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Another Perspective
Don’t Count on a Housing Rebound Any Time Soon
Even if you’re qualified to buy now the banks couldn’t care less.
I’ve been looking at the housing market lately from a different perspective — that of a hopeful buyer. I can tell you, despite whatever exhortations are coming out of Washington, it’s going to be a long time before this market recovers.
You’d think we would be great buyer material. In the town we live in, just 12 miles north of the George Washington Bridge, practically every third house is for sale, some on the market for two or three years. One place we looked at sold for $1 million seven years ago. They’re now asking $500,000 with no takers. As the real estate agents keep telling us, “You couldn’t find a better time to buy.”
With the proceeds of a house sold a month before the 2008 crash, we’re also in position to make a sizable down payment. Interest rates are hitting new lows every month. What could be more to our advantage?
Well, first there’s something called a “short sale.” You may not know the term, but it’s enough to strike fear into the heart of any real estate agent.
A short sale is where the owner has stopped making mortgage payments but the bank has not yet foreclosed, meaning the bank is still carrying the property on its books without making any money. You’d think the banks would be dying to sell. Well, apparently they are.
The first short sale we looked at — the former $1 million property — aroused my curiosity. It seemed like such a great bargain. Why had it been on the market for two years?
“None of the prospective buyers were able to respond quickly enough to the bank’s demands,” our realtor informed us. “They all had houses they had to sell first. When the bank accepts an offer, it wants to close within weeks.”
Hmm, that’s nice to know. Since we’ve already sold our house and are ready to buy right now, we may have a big advantage. When another short sale comes up within our price range, we make an offer only $25,000 below the asking price. It seems like a slam-dunk.
That was seven weeks ago. We haven’t heard anything since then.
It turns out that although banks want you to act with great dispatch when they finally make up their minds, until that point it may take them forever to respond. Banks, after all, are bureaucracies and your offer may be sitting on someone’s desk for months before anyone takes notice. We do some Internet research and find there are what amounts to support groups for people in short sales. It’s not unknown for such transactions to take two years.
“What’s going on?” we ask our realtor.
“Well, the problem seems to be that all these mortgages are insured by Fannie Mae or Freddie Mac or the Federal Housing Administration,” she tells us. “The banks know ultimately they’re not going to lose any money. So they don’t mind fiddling around waiting to see if prices go up again. It’s only when they decide to accept your offer that they want you to act immediately.”
So we wait. Now we’re starting having a problem with our rental. Our lease expires in September and the landlord says he doesn’t want to have to show the apartment during the winter. If we haven’t left by September, he wants us to sign another year’s lease. All this seemed inconsequential back in May when we put in our bid, but now it’s mid-July and nothing has happened. I start checking out motels and storage lockers just in case.
“It’s only going to get worse,” our realtor tells us. “Dodd-Frank is just going into effect and the banks are going to be dealing with a whole new set of regulations. It will slow things down even more.” The object, of course, will be to prevent the banks from making any more of those high-risk loans that the government forced them to make for two decades under the Community Reinvestment Act.
Then of course we have to get a mortgage. Our bank does a credit check and finds we score below 700, the dividing line for acceptable customers. It turns out I had a cell phone bill sent to a collection agency four years ago. I don’t even remember but I think it happened when I forget to put in a change-of-address after we moved. Also, it would help if I had more credit cards. Frugality doesn’t necessarily pay off in the credit world.
Letter to the Editor View all comments (73) | Leave a comment
More Articles by William Tucker
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chuck| 7.12.12 @ 7:01AM
And the destruction of the housing industry by the Imperial Federal Government continues.
Can't they just leave us the hell alone?
TLP| 7.12.12 @ 7:47AM
You want a house?
Get rid of Scumbag this November.
You want a Job?
Get rid of Scumbag this November.
You want this Country to Stand Tall, Stand Strong, and to Project AMERICAN VALUES to the rest of the world, again?
Get rid of Scumbag this November.
Do you want to continue to GUT our Great Military Forces as was done in the Carter Years? Or do you want them to be REBUILT, so they will be ready and able for the Inevitable Conflagrations that are on the Horizon.
Do you want NASA to stop Wet nursing the Muslim Psyche, with its Muslim Outreach Mission, and get back to doing what it was Created to do - Put Americans in to Space?
