[Boomer]

OK, folks. This is what's up. I did not know I was going to write this. I did not plan to stay so long at the keyboard this morning. I tuned in to this thread. And whoops! I was off and running. (typing) I am not a cutter nor am I a paster. I just tell stories. You do not have to read them. But here goes:

I wish I could find out who said, "Unrestrained greed is not only bad morals, it is bad economics."

I am a fan of business. But lending industry practices that we have witnessed recently do not resemble ethical business in any way, shape, or form. The bloated in DC have been so wined, dined, and propped up by lobbyists that they can no longer recognize ethical business practices, if they ever could.

The CEO of one of the largest lenders was selling his stock through programmed stock sales. Yeah, I know. That's legal. He set it up ahead of time. And he and so many other lenders set up those wide-eyed American Dreamers.

I am weary of hearing, "But the borrowers should have known." Yeah, they should have. But they did not. And their lenders knew they did not. And their Congress knew they did not. There seem to be no laws to protect the American people from the lending industry. Things have happened that should never have happened. And we will all pay.

I don't care about the speculators. I do care about those first home buyers who walked right into it, trusting the guy with the briefcase and the big desk, telling them what they wanted to hear. Vile stuff out there. And we will all pay.

I saw it coming. And I am certainly not a learned economist.

In the fall of 2006, I actually rescued a good friend's daughter from one of these loans. We are talking about a smart young woman with a good job who was walking right straight toward the wall, the cliff, whatever. Her parents could not get her attention. She was hell-bent on doing this "on her own." And thought she understood it. She is in her 20's. And she knows how to do some serious math. Whoda thought?

I asked if she would at least let her dad introduce her to someone at their local, longtime, conservative, bricks and mortar bank to see what that lending department could offer her. It worked out fine. I have no idea why she listened to me. But she did.

There is another circumstance that I have seen up close. A couple in their late 30's who are family friends transferred west. Both have excellent jobs. They bought last fall in a nice neighborhood, getting what they thought was a good deal.

They had to sell their SC house for less, but they felt they were buying for less and the new jobs dictated a move.

This couple knew not to get into the wrong kind of mortgage. And they did not. This young couple did everything they were supposed to do.

And they settled into their new and quite lovely neighborhood.

Now they are watching their neighbors walk away. They are watching their neighborhood turn to rental where possible. They are watching growing grass and general property neglect. They are surrounded by yards that have unmaintained pools. They are even seeing multiple families live in one house. And we are talking about those Ken & Barbie houses. And this young couple did things as they should have been done.

I care about the people in my little stories. I care about those who are like them. Those I do not know. And I care about the fact that we will all pay in one way or another, or in many, many ways. And I care that those who should pay, will not.

So anyway, you did not have to read it. If you are reading this sentence, I guess you did. I did not intend to write it. But I did. So I will hit send. And I will move forward with my life. But I will still care very much. And I still believe that "Unrestrained greed is not only bad morals, it is bad economics." And I still wish I knew who said it. And I wish I had.

I just looked back and saw that I did not give my opinion, directly anyway, on when the overall housing market will bottom. Well, I do so love my sayings. And one of my favorites is "It's not over 'til the fat lady sings." And I'm sad to say that I don't hear her. And I'm really sad to say that I'm not even sure she is approaching the stage. I guess, truth be told, I don't even think I see her limo pulling up to the theater.

Boomer

[tkret]

Note what the Chief Economist of LendingTree.com says about the prospect of the end of this mess. His opinion is in the middle of the article.

http://www.kansascity.com/438/story/684260.html

Originally Posted by tkret

Don't forget that the MAJOR job layoffs haven't begun yet. Of course, the airlines and banks have started to furlough employees but what about the other industries once the consumer really starts keeping the purse closed. When the other parts of the economy look to conserve cash by letting employees go, foreclosures will rise even further. This is the worse housing mess since the Great Depression. 2009 is too early for the end. IMHO we're only in the 7th inning of a 9 inning game hoping it doesn't go into extra innings.
Keep an eye on the unemployment rate; layoffs are the enemy of housing.

[ConeyIsBabe]

WOW Boomer......... that was interesting; makes sense to me.

I'm-a-thinking I might just stay put, hold on to my savings, and wait it out :dontknow:

[captain1202]

Boomer,
Great piece. The most disturbing thing about it all is the complete lack of ANY leadership in Washington around any of these issues. It's almost like they are letting it happen.
I just get so furious about the whole thing I can't even articulate it.

