Monday, September 11, 2006

Debt Epidemic

From the Daily Record:

Debts render many hopeless

It seems that we have an epidemic on our hands.

Recently, Reed Fraasa, a Certified Financial Planner in Riverdale, encountered several new clients who struck him as being at the ends of their ropes.

All of them apparently had made the same mistake: They were overwhelmed by their debts.

No, they had not splurged on their credit cards.

They had refinanced their houses -- and had spent most or all of the money they had withdrawn.

"They had no idea where the money went," Fraasa recalls.

And they were full of despair. They saw that their debts were not going away. And the debts were straining their marriages.

"They felt hopeless," he says.

Where had the money gone?

New, expensive cars -- or new leased cars. Improvements to their bathrooms and kitchens. New furniture. A summer home.

85 Comments:

Anonymous Anonymous said...

Stupid people deserve all the bad things that happen to them. Unfortunately, they can vote and let other tax-payers to bail them out.

9/11/2006 06:29:00 AM  
Anonymous Anonymous said...

they should have paid attention
when they were over in Willowbrook
loading up.

Jeans, perfume,eats,pets,show tickets,vacations,cars,

all on the arm. now they have to
pay up.

9/11/2006 06:39:00 AM  
Anonymous Anonymous said...

BATHROOMS KITCHENS AND SUMMER HOMES ARE ALL GOOD INVESTMENTS
RIGHT?

9/11/2006 07:15:00 AM  
Anonymous Anonymous said...

I work with a fellow who took out a 100k HELOC to redo his kitchen. He spent every penny of it (and more). $30k in cabinets, a $10k 'fridge, $15k countertops.

His reasoning.. All his neighbors did it, and his wife was jealous that they had the worst kitchen on the block.

His HELOC payment looks like a mortgage.

9/11/2006 07:32:00 AM  
Anonymous Anonymous said...

These anecdotes are really starting to pile up, and as everyone knows, the plural of anecdote is data.

We're just at the beginning of housing related problems, and bitching and joking about them are going to get stale really quickly.

There are many chickens out there, and they are just starting to come home to roost. Try not to get to smug, because this isn't just going to be the actively foolish who pay for this nonsense (and I'm not talking about bailouts, though that is a real possibility), there could be quite a few people caught in the downdraft.

Lindsey

9/11/2006 07:37:00 AM  
Anonymous Anonymous said...

They had no idea where the money went," Fraasa recalls.

"They felt hopeless"

There is hope, 30-40% off though. I hope they can afford to buy a turkey to cook in their 150k kitchen this Thanksgiving!! Anybody who thinks they are getting a deal at 10-15% off 2005 are crazy. Just be patient.

BC Bob

9/11/2006 07:41:00 AM  
Anonymous Anonymous said...

Welcome to debt Slavery.


Show & Tell Society has a big lesson to learn.

There is NOOOOTTT"ING for free.

Savers shall be rewarded for their patience.

9/11/2006 07:46:00 AM  
Blogger grim said...

From the Palm Beach Post:

Complex owners' dilemma: Condos or apartments?

Developer Cary Glickstein said last week he has canceled The Strand condo in downtown Delray Beach and returned $15 million in deposits.
...
Another factor that ended the project: Glickstein's buyers were tired of the waiting game. The final straw was seeing one buyer, "near tears," come into the sales office, Glickstein said. The buyer had used his daughter's college tuition for his down payment.

The next day, Glickstein told his staff to call buyers and tell them their money was being returned.

9/11/2006 08:15:00 AM  
Anonymous Anonymous said...

I take exception to the tone of this forum, particularly anon 7:39.

In 2005 I bought 12 pairs of $300 jeans and, just last week, sold them for $375, a gross profit of $900.

I've folded that windfall into 11 pairs of $400 jeans and will be laughing all the way to my condo in Florida!

9/11/2006 08:28:00 AM  
Anonymous Anonymous said...

I guess nobody read my post under
"Double Whammy".

SAS

9/11/2006 08:31:00 AM  
Anonymous Anonymous said...

I hate reading these hard luck stories and these limosine liberal apologists.

Most people get into trouble because they spend (or waste) their money on expensive designer clothing, electronic 'toys', cars they can't afford and are financed & leased into perpetuity..

We aren't even talking about housing costs here..

