May 28, 2007

An HP message to the "Mortgage Slaves" of America

Mortgage Slaves are now spending crazy (and ever-increasing) amounts per month, struggling to come up with the monthly house payment (and expenses), with little left to enjoy the things that really matter in life (you know, like actually having a life, experiences, living within your means and saving)

Why?

Was it the lure of future riches (housing never goes down they said), the ingrained sense of nesting (come on honey, Suzanne researched it), the slick homebuilder marketing brochure and advertisements, or just simple financial insanity and ignorance that drove so many people to be so stupid?

I`d say if you stretched and paid 700,000 dollars for a Phoenix condo recently, in addition to having no spending money, you`re probably having second thoughts right about now. Or you`re just ignorant or insane.

There`s a better life out there than being a debt junkie and Mortgage Slave. A life of experiences over possessions, a life where you don`t whore yourself out to an employer in a job you hate just so you can make the increasing payment on a depreciating asset.

If you`re a Desperate Homedebtor, it`s still not too late. You won`t get top dollar if you sell today, but sell you should. You`ll never see these prices (inflation adjusted) again in your lifetime. Never.

But with millions of unwanted homes on the market, and dwindling demand, the only thing that`ll help you unload your debt-trap is a dramatic price reduction. Good luck.

Join us - The Bubble Sitters and Bitter Renters and Spend-Within-Your-Means minority. You`ll be glad you did.

70 comments:

Anonymous said...

Man, if a rout in the bond market materializes, interest rates will spring up overnite. Then the housing crash will really begin.

Anonymous said...

Excellent post! Don't you just wonder about the US educational system that pumps out so many mindless consumers "who can't do the math"?

Mark in San Diego said...

NASDAQ 5100 in year 2000- only back to 2500 today. . .it might be useful to look at this chart - at the current rate, NASDAQ may take another 10 to 15 years (that would be 17 to 22 years from 2000) to ever get back to 5100 - adjusted for inflation, housing prices may take as long to get back to 2005 highs. . .and we are still in the meltdown phase (ok, except Aspen, etc.). Just remember Keith - 30% of us ARE renting, and more are joining us daily - especially those who were foreclosed upon.

Actually people who get foreclosed upon get their lives back - the go from $4000 a month or more in payments, taxes, expenses, to maybe $1200 a month for a small apartment, BUT - they actually can go to the movies with the kids again, and have money to fill the gas tank.

SeattleMoose said...

I am actually starting to enjoy renting homes that I could never afford even in a "normal" market.

I have owned condos/townhomes/land/houses in CA and TX over the years and was in the "gotta own" mindset when I moved here and went into "sticker shock". But 2 years of renting have made me realize I LIKE BEING FREE.

1) No yardwork
2) No taxes
3) Really nice homes that would otherwise be unaffordable
4) Noisy neighbor or barking dog....just move
5) Lose your job....just move
6) No appliance/house maintenance

It will be years before this things bottoms out and the "time is right" to buy again. By then I may say the heck with it.

wally said...

Why are we lemmings?

Anonymous said...

Higher interest rates would put the final nail in the coffin. Its been low interest rates that helped create this mess & its now what is keeping it from completely tanking. Job growth is also helping to hold the line. If and when inflation takes hold due to higher energy costs rippling through the economy then we will see rates rise & job growth contract and the whole house of cards will collapse. Good luck.

devestment said...

At a business meeting yesterday a corporate customer of mine mentioned that the house they are selling fell out of escrow 10 minutes after they finished moving out; the lender wants more down payment even though the buyer was PRE APROVED! My customer needs the proceed to pay down the mansion they recently moved into. I mentioned to them that they have till Thursday to make their mortgage payment and they became upset. I know of 4 properties this person owns and estimate the debit at around 5 million.

I hate to loose this customer; I have made a bundle with them. Here comes the trickle down, right into my wallet.

I don’t know if I saved to clean up on bargain property in a crash, or just to be able to live comfortably. I’ll need good staying power to last through the next 5 years of recession. 60 months of desperation feels like an eternity when you are in it. I remember the California crash of 91!!!

Anonymous said...