Get rid of Scumbag this November.
ONE GUY is responsible for EVERYTHING that WRONG in this Country, right now.
One Guy.
Scumbag.
Doctor_X| 7.12.12 @ 7:58AM
Name calling won't win anyone over. If you can't make a point without resorting to name calling then you must only have weak arugments and therefore maybe Scumbag isn't the problem.
Shadow| 7.12.12 @ 8:31AM
I thought his choice of words was quite tame. Considering the damages we have endured TLP was far too kind.
TLP| 7.12.12 @ 9:28AM
Thank you, Shadow.
Is everyone on this site, named "Doctor" something, a Tight Ass Moron?
Apparently.
Suzyqpie| 7.14.12 @ 9:25AM
I hate it when TLP has a charitable moment. I agree, WAY to kind.
C'mon Man!| 7.12.12 @ 12:19PM
And being polite has got us where? It's time for action, keep going, TLP.
MK48| 7.12.12 @ 3:32PM
TLP.....next time use POS/Traitor.....and who said name calling won't win anyone over.
First you have to get their attention......and DOC show me where Tim had a weak point...gee I thought he was right on at least he didin't lie.
Keep your powder dry brother............
Occam's Tool| 7.12.12 @ 10:51AM
Dr X: Obama IS a scumbag. Jefferson called George III a scumbag, as well, you know, using words like Tyrant.
Tim is accusing Obama of gutting the housing market: correct. The pendulum on credit has swung the other way thanks to the travesty of too easy credit.
Consider: when I bought my house I had a guranteed income of over $300,000/yr. I made, I believe, a 20% downpayment in 2008. My house COST $280 K, less than my income. And I couldn't get the lowest interest rate then. Refinancing 4 years later, having paid all payments on an EQUITY ACCELERATOR program, I couldn't get the lowest rate.
And that's just one thing. This man Obama has been a disaster on all fronts for America.
DRed| 7.12.12 @ 11:30AM
How is that Obama's fault?
C'mon Man!| 7.12.12 @ 12:31PM
Obama was heavily involved with ACORN in protesting at banks for low income home loans. He's deeply dirty in all this.
Know your facts liberal scumbag, but that isn't a strong point of liberals now, is it?
DRed| 7.12.12 @ 12:44PM
Okay. Assuming that's true, as I point out on this site again and again, the majority of risky sub-prime mortgages that were issued in the run up to the housing crisis were not made by depository banks. If you study the rates of default in low income areas in major urban centers, you find that CRA compliant banks were substantially less likely to engage in high risk lending. Can you refute that? If the mortgage crisis is the fault of ACORN, we'd find the highest rates of mortgage default in poor urban areas, right? Well, what does the evidence show? I'm just a stupid liberal with no facts-so show me.
Jack London| 7.12.12 @ 2:01PM
They are blind and deaf when it comes to the facts DRed. Even as we hear of latest settlements for predatory subprime lending – for example today $175m on Wells Fargo – they think it was the government that made them do it. If so, we should be fining ourselves, not Wells Fargo, Countrywide and all other crooks.
George S| 7.12.12 @ 2:16PM
It's irrelevant as to who issued the loans, what is relevant is that there were more buyers than houses, causing an increase the housing prices which signals to the market that houses are becoming scarce. That's where the financial markets come in and NOT BEFORE. Before, say from 1789 to 1995, the price of housing followed the rate of inflation. By the early 2000's the housing prices jumped seven times the rate of inflation. Clearly, that is something the market cannot engineer on its own for it cannot create buyers without money in the buyer's pockets. But the government can (and most importantly the Fed).
The CRA pressured banks to loan in neighborhoods where they accepted deposits, lest they be accused of racist redlining which would incur penalties in their charter. That alone would have been insignificant as the Fed would respond to the loosening of money by raising interest rates (which it did initially). But Greenspan went in the other direction to offset the dot-com crash. This had the incidental effect of flushing the market with easy credit, giving rise to the subprime lenders.
Yada yada later, credit default swaps (insurance) were created to spread the risk of bundled mortgage securities. These were created to circumvent insurance regulations which required, say, an AIG to apply state insurance laws to individual investors. No problem, for the Fed's easy money policy was interpreted by Wall Street as bank liquidity protection... so let the party begin.
