Real Estate Crash thread

[Yukonrider]

those in the industry say pick a good insurer.

Who's a good insurer? Getting close to shopping around all my policies, currently with Auto Owners.

Good conversation here

[Toadman]

What about people who choose to live not on a fault line or beachfront?

They can have the tornadoes and floods.

[Shredhead]

Who's a good insurer? Getting close to shopping around all my policies, currently with Auto Owners.

Both my son and his FIL are independent adjusters.

They both like Chubb.
Expensive and mostly cover high end homes.

[schuss]

Not Geico or general imo. Conundrum probably has a better read on it. Chubb are solid.

[yeahman]

I've heard good things about Chubb but last I checked I don't think they were doing business in Montana.

Should I be worried State Farm is losing 20 cents on the dollar or does that just mean they actually pay claims?

[schuss]

State farm is massive and has massive capital reserves. They have to figure shit out, but it's a few years at a minimum before they really need to worry.

[Bronco]

FWIW I was told by an Attorney who specializes in insurance claims that Pemco is the best for covering claims. I tried to switch from State Farm a few years ago but the local Pemco agent was a dud so I’m still with State Farm for personal coverage. Need to look into it again.

I had Chubb for my small business and they reluctantly covered a big loss but did cover it after we were sued. No longer with Chubb for business coverage.

[Conundrum]

Insurance is going to be location dependent and I’m not super up to speed on personal home markets. But, some I think would be decent-Chubb, Cincinnati, Central, and Selective. If you’re in a fire zone and higher cost home, look at Pure. Safeco was a go to but have heard that not as good as it used to be. Nationwide is tanking. Personally, I have Auto Owners and they’re fine but I moved to them when Cincinnati crept their premiums way up over the years. I’d prefer to be with Cincinnati at time of claim-they’re one of the best at paying. These are all thoughts on who I’d want at time of claim.

Not ever experienced a claim with the direct and captive agent companies so don’t know how they’d go. Farmers, State Farm, Geico, AmFam, etc.

[m2711c]

State Farm has been quick and fair on their payouts to me for my multiple car wrecks over the years and a brandy new roof when that 75’ pine tree decided it was to tired to stand anymore and took a nap on my house.

[summit]

Freddie and FHFA to enter secondary mortgage HEL market...
https://www.ft.com/content/1d287e0c-...1-9da157b50101

[Foggy_Goggles]

^^^wanna CnP that for us cheapskates?

[skaredshtles]

^^^wanna CnP that for us cheapskates?

https://archive.ph/

You're welcome.

[summit]

^^^wanna CnP that for us cheapskates?

Oh dang, I just got it off of a google search and it opened. I sure as shit ain't paying for FT

Here:

3 May 2024
https://www.ft.com/content/1d287e0c-...1-9da157b50101

The writer is chief executive of Meredith Whitney Advisory Group

What if I told you there could be an unprecedented stimulus injection into the US economy that will cost the government nothing and add not $1 to the national deficit? As early as this summer, a proposed move could begin to unleash almost $1tn into consumers’ wallets. By the autumn, it could be on its way to $2tn.

Last month, the government-sponsored mortgage finance agency Freddie Mac filed a proposal with its regulator, the Federal Housing Finance Agency, to enter into the secondary mortgage market, otherwise known as home equity loans. This was a smart move by Freddie, and the FHFA will do a lot of good by approving it. Despite the more than $32tn in equity on homeowner balance sheets, very little of it has been tapped through home equity loans.

In 2007, just before the financial crisis, there was more than $700bn in home equity loans outstanding. Today, there is roughly $350bn. Home prices have risen more than 70 per cent since then, so why have home equity loans halved?

After the financial crisis, banks have actively taken down their mortgage exposure. Bank of America, for example, has cut its home equity loan portfolio from more than $150bn in 2009 to $25bn. And in 2022, more than 50 per cent of home loans originated from non-traditional operators. These non-bank companies don’t have the balance sheets to hold loans as the banks had traditionally done, so unless they can sell the loans they originate to Freddie, its fellow housing agencies Fannie Mae and Ginnie Mae, or private investors, they don’t originate them.

There is a robust and well-oiled mortgage-backed securities machine for first mortgages in which Fannie, Freddie or Ginnie buys mortgages, pools them and sells them as mortgage-backed securities to private investors on the open market, facilitated by Wall Street firms. This process dramatically increases liquidity in the market. None of this liquidity exists in the second mortgage market.

The Freddie Mac proposal could change all that, and it could not come at a better time. Most people in the US are feeling the sting of persistent inflation, but older Americans living on a fixed income have been hit particularly hard. Insurance costs for homeowners have risen well over 11 per cent over three years while they are paying more tax. US property tax revenues have risen 26 per cent over the past three years.

That is probably why seniors have taken on more debt than any other age group over the past few years. Today, they hold 23 per cent of all consumer debt, double their share in 1999. These trends should seem counterintuitive, as typically younger individuals and older individuals would be at either side of the bell curve of total consumer debt outstanding with less debt.

Prior to the financial crisis, this was how the balance of consumer debt was distributed. Now, almost half of all seniors are at risk of a financial shock with less than six weeks of liquid savings. This means that if they face an unexpected medical expense, a sudden home repair or a rapid increase in property taxes and insurance, they have no safety net. This vulnerability makes older adults a highly receptive audience to home equity products, provided they are reasonably priced and relatively easy to access.