As long as the FDIC promotes banks to lend very easy money, which was what they did to the housing markets, and is now what is going to business interest, ie 'private equity' in huge somes; I see little changing.

Just like when housing popped in the S and L crises, the FDIC bailed out the banks, bought the bad mortgages at face, sold the same mortgages back to the banks at auction for pennies on the dollar, and the same banks made bundles retailing these same houses back to the public at a discount. You see, the fdic has access to the printing presses that print the money.

In a way the same is going on with the yen carry trade too. This is more of a global scam though. It is quite simple, those 'qualified' borrow yen at .5% in very large sums. Here is the catch, Then they purchase US treasuries with these borrowed funds yielding 5% on their .5% 'loans'. What a gimmick, huh? But that 'gimmick' provides banks and brokereges, and all others 'qualified' to reap huge sums of profit. Its like conjuring something from nothing.

Some system those in 'charge' have us sheeple on, as long as they are high up on the 'free money' tree chain, will they change anything? Hell yes, they will change the profit margins even greater by dialing UP US interest rates expanding their profits!!!

Anonymous said...

Mortgage Slaves are now spending crazy (and ever-increasing) amounts per month, struggling to come up with the monthly house payment (and expenses), with little left to enjoy the things that really matter in life (you know, like actually having a life, experiences, living within your means and saving)


...or afford to send their kids to private schools so they don't have to be around gangs!

Anonymous said...

Anonymous said...
Excellent post! Don't you just wonder about the US educational system that pumps out so many mindless consumers "who can't do the math"?

May 28, 2007 2:11 PM



They will teach you who MLK was but not how to balance your check book!

sam said...

This is a good post. The reason I post on this blog (and several others like it) is because I know it is very difficult to resist the social pressures to buy (the woman's nesting instinct for example).

Recently however, the arguments for buying have been entirely emotional and the arguments against buying are purely rational and financial. Unfortunately, there is a large industry of hucksters who are expert at manipulating the emotional dimensions of this investment. Not that the fault is with the hucksters- if the sheeple were less greedy, more questioning of authority and social norms, less intent on parading their ego through supersized consumption, the hucksters would fade away.

Creating a community of people who provide some support and counterevidence, both emotional and analytical, to the conventional wisdom is very helpful. I am not a perma-bear or apocalyptic type, and made an excessive return on a lived-in renovation (the fight club house, my friends called it). A couple of younger guys couple years out of school I know are watching their friends buy overpriced houses and win temporary social acclaim. Aside from setting a good example, at least I can arm them with the arguments (with some excellent anecdotes from the bogs) to resist making a stupid decision trading some instant gratification for decades of debt enslavement.

Anonymous said...

I have a friend that is selling his 1 bed condo for an exorbinant amount and then is surprised about the exorbinant amount other people want for a house she wants to upgrade to.

I just rolled my eyes. I have been telling my friends about the housing bubble for YEARS now. They STILL don't want to listen.

Upgrade to what? I'd ask. Bigger debt??

BPLI said...

This will be a rough summer. We are just about done with the stupid stats of being "up" in sales month over month. May or June will kill that and these guys will be eating crow by Aug/Sep

Anonymous said...

"Don't you just wonder about the US educational system that pumps out so many mindless consumers "who can't do the math"? "

All done by design.

The DUMBING down of American has been a complete success.

Anonymous said...

"The DUMBING down of American has"

Yes, complete.

Anonymous said...

Mortgage slave is the right word!

I have a friend who bought a beautiful house for $850,000 at the height of the market, November 2005. His realtor friend told him it was a great buy and the house would be worth $1.2 million in 2 years. He wants to refi. the house and had an appraisal. It appraised at $650,00 so he couldn't refi. He called up the appraiser to point out the new landscape, etc., and the appraiser said "Your lucky it appraised for that, and I can lose my license if I said more!"

Even worse he is so underwater, -$200,000 that he calls his house the submarine house. He wanted to sell it in 2006, but his status conscience wife said, "No go! I love my house!" His payments with taxes are about $50,000 a year. He could rent a place for $1,800 a month, or $21,600 a year. He would be plus $28,400! And real estate is still dropping.
He should just walk from it? I say yes!

Anonymous said...

