and worthy of criminal prosecution UNLESS a foreclosure judge says otherwise. Why deal with the risk of prosecution? Just let the damn judge decide if a mod denial, and the resulting foreclosure action, are legal or not. It’s the only choice that makes sense.
The only advantage I see for California is that we’ve already liquidated so much of the bad inventory, whereas New York and Nevada have barely gotten started. We have a notable head start that should lessen the damper this will have on local RE prices.
I didn’t see that headline. I will use it for a post next week. I think he has exaggerated the effect. I don’t think it will be as bad as what happened in Nevada. Plus, as you pointed out, we have already processed a lot of our garbage, and the banks are content to process the rest as slowly as they can.
You’re exactly right about how legislation can change the game overnight. That’s how I now view Bernanke’s decision to buy mortgage-backed securities with an unlimited budget until “conditions improve.” This is the ultimate bazooka. Until he made that announcement and backed it up with actually buying these securities, there was always an uncertainty about interest rates. Removing that uncertainty really changes my perspective.
“Keith Jurow said…I guess it boils down to whether or not you believe — as Larry apparently does — that the banks can indefinitely dribble out few foreclosed properties for sale in an “orderly” way. Wall Street thought it could control the post-1929 decline of stock prices in an orderly way. Gee, that didn’t work, did it?”
Keith, ive been following you around the intertubes for years, asking you address this question (below), and every time I do, you run away without answering. Hopefully you will do so now…
The CENTRAL issue here Keith is the relaxation of “mark to market” MTM accounting (FASB #157), and how it dictates what banks can and cannot do. Say for simplicity’s sake a bank had 100Million in bad loans and was on average earning 1Million a month (12M a year) on good loans.
Now, when MTM was in effect, the bank was showing 100M in losses vs 12 million in earnings, meaning it was INSTANTLY insolvent, and subject to loss remediation measures and/or takeover by the FDIC. It was also out of covenant with various intercreditor agreements which (again for arguments sake) would say you could only have bad loans to earnings on a 1:1 ratio. Clearly this was an untenable situation so (circa 2007-2009) the banks rushed to purge their ranks of the bad loans, dumping inventory en masse, the idea being, you could quickly get back to that 1:1 ratio.
Now, round about mid 2009, MTM was relaxed and this changed EVERYTHING. Suddenly, the bank didnt have to show a position of 100M in bad loans vs 12M in annual earnings. Suddenly, under “mark to fantasy” they do not have to “recognize” those 100M in losses vs the 12M in earnings. Instead, the point of “regognition” is when those homes are SOLD. (See the IRS rules on recognition if necessary.) Thus, they could say the 100M in losses is really only going to be 12M in the current year, and thus offsettable vs current incomes.
Accordingly,so long as MTM is relaxed, the banks will dump ONLY SO MUCH OF THE PROBLEM HOUSES AS THEY THEN CAN “RECOGNIZE” AND OFFSET VS CURRENT INCOMES. Thus, in my example, since they are only earning 1M a month in profit from good loans, they will only sell 1M a month (or less) in homes to offset that profit. And again, if they even TRY to dump more in homes than they can offset vs current incomes, they will be potentially subject to INSTANT SEIZURE and SHUTDOWN by the FDIC.
Clearly, no banker is going to do something that is going to cause him to lose his job and have the bank shut down. Therefore, he will keep dribling the inventory out in drip drip, drip, fashion AS LONG AS IT TAKES, SIMPLY BECAUSE HE HAS NO CHOICE!!!
Does this make sense to you Keith? If so, please refute it and show me why my understanding of GAAP accounting and loss mitigation rules via the FDIC is incorrect. Sorry to do the all caps yelling, but I have been trying to get you to focus on this issue for years…
I would add that the evidence of this slow drip can be found in the filing of the banks. Each quarter, they recognize a fairly consistent amount of losses on all types of real estate loans. They have been earning their way back to solvency and writing off their bad loans as they go.
One bearish point is that this process is nowhere near complete. Banks have several more years of liquidations ahead of them, and these liquidations should put a ceiling on house prices.
One bearish point is that this process is nowhere near complete. Banks have several more years of liquidations ahead of them, and these liquidations should put a ceiling on house prices.
