Real Estate Crash thread

[Benny Profane]

[iceman]

Poor Michigan shouldn't be lumped in with the rest of those assholes.

That Irish guy was dead right, but all we can do is hope that the pendulum swings far enough to knock the bankers off their feet and I doubt it will happen, too many friends in high places..

On the bright side I'm buying a house for just about exactly half of what it would have cost me five years ago, when I probably would have been outbid. But this time I was treated like a savior, as I guess I was, to them. Buying it with a line of credit, 2.75% and no money down (fully backed, though). Times are good if you haven't been greedy.

[Benny Profane]

Irish guy?



This is important. Expect many people living "rent free" in their homes within the next decade, if they have a good lawyer.



Top Court in Massachusetts Voids Foreclosures by 2 Banks
By GRETCHEN MORGENSON
The highest court in Massachusetts ruled Friday that U.S. Bancorp and Wells Fargo erred when they seized two troubled borrowers’ properties in 2007, putting the nation’s banks on notice that foreclosures cannot be based on improper or incomplete paperwork.

Concluding that neither institution had proved it had the right to evict the borrowers, the Supreme Judicial Court voided the foreclosures, returning ownership of the properties to the borrowers and opening the door to other foreclosure do-overs in the state.

Legal experts said that while this ruling did not set a precedent for other states, the outcome will be closely watched across the country because it is the first such ruling from a state’s highest court. Investors viewed the ruling as negative for banks; an index of financial company shares fell almost 1 percent on the day.

“The broad implication is you’ve got to dot your I’s and cross your T’s,” said Kathleen G. Cully, an expert in bankruptcy and lender regulatory law in New York. “You need a proper chain of title, and in both of these cases there was a gap in the chain.”

The case dates to July 2007, when Wells Fargo and U.S. Bancorp began foreclosure proceedings against delinquent borrowers on two separate properties. Neither borrower fought the proceedings — the courts in Massachusetts are not obligated to oversee foreclosures — and both banks quickly seized the properties.

The banks’ problems began in the fall of 2008, when Wells Fargo and U.S. Bancorp sought judgments from the Massachusetts Land Court that would have given them clear title to the properties. In 2009, the court rejected the banks’ arguments, ruling that the banks had not been assigned the mortgages before they foreclosed on the borrowers, as is required. Instead, the banks had acquired the mortgages after they had begun foreclosure proceedings.

The ruling on Friday upheld that decision.

Foreclosures are supposed to occur only when lenders can prove they own the note underlying the property. While it is common now for borrowers to question whether banks moving to seize their properties have the right to do so, in 2007, most borrowers assumed that the institutions foreclosing on them were acting properly.

Since then, lenders’ foreclosure practices have come under intense scrutiny. Borrowers’ advocates have argued that lenders flouted private property rights in their rush to foreclose on troubled borrowers. As lenders and Wall Street firms bundled thousands of mortgage loans into securities, banks often failed to record each link in the chain of documents demonstrating ownership of a note and a property.

Attorneys general in all 50 states are investigating foreclosure improprieties, which include forged signatures on legal documents and other dubious practices meant to patch up holes in loan documentation.

Both mortgages in the Massachusetts case had been bundled into securities and sold to investors; the banks that foreclosed on the borrowers were acting as trustees, bringing the actions on behalf of investors in the trusts. The banks held the properties at the time of the ruling.

In a statement, Steve Dale, a U.S. Bancorp spokesman, said: “Our role in this case is solely as trustee concerning a mortgage owned by a securitization trust. This judgment has no financial impact on U.S. Bancorp. The issues addressed by the court revolved around the process of the servicing of the loan on behalf of the securitization trust, which was preformed in this case by the servicer, American Home Mortgage Servicing.”

Vickee J. Adams, a Wells Fargo spokeswoman, said: “The loans at issue in the court’s ruling were not originated, owned, serviced or foreclosed upon by Wells Fargo. As trustee of a securitized pool of loans, Wells Fargo expects the entities who service these loans to abide by all applicable state laws, including those laws that govern foreclosure sales.”

Paul R. Collier III, a lawyer in Cambridge, Mass., represented Antonio Ibanez, one borrower in the case. “It’s been pretty clear and becoming ever more clear that the securitization industry has behaved as though it were immune from consumer protection laws, state homeowner protection laws and real estate regulations in its underwriting, securitization and foreclosure practices,” Mr. Collier said. “I am quite confident that this is merely the first petal off the rose with regard to predatory foreclosure practices.”

A special education teacher in Brookline, Mr. Ibanez and his wife moved out of the house and are now living in a rental condominium, his lawyer said. U.S. Bancorp, as trustee, will either have to pay Mr. Ibanez to buy a deed from him, Mr. Collier said, or it will have to walk away from the property, leaving it to Mr. Ibanez. The loss on the property will be taken by investors in the trust that had claimed ownership of the mortgage.