Gee $3.50 and a housing crash underway and whatadaya know. Memorial Day weekend has more people driving this year than last. I was at the lake for the weekend and everyone was doing what they do every Memorial Day...boating, saliling, drinking...having a good time. And pulling the boats, why it's the big bad evil 12 MPG SUVs. But, but, but $3.50 gas is supposed to be hurting. People have to make a choice between driving and eating. Yeah right. Tell that to the people stuck in traffic with me Friday night as it took me 4 hrs to drive 140 miles.

Face it renters, aside from a few hard luck cases on the fringe, gas prices aren't affecting anyone. Sure it's psycologically painfull to put $70 in your tank when it used to be $40. But so what, people aren't all of a sudden going to sit at home on the weekends because the cost of gas went up. And the same goes for this supposed housing crash. On no, my home's value dropped 5% (after going up 100%), guess that means my life is over.

I honestly don't know what planet you people live on with all this doom and gloom around you.

Anonymous said...

dwindling demand, right, I forgot in HP land a 16% increase in homes sales is really a decrease.

Anonymous said...

Steve Forbes said on Forbes on Fox that real estate will go up because the fed keeps printing money.

Westchester Chick said...

anon 8:57 - people that own 2nd vacation homes on a lake are probably not going to hurt too bad. Same goes for anyone that owned a house prior to 2001 - because whatever it was worth then will be the value of that house within 5 years. It's the people that bought and over-extended themselves between 01-06 that are having a hard time and your neighbors may be good at hiding their troubles by increasing their debt. You clearly are not living in the same reality as the majority of the people in this country. Ask your local Walmart or Home Depot clerk if paying $70 vs $40 for a tank of gas hurts. Even if you don't get hurt by this - there will be people close to you that will.

Anonymous said...

devestment said...
At a business meeting yesterday


A bidness meeting on Sunday...geez and homedebtors are the ones with no life?

Guy Daley said...

anonymous 8:57PM

I honestly don't know what planet you people live on with all this doom and gloom around you.

And honestly we at HP wonder if people like you ever graduated from anything.

Housing bubble, credit bubble. Have you heard of negative savings rate? Does that mean anything to you? I suppose not. So I give up.

Our education system is a total loss. But the teachers union likes it this way. They won't guarantee a quality education until they are making six figures a year.

Anonymous said...

Record numbers of foreclsoure. That's all I need to know about housing. Why didn't those millions of people sell for a profit? Is it because there are no profits to be made from housing?

Smokey Bill said...

Went for a drive and a walk by the river today. HUGE boats in all the usual places -- way too big to tow, even with an Excursion. Then I filled up with $2.99 gas and thought to myself "what a bargain gas is at this price -- I covered many miles in my big truck for about 15 minutes of wages. It is really hard to beat gasoline for value.

The only downside was that, because of all the HUGE powerboats, I left the small sailboats I usually enjoy playing in at home. No reason to get swamped by a bunch of…(you fill it in).

SB

sam said...

Anon troll,

Keep up the good consumption work

After all someone's gotta keep the arabs in their robes this memorial day.

Lost Cause said...

Yeah, inflation now makes everyone a millioniare. There are so many homes in California that are over $1 million -- it is not even funny. Nobody ever doubted that so many American were stupid enough to pay $3.50 a gallon to tow at 12 miles per gallon -- look at who they put in the White House.

I don't think wasting gas is good -- smog is not good.

I don't think million dollar homes are good -- going in debt is the only way to extract the cash.

How is this good, anon?

sam said...

Anon troll,

One more point, since you're probably in real estate, let me tell you a story that illustrates "what world we live in". I worked for a tech company in 1998-200x. Clearly something was wrong in the market. I stayed in cash from mid 99. Nevertheless, the good times rolled on. Come April 2000, I was buying a motorcycle (even as a kid, I liked cash purchases). The guy I had responded to in the paper had at least 7 cycles, including some pretty pricey ones. He was a really nice guy, ironically a small time rehabber who was dabbling in the stock market. He let it loose that he needed to sell several of his cycles to make a margin call by Tuesday. I felt really bad for him, because the crap he was holding was really worthless dot-com nonsense and I politely tried to let him know it was crap. But I didn't feel so bad that I didn't knock 10% of my pending offer as soon as he told me his desparate situation. In retrospect, I could have gotten 20% with the registered check Monday AM.