Agree wholeheartedly the chance of bigtime price appreciation is somewhere between slim and none. Still, im not sure this is a “bearish” point as much as it is a “neutral” one.
I think too its a matter of perspective. I believe Mr. Jurow thinks we will see cataclysmic (as in 50%) price declines in the next year or two. Thus, relative to him, the idea that there will be a ceiling on price increases is wildly bullish.
Okay, I’ll give it a try. I am quite familiar with the 2009 changes in how the banks could handle non-performing loans. Of course, it freed them from having to mark-to-market and bailed out essentially insolvent big banks.
But does this mean we know what the banks will do with their growing number of seriously delinquent mortgages? They will try to do what you say. But tremendous pressure is being put on them to recognize losses on their home equity lines of credit (HELOC). No one seems to discuss this. The four largest too-big-to-fail banks own nearly $400 billion of them. FHFA would like them to write down (or write off) their underwater HELOCs to facilitate short sales on the first liens. The banks are doing this in large numbers. Go to their latest FDIC call report (on the Internet) and look at their HELOC writedowns.
You see everyone is focusing on the delinquent first liens. But it’s the second liens which could take down the Big 4. Recent California legislation has actually encouraged underwater homeowners to walk away from their second liens. No risk for them.
So while I agree that the banks will do everything possible to avoid foreclosing on the first liens which they own, their problem is much larger than that. Take a look at my comment above and my bathtub analogy. The real shadow inventory is growing daily. No accounting bailout will fix that problem.
“They will try to do what you say. But tremendous pressure is being put on them to recognize losses on their home equity lines of credit (HELOC). No one seems to discuss this. The four largest too-big-to-fail banks own nearly $400 billion of them. FHFA would like them to write down (or write off) their underwater HELOCs to facilitate short sales on the first liens.”
I am well aware of what they would like. At the time we told them, respectfully, go F yourselves. Got the AG to render an opinion that yes, they have no authority to make us do anything… even went as far as to say its largely “posturing” in that if push came to shove, they would back down. So as I noted, nothing is going to change to the drip drip drip method.
“You see everyone is focusing on the delinquent first liens. But it’s the second liens which could take down the Big 4. Recent California legislation has actually encouraged underwater homeowners to walk away from their second liens. No risk for them.”
I dont care whether its first or subordinate. Its largely immaterial to my point. Even if CA did encourage more walk away, that would not change the drip, drip, drip, perspective.
“Take a look at my comment above and my bathtub analogy. The real shadow inventory is growing daily. No accounting bailout will fix that problem.”
Respectfully, you are really out of your element. Back in 08 when we first started working with this bank, the prognosis was to drip them out for 17 years. Incredibly, as the crisis deepened in 09, the time to drain the bathtub was briefly 46 years!!! Nowadays, its closer to 11 years I believe.
In any event, the analogy is misplaced. Its not so much a bathtub as it is a sealed tank. They cant overflow. Given the current regime, its impossible.
CRT,
Would you be willing to write about your perspective on what is going on? I think it would be a valuable insight because so few truly grasp the implications of the periodic debt write downs. It impacts the rate of foreclosure processing and REO sales, plus this steady flow of supply over the coming decade will supress appreciation for a long time. I don’t think many fully get this concept. Your insider knowledge would be most illuminating.
You mean like a guest post? Yeah, I guess so when I get a few minutes. What would you like – basically for me to expand on this point?
Yes, if you could expand on that point as a guest post, that would be great. If you could explain the issue to the readers they way you explained it to the banks you were dealing with, I think it would go a long way toward getting people to understand the nature of overhead supply and why shadow inventory is such a problem. From what I read in comments on other blogs, shadow inventory and overhead supply is being completely dismissed as something akin to a UFO sighting.
The conclusion that reduced foreclosures is a sign of the industry “finding its footing” is completely wrong. Foreclosures are down because lenders have voluntarily slowed their processing, not because they are out of people to foreclose on. However, the old saying is that you can’t fight the tape. Lenders are succeeding in withholding inventory to drive prices higher.
Recovery Finds ‘Footing’ as Foreclosures Fall: CoreLogic
Completed foreclosures continued their progressive decline, and foreclosure inventory fell to its lowest level since April 2010, CoreLogic reported Thursday.