[another Linda]

Thanks so much for your post, Boomer. My daughter is also in a bad situation with this mess. No, she didn't get an ARM and she isn't in danger of losing her house. But both she and her husband now have close to 2 hour commutes and a new baby. They'd love to move closer to their jobs but the house is now worth probably $20K less than the mortgage on it. If they did sell, not only would they have nothing to put down on another house, they'd still owe a bundle on this one. A realtor told them to just walk away, but then who would give them another mortgage? And I'm sure they aren't alone.

[railroader12]

Great article Boomer. I just purchased in Hemingway village, unable to wait for the market to turn around. Plus we got a great price, even made a few dollars according to the prices on TV's web sit. I had my house on the market since January here in South New Jersey and no takers. We are selling it our selves, had open houses with visitors but no buyers. Two years ago, this house would have sold in less then a week. But it's like you say, no one in DC is listing or even cares. It seems the name of the game is GREED.

[tkret]

http://biz.yahoo.com/rb/080702/usa_paulson_economy.html

[Happy62]

Originally Posted by Boomer BeBack

OK, folks. This is what's up. I did not know I was going to write this. I did not plan to stay so long at the keyboard this morning. I tuned in to this thread. And whoops! I was off and running. (typing) I am not a cutter nor am I a paster. I just tell stories. You do not have to read them. But here goes:

I wish I could find out who said, "Unrestrained greed is not only bad morals, it is bad economics."

I am a fan of business. But lending industry practices that we have witnessed recently do not resemble ethical business in any way, shape, or form. The bloated in DC have been so wined, dined, and propped up by lobbyists that they can no longer recognize ethical business practices, if they ever could.

The CEO of one of the largest lenders was selling his stock through programmed stock sales. Yeah, I know. That's legal. He set it up ahead of time. And he and so many other lenders set up those wide-eyed American Dreamers.

I am weary of hearing, "But the borrowers should have known." Yeah, they should have. But they did not. And their lenders knew they did not. And their Congress knew they did not. There seem to be no laws to protect the American people from the lending industry. Things have happened that should never have happened. And we will all pay.

I don't care about the speculators. I do care about those first home buyers who walked right into it, trusting the guy with the briefcase and the big desk, telling them what they wanted to hear. Vile stuff out there. And we will all pay.

I saw it coming. And I am certainly not a learned economist.

In the fall of 2006, I actually rescued a good friend's daughter from one of these loans. We are talking about a smart young woman with a good job who was walking right straight toward the wall, the cliff, whatever. Her parents could not get her attention. She was hell-bent on doing this "on her own." And thought she understood it. She is in her 20's. And she knows how to do some serious math. Whoda thought?

I asked if she would at least let her dad introduce her to someone at their local, longtime, conservative, bricks and mortar bank to see what that lending department could offer her. It worked out fine. I have no idea why she listened to me. But she did.

There is another circumstance that I have seen up close. A couple in their late 30's who are family friends transferred west. Both have excellent jobs. They bought last fall in a nice neighborhood, getting what they thought was a good deal.

They had to sell their SC house for less, but they felt they were buying for less and the new jobs dictated a move.

This couple knew not to get into the wrong kind of mortgage. And they did not. This young couple did everything they were supposed to do.

And they settled into their new and quite lovely neighborhood.

Now they are watching their neighbors walk away. They are watching their neighborhood turn to rental where possible. They are watching growing grass and general property neglect. They are surrounded by yards that have unmaintained pools. They are even seeing multiple families live in one house. And we are talking about those Ken & Barbie houses. And this young couple did things as they should have been done.

I care about the people in my little stories. I care about those who are like them. Those I do not know. And I care about the fact that we will all pay in one way or another, or in many, many ways. And I care that those who should pay, will not.

So anyway, you did not have to read it. If you are reading this sentence, I guess you did. I did not intend to write it. But I did. So I will hit send. And I will move forward with my life. But I will still care very much. And I still believe that "Unrestrained greed is not only bad morals, it is bad economics." And I still wish I knew who said it. And I wish I had.

I just looked back and saw that I did not give my opinion, directly anyway, on when the overall housing market will bottom. Well, I do so love my sayings. And one of my favorites is "It's not over 'til the fat lady sings." And I'm sad to say that I don't hear her. And I'm really sad to say that I'm not even sure she is approaching the stage. I guess, truth be told, I don't even think I see her limo pulling up to the theater.

Boomer

YEP YOPU NEED TO GET A HOBBY -- Way too long to read

[Boomer]

but, but, but, but, but, but, Happy 62,

You said, "YEP YOPU (sic) NEED TO GET A HOBBY -- way too long to read."