Most people in NYC are renters with six figure incomes, five figures of credit card debt, a closet full of designer clothes (defined their worth & 'coolness'), but a net worth of close to zero, and a bank account balance of close to zero.

We have not had a real recession or even slowdown in consumer spending since 1990-1992.

Remember operation desert shield / desert storm?? Back then it was a whole different mindset in this region, not of extreme consumerism.

9/11/2006 08:44:00 AM  
Anonymous Anonymous said...

You don't live in the NYC region and save money. It is the biggest uber consumerist place in the US outside of CA...

If you want to save money & not be looked down upon because you don't or can't spend $2,000 a month for clothes, then maybe upstate is the best place. You can still find a home for less than $300,000 and people don't look down on you because you aren't wearing $200 dress shirts & $500 shoes.

9/11/2006 08:48:00 AM  
Anonymous Anonymous said...

im in london today... i'm wondering if the usa will follow predictably the english market... with similar appreciation these last years that have fallen flat in the last year or so. everyone is saying the same. slight inventory build up (large versus 2 years ago, but only sliightly above looking at historical), flat pricing and no real price declines to speak of. they are further along thru their 'bubble' without a 'pop'.

just a thought, but maybe 2007 will be, well, not so dramatic...and a bit more boring than we are expecting.

curious

9/11/2006 09:04:00 AM  
Anonymous Anonymous said...

"We have not had a real recession or even slowdown in consumer spending since 1990-1992"

How right you are. This upcoming bust will be the ultimate cocktail. The hangovers will be severe.

BC Bob

9/11/2006 09:08:00 AM  
Anonymous Anonymous said...

Not one bit of sympathy for these people. I cant wait until they try to raid my 401k for SS because the boomers pi$$ed away all of their money.

9/11/2006 09:32:00 AM  
Anonymous Anonymous said...

"Most people in NYC are renters with six figure incomes, five figures of credit card debt, a closet full of designer clothes (defined their worth & 'coolness'), but a net worth of close to zero, and a bank account balance of close to zero."

There seems to be a backlash against Wall Streeters here, so I feel the need to answer. I am a Wall Streeter, and yes, I do reasonable well (after killing myself to get into B-school and several years of 80 hour work weeks). Do I have a nice TV and nice clothes? Yes. However, every year since graduating B-school, I have saved roughly 60-70% of my take home income. How? In a rent stabilized apt and no car for the first three years. Now, I live right across the river for about 2k a month, and my car is a VW. I have carried credit card debt for a total of one month of my entire life. Just because you work on the St and have nice clothes doesnt mean you pi$$ all of your money away (but in many cases, it does).

I - like the rest of you, are waiting for a 30ish% sell off to finally buy my house. From what Ive seen just this year, its gonna be at least that bad.....

Chaka Chong

9/11/2006 09:44:00 AM  
Anonymous Anonymous said...

Chaka Chong

Good for you!!!! I also work on the street, however my jeans are from Marshall's. I rent about 10 miles west of the city for $1,500 mo., sold last summer. I found it very hard to believe that everybody is bitching, with good salaries, that they can't save a dime. I'm in your camp, 30-40% minimum. Good to hear your story.

BC Bob

9/11/2006 09:51:00 AM  
Blogger Richard said...

the source of borrowing is irrelevant. you can't blame rising house prices or the credit card company for people's lack of financial management. weak correlation.

9/11/2006 09:57:00 AM  
Blogger RentinginNJ said...

im in london today... i'm wondering if the usa will follow predictably the english market...

Anon 10:04,

This weeks Economist has an article on this very issue. The article makes 2 good points:
1) While most of Europe has not experienced a significant housing market correction, it’s still premature to declare victory just yet. Prices are still way out of line with the fundamentals.
2) Americans have borrowed much more heavily to buy homes and have borrowed heavily against their equity to fuel consumer spending, which most Europeans have not done. While the savings rate in the US is negative, the savings rate in Europe only took a modest hit. The Europeans appear must better equip to ride out a stormy economy.

http://www.economist.com/finance/displaystory.cfm?story_id=7891311

9/11/2006 10:18:00 AM  
Blogger lisoosh said...

Here's a nice story.
Friend drank the kool-aid and owned a McMansion and two businesses.
Woke up one morning, realized him, his wife and son were never home and didn't need all that stuff. Sold the Mansion, bought a nice townhouse outright, consolidated his two businesses into one location to save costs.
He owes NOTHING. Income from business pays for property taxes, utilities, food and luxuries where required with plenty left over to save.