To answer your question, the world we live in is CYCLICAL. No, it really isn't different this time.

- Renter

PS. Drop me a line if you're looking to sell a jet ski and need cash tomorrow.

Roccman said...

Keith - NO MORE FREAK'N SORRY ASS ANONS!!!

I wanna know who this fool is!!!

Come on bro...DELETE THEIR POSTS if then can't nut up.

When gas is $8.00 a gallon and this fuck is out of a job - I want to rub it all in his face...ALL IN IT!!

NOTE TO ALL ANON POSTERS:

WHEN GAS IS RATIONED AND $8.00 A GALLON - ALL OF YOU ARE GONNA GET THE "I TOLD YOU SO"...

SORRY ABOUT SOME OF THE SHRAPNEL GETTING THE ONE OR TWO GOOD ANON POSTERS...JUST LIFE i GUESS.

Freag'n Useless Eaters!!!!!!!!!!


"Gee $3.50 and a housing crash underway and whatadaya know. Memorial Day weekend has more people driving this year than last. I was at the lake for the weekend and everyone was doing what they do every Memorial Day...boating, saliling, drinking...having a good time. And pulling the boats, why it's the big bad evil 12 MPG SUVs. But, but, but $3.50 gas is supposed to be hurting. People have to make a choice between driving and eating. Yeah right. Tell that to the people stuck in traffic with me Friday night as it took me 4 hrs to drive 140 miles.

Face it renters, aside from a few hard luck cases on the fringe, gas prices aren't affecting anyone. Sure it's psycologically painfull to put $70 in your tank when it used to be $40. But so what, people aren't all of a sudden going to sit at home on the weekends because the cost of gas went up. And the same goes for this supposed housing crash. On no, my home's value dropped 5% (after going up 100%), guess that means my life is over.

I honestly don't know what planet you people live on with all this doom and gloom around you. "

Anonymous said...

One of your best posts Keith. I copied it onto Bloodhound realtwhore. It lasted a minute (maybe). Nothing to do at the realtwhore shop these days but delete truths.

Renting a house for $1600. The house next door is for sale for a monthly mortgage of $3700. Two price drops and no bites.

Financial Darwinism is at work.

Mark in San Diego said...

To Anon - "a few hard luck cases. . .don't know what planet you renters live on."

Agree to a certain extent - this blog is focused on the 30% of the American public who rent. . .If you bought your home 10 years ago for 200K (here in SoCal or elsewhere) and it was worth 700K in 2005, and is now worth "only" 650K now, then you are in great shape!!. . .BUT. . .lots of idiots Heloc'd (home equity line of credit) their future, and pulled money out every year. They now owe 700K on a 650K house. . .if you were a smart one, then more power to you. . . I would gently suggest that there are more than a few hard luck cases - from reading local papers, and reports - probably 20% of people in SD county are either underwater, or have no equity in their homes. . .as ARMs reset, they can't refinance, so they are stuck. . .

Kurt said...

Partying like its 1999, anon asshat 8:57pm, or are all you troll anons asshats. It is your birthright to live that piggy piggy lifestyle, you piece of ditch trash, too drunk to get out of the water and pee. When it costs $140 to fill up your tank, then you'll be bitchin'.

King of the Bitter Renters

bankguy said...

"Steve Forbes said on Forbes on Fox that real estate will go up because the fed keeps printing money."

Nail on the head! HPers refuse to acknowledge the price inflation that is running rampant in the U.S. economy. The money supply is growing at 12% a year and price inflation is anywhere from 6% to 10%. Even if house prices drop 30% from their 2005 peak, in just a couple of years inflation will boost them back up again. When China starts investing their hundreds of billions in recycled USDs in our stock markets and buying RE (remember the Japanese?), I expect prices will move to even crazier levels.

RJ said...

Anonymous said...
Gee. $3.50 and a housing crash underway and whatadaya kwow...

