12
03/10
More Reality about Real Estate
by John Galt
March 12, 2010
The news today is more of the same from the mainstream media, then again, I’m not a representative of nor party to the nonsense they spread. The true depths of where the real estate crash is heading is not then happy-happy joy-joy news about modifications increasing, since 70% of those fail within 12 months. It is not the stories from the Florida Association of Realtors proclaiming that some stabilization appears to have finally begun in our state since I’m involved in it at the grunt or ground level and know that the shadow inventory of literally block after block of empty homes tells a much more factual tale.
This story from DSNews.com:
REOs and Short Sales Account for 50% of California Home Sales
is a tell tale sign as to where reality and the truth in the hardest hit states probably does and shall continue to exist.
If 50% is the number in California, then you can be assured that is the same story for Nevada (probably worse), Florida and of course, Arizona. The pattern will repeat through many other states, especially those hardest hit by the unemployment problems sweeping the nation.
Carl Livingston
13.03.10
13:20
From the article:
“According to a survey conducted by C.A.R. on the effectiveness of the federal tax credit, nearly 40 percent of homebuyers in the state said they would not have purchased a home if the tax credit was not offered.”
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So then, any claimed gains or progress is artificially propped up. That is, without federal interference (bribes) 40 percent of the homes sold would still be on the market – rotting and being infested with termites!
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From the article:
“C.A.R. also noted that the large number of distressed properties led to more than half of all first-time buyers purchasing an REO/foreclosure or short sale property.”
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So I wonder… How many of these “First time buyers” were really qualified to purchase a home that they wouldn’t have otherwise purchased, without government intervention or bribery?
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Unfortunately, not only is the government prolonging the inevitable collapse, they are actually contributing to its eventual demise by enabling individuals to purchase homes that they otherwise couldn’t afford!!!
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Hey! Let’s kill America! But let’s kill America by way of 1,000 razor cuts!!!
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Man, oh man, how good it feels!!!
sheepdog51
13.03.10
19:10
Yes the pattern will repeat through many other states as the unemployment problems keep sweeping the nation. Our State annouced on Friday 1000 more public sector jobs will be cut, along with another 700 lost in one public school district. It is what our State Consitution dictates and I apprehensively commend what our Democrat Governor is doing. Yet these soon to be unemployeed people will not be able to find suitable employement to make thier house payments and the whirlpool just keeps sucking folks in.
Our leadership in DC have no clue on how to stop it! Bailing out the Big Banks was not the answer and now the entire country is soon to face the Perfect Storm of financial collapse.
History will repeat itself because we have allowed the same type of “experts” to continue to run the monitary engine of the country. The stock market crashed in 1929. 1932 and 1933 were by far the worst years of the “Great Depression”. It took 3 years for it to trikle down to Mainstreet! Our crash happened in 2008. Late 2010 and 2011 do not look promising.
A word to the sheep with lambs, decide now, how and where you want to spend 2 to 3 years of economic and personal hell. The strong and well positioned will survive!
sheepdog51
13.03.10
19:31
Yes the pattern will repeat through many other states as the unemployment problems keep sweeping the nation. Our State annouced on Friday 1000 more public sector jobs will be cut, along with another 700 lost in one public school district. It is what our State Consitution dictates and I apprehensively commend what our Democrat Governor is doing. Yet these soon to be unemployeed people will not be able to find suitable employement to make thier house payments and the whirlpool just keeps sucking folks in.
Our leadership in DC have no clue on how to stop it! Bailing out the Big Banks was not the answer and now the entire country is soon to face the Perfect Storm of financial collapse.
History will repeat itself because we have allowed the same type of “experts” to continue to run the monitary engine of the country. The stock market crashed in 1929. 1932 and 1933 were by far the worst years of the “Great Depression”. It took 3 years for it to trikle down to Mainstreet! Our crash happened in 2008. Late 2010 and 2011 do not look promising.
A word to the sheep with lambs, decide now, how and where you want to spend 2 to 3 years of economic and personal hell. The strong and well positioned will survive!