The other borrowers whose foreclosure was overturned — Mark and Tammy LaRace — are still living in the home. They could not be reached.

The banks involved in the matter had asked the Massachusetts court to make its ruling prospective, meaning that it would affect only new foreclosures. The court declined to do so, allowing foreclosure cases that have been completed to be reopened and brought under scrutiny.

Mr. Collier said he had a dozen similar cases. In a legal brief presented to the Massachusetts court, representatives of the real estate industry said there were thousands of foreclosure cases in the state with facts like those in the Ibanez matter.

[WICS]

...all we can do is hope that the pendulum swings far enough to knock the bankers off their feet

...And they approved your mtgg application, too?


~~~~~~~~~~~~~~~~~~~~~~
US Bank Regulator Seeks To Recover $2.5B In Lawsuits


WASHINGTON (Dow Jones)--The Federal Deposit Insurance Corp. said it is seeking to recover $2.5 billion by suing former executives of failed U.S. banks.

The agency said it has authorized professional liability lawsuits against 109 such officials, who weren't named by the FDIC. After seizing failed banks, the FDIC is permitted to sue officers and directors and other officials such as lawyers and accountants to replenish the agency's deposit insurance fund, which absorbs the cost of bank failures.

The FDIC has filed just two civil lawsuits as a result of the recent surge in bank failures, but the agency's disclosure indicates that more are likely on the way.

The agency is seeking $300 million in damages from four former executives of IndyMac Bancorp, the Pasadena, Calif., lender that sank in 2008. It is also suing 11 former directors and officers of Glenwood, Ill.-based Heritage Community Bank for $20 million in damages.

The FDIC said it only pursues such cases "if they are both meritorious and cost-effective." Before doing so, the FDIC said it seeks to reach a settlement.

More banks failed in 2010 than any year since the savings-and-loan crisis ended in 1992, as damage mounted from the recession and real-estate bust. The 157 banks that failed last year had total assets of $92.1 billion, compared with 140 bank failures and total assets of $169.7 billion in 2009.

The FDIC said last year that bank losses will cost the deposit insurance fund $52 billion from 2010 through 2014. The FDIC insures deposits for banks, which pay premiums. It uses that money to cover the cost of dealing with troubled banks when they fail. The FDIC asked banks to pay three years of premiums at the beginning of 2010 to help defray the cost of the high level of failures.

[GiBo]

Sweet. I own a house in #2 and work for #1.

FML...

[Toadman]

Sweet. I own a house in #2 and work for #1.

FML...

So you live in a shit hole, and piss on your job?

[liv2ski]

So I get this email today:

"On Monday, I reported on how top experts like Meredith Whitney — who accurately warned of the credit crisis well in advance — are now forecasting that up to 100 major U.S. cities will go bankrupt THIS YEAR.

That’s right: 100 MAJOR U.S. cities could go broke and default on their debt in 2011. And that doesn’t even begin to count the dozens of U.S. states and thousands of counties and smaller towns that are also within a hair’s breadth of financial failure!"

With that said, and considering the upcoming reset of ARM loans as discussed in the RE Crash thread and the resetting of Commercial loans that will have to be refinanced in 2011 and 2012, how does anyone believe the FED will be able to continue the Ponzi pumping of the stock and credit markets???

We are going to fucking tank hard IMO Maybe I need to revisit my 2012 and the FED thread?

[4matic]

So I get this email today:

"On Monday, I reported on how top experts like Meredith Whitney — who accurately warned of the credit crisis well in advance — are now forecasting that up to 100 major U.S. cities will go bankrupt THIS YEAR.

That’s right: 100 MAJOR U.S. cities could go broke and default on their debt in 2011. And that doesn’t even begin to count the dozens of U.S. states and thousands of counties and smaller towns that are also within a hair’s breadth of financial failure!"

With that said, and considering the upcoming reset of ARM loans as discussed in the RE Crash thread and the resetting of Commercial loans that will have to be refinanced in 2011 and 2012, how does anyone believe the FED will be able to continue the Ponzi pumping of the stock and credit markets???

We are going to fucking tank hard IMO Maybe I need to revisit my 2012 and the FED thread?

She's still bearish banks as late as this morning. Up almost 20% in two months. Nice call Meredith.

http://finance.yahoo.com/q/bc?s=XLF+Basic+Chart&t=1y

You have to quit reading that doom and gloom crap. SPX is back in the upper channel and stabilized.

[Missing Sock]

She's still bearish banks as late as this morning. Up almost 20% in two months. Nice call Meredith.

http://finance.yahoo.com/q/bc?s=XLF+Basic+Chart&t=1y

You have to quit reading that doom and gloom crap. SPX is back in the upper channel and stabilized.

