Subprime Meltdown, the US Housing Market & the Direction of the US Economy in 2009 and 2010

[RuffDice]

Quote, originally posted by beng »

That forces me to report very large unrealized losses, which in turn punich my stock price. ...and these losses are largely the result of illiquidity in the market. ...not issuer defaults.

wow I had no idea.

Thanks. I finally understand something

[beng]

Theres a weird freudian slip.

[peecee]

Did anyone see the show about the two guys that were mortgage brokers in CA, lost their jobs, somehow got 11 months delinquent in their mortgage, and were able to cut a deal with their mortgage company? The mortgage company apparently came back with a payment amount, and the two guys told them it was too high, and wouldn't accept a mortgage payment over a certain amount, to which the lender eventually agreed. My wife was telling me about it this morning (I didn't see the show), but basically she was asking how it's possible? We can afford our mortgage now, but thinks that if we tried this, we could get our payments lowered by a significant amount. I told her I was not going to even try, because it doesn't seem possible, and I certainly don't want to risk losing my home for some hairbrained idea.


Modified by peecee at 9:37 AM 2-25-2009

[mbuxton]

It's definitely infuriating to hear about "deals" being worked out with dumbasses who got in over their head. I put a LARGE chunk of money down as a downpayment and it's completely vanished, but I'm not upside down in my mortgage as a result, thus won't be receiving any free aide.

[Viss1]

Quote, originally posted by peecee »

Did anyone see the show about the two guys that were mortgage brokers in CA, lost their jobs, somehow got 11 months delinquent in their mortgage, and were able to cut a deal with their mortgage company? The mortgage company apparently came back with a payment amount, and the two guys told them it was too high, and wouldn't accept a mortgage payment over a certain amount, to which the lender eventually agreed. My wife was telling me about it this morning (I didn't see the show), but basically she was asking how it's possible? We can afford our mortgage now, but thinks that if we tried this, we could get our payments lowered by a significant amount. I told her I was not going to even try, because it doesn't seem possible, and I certainly don't want to risk losing my home for some hairbrained idea.

From what I've read, it is possible to negotiate with the lender. I guess success or failure of that effort depends on their faith in your ability to pay the renegotiated loan. Of course, the crushing number of foreclosures suggests successful negotiation is more the exception than the rule.

Also, I wouldn't let TV "news" infuriate you too much. They like to sensationalize everything in the name of ratings. Doing a segment on two guys who lowered their mortgage payments is guaranteed to generate word of mouth.


Modified by Viss1 at 3:25 PM 2-25-2009

[SAPJetta]

Every time Obama gives a speech, the market drops.

Down we go again......

[beng]

Nortel cutting another 3,200 jobs

...to be fair... during that Oct/Nov death spiral, Bush was speaking like once a week and the markets would always tank afterwards. ...it became a running joke in my office.

[AZGolf]

Quote, originally posted by SAPJetta »

Every time Obama gives a speech, the market drops. Down we go again......

In fairness, the major indices were up about 4% yesterday and down "only" about 1.5% so far today, which means they've given up just a portion of yesterday's gains. Still, I'm not convinced we've reached the turning point. That's the million-dollar question of course. For those of us sitting in cash for the last 6 months, how do we know when to get back in to the market? Obviously, it's not like somebody rings a bell and says "OK, this is the ground floor. Going up?" and waits for everybody to get on the market elevator as it goes up again.

[SAPJetta]

For sure.

It would be really nice if I could just receive an email or text message as things were about to turn around.

[beng]

What's your number?

[SAPJetta]

Quote, originally posted by beng »

What's your number?

Not sure receiving market advice from the 'market crasher' would be such a good idea

[RuffDice]

Maybe he's really just the elevator operator.

[a_riot]

It could be a nice rally for those who are still holding and want to sell. The problem for longs with a prolonged downturn such as this one, is that any minor rally will be sold into so no sustained rally can really happen. I would expect the DJI to get below 7000 in a week or two, triggering more selling. I am not an optimist. I haven't ever really found optimists much use for anything.

[beng]

I think there's a chance we'll see the 6s on the Dow by the end of the week.

[SAPJetta]

Quote, originally posted by beng »

I think there's a chance we'll see the 6s on the Dow by the end of the week.

Where's my email?

[jnm2.0t]

added my name to their list serve.

Quote, originally posted by SAPJetta »

For sure. It would be really nice if I could just receive an email or text message as things were about to turn around.

added my name to their list serve.

[beng]

Quote, originally posted by SAPJetta »

Where's my email?

We're a low tech firm. You'll have a letter from me by regular mail in 7-10 business days.

[SAPJetta]

By then I'll have missed the bottom.

Lousy business plan you have here......

[beng]

[SteveMKIIDub]

Quote, originally posted by beng »

I think there's a chance we'll see the 6s on the Dow by the end of the week.

The more you most the highest those chances are!

[Jimmy Bionic]

Quote, originally posted by peecee »

Did anyone see the show about the two guys that were mortgage brokers in CA, lost their jobs, somehow got 11 months delinquent in their mortgage, and were able to cut a deal with their mortgage company? The mortgage company apparently came back with a payment amount, and the two guys told them it was too high, and wouldn't accept a mortgage payment over a certain amount, to which the lender eventually agreed. My wife was telling me about it this morning (I didn't see the show), but basically she was asking how it's possible? We can afford our mortgage now, but thinks that if we tried this, we could get our payments lowered by a significant amount. I told her I was not going to even try, because it doesn't seem possible, and I certainly don't want to risk losing my home for some hairbrained idea. Modified by peecee at 9:37 AM 2-25-2009

I would suspect this is some sort of infomercial...