And you yelled the first part at me.

sniff. sniff. sniff.

but, but, but, but, but, a few people liked it I think. sniff. sniff.

And, and, and, and, I am really a pretty nice lady. And I try to never be rude to anybody on here.

sniff. sniff. sniff. sniff.

And if you tell me who was making you read it, I will ask them politely to stop making you read stuff.

sniff. sniff. sniff. sniff. sniff.

but. but. . .

But right now I am going to go play with the alligators.

sniff. sniff. sniff.

but. but. but, Happy62, justsoyaknow, that was only the first chapter.

Boomer

[Peggy D]

Things here at the Delaware shore are at a standstill as far as houses being sold.

How bad is it?

A house down the street from us that when put on the market a year ago was listed at $600,000, a fair price for this house. The price was reduced to $400,000 this season
--and it still hasn't sold!!!

[samhass]

Don't cry, boomer. I loved your post. :bigthumbsup: I think you are a very smart lady and I never want to get to the point that I refuse to read a good post because it's "to long".
Let your fingers fly!!!!!!!!!!!!!! 040

[travelstiles]

Boomer,
The post was not too long, and it said just enough to make me think about those individuals you described and really feel for them. There is something basically wrong when CEOs who mismanage a company walk away with huge golden parachutes. Many of us have seen it first hand, and the company cuts never seem to affect those who made the very decisions that caused the problems to begin with.
Individuals shareholders have very little say, as the large mutual funds and pension funds (in addition to wealthy foreign investors) make the calls that are perpetuating these problems, and it all boils down to the next quarterly profit report.
I am not saying there is anything wrong with profits, but there is no longer any long-term corporate (or government) strategy. Everything is focused on the next election or the next earnings report.
Yet how many of us even read, no less vote, on proxy statements when we receive them?
Financial education, disclosure and more transparency in corporate governance are needed.
I know, this was probably too long as well, but maybe we've all become too accustomed to "sound bites" and need to delve more deeply into the issues.
Thanks, Boomer, for your thoughts.

[Villages Kahuna]

If Fannie Mae and Freddie Mac are in as much trouble as is being reported we aren't anywhere near the bottom of home prices.

Basically, the problem is this...Fannie and Freddie guarantee a huge proportion of the home mortgages made in the U.S. The losses being incurred because of the flood of sub-prime loans and now the resulting foreclosures has placed the underlying capital of Freddie and Fannie under tremendous stress. I've heard several experts say that they're nowhere near insolvency, but the financial markets are reacting in a way that they will have a very difficult time raising the money they need to continue to do their business.

That means that mortgage loans will become very, very difficult to get. Only the absolute most creditworthy borrowers are going to be able to get loans. The basic protection that any lender seeks in circumstances like this is to reduce the "loan-to-value" ratio that they'll lend. So, if lots and lots of buyers who might like to buy a house can't get financing, or if they can only borrow 60 or 70% of the purchase price, the number of homes sold is going to decline precipitously. But there will still be home owners who absolutley have to sell their homes. That could include lenders who own homes from foreclosure, people who are transferred by their companies who have agreed to "underwite" the sale of the transferred emplyee's house, or people who have very low mortgages outstanding on their houses and are willing to sell at a very low price just to get out. All those types of circumstances result in much lower sales prices for houses. MUCH lower!

So much of the future of home prices and home sales rests on the willingness of lenders to make loans. And without Fannie or Freddie to guarantee those loans, I think you're going to find lenders sitting on the sidelines for quite some time to come. I think that there is a reasonable argument that can be made for a further precipitous drop in home prices in the next year or so.

[Barefoot]

Originally Posted by Villages Kahuna

I think that there is a reasonable argument that can be made for a further precipitous drop in home prices in the next year or so.

Kahuna, I agree.

Interestingly, I have been recently warned by a Village agent that TV will soon be increasing prices on new homes because building supply costs are escalating due to increases in transportation costs. The Village agents insist the market decline hasn't really affected Village home prices because it is a "unique" market. That has always been their "party line" in spite of much evidence to the contrary. (If you peruse the MLS site, almost every house listed has been reduced in price, many substantially.)

[inda50]

thanks for your input Boomer and all the rest. Housing is still supply and demand, like just about every thing else, and at this time oil seems to be in demand, house owner in supply, jobs decreasing, not good situation for the country I love. Even rougher for the newer generation. No solution in sight, both candidates spouting the same old Republican and Democrate dogma.