I'm sitting here in my living room watching CNN. They have a young couple on who lost their home and are now living in a trailer park. The wife is comparing her current living conditions to the home she once owned.
The story talked about the equity they once had. It said their home almost doubled from the time they purchased it. He was a casino employee, she an executive assistant. She lost her job and they took out a loan to help cover expenses. Apparently they put their home on the market and received an offer, only to have it fall through. After that they took out another loan. They were foreclosed on and had to move to the trailer park.
The interviewer asked several times if they had read the fine print. They said the person on the phone told them their payments would only go up $100 dollars. They seemed adamant that they were swindled by the lender. Should consumers be liable for their own actions, or should the government bail out all these debts. I still have some questions about this. Did they qualify for the new payment solely on her husbands income? Did they go "stated" and claim they made more money than they did? Is the moral of the story, use a lender you can find if you feel like you were cheated? (no internet loans).
Monday, March 17, 2008
Sunday, March 9, 2008
Thank You Lee For This Perspective
Lee Spangler is the Principal Broker of Area Properties in Astoria Oregon. I found this very thought provoking.
This week I read several articles about scams as a result of the housing crisis. The first concerned itself with people who preyed on distressed homeowners by offering, at a fee, to negotiate with the lender to save the property from foreclosure. In the end, some homeowners either lost the property anyway or were milked for a service which could have been done for free with a simple phone call to the lender. In some cases the scammer actually ended up with the deed.
Likewise I enjoyed an article by Ralph Roberts, a renowned real estate agent and author, who listed a series of new and innovative ways in which sellers were funneling money back to buyers in order put home purchases together without regard to lender disclosure or, in some cases, state regulations. The result was that some people were able to buy homes who otherwise couldn't qualify, but the lender was duped. It is easy to take the high moral ground against such activities in which allegedly innocent parties are duped. Yet, it is worth mentioning, people are continuously taken advantage of legally as well. What is to be said to those people lured by flowery letters offering teaser interest rates on loans, especially on credit cards, and then later shocked when the small print of a subsequent letter revealed that the borrower was now subject to usurious rates? Were these people not also, to some degree, scammed? Of course those with power rationalize that such loan offers are a result of good marketing and included full disclosure. In fact, the product offered even fulfilled a demand in the marketplace. Such actions are viewed as good business, whereas other similar actions outside the legal system are considered sneaky and a scam. These devious ideas can be refined and often become legal once those in power find a way to make a buck on the idea.
It is difficult to sort out the knights from the dragons, the innocent from the guilty, the gullible from the stupid. This economic time is really no different from any other. Perhaps this housing crisis reminds us, in some poignant way, that there have always been those that are fed snake oil and those that feed it. Like the barker at the sideshow says, "Step right up, ladies and gents, see for yourselves." Lee
This week I read several articles about scams as a result of the housing crisis. The first concerned itself with people who preyed on distressed homeowners by offering, at a fee, to negotiate with the lender to save the property from foreclosure. In the end, some homeowners either lost the property anyway or were milked for a service which could have been done for free with a simple phone call to the lender. In some cases the scammer actually ended up with the deed.
Likewise I enjoyed an article by Ralph Roberts, a renowned real estate agent and author, who listed a series of new and innovative ways in which sellers were funneling money back to buyers in order put home purchases together without regard to lender disclosure or, in some cases, state regulations. The result was that some people were able to buy homes who otherwise couldn't qualify, but the lender was duped. It is easy to take the high moral ground against such activities in which allegedly innocent parties are duped. Yet, it is worth mentioning, people are continuously taken advantage of legally as well. What is to be said to those people lured by flowery letters offering teaser interest rates on loans, especially on credit cards, and then later shocked when the small print of a subsequent letter revealed that the borrower was now subject to usurious rates? Were these people not also, to some degree, scammed? Of course those with power rationalize that such loan offers are a result of good marketing and included full disclosure. In fact, the product offered even fulfilled a demand in the marketplace. Such actions are viewed as good business, whereas other similar actions outside the legal system are considered sneaky and a scam. These devious ideas can be refined and often become legal once those in power find a way to make a buck on the idea.
It is difficult to sort out the knights from the dragons, the innocent from the guilty, the gullible from the stupid. This economic time is really no different from any other. Perhaps this housing crisis reminds us, in some poignant way, that there have always been those that are fed snake oil and those that feed it. Like the barker at the sideshow says, "Step right up, ladies and gents, see for yourselves." Lee
Realtytimes Article Finds Bend Oregon
Realty Viewpoint: The Bubble Is In Housing Prognosticators
by Blanche Evans
An index that has been tracking new home sales since 2005 says its historical data dates as far back as 1830. Winans International has patented a combination of housing studies to provide a continuing data set without the scaling and gapping problems found in other studies, it says.