The proposed Freddie Mac second mortgage/home equity proposal, if implemented effectively, could be a lifeline for these households, offering them financial flexibility. It sets up guidelines to protect both the borrower and Freddie Mac that are likely to be the template for future moves by Fannie Mae and Ginnie Mae. Freddie will only buy the second mortgages of borrowers that it already has a first mortgage with, and the combined loan-to-value of both the first and the second mortgage cannot exceed 80 per cent of the value of the property. The current loan-to-value of Freddie’s mortgage portfolio is 52 per cent. Thus, we estimate Freddie could unlock $980bn in equity for homeowners.

If Fannie Mae and Ginnie Mac follow Freddie Mac’s lead into buying second mortgages, we estimate the secondary home equity loan market could exceed $3tn. By opening up the securitisation market for second mortgages, not only would more institutions be inclined to originate the loans, but the cost to borrowers would meaningfully decline with more finance providers. It would also provide big stimulus to an economy and consumer that appear to be slowing down without adding a dime to government debt. Rarely have I seen such a true win-win scenario for the government, Wall Street and the US consumer.

[byates1]

Just giving ppl more rope to hang themselves.

You have no more money? Here, we created something else for you to borrow against. Go buy 2 more jet skis

[skaredshtles]

Just giving ppl more rope to hang themselves.

You have no more money? Here, we created something else for you to borrow against. Go buy 2 more jet skis

I think the idea is to help people get out from under 21% consumer debt down to something more reasonable.

But there will be jet ski buyers for sure...

[Danno]

jet skis are fun AF

[fastfred]

what could possibly go wrong?

so the gov't wants to back up shady lenders before they implode this fall? is that what I'm reading
there must be a reason big banks aren't interested in equity lines of credit.............

[Core Shot]

That is so sad.

What
The
Fuck

Helocs for everybody!

[jackstraw]

Are the guys who make their living building bitching about this?

[fastfred]

Are the guys who make their living building bitching about this?

yes

and yes I've seen a dip due to interest rates free money and less and less helocs
but then I have customers with millions in cash ready to go

[4matic]

Ski buddy helps design and build high end Tahoe homes. He’s starting to get cancellations. Remodeling still strong but they are under 2y wait now.

[anotherVTskibum]

Apparently someone from the NYTimes read the insurance discussions above and did some further research.

https://www.nytimes.com/interactive/...smid=url-share

[Mustonen]

what could possibly go wrong?

so the gov't wants to back up shady lenders before they implode this fall? is that what I'm reading
there must be a reason big banks aren't interested in equity lines of credit.............

Being in second lien position to Fannie or Freddie or anybody, really, is not a great place to be. If/when it goes tits up you either buy them out or write it off, there isn’t much in between. None of those guys care much about downstream lienholders and aren’t worried about your recovery, you’re almost like insurance. If you already have the first you’re just maintaining your LTV position and can manage that ongoing, though.

Also, before 2008 second lien products were frequently written out to 90% or even 100% LTV and most lenders aren’t wandering back out into that deep end of the pool yet. And neither are Fannie and Freddie, it seems.

I haven’t read details on this yet, but curious what the reporting and servicing agreements look like. HELOCs are a bit higher touch than a plain old closed end mortgage.

[Name Redacted]

Apparently someone from the NYTimes read the insurance discussions above and did some further research.

https://www.nytimes.com/interactive/...smid=url-share

Good article about what's happening with insurance. Sounds like it is gonna get worse before it gets better. Our neighbors just got dropped by their insurance, Allstate, because they are moving out of Colorado altogether. We are with State Farm, so we will see how long they last. Not looking good for anyone these days.

[Foggy_Goggles]

I was talking the other day with a owner of a largish (for Grand County) HOA/property manager. He said increases in premiums for HOAs (condo complexes with actual common elements) range between 12% and 400%.

He said the primary drivers are claims and deferred maintenance/reserves. I'm no apologist for the insurance industry, but the behavior of these BODs needs to take some responsibility.

In Colorado, you basically need to have a licensed Community Association Manager who, in theory, has been educated on this stuff.

CAM "Hey, your records indicate you haven't you haven't replaced your roof in 30yrs., you had three claims last year. We suggest you at least start budgeting for replacement in your Capital Replacement Plan"

Board "Cool, can you please get us some bids for the next quarterly meeting"

Contractor "That will be about $300k"

Board "Fack, we don't have that money"

CAM "No shit, that why we said you should raise dues, have a special assessment, borrow the money or do something...we should talk about it at the annual meeting"

Homo's at the meeting "[Karens/outrage/fixed income/can't afford it/dumbasses]"

CAM "Yeah, you people suck. We are gonna not renew your contract because our staff hate you because you ignore all professional advise. We'll just replace you with a newer complex with more wealthy owners who ain't afraid to maintain their complex"

Steve and Stacey "I think we should sell, take our equity, maybe buy somewhere new that maybe doesn't suck as bad. I'm sure there is some Conners and Addisons that want to be the first in their friend group to #we've got a place in Fraser"

Realtor "yeah, nobody looks at the HOA finances. The home inspection actually precludes that stuff. I don't bring it up. I've got all kinds of clients that can only afford the older, shitbox condos. I'll make it happen"