Drunken Sailor| 7.12.12 @ 2:20PM
Your wasting your breath George. As much as DrRed and Jack say they have been trying to explain how it wasn't the fault of CRA, we have been pointing out what you so eloquently explain to them. It falls on deaf ears.
George S| 7.12.12 @ 2:23PM
... so forget ACORN and concentrate on Frank, Dodd, Cox and Greenspan. A political directive acted as a sub-ocean earthquake and the political class colluded with Wall Street to protect their respective asses: the politicians get to give away housing and Wall Street gets to manage the risk to the point that their potential losses were out of whack with the risk (some have written that the losses were covered for anything greater than 20 percent).
But the bottom line is all this would have never happened without Joe and Jane going into a real estate office and saying "I have been pre-qualified for a mortgage". Without excess buyers, credit default swaps would have bever been created and without the CRA excess buyers would have never been created.
That is the bottom line.
Jack London| 7.12.12 @ 2:34PM
What you don't seem to appreciate George is that the CRA is regulation. It was deregulation, mostly favored by Republicans but some of it on Clinton's watch of course - that led to the mess. This is true in other countries such as the UK but not in those with well regulated housing markets such as Germany.
Housing bubbles are also created by a lack of affordable homes, which again is a case for regulation of rents and building low-income projects.
George S| 7.12.12 @ 3:18PM
Jack, I took the time to go into details to show how the market was distorted by both the CRA and the Fed, which only then led to Wall Street acting. Prior to the CRA, as I have also stated, the price of housing followed the inflation rate. I do not see how a "lack of affordable homes" has anything to do with it. So exactly what regulations were in place for 200 years that were suddenly lifted? I don't recall the Federalist's Glass-Steagall Act of 1798.
"Affordable" is the market's natural way of allocating resources -- all those who own houses can afford them and the rest, who can't, either rent or crash with friends and relatives (there are no homeless because of Obama).
Speaking of regulation: do you agree that if we passed a Marxist type law in 2000 that nationalized all private property, the housing crisis would never have happened? Or if the EPA banned the construction of new homes? Yes, it would have prevented it, but is that what we want? (To me this is humor but I'll bet you, Purp and the rest of the gang are saying "...hmmm, interesting").
TLP| 7.12.12 @ 3:34PM
Don't bother, George.
You're just beating your head against a wall?
DRed| 7.12.12 @ 4:05PM
The CRA market is too small and localized to affect housing prices on a national basis. The market for inner city housing isn't going to affect the price of a house in suburban Florida. What drove the sharp increase in housing prices was the availability of cheap credit and wall street figuring out they could trick suckers into buying highly rated securities made up of shit mortgages. It created a sort of feedback loop.
If there had never been a CRA, you really don't think anyone would have figured out that you could securitize subprime mortgages? And before you object, I'm not saying securitization is bad-in general, risk spreading mechanisms are good.
Dai Alanye | 7.12.12 @ 4:51PM
Markets go up and down, cycles occur, boom and bust isn't new.
Still, without the encouragement of CRA, FHA, Fannie and Freddy the situation would have been far less dire than has been the case. The theory of "predatory lending" seems to be lenders forcing poor folks to buy homes at the point of a gun. Ridiculous!
The lenders themselves had to get the money from somewhere, and government guarantees enabled the system. Yes, buyers of bundled mortgages were fools, but the government set the example and urged them on, while home buyers chose to assume there would always be another sucker to whom to sell the over-priced product.
The only hope now is to let the market clear without government trying to make things "fair" through regulation.
George S| 7.12.12 @ 7:01PM
Dred,
The CRA was a federal law, not a local Florida regulation so the localized markets were national. Plus I said that the Fed had to be involved in order for the CRA to do damage.
Also, why did it take Wall Street until the late 90's to figure out that they could simply issue cheap credit and trick people into mortgages? Surely the Ivan Bosky's of the 1980's would have jumped on that.