So what is the point? Did you expect that people were not going to whip out the VISA card to spend a Memorial Day weekend jet skiing in Lake Havasu? If we've borrowed ourselves into never before seen levels of personal debt, why stop now?
The fact is, all the economic indicators from YOY ISM to GDP are showing that we are in a recession (Do some research at www.shadowstats.com). But it is still in its early stages. Furthermore, most folks can still afford gas at $3.50 although it's just beginning to take a small bite out of retail sales. Next Memorial Day Weekend will be a far different story if and when gas prices go to $5.00/gal coupled with far higher food prices and vast numbers of housing industry workers unemployed. Accepting reality is not doom and gloom. Your denial of the hard facts is simply delusional.

Anonymous said...

You can pay off your mortgage but you never can pay off your property taxes.

And they go up every year

Anonymous said...

There's no real estate crash. Just ask the former employees of New Century and the other dozens of mortgage brokers who are now a little broker.

Wigga said...

"...or afford to send their kids to private schools so they don't have to be around gangs!"

Who is this idiot who keeps insisting that renting=living in the ghetto?

RJ said...

Bankguy said...
"Nail on the head! HPers refuse to acknowledge the price inflation that is running rampant in the U.S. economy."

Are you arguing that double-digit inflation is going to be a good thing? Of course asset prices will skyrocket in such an inflationary environment. The problem is, nobody but foreigners and wealthy Americans will be able to invest in U.S. assets. The rate of inflation to which you refer will wipe out the working and middle classes if it continues unabated and accelerates. Things will be exponentially worse for the middle class if Congress decides to allow the free flow of cheap labor into the U.S. to continue without restraint. What you are describing will utlimately end up in stagflation with Chinese buying up RE and stocks at high nominal prices in dollars, but firesale prices in other currencies. So, great. Your $600,000 home will be worth $1 million when you sell it to a Chinese businessman. You'll then be able to take your $400,000 equity and buy a 1-bedroom condo cash or put a down on a $2 million dollar upgrade. Of course, you'll be paying $10/gal. for gas. You're grocery bill will be $4,000 a month. Utilities will exceed $1,000 per month and all this with a 3% cost of living increase - because official inflation figures are way below the real numbers. Of course, you can just hold on to the house until hyperinflation destroys your wages and savings and you are forced to foreclose. High rates of inflation are not a good thing.

Anonymous said...

My Prayer:

Interest rates rise to 12% and lenders get so freaked out they demand 30% MINIMUM downpayments.

Let's fix this problem FAST!

Rallying Cry: A house is just a home!

Anonymous said...

"Sure it's psycologically painfull to put $70 in your tank when it used to be $40. But so what, people aren't all of a sudden going to sit at home on the weekends because the cost of gas went up."

Eventually they will.
I have a VERY economic car, which I drive 7 miles to work, and don't drive much on weekends because I live oceanfront. Right now I'm spending $100 / month in gas.

I can't hardly believe that a majority of gas guzzler-SUV owners, who live in the boonies and far from work, would spend less than $500 in gas per month (without considering wear and tar and depreciation). That's just for one car, imagine another one for the spouse. Add to that upside down car leases and car insurance.

So a driver like that would spend more than $10,000 per year, just for car expenses alone.

According to the 2005 US Census, the great majority of households earn $40k per year. ONLY 17% of households earn more than $100k per year, and that's combined income from both spouses, which usually ends up in costly divorce. Moreover, ONLY 16% of Americans have a bachelor's degree, the minimum education necessary to get a better paying job in this competitive and risky market.

As you can see, the numbers don't lie. So yes, there are many people whistling through the graveyard, like those other wannabes that join you in the lake. Enjoy the little credit left because this party will end soon.

Anonymous said...

"I honestly don't know what planet you people live on with all this doom and gloom around you."

Let it go, another wannabe FB who's leveraged to the wazoo, but still faking big shot. Just by the stuff you post here, it's clear that you are screwed financially. Your credit must be crap, too. You are not convincing anyone here, hamster.

Anonymous said...

Sure, everyone is swimming in money:

1. 40% of the population can't afford/don't have health insurance.

2. Negative savings.

3. Average balance on credit cards is $10,000.

4. The number of Americans living below poverty has been increasing by a million/yr since Bush took office.

5. Gas prices are higher than the oil crisis of the 70s.

Anonymous said...