In August 2012, 57,000 homes were lost to foreclosure, down from 58,000 in July and 75,000 a year ago, according to the report. The yearly decrease represents a 24 percent decline.
“August marks the fourth month in a row there were fewer completed foreclosures, which is more evidence that the housing industry is finding its footing,” said Mark Fleming, chief economist for CoreLogic.
Since the financial crisis began in September 2008, 3.8 million homes have been lost to foreclosure.
Fewer homes with a mortgage were also in the foreclosure process in August, with foreclosure inventory numbering about 1.3 million homes, or 3.2 percent of all homes with a mortgage, down from last year’s 1.4 million homes, CoreLogic reported. Foreclosure inventory remained unchanged on a monthly basis.
Anand Nallathambi, president and CEO of CoreLogic, gave credit to foreclosure prevention efforts for the decline.
“The reduction in foreclosure volumes is to some degree being facilitated by the rising popularity of alternative resolution methods, such as short sales and loan modifications,” said Nallathambi.
While the national numbers are down, certain states are still seeing a high number of foreclosures, with five states accounting for 48.1 percent of all completed foreclosures, according to the report.
California led among the five states with 110,000 completed foreclosures over a one-year period ending in August. Florida ranked second, with 92,000 foreclosures, followed by Michigan (62,000), Texas (58,000) and Georgia (55,000).
South Dakota, however, only saw 25 completed foreclosures. Other states with fewer foreclosures included Hawaii (435), North Dakota (564) and Maine (612).
While California had the most completed foreclosures, Florida took the lead for having the highest percentage of mortgaged homes in foreclosure inventory, leading with 11 percent.
New Jersey came in second with 6.5 percent, followed by New York (5.2 percent), Illinois (4.8 percent) and Nevada (4.6 percent). Nevada is the only non-judicial state among the top five.
Four states had less than 1 percent of homes in foreclosure inventory: Wyoming (0.5 percent), Alaska (0.8 percent), North Dakota (0.8 percent), and Nebraska (0.9 percent).
Bernanke is having success in lowering mortgage rates.
Mortgage Rates Find New Bottom for 2nd Straight Week
For the second week in a row, mortgage rates hit new record lows, and for the first time since mid-October 2009, the 15-year fixed-rate mortgage is lower than the 5-year adjustable-rate mortgage (ARM).
The average 30-year fixed-rate mortgage for the week ending October 4 was 3.36 percent (0.6 point), down from last week’s average of 3.40 percent, according to Freddie Mac. Bankrate also recorded a fall in the 30-year fixed-rate mortgage but recorded an average rate a little higher at 3.52 percent (0.44 point).
The 15-year fixed-rate mortgage fell to an average of 2.69 percent (0.5 point), down from 2.73 percent the previous week, according to Freddie Mac. Again, Bankrate recorded a slightly higher average, albeit a record-low for its index. The 15-year fixed-rate mortgage averaged 2.84 percent, according to Bankrate.
The 5-year Treasury-indexed hybrid ARM was the only rate to rise over the last week, up to 2.72 percent (0.6 point) from 2.71 percent the previous week, according to Freddie Mac.
The 1-year Treasury-indexed ARM fell from 2.60 percent to 2.57 percent (0.4 point).
Frank Nothaft, VP and chief economist at Freddie Mac, attributes the falling rates to “mortgage securities purchases by the Federal Reserve and indicators of a weakening economy,” such as slow personal income growth in August–just 0.1 percent–a 2.6 percent decline in pending home sales, and last quarter’s downwardly revised Gross Domestic Product.
According to Bankrate, the “historically low rates led to a surge in refinances last week.”
Looking forward, Bankrate suggests it’s unlikely rates will rise “anytime soon.”
Survey: 32% of Americans Justify Strategic Default
The housing crises seems to have led Americans to take a less critical view of strategic default.
According to a recent survey that polled 1,026 U.S. adults, 32 percent stated they believe homeowners should be able to strategically default without facing consequences. The online survey was conducted by JZ Analytics on behalf of ID Analytics.
ID Analytics also reported 13 percent of the surveyed Americans said they are likely to strategically default on a mortgage, and 17 percent said they know someone who has strategically defaulted.
The statistics were revealed Wednesday at ID Analytics’ Advance 2012 conference.