Any way you slice it, twist it, turn it, or view it, a bubble cannot be created unless people have the means to participate. Demand for houses has always been there but what kept the market in check was prices and the ABILITY to pay them. Once you make it possible for people to enter the market -- whether it's counterfeiting, grants, entitlements or forcing banks to relax lending standards -- the demand increases causing the prices to increase. Same thing happened in 1928 when banks loaned money to buy stocks and the same thing happened in 1637 Holland with the tulip craze. As soon as more people are in the market for a good, the price starts rising and attracts more buyers, thus driving up the price more. A bubble. And then one day, someone says "enough -- I cannot afford it anymore". The sell off begins and the bubble collapses as everyone tries to save first their profit, then their investment and then to limit losses.
DRed| 7.12.12 @ 7:38PM
Look, the housing bubble is a pretty complicated thing. And the federal government bears a lot of responsibility for it. However, the idea that the massive housing bubble (and the coinciding commercial real estate bubble) was caused by the government forcing banks to lend money to poor minorities is just nonsensical.
As for why it took until the 90s to figure out how to make money off subprime securities, I can't say for sure. The short answer is that for most of modern American history is that it would have been illegal. The market didn't exist until sometime in the mid-80s. So it took a while for the industry to be created. It's not just that people were tricked into mortgages-you have to have someone willing to buy those shitty mortgages. I mean, no money down mortgages to people with bad credit seems insane. Why would anyone do that? The answer is that wall street figured out how to get those loans rated AAA. Then it's win-win all around, unless the entire mortgage market collapses at once. And people thought that was impossible.
JD| 7.12.12 @ 4:50PM
You have to love Jack's comment. He says it can't be the CRA's fault, because the CRA is regulation, and regulation didn't cause the mess; deregulation did.
That's right. It's such a Gospel fact that deregulation caused this mess, that logical explanations are to be rejected because they don't fit the dogma!
Where does this indisputable truth that deregulation caused it come from? Nowhere. Democrats invented the lie, and they keep repeating the lie and acting like anyone who challenges it is too insane to respond to.
biomedlives| 7.14.12 @ 9:16PM
I think we Republicans make a dogma of the view that regulation is bad, period. I don't want thalidomide on the shelf at the drug store, heavy metal ions in the drinking water, or lethal bacteria in lettuce or hamburgers, and I don't believe the free market will minimize these dangers. Yes, regulation costs money and slows businesses down, but it's sometimes necessary.
Houdini| 7.12.12 @ 11:52AM
I'm sure my wife would appreciate it if the worst thing I call BHO is scumbag. Back in the day, your morgage was from a local bank or S&L that you had a real relationship with. Our betters in Washington thought buying up all of the mortgages (no matter what quality) would fulfill the American Dream of home ownership for all. That road to hell has now been fully paved, and homeowners (those that still have one, that is) are living in it. In my almost 62 years, I don't believe any election (save getting rid of Carter) will be more important than this November.
TLP| 7.12.12 @ 3:36PM
Amen.
biomedlives| 7.14.12 @ 9:06PM
From the tone of your comment, I get the sense that you believe the blame for promoting "the American Dream of home ownership for all" rests entirely with the Democrats. I recall, however, that the Republicans were pushing the "Ownership Society" prior to the meltdown, which made sense because people who own stuff are more likely to vote Republican. Because a home is likely to be the major asset for most people, I suspect that the Republicans were also promoting the dream and the attendant mortgage purchases.
Purp| 7.12.12 @ 5:26PM
Look to your Republican boys who created the WHOLE MESS and have no balls to own up to it. They lie, cheat and deceive to get you to believe innocent Obama left you high and dry. Believe what you will, but those are the FACTS.
DTOM| 7.12.12 @ 11:16PM
You betcha! Those are Purp facts. He gets them from Obama's stash. They don't hold water, they don't hold air, they won't even hold up to scrutiny, or even daylight.
Purp Please name the heads of Fannie Mae and Freddie MAc that Clinton appointed and remind us of their salaries and when they left office!
You don't know and probably cannot even figure out who they were. But they got this entire debt crisis rolling from DC with a decided push from ACORN.
None of whom are Republicans. Not even RINO's, ya know, the useful idiot's useful idiots...