Anon 9:14 you have no clue dude.

I have a VERY economic car, which I drive 7 miles to work, and don't drive much on weekends because I live oceanfront. Right now I'm spending $100 / month in gas.

14 miles per day. 22 workdays per month. You don't drive much on weekends so say 100 miles per weekend. That adds up to about 700 miles per month. How the hell do you spend $100 a month on gas driving 700 miles with a "VERY" economical car?

According to the 2005 US Census, the great majority of households earn $40k

Wrong. The MEDIAN household income in 2005 was $46,000. Meaning 1/2 were above $46,000 meaning it is mathematically impossible for the "great majority" to earn $40K.


I can't hardly believe that a majority of gas guzzler-SUV owners, who live in the boonies and far from work, would spend less than $500 in gas per month

You can't hardly believe? You mean you can hardly believe right? Either way...if using your 700 miles = $100 then OK they spend $500. In the real world of say 25 miles each way commute and a 15 MPG big bad evil SUV @ 3.25 a gallon that works out to $238 in gas cost.

Get a grip will you?

Anonymous said...

The number of Americans living below poverty has been increasing by a million/yr since Bush took office.

Oh right I forgot between 1993 and 2001 there were no poor people in this country. Get your head out of moveon.org's ass.

Anonymous said...

Can't have it both ways renters. Either there is inflation or there isn't. Can't have inflation and decreasing asset prices. So choose your loonie battle, hyperinflation or housing crash, can't have both.

Anonymous said...

1. 40% of the population can't afford/don't have health insurance.

Wrong. 40% would mean 120 million uninsured people. The actual number is 40 MILLION. Million, percent, yeah same thing. And of that 40 million if you exclude the 15 million illeals w/o insurance the number is 25 million or less than 10% of the total population.

2. Negative savings.
Wrong. Only if you ignore 401k and IRA contributions. But why worry about those, nobody contributes.

3. Average balance on credit cards is $10,000.
Wrong again socialist. Do some research and find out what the numbers are.

4. The number of Americans living below poverty has been increasing by a million/yr since Bush took office.
Population has grown by 10% you tool. Of course more people will be below poverty. What counts is the % of the population. That has stayed the same. Do they not teach basic math in publik skools anymore? No wonder you idiots can't even see the difference between % and absolute numbers, you go to government funded socialist indoctrination camps called publik skools.

5. Gas prices are higher than the oil crisis of the 70s.
You get this one right, partly. Which oil crisis? 1973/4? Or 1979? And actually my uneductaed socialist friend, the highest oil price adjusted for inflation was in 1980. Meaning you are wrong yet again.

Final score 0.5/5 or 10%.

You fail.

bankguy said...

"High rates of inflation are not a good thing."

No, its not a good thing, but inflation is infinitely better than the widespread asset deflation the HPers are predicting. In a deflationary depression, there is no "bottom", and all incentives for investment and risk disappear.

The money guys and politicos will all opt for inflation to get us out of the coming crisis, and that is why they don't seem to care about all of the debt they're running up. Yes, the USD is toast, but that $2500 mortgage payment will seem quite reasonable when a loaf of bread costs $5.

Anonymous said...

25 miles x 2 = 50 miles
50 x 22 days = 1100 miles

1100 miles + 500 miles = 1600 miles

1600 miles / 15 mpg = 107 gallons

107 gallons x 3.25$pg = $347

$347 x 2 SUV's = $700/mo gas

Unless you think most families have only one car.

Anonymous said...

There can be inflation and deflation at the same time. The 1970's saw inflation in consumer goods and a bear market in stocks. This time there is definitely inflation in comsumer goods with groceries and energy prices skyrocketing since 2000. Milk is $5/gal along with bread, soup and anything else going up in price. This time housing prices will be flat and down in most areas.

Anonymous said...

Since when has it been normal for a starter home in the ghettos of Compton or Watts to cost $500,000?

Is this country, the third largest in the world, really running out of land?

You bitter homedebtors claim there is no inflation, yet you also claim that rents will be increasing 5% every year and home prices will climb even higher than that. Gas prices have gone from 99 cents in 1998 to $3 today. Milk has gone from $2 to $5. So which is it? Is there inflation or not?

devestment said...