John Zogby, senior analyst at JZ Analytics and creator of the Zogby Poll, presented the results at the event.
“Our research into the consumer opinion of the economic crisis of 2008 found alarming results,” Zogby said. “What jumped out is how many Americans feel it is acceptable for homeowners to walk away from a mortgage and go into foreclosure. If Americans carry on with that mindset, it will continue to cause problems as the economy undergoes a slow recovery.”
Some of the survey respondents justified their position on strategic default because they believe the “mortgage market has been a scam for many years, built on false promises that took advantage of people that didn’t understand what was happening,” according to a release.
Low credit scores don’t appear to bother people very much as well, with 36 percent of those surveyed stating they believe it’s socially acceptable to have a poor credit score.
In addition to those findings, 17 percent said they would exaggerate personal information to obtain credit.
It would be interesting to see how “strategic default” was defined for the people polled. What percentage of defaults are truly “strategic”? I’d guess less than 20%. Defaulters like to claim their foreclosure or short sale is due to their “weighing of all the financial factors and coming to a reasonable conclusion that this was the best course.” But the truth behind that narrative they’ve created, is that they really stretched their finances to buy a house using max DTIs and creative financing; and they could continue to kill themselves each month to pay their housing costs, but they’ve awakened and realize they need to reset their lives.
I meant to finish with…
This is not strategic default. It’s capitulation. It’s accepting your poor decision and choosing to move on.
True “strategic default” is when this household chooses to default: An underwater household whose housing costs make-up less than a third of their gross income, and who has sufficient savings and/or the ability to pay-down the mortgage to cover the underwater portion in two years or so.
Interesting semantic difference. The result is the same though, the people quit paying their mortgages. The people who are capitulating will make up many of the equity sales over the next several years as many will wait until they are back above water to sell.
I agree with Perspective’s definition of strategic default, although I think the percentage is probably higher – like maybe 40%. Nearly all modifications since ’09 bring the payment to borrower affordability, so by definition every mod default should be viewed as strategic, except in cases of job loss.
By the definitions you guys accept, very few defaults were truly strategic. I have always thought of strategic default as a form of accelerated default. The borrowers were already in distress, and they finally made the decision to get out. I think this is most defaults. I always considered them strategic because it takes planning and decision making even if the decision is made in duress.
“…By the definitions you guys accept, very few defaults were truly strategic…”
That’s my take. There’s nothing strategic about defaulting on a mortgage that us burying your finances each month. Default is an inevitability (without appreciation) under these circumstances. You’re not being forced-out by the bank today, but you’re not saving a dime, your car is old and you can’t afford repairs, and you’re paying your property tax bill with a credit card.
Keith Jurow is a true bear and is not sorry for it. He backs it up with data. If cost of living continues to increase in California. I just $4.60 a gallon and stopped filling up when I looked at the price, then available budgets for housing will decrease even with low mortgage rates. Incomes have decreased 8.2% over the last 4 years. However, unemployement is under 8%, but the real number U-6 which around 20% in California.
Bernanke: QE3 to continue indefinitely until employment improves
—————————————————
10/5/12: Jobless rate falls to 7.8%
Will revisit on 11/2
I read some of the other federal reserve governors setting a target of 5.5% unemployment. It will take two or three years at least to get to that level, and that’s assuming we don’t have another recession.
Bernanke’s term is up in 2014.
PS I wonder what is going to happen at that time. I can’t image him getting a new term.
Despite his mistakes, many will view Bernanke as a hero for how he handled the 2008 crisis. I bet he does get reappointed.
Market cheerleaders say ‘shadow’ homes won’t crush housing
Investors and homeowners needn’t fear homes in the “shadows” of the housing market, a panel of experts said as the California Association of Realtors wrapped up its annual conference in Anaheim this week.
The housing market’s so-called “shadow inventory” has long been considered a threat by unleashing an avalanche of discounted foreclosures onto the housing market. But members of CAR’s economics panel said distressed homes will continue to trickle back onto the market bit by bit.
“We know that the shadow inventory exists. Will it translate into a volume of properties that will dump on the market at one time? We just don’t think so,” said Michelle Lenahan of ForeclosureRadar, an online site that tracks foreclosures.