Doctor_X| 7.12.12 @ 7:50AM
The inability of credit-worthy people to buy and sell houses is affecting the job market. We have a high rate of unemployment, yet we see companies can’t fill certain jobs. I can’t take a job in a new town because 1. I can’t sell my current house and 2. I can’t buy a house quick enough in the new town. This means I am stuck making less than I should in a job that I am way over qualified for while another company tries to find a Ph.D. from a total pool in the US of about 40,000 people who hold a Ph.D. in the needed subject area. My only hope is for the new company to buy my current house so I can rent and over price apartment in the new town.
I don’t think we will see real economic growth until this problem is solved.
DTOM| 7.12.12 @ 8:28AM
Which it will be by this simple procedure:
"Get rid of Scumbag THIS November!"
It it NOT some complicated, too-hard-for-mortal-men-to-solve problem. Just get rid of him, ASAP.
TLP| 7.12.12 @ 9:32AM
You could also Kill Yourself, which would eleviate you from having to look at Bad Words.
ps - I find it hard to believe that you are "Way Overqualified" for anything.
Overqualified.
What an idiot.
Purp| 7.12.12 @ 9:02AM
So, what's your solution? Remove ALL regulations and standards? Go back to what created this mess in the first place? I don't think so.
Moreover, slowly, but surely, the housing market is coming back. My own property is up 12% year over year from last year. THAT is better off than we were 4 years ago.
Unemployment applications are lower this week (Breaking News!) than they have been since March 2008. THAT is better off than we were 4 years ago.
Yep, stay the course, don't change the conductor - we are going in the right direction.
TLP| 7.12.12 @ 9:53AM
Great. Let's all take joy in the fact that the Public Housing Project, where Purp lives, has gone up 12%.
Every Bullsh-t Number that every lying Bullsh-t Liberal spouts, is total Bullsh-t.
When everything is WORTHLESS, it's easy for it to gain Value.
If your House in Detroit has managed to escape the Bulldozer's Blade, but it's only worth $10, and someone comes along and offers you $20? The Purps among us, all rush out to spread the word that: "House Prices have Doubled under Obama".
And, when the opposite occurs? They proclaim the Wonderfulness that Houses are becoming "More Affordable" under Obama.
"The Private Sector is doing fine."
It's a Mental Disorder.
John Navratil| 7.12.12 @ 10:27AM
Mine's up 186,000 percent per second. And funded completely by magic jelly beans. So there!
Purp| 7.12.12 @ 11:17AM
White, upper middle class house ... If you're this stupid, no wonder you like Mr. Magic Pants ...
Truth to Power| 7.12.12 @ 1:29PM
The race obsessed even assign race to houses. The big O is part of the problem and needs to go write books about composite characters. As TLP pointed out there is a large group of mentally ill folks like purp that won't seek help until their delusion is destroyed. Lets get purp some help, vote for Romney.
Purp| 7.12.12 @ 2:51PM
Hahaha ... Romney is the sorriest excuse for a nominee. Why does he have Swiss Bank Accounts? Only one reason - to hide cash from the taxman. And, that's just one questionable practice - Cayman Islands accounts? Bermuda Island companies? 100 million dollar IRA (How?)?
Yeah, America will trust Richie - NOT.
CJW| 7.12.12 @ 3:03PM
Obamaboy
You still have not explained why Michelle got a raise from $100,000 to $350,000 per year as a "community relations" lawyer for the Chicago hospital that got an earmark from then Senator Obama.
You still have not explained how Obama got the land from the Chicago crook Rezko.
Remember your other hero, Bubba, who sold a pardon to the tax cheat Marc Reich for one million dollars paid by Denise Rich to the Bubba Library (is that where you work?). Denise just renounced her USA citizenship.
Romney is the next president, by a landslide.
Better make your money now as a paid troll, purpie.
TLP| 7.12.12 @ 3:41PM
You forget that when Fat Ass left her No Show Job, she was not replaced.
You also forget that her "Job" was to steer Poor People AWAY from the Hospital where she was paid for doing Squat.
God Bless Amerika.
Suzyqpie| 7.14.12 @ 9:43AM
I'm 48 hrs late to what looks to have been a great party-conversation thread. I don't care what Romney does with the money he earned. I am very concerned with what 0bama has done with the money I earn, or hope to earn.
MK48| 7.12.12 @ 3:44PM
Magic Pants............here we go...........
Doesn't anyone ever get tired of these morons PURP aren't you out of loton it's time to go to the store.......forever.