Anonymous said...
devestment said...
At a business meeting yesterday


A bidness meeting on Sunday...geez and homedebtors are the ones with no life?


I never travel on busy holidays; Tuesday is my favorite day to take off. You see, financial independence brings choices, not compulsion. Plus, Sundays can be the best day to buy chattel at pennies on the dollar.

Anonymous said...

So can the great majority of households earning $46K/yr afford the $500,000 starter home on the West Coast? Can they afford the $250,000 starter home in the Midwest? How about all the people earning less than $46K/yr? Maybe that is why foreclosures are up 80% in California and nearly 100% in Florida.

Anonymous said...

Why has no bitter homedebtor explained why New Century went bankrupt if home prices are still increasing? They could have taken the REO's and sold them for a profit or at least break even.

$700K house x 1.05 = $735K

That should have been a $35K profit on that 100% loan. Let's say the foreclosure cost is $50K. That means New Century only lost $15K on that loan. Unless they had to sell that house and take a $200K loss. That would add up to billions.

Anonymous said...

Damn, I am loving Anon 11:43 AM- the dude rocks.

Anyway, what is this "living" that the non-Mortgage Slaves are supposed to be doing? It appears to involve not huddling in your rented home, not driving anywhere for fear of spending money on gas, and praying for a recession and $8 gas so you that you can laugh at everybody else.

Huh? Is it really going to be that fun that you can afford to waste years waiting for your chance to "HA HA"?

Anonymous said...

Anonymous said...
25 miles x 2 = 50 miles
50 x 22 days = 1100 miles

1100 miles + 500 miles = 1600 miles

1600 miles / 15 mpg = 107 gallons

107 gallons x 3.25$pg = $347

$347 x 2 SUV's = $700/mo gas

Unless you think most families have only one car.

---------------------------------

And both cars are driven 50 miles a day to work and both cars are driven an extra 1000 miles a month.

I suppose there are cases like this, but not the norm.

The average commute in the US is 18 miles. The average car/suv gets 21 MPG.

Rerun those numbers.

Anonymous said...

I know you renting fools are on the lower income scale when you complain about the cost of milk. I drink about a gallon of milk a week. If it's $3 or $5 or $10, big deal.

bankguy said...

"Why has no bitter homedebtor explained why New Century went bankrupt if home prices are still increasing? "

New Century went tits-up because excessive defaults triggered the buy back clause in their MBS agreements with investors. They didn't have the cash to meet these demands so their only option was bankruptcy. Falling RE prices were not the direct cause of their failure.

If the poor bastards could've held on for another six months, they'd be able to glom on to the bailout packages Congress will be handing out to banks left and right. Remember the S&L bailouts? This is the sequel, only this time it will be 50X more expensive for us taxpayers.

Anonymous said...

$500 a month payment on a 4000 sq. ft. home. Thanks but I'll own over renting and having to live next to tards. The 2.5 acres I have keeps you tards far away. Some of us are smart enough to have steered clear of the pump and dump of the last few years and are continually gaining equity. You renters just flush your $ down the toilet monthly with nothing to show for it.

Anonymous said...

"Sure it's psycologically painfull to put $70 in your tank when it used to be $40."

And, let's say that is put in everyweek of the year

70-40= 30

30 x 52= 1,560.00

So, arguably, each person is not spending that 1,500 bucks a year on other stuff. Multiply that 1,500 by hundreds of millions of people and it is a lot more than psychologically painful.

Anonymous said...

Like it or not, the only way the Fed can get the US out of it's staggering debt is to inflate our way out of it. This is what we are seeing today. However, there are several drawbacks here. Because our creditors (read Japan and China) won't like seeing us steal their profits by printing more money, credit will get very tight, and interest rates will go up. Therefore home prices will be held in check not by the Fed, but by the folks who won't cotton loaning money to us for free. I won't make any political statements here - both parties have essentially abandoned the middle class. Americans are being undone not by their government per se - the government is the people in theory - they are being undone by pure GREED. We elect officials not by what ideas they have or how they best server the country - but by who can bring home the bacon. There will be a huge economic price to pay, but folks, we brought it on ourselves. Take a look at the Constitution and the moral vision of our founding fatheres who risked everything for an idea. Now look at the confusion we call Washihngton - any questions?

dean said...