Shadow inventory refers to the hidden backlog of foreclosures or potential foreclosures that have yet to hit the market. They include homes that have delinquent mortgages, homes in some stage of foreclosure and bank-owned homes that for some reason haven’t gone up for sale yet.
Santa Ana-based housing data giant CoreLogic estimated earlier this year that one out of every three potential homes for sale was part of the shadow inventory – or about 1.6 million homes nationwide.
In California, 421,000 homeowners currently are delinquent on their mortgages, Lenahan said. And 168,000 more are in some stage of foreclosure.
The number of bank-owned homes coming onto the market is trending down, she said. Seventy-five to 80 percent of foreclosure sales are being postponed.
“If you’re waiting for that foreclosure wave to hit after the first of the year, I’ve been hearing that for the last four years,” she said. “I just don’t see it happening.”
Aliso Viejo broker Steve Thomas of ReportsOnHousing.com concurred.
“As far as the short sale inventory and foreclosure inventory having an affect on the market as far as the number of total sales, I don’t think we’re going to see it,” Thomas said. “Instead, we’re going to see the corollary. We’re going to start to see more equity sellers.”
There won’t be a spike in bank-owned foreclosures hitting the market without a big increase in default notices and foreclosure notices, and lately they’ve all been trending downward, panelists said.
Joel Singer, association CEO and former chief economist, argued that California’s foreclosure process is ranked among the most efficient in the nation, meaning that if lenders wanted to foreclose more homes, they could do it reasonably quickly.
“I do feel good that in the California marketplace is going to give us advance warning,” Singer said. “From the standpoint of there being a huge inventory coming out at a particular point in time, when somebody tells you that, you probably ought to turn and walk away.”
Wow, excellent analysis all around. I am surprised that you haven’t yet discussed the WSJ article from two days ago about the battle between FHFA and the TBTF banks over who will partner with private equity titans to pick up millions of shadow inventory units. It appears to have been decided that the best way to drain the swamp is to give all these houses to PE, but even our oligarchy doesn’t have that kind of money (or rather, doesn’t see why it should have to risk its own capital). So who will give it hundreds of billions in new loans?
Once this little kerfuffle is settled (guys, guys–let’s split it–a couple million for you, a couple million for us!), and once our pesky quadrennial exercise in “democracy” is over, there will be a giant cleansing of the bowels that will really shake things up. It’s got to happen fast, because congress critters will want it all over long before the next election.
Regarding the jobs numbers today: more people dropping out of the work force and more part time jobs for economic reasons.
Larry Roberts (IR), please see my comment above. Given that you hold sway with Mr. Jurow, can you see to it that he addresses my comment above? I say it, not with a sense of “told you so” partisanship that most bubble blogs have, I just want him to have a better understanding of the issue at hand.
Full disclosure, I am not an accountant but a transactional attorney practicing in the DC area. Back in 2009, I did some work with a few small banks on changes to GAAP accounting per the relaxation of MTM rules. However, I have not done any work on that since, so the rules may have changed or (given that I am not an accountant) my understanding of loss recognition/realization may not be correct. If so, I fully invite Keith to correct me. Cheers.
I’ll see what I can do. Thanks for providing your comments and insights.
Thank you. Seems to me if his intent is to truly “help” people, he will address those areas of his argument which are (as I understand it) not just unlikely but actually impossible under this current regime.
Still, I think I brought this point up at least once before, and he just ran away, only to repeat the same irresponsible argument. However, its possible he just missed my comment before.
Good thing now is I know he sees this, and knows we are waiting for a response. We shall see if he can actually step up and address my objection to his argument.
PS – love your blog!
Thanks for the kind words, and thank you for your readership.
I emailed Keith about your comment. Hopefully, he will address your points. I am curious as to how he will respond too.
“…Seems to me if his intent is to truly “help” people…”
I’d ask, which people too? IR’s focus is spot-on for most of us – “Should you buy a house to live-in today and what are the risks?”
Focusing on rental parity foremost, makes the decision much easier because you can discount future price appreciation/depreciation. Besides, it’s not really an “investment” to most people here. A house you live in is more akin to a consumable like a car, but with the sincere hope that there may be some serious residual value 5, 10, 20 years out.