Pecos Pete| 7.12.12 @ 10:04AM
The Purp believes the sewer pipe is the right direction for the economy.
Occam's Tool| 7.12.12 @ 10:54AM
No, purp, it simply means that everyone who is going to be off the rolls has already been off the rolls. The unemployment rate is MUCH higher than it was in 2008. The underemployment rate, as well. These are for reasons noted---producers don't do as well when they are viewed as evil.
Purp| 7.12.12 @ 2:53PM
Nothing new about long term unemployed. But over 4 million people have jobs now they didn't have in 2008.
Had Republicans not cut the public sector jobs nationwide, the unemployment rate would be 7.2%. Good job Republicants! They laid off 600,000 people.
CJW| 7.12.12 @ 3:07PM
Obamaboy
If there are 4 million people who now have jobs that did not have jobs in 2008, then there must be over 4 million people who had jobs in 2008 that do not have jobs now.
The effective unemployment rate is over 10%, and much higher among certain groups like young blacks.
Only you and your brain dead obamabots believe the economy is better now.
Drunken Sailor| 7.12.12 @ 3:26PM
CJW,
Purp ignores the net Jobs gained VS lost and a simple little thing called population growth. Even if Obama did create 4 million jobs, over his term that does not even keep up with our population growth. He would have needed over 6.6 million jobs created just to keep up with it. Isn't that right Purp?
Purp| 7.12.12 @ 3:36PM
780,000 jobs lost/month in January 2009 - 89,000 jobs produced in July 2012 ... do you know how to add and subtract?
It's clear that we are growing and we were falling at a rate of -6% when Obama was sworn in. THAT people is where we were 4 years ago - we ARE better off, no matter how you slice it.
TLP| 7.12.12 @ 3:47PM
14.7% Unemployment in the Black Community.
Black Youth Unemployment at 50%.
Every Day, another U.S. City files for BANKRUPTCY.
Think about that.
Do you want me to go on?
Because, I can, if you want me to.
John Navratil| 7.12.12 @ 6:02PM
TLP,
Don't waster your time with Purp. 89,000 jobs produced is a positive to him, even though it takes twice that many to keep up with population growth. The only reason the unemployment rate didn't go UP is that more people went onto the disability rolls than got jobs. Disability up 15% under Obama, employment up 2%. Unemployment over 8% for his entire presidency despite spending five trillion dollars. Lowest employment rate in generations.
But Purp thinks we are better off. Facts are irrelevant.
Drunken Sailor| 7.12.12 @ 4:43PM
Why yes I do know how to add and subtract. Do you know how to think logically? I don't care how many jobs you claim he created. It is still below the rate of population growth. That means Unemployment will not go down until the country starts producing more than 150,000 jobs a month. The only reason Obama's numbers don't look even worse it they have stopped counting all the people that have quit looking for work.
Can you do math? More people went on disability last month than jobs created. Do you know what happens if that trend continues? Who pays the disability benifits? Does it come out of Obama's magic money pile?
Don't know why I waste my time with you. You're a partison troll that will never realize he is a idiot and I realize you will never convince me that white is black and black white, just because you say so over and over again. Hope you have another job lined up in December. A retired Obama will have no more use for a paid Troll.
CJW| 7.12.12 @ 5:29PM
Obama and Holder created lots of jobs in Mexico for doctors, morticians, and drug dealers with the guns they sent to Mexico in Fast and Furious.
John Navratil| 7.12.12 @ 6:09PM
Drunken Sailor,
You beat me to the punch. I should have read further before responding to TLP. Purp is incorrigible - either a liar or a fool.
CJW| 7.12.12 @ 7:10PM
John
He is a lefty which makes him both.
DTOM| 7.12.12 @ 11:11AM
Purp,
Your ignorance is frightening. IT WAS THE REGULATION OF FREDDIE MAC AND FANNIE MAE THAT DESTROYED THE HOUSING MARKET. Going back to local financing of homes through either Mr. Potter or Building and Loan would have localized this situation to a few over built places. Instead by putting everyone's mortgage in a single pool, when one area started to crumble it dragged everybody down with it. And as long as the incompetent, incontinents keep mixing bad mortgages with the good ones, the housing market will continue to be a disaster. We have to SEGREGATE the bad mortgages from the good ones - we have to take the losses, the writedowns now, or they will remain a permanent boot on the throat of housing values.