The only way she stays relevant is by saying the most outlandish things possible on CNBC. Otherwise she and her "firm" would disappear...There is next to zero respect for her actual work among investment professionals.

[hardboiled]

^^^ I'm no expert by any means, but MW doesn't exactly have an impressive track record does she? and does she have any experience whatsoever in the muni bond market? money talks and if Bill Gross is buying munis with his personal fortune that tells me more than any chicken little schtick on 60 minutes.

[ncskier]

Having seen this posted yet, but it was pretty sobering to say the least.http://www.cnbc.com/id/41019790
Basically goes on how the metrics of home values have now surpassed the great depressions in terms of peak to trough in value, with no apparent call to the actuall bottom. So, in a nut shell homes have dropped lower at this point then during the depression and more to come. I see it in my own neighborhood where people who purchased short sales last year now look they have overpaid compared to sales this year. I put nearly 40% down when i moved in Ocotober 2007 and I am underwater by about 100k. The sad part is I built the home myself so that means no markup either. Oh well, its interesting to say the least. At this point it almost a matter of curiosity to see how efn low prices can go.

[liv2ski]

She's still bearish banks as late as this morning. Up almost 20% in two months. Nice call Meredith.

http://finance.yahoo.com/q/bc?s=XLF+Basic+Chart&t=1y

You have to quit reading that doom and gloom crap. SPX is back in the upper channel and stabilized.

Keep playing in the Sun while the Fed pumps the market Grasshopper. Like the little ant, I am ready for winter.

[4matic]

Keep playing in the Sun while the Fed pumps the market Grasshopper. Like the little ant, I am ready for winter.

Keep making excuses for missing a 100% rally in the SPX.

Edit: I know how and when to take profit and re balance. I'm ready for Spring, Summer, Fall, Winter.

[Benny Profane]

Keep making excuses for missing a 100% rally in the SPX.

Edit: I know how and when to take profit and re balance. I'm ready for Spring, Summer, Fall, Winter.

Really. Then why aren't you worth 100 million by now?

Hindsight is so, like, 20-20.

[4matic]

Really. Then why aren't you worth 100 million by now?

Hindsight is so, like, 20-20.

Huh? I'm talking about simple allocation and long term time frames. I'm 50/35/15 Equity/Income/Cash right now. Last summer I was 85/15 Equity/Income with no cash after flash crash. You guys are the ones looking in the rear view mirror.

I did miss a re-allocation in 2008 and that's why I've been aggressive in relative terms the last two years.

Keep on hoping for the end and reading zerolongs. The wall of worry.

[Missing Sock]

Huh? I'm talking about simple allocation and long term time frames. I'm 50/35/15 Equity/Income/Cash right now. Last summer I was 85/15 Equity/Income with no cash after flash crash. You guys are the ones looking in the rear view mirror.

I did miss a re-allocation in 2008 and that's why I've been aggressive in relative terms the last two years.

Keep on hoping for the end and reading zerolongs. The wall of worry.

Maybe if Benny took some of your advice he would already be in that Summit County condo he has been worked up over for the past 4 years rather than delivering pizza in the tri-state area bitching about bankers, lawyers, homemakers, parents, kids and anyone else he passes in the midst of his daily routine?

[Benny Profane]

Hey, I've seen pictures of his neighborhood. You should see mine.

We'll see where Summit condo prices are in May. I'm guessing much cheaper, again. I still have to work another few years. My timing should be impeccable. Hey, if I don't buy, that's cool, too. Have you seen rental prices in Tahoe? People are desperate.

[grrrr]

My next door neighbor was gone yesterday. Couldn't cover the $109,000 he still owed on a house he bought nearly 5 years ago. Didn't get a single offer for an asking price of the foreclosure amount.

Silly Zillow still thinks its worth $80k more than that. The bank might get $60k.

[Toadman]

Huh? I'm talking about simple allocation and long term time frames. I'm 50/35/15 Equity/Income/Cash right now. Last summer I was 85/15 Equity/Income with no cash after flash crash. You guys are the ones looking in the rear view mirror.

I did miss a re-allocation in 2008 and that's why I've been aggressive in relative terms the last two years.

Keep on hoping for the end and reading zerolongs. The wall of worry.

Only 50% equity? Why so bearish? Close to retirement?

[4matic]

Only 50% equity? Why so bearish? Close to retirement?

Yep. I have to be cautious and don't want to trade actively. I have dry powder looking for income allocation and also buy some equity on pullback to 1200 SPX which I expect at some point this year. Will sell more equity on moves to 1310 and again at 1350 SPX.

I'm overweight cash mostly because of the low volatility and sideways action for the last month or two. Areas I'm looking at adding include Muni's, Corporate bonds, and traditional Large Cap Value.