CRT,
You’ll see that I have responded to your point. Now tell me, what do I say in my articles (30+ of them on BUSINESS INSIDER) that you find “irresponsible?” My articles focus on stats, charts, graphs and tables that you’ve probably never seen before. Do you read them carefully? Did you read the ten charts in this article carefully? Or my explanation of their importance? That’s why Larry posts my writings — to help educate you.
You can disagree with my conclusions. No problem. But it’s my data that you need to come to grips with. I base my conclusions on the data. I understand that attorneys love (and get paid) to dispute and argue. I know because I taught constitutional law for many years.
But we’re not in a courtroom. I’m trying to save my readers from possible financial ruin. The number of homeowners with equity still left in their home is shrinking and time is running short. Had underwater owners bailed out of their house two or three years ago, they would have certainly been better off. It’s still not too late. I’ll continue to show the evidence why the housing bottom idea is nonsense.
Now tell me, what do I say in my articles (30+ of them on BUSINESS INSIDER) that you find “irresponsible?”
Only your inability to address the idea that there will be a massive DUMPING of the shadow inventory (vs the drip, drip, drip reality) as I noted above.
FAS-157 is still in full-effect: http://blogs.wsj.com/marketbeat/2007/11/15/a-fas-157-primer/
Umm, did you read the date of that article??? 2007??? The argument is it was suspended in 2009.
[...] growing equity. Because of this, nearly all properties … … See the original post: Why the housing crash is far from over » OC Housing News ← Housing Market: California Home Sales and Prices Expected to [...]
The banks can manage this market as long as the FED keeps interest rates so low.
For example, I have a credit card now with about $10,000 on it that I got a 18 month ZERO interest teaser rate… Well, guess what, I’m gonna transfer that money to another 18 month teaser 0% credit card before this one expires.. put it in a drawer and pay the minimum.
This is what the banks are doing… They have massive debt that the FED is giving them 0% interest on. So they put it in a sock drawer, pay off the balance slowly and pay no interest on the debt.
Yes, that is exactly what they are doing. Since they have this zero interest credit card, all the non-performing loans on their books aren’t costing them anything. Ordinarily, a large number of non-performing loans would be the death of a bank because they would go bankrupt paying their depositors. Right now, banks have a zero cost of capital, so they can allow the delinquent mortgage squatters to stay in place until prices rise and the banks can afford to take the losses.
Au contraire, remember, you calculate both the cost of debt and the cost of equity + a few other elements to determine actual cost of capital. Banks may be able to borrow at 0 but their actual cost of capital is not 0, it’s about 4.25%. Check it out….
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/wacc.htm
Also, despite ZIRP, about half of today’s top 25 banks aren’t even earning their cost of capital, which is very telling. More irrefutable proof that an Ivy-League education is the most over-rated/over-priced education in the entire world. just say’n.
The reason I made note of this is because at some point, should the fed lose some control of the bond markets and rates rise a bit coupled with any increase in cost of capital, this scenario could be the one catalyst that forces more ‘shadow’ out into the market. My guess is we’ll see this play-out somewhat this Spring.
BTW, no need to make note of this post because MellowRuse has already done so
So what does this mean for a first time buyer like me waiting on the sidelines? I have A+++ credit, FICO is 800, i’m going to put a down payment up to 100k. My primary market is Garden Grove, and based on what I’m reading here, I assume the course of action is to “wait”? Housing prices have been inching up lately, but I am somewhat bearish as well. I believe they will drop; however, I don’t see this really happening due to the market manipulation. I can afford a $500k home, but at the same time, I don’t feel that the market value of these houses is worth the asking price. I feel like letting this wave of investors and cash buyers to get what they want now, and then jump into action when there is less demand.
I have been advising people to wait, mostly because there is so little inventory available locally. However, my reports are giving a strong buy signal, so my advice now is not to wait. If you can find a property, and that is a big if, I see no reason to wait any longer. The cost of ownership is not likely to decline from here.
Thanks. I haven’t really found one I like. The ones that I do, usually get multiple bids. I’m seeing mostly houses on the market for 100+ days, these are the junk houses. I think people are getting desperate and in a panic buying state. I really don’t see the need to rush in even if the inventory is at a trickle.