The index found that from its all-time record of 296,000 set in March of 2007, housing prices have declined -16.8% to its current level of 246,300. That's the worst price decline in U.S. new home prices since the 17-month decline of -17.8% from May 1969 to October 1970, says the index.
It could get worse. The worst decline of U.S. new home prices in the last 100 years was the 55% decline from 1929 to 1932 during the Great Depression.
This is just the latest in predictions from housing prognosticators, who are looking backward not forward.
We all know that housing price predictions are about handicapping stocks, so it's no surprise that investors can only get a sniff of what's happening. To get to the meat, they usually have to buy the full report. So the bottom line is, it's about sales and sales improve in a climate of fear.
If you don't want to pay to be scared, you can look at the National Association of Home Builders' useful Housing Information Center. There you can find essentially the same information for free.
The latest NAHB forecast is for housing sales to drop 22 percent in 2008. Housing is in its "deepest, most rapid downswing since the Great Depression," says David Seiders, chief economist for the NAHB. "More and more of the country is now involved in the contraction, where six months ago it was not as widespread."
That sobering tidbit was just verified by the Federal Reserve Beige Book report in which eight of the twelve Fed regional bank districts reported a "weakening in the pace of business activity."
And the other four reported "subdued, slow or modest growth."
The housing sector isn't going to see improvement any time soon. All 12 districts reported overall drops in home prices, suggesting that the mortgage market flu is airborne. The reason is tight credit, where standards are being set making it harder to obtain a mortgage loan. That's causing sales to slow down even in healthy markets.
However, there are reasons to hope things will get better for sellers and buyers. The Beige Book noted that foot traffic is increasing to homes for sale, as buyers sniff around for bargains.
The national malaise has caused some areas to be undervalued, according to a report by National City Corporation and Global Insight. That report found that 88 percent of 330 housing markets surveyed showed price declines but that translates into improved affordability.
The most overvalued city wasn't in California or Florida, for a change. That dubious honor went to Bend, Oregon, where prices were judged to be overvalued by 59 percent. On the other end of the spectrum, homebuyers can find serious bargains in Louisiana and Texas. Dallas, for example, is undervalued by 30 percent.
So you see -- all the prognostication in the world doesn't matter. It boils down to what's happening in the local marketplace.
by Blanche Evans
An index that has been tracking new home sales since 2005 says its historical data dates as far back as 1830. Winans International has patented a combination of housing studies to provide a continuing data set without the scaling and gapping problems found in other studies, it says.
The index found that from its all-time record of 296,000 set in March of 2007, housing prices have declined -16.8% to its current level of 246,300. That's the worst price decline in U.S. new home prices since the 17-month decline of -17.8% from May 1969 to October 1970, says the index.
It could get worse. The worst decline of U.S. new home prices in the last 100 years was the 55% decline from 1929 to 1932 during the Great Depression.
This is just the latest in predictions from housing prognosticators, who are looking backward not forward.
We all know that housing price predictions are about handicapping stocks, so it's no surprise that investors can only get a sniff of what's happening. To get to the meat, they usually have to buy the full report. So the bottom line is, it's about sales and sales improve in a climate of fear.
If you don't want to pay to be scared, you can look at the National Association of Home Builders' useful Housing Information Center. There you can find essentially the same information for free.
The latest NAHB forecast is for housing sales to drop 22 percent in 2008. Housing is in its "deepest, most rapid downswing since the Great Depression," says David Seiders, chief economist for the NAHB. "More and more of the country is now involved in the contraction, where six months ago it was not as widespread."
That sobering tidbit was just verified by the Federal Reserve Beige Book report in which eight of the twelve Fed regional bank districts reported a "weakening in the pace of business activity."
And the other four reported "subdued, slow or modest growth."
The housing sector isn't going to see improvement any time soon. All 12 districts reported overall drops in home prices, suggesting that the mortgage market flu is airborne. The reason is tight credit, where standards are being set making it harder to obtain a mortgage loan. That's causing sales to slow down even in healthy markets.
However, there are reasons to hope things will get better for sellers and buyers. The Beige Book noted that foot traffic is increasing to homes for sale, as buyers sniff around for bargains.
The national malaise has caused some areas to be undervalued, according to a report by National City Corporation and Global Insight. That report found that 88 percent of 330 housing markets surveyed showed price declines but that translates into improved affordability.
The most overvalued city wasn't in California or Florida, for a change. That dubious honor went to Bend, Oregon, where prices were judged to be overvalued by 59 percent. On the other end of the spectrum, homebuyers can find serious bargains in Louisiana and Texas. Dallas, for example, is undervalued by 30 percent.
So you see -- all the prognostication in the world doesn't matter. It boils down to what's happening in the local marketplace.
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