[Benny Profane]

My next door neighbor was gone yesterday. Couldn't cover the $109,000 he still owed on a house he bought nearly 5 years ago. Didn't get a single offer for an asking price of the foreclosure amount.

Silly Zillow still thinks its worth $80k more than that. The bank might get $60k.

The important listing in Zillow right now is the "Recently Sold" category. I've seen some areas with hundreds for sale, and zero, zip, "Recently Sold". What's that tell you?

[4matic]

Hey, I've seen pictures of his neighborhood. You should see mine.

We'll see where Summit condo prices are in May. I'm guessing much cheaper, again. I still have to work another few years. My timing should be impeccable. Hey, if I don't buy, that's cool, too. Have you seen rental prices in Tahoe? People are desperate.

Overall, rental prices are rising:


Industry analysts at MPF are forecasting a 5.1 percent jump in rents for 2011. Combined with an increase of 0.8 percentage points anticipated in occupancy, the rising rents should increase revenues by 5.9 percent for apartment owners.

“The past year was about rebuilding occupancy after job losses during the recession took the rate down to a record low at the end of 2009,” said Greg Willett, vice president of research at MPF Research. “While rents have increased slightly, we're just now reaching the point where unit pricing can gain some real momentum in most individual metros.”

MPF Research's 4th quarter 2010 analysis showed U.S. apartment occupancy reaching 93.5 percent, up from 91.8 percent in late 2009. Effective rents climbed 2.5 percent during the past year, measuring change on a same-store basis. Monthly rents now average $1,029.

Properties built over the past 20 years will drive rent growth in 2011, according to MPF.

“While a number of apartments at the lower tier of the product spectrum remain vacant, better-quality units are essentially full once again,” Willett said. “The best communities won't face much additional direct competition from new deliveries, since completions in 2011 will be so few. There also seems to be minimal danger that raising rents in top-tier apartment projects will drive residents to opt for home purchase right away. While higher rents could cause some to downgrade to lesser-quality apartment choices, projects with significant vacancies today tend to be notably less upscale than those already full.”

2011 Projected Top 10 Performing Apartment Markets

San Jose, Calif.
Austin, Texas
Boston
New York
Denver
Washington, D.C.
San Francisco
Fort Lauderdale, Fla.
Raleigh, N.C.
Baltimore

[Benny Profane]

Yes, well, that's why I have some spare change in REITs that focus on multi families. While the rest of the world fiddles as the market burns, the smart investors are catering to the people who will never own a home again, especially the Boomers who can escape their expensive MacMansions.

[WICS]

"Up to 100 major U.S. cities will go bankrupt."

• There are 19,429 municipal governments in the US.

[Benny Profane]

• There are 19,429 municipal governments in the US.

It's fascinating to watch this game unfold. We're a year or two behind the EU. It's a long, slow spiral downwards. All that shitty bank debt has been pawned off on governments around the developed world, and, it's almost on a level of a three card monte game on the sidewalks of Manhattan. Ireland gets "bailed out" by the EU, which includes Portugal, at the time, but then the EU turns around and helps Portugal, who, technically, was just part of the team who helped Ireland from bankruptcy. All the while, everyone ignores the problems in Greece, which are beyond bankruptcy now. How the fuck can a country pay off nearly 10% loans when their GDP is barely registering on the EKG? Spain just stands off to the side, smiling nervously, because, if their smart, they know they're next. France? Give it 5-10 years. And the banks just hide in their closets, avoiding the assured haircuts. Oh, and, then the biggest laugh, Japan today announces that they will be buying EU bonds to help them out. Japan, a country with a debt that equals 200% of GDP and a population that, what, consists of a median age of maybe 55, and allows zero immigrants into the country to fix that?
The next twenty years will be a long, unfolding problem here as the Boomers die off. Here's a factoid for you: As of 01/01/11, 10,000 Boomers a day will turn 65 for 19 years. That's 3.65 million a year. Rounded off to 70 million by 2030. Think of what that will do to our public pension, and more important, public retiree health costs. That's the big one. Full medical for millions and millions of public retirees. You do the math. You've seen their fat asses at the mall, right? You think they are going to go fast? Drugs and hospital care will keep them alive for years and years. And, what's going to happen to the houses they "own"? That tidal wave is happening right now, and it is the phantom "shadow inventory" that no pundit can measure.
The last thing I would do right now with my money is continue paying for an underwater mortgage. Move, reset, rent, don't look back.