[AZGolf]

Quote, originally posted by Jimmy Bionic »

I would suspect this is some sort of infomercial...

I'm sure the housing market is a lot different in Connecticut than it is in places like California and Arizona. My sister is a realtor in Arizona and one of her clients had a baby at the same time that one of the parents had their hours cut at work due to the slowdown. They still counted themselves lucky to even have work, but between the two things at once, they fell behind on their house payments. They paid $200k or something in 2004 and houses were now selling for half that in their neighborhood. They kept making partial payments, knowing that makes it a lot harder for the lender to foreclose in the current market conditions than if you stop paying entirely.

Eventually they hired my sister to work out a deal with the lender to put the home up for sale as a short sale, which is where you just try to get market value and the lender agrees to let them out of the mortgage regardless of the loss. The house went up for sale for $140k initially, but after a couple homes in the neighborhood had sub-100k transactions she was able to get permission to list it at $90k.

About a week after the lender agreed to letting it sell at $90k they began repeatedly contacting the family offering to let them refinance the $200k mortgage as some lower amount. I'm not sure how much, but I'm guessing more than $90k, so in theory they may have still ended up with a $120k mortgage with homes still selling for a lot less than that. Still, I know there was an offer made to them to just plain forget about some huge portion of the principle and let the lender write it off and they could keep the house. A couple weeks later they got an offer on the home for the full $90k and took it. As far as I know, the deal went through, so they were able to complete the short sale and go find somewhere else to live.

I'm not sure how common this is, but if Obama's $150 billion mortgage rescue plan is structured to simply pay off a portion of the principle of home loans and refinance the new, lower principle then at least the government is making a limited time intervention, then stepping back and letting the market forces do as they will.

[Jimmy Bionic]

Quote, originally posted by AZGolf »

I'm sure the housing market is a lot different in Connecticut than it is in places like California and Arizona.

While the housing market is most definitely different here, CT has been hit fairly hard with unemployment. There are towns with over 40% unemployment because of Bear Stearns, Lehmann, etc.

Anyway, the reason I said it was an infomercial was not because the mortgage company was willing to work, but because the subjects of the show demanded stuff from the mortgage company. I doubt that would ever happen in real life and it seems like an oversimplified view of how to fix your mortgage problems and therefore my thought is "infomercial".

Sorry to hear about your sister's issues, sounds like she was able to get out. Must be a great time to buy in Arizona.

[beng]

Down 80 points... not so bad I guess.

[AZGolf]

Quote, originally posted by Jimmy Bionic »

While the housing market is most definitely different here, CT has been hit fairly hard with unemployment. There are towns with over 40% unemployment because of Bear Stearns, Lehmann, etc. Anyway, the reason I said it was an infomercial was not because the mortgage company was willing to work, but because the subjects of the show demanded stuff from the mortgage company. I doubt that would ever happen in real life and it seems like an oversimplified view of how to fix your mortgage problems and therefore my thought is "infomercial". Sorry to hear about your sister's issues, sounds like she was able to get out. Must be a great time to buy in Arizona.

Wow, the only place we have unemployment that high in Arizona is on the native American reservations. I didn't realize anybody was running infomercials for this, but it's not surprising. Any time you have a bunch of people affected by the same thing, there will be somebody selling a book, seminar, or motivational CD's to people affected by it. As for my sister, she's doing fine, she was just the realtor helping to sell the distressed home(s). Apparently about half of the listings in MLS for the Phoenix area now are bank owned properties, from what she was saying.

[beng]

Benanke mentions relaxation of mark to market rules...

...we see that... and the formation of a bad bank... and Ill be willing to call a bottom.

[a_riot]

Quote, originally posted by beng »

Benanke mentions relaxation of mark to market rules... ...we see that... and the formation of a bad bank... and Ill be willing to call a bottom.

We already have a 'bad bank'...its called the Federal Reserve.

[SAPJetta]

Zing!

[peecee]

Quote, originally posted by a_riot »

We already have a 'bad bank'...its called the Federal Reserve.

But the Federal Reserve isn't a bank. It might be bad though...

[Viss1]

Quote, originally posted by beng »

Benanke mentions relaxation of mark to market rules... ...we see that... and the formation of a bad bank... and Ill be willing to call a bottom.

Yeah, hopefully this will help move the market towards placing values on toxic paper.

[Viss1]

Quote, originally posted by AZGolf »

if Obama's $150 billion mortgage rescue plan is structured to simply pay off a portion of the principle of home loans and refinance the new, lower principle then at least the government is making a limited time intervention, then stepping back and letting the market forces do as they will.

There are also a few more components to the plan, most notably the elimination of the 20% down/equity requirement for refi's.

[vwconvert]

Quote, originally posted by beng »

Benanke mentions relaxation of mark to market rules... ...we see that... and the formation of a bad bank... and Ill be willing to call a bottom.

Not sure its going to be that simple or they would have done it already. Mark to market will help but there are still trillions of dollars worth of assets that are worth zero in whatever manner you want to value them. If I see a bad bank and mark to market accounting implemented, then I'm setting up some more short orders to take advantage of the mother of all sucker's rallies.

[beng]

Long term equity buy and hold... I'd be bullish long term with those two criteria (bad bank/relaxed mark to mraket).

Futures are up!

[RuffDice]

Jobless Claims hit 5.1 million compared to 2.8 Million from this time last year. 1.4million more that are receiving extended claims aren't even included in that number, so it's really 6.5million.

[beng]

The job market had truly gotten scary... and I think during the next three months we'll see continued acceleration.