I thought the whole point of QE3 and everything that is going on is to improve the housing market. I don’t see it this way, and I feel like I don’t want to bother looking anymore as I’ve lost all faith in this industry.
Great comments all around. I don’t know which part of this blog I still find more addicting, the daily posting or the comments.
I can’t help but LOL comparing the reputable nature of today’s comments to the trolling of “Truthiness” (~2007) and all her other names here and at the OCWeekly. If you don’t remember, good, because you can be always be similarly amused by watching TV like Springer or Fox news.
best wishes
Truthiness was one of the only two people I ever banned from the IHB. I know her real identity, but I won’t post it here. She is/was an Orange County mortgage broker who never could accept the collapse of the housing bubble. She was the most extreme case of cognitive dissonance I have ever seen.
Thanks for stopping by. I hope your enjoying your wonderful new home in Florida.
I love the new home, but there’s waaay too many Romney signs on my street for my comfort. If I have time I’ll go get an Obama sign for my lawn and then we’ll see if there’s any trouble over that.
Truthiness was an absolute lunatic with a severe blogging addiction. Maybe the hint that the market was crashing was how much time she was able to spend commenting every day, instead of originating new business.
She quit the Lansner blog in a huff because she perceived that he blocked one of her comments, while allowing a bearish adversary’s comment to post. In reality it was the horrible spam blocking software that probably blocked her. So she quit over a software glitch.
Truthiness was insane but a source of great entertainment.
+1 !!!
Lansner’s blog was ‘alive’ back in the day. Sadly, not the case today. I wonder if OCR regrets the switch to FB?
Some classic exchanges below…..
Enjoy!
http://lansner.ocregister.com/2007/11/10/insider-qa-learns-how-a-housing-expert-goofed/
The Fed’s stated policy
of open-ended purchases of
TBTF bank mortgage backed
securities (which will be at
those banks’ NON-mark-to-
market prices) also looks like
a policy of “the fix is in”
following on the one aimed at
those who SOLD the bubble titled
“Hand It Over.”
Once the excess valuations are on
the Fed’s balance sheet, and the
securities can be sold back to
the banks at market prices,
the banks’ SHORT positions will
pay off as well.
Those who SOLD the bubble have gotten
zilch for income on the proceeds so
the banks could be carried by the Fed.
The loss sharing and mortgage re-works
have been essentially a cover for
keeping the mortgagors on board till
the process was completed.
http://www.bloomberg.com/news/2012-07-22/bungled-bank-bailout-leaves-behind-righteous-anger.html
That latter group should’ve enjoyed
a non-recourse regime everywhere and
not had their feet held to the fire.
The U.S. NEEDS risk taking.
http://online.wsj.com/article/SB123336541474235541.html
Now, once the process is complete,
the banks’ losses will have been absorbed
first at Treasury,
http://www.youtube.com/watch?v=kXJjNRIZNZk&feature=related
then by the Fed’s balance sheet.
How soon, how fast, will the foreclosure’
floodgates be opened?
At This Point I’d Say Bernanke
Would’ve Done Better By Instead
Of Marshalling The Economy With
A “Liquidity Trap” Coupled With
A Massive Cheap Credit Pipeline,
By Simply Putting Up A Sign:
“TBTF-R-Us So We’re Going
To Print Real New Money In
Massive Quantities To Cover Our
Collateral Losses.
The End Result’s The Same, The
Disruption’s Gone, And It’s Less
Of Direct Taking From Those Who
SOLD The Bubble.
That’s Essentially Analogous
To A Family In A Home Invasion
Robbery Saying To The Burglars:
Please. Just Quickly Take The
Jewels. Just Leave Us Alone.
http://evernewecon.weebly.com/realty.html
The form required a name.
I broke EverNewEcoN into
EverNew Econ.
I’m not into self-promotion, actually,
except the above was sufficiently
new in presentation of the issues that
I gave the source.
But, I didn’t want my actual name
confused by the form.
If this sounds too spammy, by all means,
don’t use it, mods.
Ha! There are some great old names there… mav, shockg, graphrix, hwood. Yes, there was a lot of life on that blog!
The OCR committed sepuku when they switched to FB commenting. Pretty sad…
[...] at record highs, and houses are undervalued by historic norms, the report is very bullish. And as I noted recently, I am turning bullish [...]