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Oh I agree completely, 2009 will be OK, but wow does 2010-2011 look bad...
And
And
And
Remember
(I'm on remix)
And remember that each one of those little ARM's that explodes takes on average 9 months from first default to hit inventory as REO
Sunrise.
What I am hoping is if the market stabilizes next year, and the inventory subsides, then the final wave in 2010 -2011 will be easier to refi or sell.
Lets hope so. Behind the scene is some other major problems going on. All that reseting paper is wrapped up in CDOs and MBS, and against their "value" billions of $$$ in credit swaps and derivitives are leveraged against them. The Fed is on full tilt trying to contain subprime damage and they are already taking below investment grade (read, junk bond grade) non-salable MBS and repackaging them as US treasury bonds, not to mention their heavy involvment in both the CW & BOFA merger as well as the Bear Stearns debacle. We are stretched to the limit to do damage control and the liquidity is completely hamstringing potential purchasers. If interest rates rise to even 7.0% range we are looking at a tinderbox type situation.
I remember when Reagan de regulated banking.
I wonder if he foresaw this, especially after the S and L crisis in 87.
Sometimes I wonder if we repeat the same miskates -crash of the late 1880s, crash of 29, crash of 87, .........simply because we think we have learned from the mistakes and egro it cant happen again .
We really don't repeat from previous experiences... This is because nobody in this mess has any history recent enough to use as a guide to avoid.. The '87 crash... ?? 21 years ago.. We don't get prepared for hurricanes today like we did right after the 3 came through FL 4 years ago.., but when a cloud came over FL with a sunshower in the fall of '04.. we were pulling out the DeWalt screw guns and plywood. Crash of '29.... There is probably not an investor alive and actively investing today that was Investing in 1929... Are there any "SMUCKERS" investors out there?? So we think it can't happen again, becasue we didn't know how it happens.. I do know this: When a rollercoaster starts at level ground and goes up 300 fett in the air quickly... it must return to level ground to finish and get off the ride. We are in the downward corkscrewing part of the ride right now and not many air sick bags are on board. Thank god for harnasses... Buckle up.
Lol
Yeppers. A lot of folks down here had the same roof they had since 79 and it got torn off in 2004. They were all going 'well we had to get a new one anyways' ........
Not so many frame houses left around these parts........
Who knows what to believe. Business Week is warning about double-digit inflation for 2009. Won't that cause most rates to increase?
Tech bubble, housing bubble, commodities bubble. We are sheep; we are obsessive consumers. Just like with people who overcome one addiction only to succumb to another, we will transfer our economic focus from pursuit to another, and we'll ruin that as well.
Markets should operate on efficiencies, and efficiencies assume balance. There is nothing balanced about our economy. We consume more than we produce, so we function on deficit. The trickle up of all this is particularly interesting. Individual citizens borrower more than they can pay back, lenders borrower more from investors, investors get bailed out by the government, government tries to recoup more revenue from the citizenry to no avail because people don't want to pay taxes, so government instead increases deficit. National debt gets sold to Japan and China, so soon we will be forced to enter military conflict to rebalance debt. Don't think it's not coming (like my double negative).
Guys-
Because of mark to market policies, everyone holding mortgage backeds has taken their losses. If everyone of those option arms blows up and goes to foreclosure, they have already booked the losses. Next year the numbers will look good.
There are few builders anywhere that are adding inventory and the population is growing. People need to live somewhere, so do the math.
2009 will be good, not great, but LO licensing means vacuum cleaner salesmen will not find it easy to become loan officers. For those of us who have survived, 2009 will be a reasonably good year.
Now if we can just get through 2008........
fermi gets the clueless lender of the week award!
ANY mortgage that is still current is carried at 100% on the books, ask any accountant. Furthermore, the neg am loans are still showing income for the negative am part; The banks book the uncollected interest as income, and will have to re-write previous years earnings when those puppies die in waves.
MOST lightly traded items are NOT marked to market, they are marked to model. And guess who makes the model? the bank that holds them! Wells fargo just announced they are allowing more time for defaulting mortgages to get back to current and presto: They can count the delinquent loans as current since they are still being negotiated. Surprise! they had good numbers a couple weeks ago!
Question I have is this.
We went thru a wave of hurricanes in 2004. A whole pile companies bit the dust and the ones that survived had to jack up the rates astronomically to make up the diff.
But then NEW insurance companies came in -with no big debt load in payouts - and started to charge the same as the others, raking in huge profit.
So , when all these banks fail under the glut of bad paper, what is stopping new guys from walking in without any bad debt or paper whatsoever and start lending under fannie guidelines with 20% down?
Nothing.
And it will cause the banks with bad debt to falter , and new banks take its place.
Florida and Cali will surprass then i highly suspect chad.
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