Get it over with already! This is like the picture of the goldfish in the blender with the guy's hand on the switch!
Arrrrggghhh!
Defeat the SB in November 2012!!!!
Purp| 7.12.12 @ 3:09PM
What do you think regulations would avoid?
Exactly what you are saying.
By removing the inhibitors and lax oversight by Republicans, this mess was allowed to happen, because the greedy will always overplay their hand and we all suffer.
So we agree ... Romney will go back to GW Bush policies - he's campaign spokesman said so -
"Bush policies - On Steroids" - and we don't need no stinkin' Bush policies no more.
Truth to Power| 7.12.12 @ 10:10AM
Thus is what happens when the government decides to help more people own houses. Fewer people own houses and idiots like purp think we are better for it. One of the big O's first acts as a Senator was to join a filibuster against reforms that Barney Frank and his Fannie Mae boyfriend didn't like. The big O is part of the problem and not part of the solution.
DRed| 7.12.12 @ 11:31AM
And don't worry, people. The WSJ says the housing bust is over.
http://tinyurl.com/d2esgdb
Warrior| 7.12.12 @ 12:35PM
This article gets it completely wrong. Banks are sitting on thousands of foreclosures. Early in the process when banks moved to foreclose, our government prevented them and thus these toxic assets continue to sit. Many of them with the unqualified buyer living in the residence and not paying. Once released, values will crash again. What's also not mentioned is starting in 2013, there is a tax imposed by Obamacare onto the sale of houses which will further discourage sellers. Volumes can be written on this subject, most of it points to another dip in values.
howard lohmuller| 7.12.12 @ 4:08PM
Warrior: You are right. The new tax imbedded in Obamacare is something like 3.5 % of the selling price. That is $7000. additional selling costs on a $200,000. home. Add that to a 6% real estate commissions ($12,000.) plus closing costs and the seller faces a challenge in selling a home at break even or a profit.
Enchanted| 7.13.12 @ 1:45PM
what a crock. Just because you were able to sell the house for $200,000 doesn't mean there is enough equity to pay for closing costs, realtor fees and barry's health care tax. This could mean people 1. will not be able to sell their house or 2. will have to borrow money to come to the table, both not very good alternatives - and yet barry continues to tell us the private sector is good.
Purp| 7.12.12 @ 5:17PM
The government didn't prevent them from foreclosing - the banks had fraudulently sold the mortgages and they therefore had no right to foreclose on something they could not prove they owned ... get it straight. They'll be lucky they ever can foreclose.
It's their own fault for being greedy.
The housing tax is 3.4% on any PROFIT when selling a house over $250,000.00 for a couple, $200k for individuals. Not something most of us need to be concerned with, now is it?
DRed| 7.12.12 @ 5:31PM
It's actually only a tax on a profit from the sale over $500,000, for couples with an income over $250,000 a year. So in howard's example, there would be no additional tax, no matter the income of the family selling the house.
howard lohmuller| 7.12.12 @ 11:45AM
Mr. Tucker is right to think there are plenty of reasons to think the real estate market will be difficult for longer than anticipated. There are two main reasons. First, banks are risk adverse not just because of new tighter regulations but also because mortgage interest rates are so low. Low interest rates limit profit potential and banks can make money in several less risky ways including outright speculation. Second, too many foreclosures are in or coming into the supply pipeline. This increasing supply holds down prices causing all homes to lose value, some of which fall to a value less than the mortgage which results in more foreclosures.
A way must be found to stabilize and raise housing prices. Investors must have a reason to put their money into the housing market clearing the market of excess supply and thus raising prices. One way to accomplish this would be to offer foreclosure buyers a 5 year second mortgage that pays the taxes and insurance on their purchase for 5 years. Payment on the second would not start until the 5th year. The second mortgage would then be amortized over the remaining years of the first mortgage. The system would work like student loans.Taxes and insurance are often 1/3 to 1/2 of the monthly mortgage payment which would create a return on investment sufficient for the investor to fix up and either rent or sell the house.