High gasoline prices might not affect people's DRIVING habits, but they affect other habits. The extra $100/month you're spending on gas means that you are cutting back on savings, dining out, or other discretionary expenses. If gasoline was a major expense for me (it isn't), and my expenses for gasoline suddenly doubled, that money would have to come out of _somewhere_. If I didn't change my driving habits, I'd have to change other habits to make up the difference. How hard is that to understand?

dean said...

You renters just flush your $ down the toilet monthly with nothing to show for it.

Honestly, if someone's rent is the same as a homeowner's taxes, maintanence, and interest payments, he wins. The equity you would otherwise put into your house could easily be put into stock equities. There's never any point in making major financial sacrifices for a house. When buying a house doesn't mean I have to sacrifice other parts of my lifestyle, I'll probably do it. Until then, I might as well rent for as little monthly outlay as possible.

Anonymous said...

Honestly, if someone's rent is the same as a homeowner's taxes, maintanence, and interest payments, he wins. The equity you would otherwise put into your house could easily be put into stock equities.

---------------

I appreciation is 0 or negative. If appreciation is even 1% a year, your statement is false unless the investments return late 90s type nasdaq returns, highly unlikely long term.

Anonymous said...

and of coure you conveniently left out the tax deduction on interest and property taxes

Anonymous said...

but what if the average income numbers are as bogus as the inflation numbers and its 27,000 not 45,000 or 14-25% not 2.5 and includes housing costs, food, energy, insurance, taxes,and gasoline, join the lists of the common screwed, and blame it on the anger i felt when called consumer, rather than customer, and the line of the eat or be eaten, consumed, vrs, the customer is always right..... but its to late now for to invest in the remedy of that problem.........no more bonuses for wall street, with paulson as sect of treasury, spelt treason>>>>>>>>>>.

Anonymous said...

median income is $27K....maybe in your ghetto apartment complex, rest of the country, not so much. What you ghetto renters assume is that your pathetic lives are the norm. Not so. You are the lowest of the low. Please don't assume this entire country mirrors your existence.

g said...

All you dipshits who say that you can't have inflation and house prices dropping too - pull your heads out of your asses. The Fed's cooked inflation number uses RENTS not HOME PRICES. So inflation could skyrocket if rents stay fairly constant due to increased supply of McCondos out there and other consumer prices rise. At the same time all that extra pressure on the consumer's wallet will make it all that much less likely they can afford a more expensive house -> house prices continue to drop.

Anonymous said...

BW HA HA HA!! You idiots you can't have inflation in rents without inflation in real estate or vice versa. If house prices plummet so will rents = no inflation. If the opposite happens then yes you have inflation but you also have higher house prices.

You can't have it 1/2 and 1/2, ie plummeting house prices AND inflation.

Get a fucking clue.

dean said...

I confess you're right. Leverage ensures that even small housing equity can increase quickly even in a slowly growing housing market, but there's a penalty one pays for lack of liquidity. I wouldn't spend the limits of my means on rent, nor would I do so on a mortgage. My money's worth more to me in my money market account than it is paying a mortgage right now, so that's where it goes.

Of course, then there's the traditional, old-world method of buying a house: with a brown paper bag full of cash.

jt said...

Best mortgage lending commercial ever. Not a joke. But is laughable.


http://tinyurl.com/2vgcw5

Peahippo said...

anon @ 8:30 PM, I applaud your sentiments, since at least you're honest about what a f*cking elitist scumbag you are. The median income for America is about $32K. That makes at least 1/3 of America a "ghetto" to you, populated with people living pathetic lives. Since THAT is patently false, we can see what a demented fantasy world you live in.

Half of America brings home a gross $15/hr. Taxes and fees swallow at least 40% of that for workers. If half of kept money is applied to housing, that produces about $800/mo. This proves that the issue is not about being poor and pathetic, but that housing in too many areas is overpriced and must fall in order to accommodate real homeowners.

It's terrible for us sensible economists to hear how the monied classes are so howlingly for bankrupting the rest of America. Perhaps it really is time to start killing these pigs.