Kathy
14.03.10
04:31
I have been visiting here since I found “The Day the Dollar Died” but haven’t commented. I loved reading the series and the ending was sad. Although a work of fiction, it was very believable. (Thanks Jonh Galt)
I don’t yet understand that much about the bond market but real estate…. I would have told you earlier in 2008 that I had a good working knowledge of Real Estate and mortgage lending. But I don’t. And maybe you guys don’t realize how compartmentalized it is either.
I was a licensed Realtor here in Tennessee for 5 years. I moved away and then back to Tennessee and went into training to become a mortgage loan processor working my way up to a loan originator. I originated for about 12 years and then walked out on the business in October of 2008.
I did not originate sub-prime loans. I originated mostly VA loans followed by FHA and then conventional loans. The reason being, I’m located next to Ft Campbell Ky, one of the largest Army bases in the country. Our little city caters to the military. VA home loan guidelines were about 1000 pages long and I studied them inside and out. FHA or (HUD) guidelines….I couldn’t tell ya how many pages because they were only my secondary and I just had their basics plus the most updated mortgagee letters. Fannie and Freddie conventional were easy enough and little enough to memorize.
My point is, as a loan officer, I knew my part. I had about 40 pages of disclosures to go over with my buyers to try to make sure they understood their transaction. I am told that I was very good at my job and clients told me they understood. But I started studying our monetary system in late 2007 and things started to “not make sense to me.”
The company that I was working for was a correspondent lender to Countrywide. Countrywide was going under and later bought out by BofA. (I left Oct 2008, before the complete take over of BofA.) If I had stayed 4 more months, I would have been terminated because my company RMC went out of business. Shot myself in the foot on that one because if I had stayed, I could have drawn unemployment from losing my job. As it is, I quit the business so I couldn’t draw and I am not counted in the unemployment numbers in the USA.
My co-workers who did stay,,,,they all received an email at 10 minutes before 5 one evening. 10 minutes before quitting time first week of February saying “you no longer have a job. As of this moment RMC is out of business;” What happened???
Bank of America had finished with the overtake of our Countrywide correspondent lending line of credit. They had taken the bail out funds. They shut us down. I say “us” even tho I was no longer there. My friends were left not even being able to collect their final two week paychecks!
This post may be a little long but I’m trying to give you a human insider perspective. My friends who found themselves without a job in the first week of February 2009 have changed companies 5 times by now. 5 employers in 13 months is harsh! They are still trying to figure out who is going down and who is coming up. When I left the business I thought they were all going down until at least the end of 2010 just because I saw a depression and dollar crisis based on my studies.
I don’t think I’m right. Variables and timing are things that I don’t quite know how to factor. In my geographic area we never had real estate booms and busts. Our market was always kept rather stable with a projected property value increase of about 3% per year. There was a slight difference in the market when our troops were deployed but still no major booms or busts.
I just wanted to somehow state: There are many markets in America that aren’t like Florida, California, Arizona etc etc. and yet …..Sub-prime isn’t the problem. Option Arms aren’t the problem…
What I never looked at as a mortgage loan originator is what happens to a loan AFTER it closes???? THAT is the problem!!! Sub-prime or conforming conventional loan….after the closing…what happens to the deed of trust mortgage security agreement? What happens to the promissory note?
Your disclosures will tell you that promissory notes and deeds of trusts are security instruments. But they won’t disclose to you that they are also “negotiable instruments”. That’s not full disclosure to you the buyer!! That changes the whole risk factor for you the buyer. (Me the buyer too!) We sign a 30 year promissory note, promising to pay back principle and interest because we feel it’s only fair. WE have put the bank at risk for loaning us their money. (WE OWE THEM).
What we don’t understand is that the bank has options that we as people don’t have. The promissory note that I signed is just as good as green printed dollars to the bank. Green printed dollars or federal reserve notes are just IOU’s. My promissory note that I signed for my house is white paper with black lettering that is still just an IOU. So my IOU is just as good to the bank as the Federal Reserve IOU and they are both considered money for the bank. Who knew???
