Sign of Fire — The Fixx
As with any holiday, the traffic at the IHB is a bit erratic, so I wanted to give everyone an easy recap of the weeks posts for your review:
Off a Cliff — HELOC abuse of about $350,000 on two properties with no money down.
Pepe le Pew — HELOC abuse of $500,000.
Mistake 2008 — Distressed property in Turtle Ridge.
Predictions for 2009 — It is what it says.
When not If — A look at the refinance problem.
I would like to remind everyone that we are having another IHB party on Wednesday, January 7, 2009, from 6:30-10:00 at JT Schmids at the District.
Last time was a great gathering, so we are doing it again. Here is your chance to meet many of the regulars of the IHB. Everyone is welcome, so please stop by.
{book}
Heart of stone — I tried to reach you
Of the altar stone — I tried to warn you
But you were not alone — you wouldn’t take the call
You wear brimstone — I tried to warm you
Sign of Fire — The Fixx
Judging by the reaction yesterday to the poor homedebtor in Northwood I guess I am an official IHBer (Irvine Heartless Bastard). I want them “outta my house”!
That should be our motto.
I think I’ll go to the block party a second time since I need a good excuse to buy another book.
Sorry I missed the conversation yesterday. Yes, I want them outta my house too.
I’m still pissed that a bunch of poseurs took short cuts to get into a “starter home” that I had to scrimp and save for and which is in the category of legitimate “move up” housing for my family.
Snotty folks with “jobs” like multilevel jewlery marketing, a “lawyer” who couldn’t pass the bar and was living large on his wife’s “private school teacher” salary, one income ML derivitives trader with 5 kids and a stay at home meddler wife,and more….
Really, it was all about them. It would be such a shame to see them all capitulate. They came in with nothing, they helped make nothing better in the neighborhood, and now they can’t stay in a place that they only felt entitled to…. Boo F’in Hoo.
I wonder how many people were living in houses that were making more in appreciation than the wage-earners were earning. Those days are over.
That’s where virtual space falls short – block party. It’s still valuable to be able to meet or visit in person.
Wish you guys have a great party. And, please tell us about it.
this was going on everywhere. Now if you were financially responsible, you are almost being punished. If you bought a house that was way to big and 3times what you could afford you are able to get your mortgage adjusted.
there were tons of people riding on appreciation!! There were so many refi cashouts on properties they had only owned for a few months it was kind of sickening
Does anyone have any idea how much helco abuse is out there? I was wondering if it’s more than subprime–after all subprime has no or little equity therefore the helco abuse could be worse than those that bought with no money down and had an ARM loan ect. Those walking away from helco loans could be more $$ than subprime?
Subprime is the least of the credit abuse that took place. The whole economy has been, as many observers pointed out, truly a gigantic Ponzi Scheme, driven by government policy and Fed manipulations.
Subprime was only the Canary in the Coalmine, and its unraveling was only the very first, necessary stage of the unspooling of the entire layered structure of debt, unbelievable in size and scope, that was built in order to drive an essentially unproductive and parasitical economy in the absence of real productivity- i.e. the production of real goods and services, which this country stopped doing by 1980.
Economic life such as it is in this country, since that time, has consisted of financial scams. We simply moved from manufacturing and commerce, to financialization, and every formerly productive economy that went through a similar shift ratcheted straight down hill subsequently.
In the early 2000s, debt creation, asset inflation, and monetary manipulation became, by default and by policy decisions both, the means of driving our economy. AS of 2004, people like Paul Volcker were warning that the overhang of public and private debt was insupportable and that it was not a question of if, but when, the entire hairball of debt and debt-based derivatives based on it would start to unspool, with the results we are experiencing now.
From what I have seen, subprime is only a small part of the problem, or, I could say, many “prime” borrowers became “subprime” by borrowing far over their heads for vastly more expensive properties than they could afford, urged on by our financial concerns. Jamie Dimon of JP Morgan Chase stated that Prime debt was a “disaster” and that his firm would be facing large losses from it. Almost everyone in every income bracket who bought in the past five years bought far over his head as measured by traditional lending standards.
Now, as many predicted, the commercial, which is an even larger pool of bad debt, is starting to fall apart. Notice how many regional shopping malls, Power Centers, and Big Box outlets were built within a couple of miles of each other over the past 10 years? Did you ever wonder how the population could support so much redundant retail? Simple- it can’t, and this proliferation of retail outlets never did make business sense. Only tax-funded “gimmes” to retail concerns to entice them to develop, and DEBT FINANCING made with no regard for the ability of these concerns to earn the money to pay back the debt, made all this possible. We are going to see more really massive contraction in retail over the next couple of years, with more huge defaults as a result.
“Notice how many regional shopping malls, Power Centers, and Big Box outlets were built within a couple of miles of each other over the past 10 years?”
Absolutely. I see this everyday as I drive through the so called Irvine Business District on Jamboree. As businesses get torn down and replaced with condos and shopping centers, I wonder where are all the people are going to work?
High paying subprime mortgage companies?
> High paying subprime mortgage companies?
nope. high paying mortgage mod companies!
IR,
Here’s a property for you to profile: 65 Briar Lane in Irvine.
http://www.ocregister.com/articles/sadek-citi-loan-2270290-billion-quick
Daniel Sadek, the founder of defunct subprime lender Quick Loan Funding bought the house at 65 Briar Lane, Irvine, in 2006. He refinanced it with a $678,000, interest-only mortgage that August. In August 2008, Citi Residential Lending modified his loan after he fell two months behind in payments. In December 2008, Citi moved to foreclose on the house after Sadek failed to make payments.