Sean| 7.12.12 @ 1:15PM
I just bought another home and we had to use my wife as the loan recipient because I have zero credit. My wife holds many credit cards and before we were married almost her whole pay check went to paying bills and credit cards. If she had lost her job she would be in default within a month. I on the other hand bought my car with cash and had six figures in the bank and investments. I had no need for a credit card as I could pay all my expenses upfront. If I lost my job I could pay my bills for almost 10 years without getting a new one.
Texan Realtor| 7.12.12 @ 1:53PM
Error: a "short sale" is NOT a foreclosure. Two different situations. In a Short Sale the owner still owns the house, however, the bank agrees to take less than the loan balance. The owner still owns the house until it sells but receives nothing from the sale. Short Sales are popular now because they are less costly to the banks than a foreclosure.
There are other issues, however. It can take a long time, 90-180 days or longer, to close a transaction because the bank may have thousands of files to deal with.
William Tucker| 7.12.12 @ 7:00PM
You're right about the short sale. My mistake. The former owner still owns, the property, not the bank. The bank is just managing the sale. Now I understand why the old owner is still collecting rent from his tenants and why he has to let me in every time I visit.
Enchanted| 7.13.12 @ 1:52PM
the short sale is just one step prior to foreclosure. agreed. However what happens is that the bank does not have to necessarily agree with the appraisal, and or the amount the prospective buyer offers. I looked at a lot of short sales and some of them were wicked. When they say a room needed some TLC, they were talking about major damages. Some lenders actually pay the homeowners not to damage the house before moving out. (pouring concrete down the toilets comes to mind) Lenders were being unreasonable about what they thought the property was worth and what it actually was worth. They had never seen the house and didn't have a clue. So you have to be very careful.
Frankly while on a roll not only the banks had a hand in this debacle we are now experiencing, but realtors too. Were they keeping the buyers interest in mind when selling? No. all they saw was the boat load of money they were going to make. Did they probably know they were in a bubble? absolutely. However I have digressed.
wolf| 7.12.12 @ 3:55PM
with savings interest rates under 1% for amounts under 100k and the fed one yr T-bill in the same neighborhood...it will be a long time before banks and afford to pay a higher interest rate (greece just issued NEGATIVE bond rates)..so the vicious cycle of low mortgage rates/bank income/low savings interest..will be with us for quite some time..
put aside blame and just study the mechanisms in play..with the govt involved now in the mortgage business..it can do nothing but increase internal costs for banks..in terms of time and dollars..
sitting vacant properties have costs..insurance, maintenance, security etc..if there are many houses in inventory..the costs can be very high..offsetting the final sale price..shifting the costs to other aspects of the banking industry (fees, check / credit charges etc..causes customer resentment immediately..and they leave because today there is little return for putting your money in a bank..
Tom Kyba| 7.12.12 @ 6:43PM
I'd like to believe Purp & pals are making actual points here, but it sounds like the regurgitation of literally everything the MSM wants you to believe. If you are right, then virtually every article and comment I've read complaining about the lies and obfuscations of Obama and his administration are lies or delusions. Then one of you even throws in the quote from the WSJ as if all conservatives are represented by them and hence, argument won.
All things considered, it sounds like you're trying to convince yourselves.
bluecollarbytes| 7.12.12 @ 9:56PM
If Purp didn't exist, obamacampaign would have to create one. Gotta conserve obama's campaign cash till the mideast gift cards start rollin in.
biomedlives| 7.14.12 @ 9:22PM
Though I'm a lifelong Republican, I don't buy the idea that the entire financial meltdown is the result of the CRA. I believe that the banks, far from being reluctant about loaning to people with poor credit, were happy to do it because they could either
- assemble the mortgages into packages that they could sell to investors, and/or
- obtain insurance from Fannie Mae, Freddie Mac, or FHA on the mortgages.
In either case, as Mr. Tucker notes for the present day, "'The banks know ultimately they're not going to lose any money.'" Thus, prior to the meltdown, the banks were earning substantial fees with virtually no risk. They had no reason to want the government insurance programs reined in and, by extension, neither did their Republican allies in Congress.
I believe that the root cause of the meltdown was that everyone, including lenders, borrowers, regulators, and credit rating agencies, drank the Kool-Aid and believed that housing prices would go up forever.