When I signed my own home loan promissory note I signed for about $92,000 plus interest. I didn’t realize that my signature upon their printed note would create $92,000 for them upon their bookkeeping ledgers or computer. They wired my seller $92,000 to close my home deal after they had my signature upon their note. So if I created $92,000 with my own signature for them, and they sent $92,000 to my seller that seems like an exchange of value doesn’t it? Why do I owe them $92,000 plus interest after the closing if I just gave them $92,000 AT the closing with my signature? It’s because we don’t understand how we create money for banks with our signatures! We don’t understand the law of contracts either. Understand that there is more than one kind of money floating around out there. Some of it is green ink and coinage and most of it is “paper instruments” Watch the video link below for a starter and then search google video for a movie called “the money masters” to see what is happening to our monetary/debt/slave system.
http://www.youtube.com/watch?v=xSqi1N_RrUs#lq-lq2-hq-vhq
Carl Livingston
14.03.10
05:23
I’ve spent a lot of time reading, and listening to all the mumbo jumbo that these investment experts have been spewing for a couple of years now. On the surface, it all sounds great – for their pockets.
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To be sure, these clowns don’t know much more then I do about what is really going on with this country, its economy, the global economy and who is really pulling the strings.
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So today, I read:
http://neithercorp.us/npress/?p=268
which seems to be the clearest picture I’ve read yet.
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Maybe it’s conspiracy, but maybe it’s not really too far fetched, either…
BadBrad
14.03.10
05:23
I have been listening to JG music this evening. Yeah, I have Sirius radio but the Master knows his tunes. Okay, life is filled up with horse poop. We know this. The
difference between us and the the great Depression is
inflation. Inflation is in increase in money supply.
So, M3 is crazy. WAIT! It is not even published. Hang
tight, here we go. Inflationary depression. Worst of
all worlds.
Kate
14.03.10
08:28
I’m a residential real estate appraiser in Riverside County, CA, a.k.a. “The Inland Empire” (there must be a great tongue-in-cheek satirical name for that somewhere). Bank of Amigos is finally opening the tap & letting some of their short sales actually be bought by new homeowners. I did 18 full appraisals last week, just in the Palm Springs/Cathedral City area alone, for 1 bank! The banks are not letting all the inventory go to market because that will decrease prices further. This is what NEEDS to happen, they can only sit on the shadow inventory for so long. We’ve got to take the pain, like getting that novocaine shot at the dentist, and let it balance out. The numbers above, about values still needing to fall is spot-on.
I hate to sound racist, but many, many of these homes were bought by (illegal?) immigrants with no idea how the system works and no understanding of the documents they signed. Many (not all) of these homes are filthy, with holes in the walls, illegal second kitchens and rodent feces. Disgusting. They make the mortgage payments by packing in renters in the garage, the family room, wherever!
It’s only going to get worse, as the banks inventories fill up and they have to sell some of these homes at huge losses. Thanks JohnGalt for all you are doing to warn us. I appreciate your hard work.
templar knight
14.03.10
23:45
Kate, telling the truth about illegal alien home purchases, and the hows and whys of what condition the homes are in is not racist in any way. And it doesn’t sound that way to any normal person.
Carl Livingston
15.03.10
16:22
If it waddles like a duck, quacks like a duck and looks like a duck, just maybe it is what it is – a duck!
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I’ve noticed what when ever the Left doesn’t want you to play in a particular neighborhood sand box the race card is usually one of the first things they like to play.
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But even still, we should be careful how we present certain things.
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With the new Marxist/Socialist regime, good is bad, white is black, and up is down. And to prove this point, to enforce this new mind-set, they have given us the new “Hate Crimes” bill.
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Remember, after all, a Jihadist terrorist is classified as an enemy combatant and now has Constitutional rights. But as a natural born U.S. citizen, if I voice my dissatisfaction toward this tyrant government, I may well be arrested as a “Belligerent combatant” and imprisoned indefinitely – with no Constitutional rights!
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So my point is this… It doesn’t matter what your original intent was, for those seeking our destruction, the simplest verbal expression may well be used against you by the new political regime.
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Welcome to the “Born Again” Amerika!!!