There are some sane people out there. He is a very happy man, especially when he hears his friends complain about their debt loads.

9/11/2006 10:21:00 AM  
Anonymous Anonymous said...

BC Bob,

Nice little pullback we have on the metals and oil markets.

Going to make a move?

SAS

9/11/2006 10:33:00 AM  
Anonymous Anonymous said...

I find it pathetic that would even care what people think. I have a paid off house. 350k in secure investments and drive a honda civic( 5 years old). I havent bought new clothes for over a year. I a have nice clothes but prefer to wear my 2 year old nikes and 10.00 pair of sears jeans. I have friends and clients who are very rich and they could care less if i show up to there house in old clothes and a dirty baseball cap, they love me for who I am. PS: I do have a nice sports car(not because i care what people think...because i love the way it drives. If you have friends that only like you because you have money, then rethink your friendships.. Are they really friends???? Come on!

9/11/2006 10:43:00 AM  
Anonymous Anonymous said...

SAS,

Very tempting to get back into gold soon, 1-2 days, with tight stops???

BC Bob

9/11/2006 10:45:00 AM  
Anonymous Anonymous said...

If people are wondering, i am 35, married with a 2 year old. Family is what really matters.

9/11/2006 10:46:00 AM  
Anonymous Anonymous said...

Anon-9/11/2006 11:43:57 AM

Amen to that!! Totally in your camp. I go to friends parties in my sweats. Funny thing about those parties, last year they all thought I was nuts for selling. They don't think that anymore.

BC Bob

9/11/2006 10:49:00 AM  
Blogger chicagofinance said...

Anonymous said...
BC Bob,
Nice little pullback we have on the metals and oil markets.
Going to make a move?
SAS
9/11/2006 11:33:45 AM

Bergs & SAS:

This one was a long time coming. I know you guys think I'm nuts though.
All the best.

chicago

9/11/2006 10:49:00 AM  
Blogger Joan said...

We are slaves of the financial system they want us to be a consumism society so we can get more in dept and be their slaves so they can continue to run the federal reserve money machine,
while the country is drowning in dept.

retail business

9/11/2006 10:50:00 AM  
Blogger chicagofinance said...

Bergs:

I literally wrote this at the same time you did....

"I know you guys think I'm nuts..."

9/11/2006 10:51:00 AM  
Anonymous Anonymous said...

Thats good stuff, owe i didnt mention i am closing on my paid off house and living with the inlaws...no utilities no cable, no property taxes. AND making 1500.00 a month in interest on our money from the house. Life sure is sweet living POOR!!!!

9/11/2006 10:52:00 AM  
Anonymous Anonymous said...

I do feel sorry for the guys that are up to there eyeballs in debt. Because next to my daughter being borned, i have not been happier being debt free..NADA(oh and my wife) so in order:

1.child
2.wife
3.being debt free and having a shitload of money

9/11/2006 10:57:00 AM  
Blogger DEBTective said...

Sad thing, baby. Debt destroys and takes you down with it. The key? Live on less than you make, do a budget and stick to it, deep-six the debt and connect with the cash. That's the smart money talkin'.

9/11/2006 10:59:00 AM  
Anonymous Anonymous said...

Did i mention my yearly salary is only 42k and my wife works 2 days a week, but she makes about the same. So were a family in Morris County that makes about 85k gross. If we can do it anybody can!!

9/11/2006 11:14:00 AM  
Anonymous Anonymous said...

It is really refreshing to see many posts today regarding being debt free. I was beginning to think everybody, with the exception of a few on this site, were in debt up to their eyeballs.

BC Bob

9/11/2006 11:14:00 AM  
Anonymous Anonymous said...

Hey BC BOB we got there doing this , it might not be for everyone.

1.Paid off cars, at all times
2.triple our mortgage payment of 850.00
3.Refinanced at a 3.2% 5 year arm
4.Budget 100.00 eating out
5. had cheap vacations...real cheap
6.cut coupons for groceries
7.wife made lunch and drank coffee at home or work(free)
8. NO major salon visits
9. Still bought toys, tvs,games,computers,ect

9/11/2006 11:25:00 AM  
Anonymous Anonymous said...

"Anonymous said...
Did i mention my yearly salary is only 42k and my wife works 2 days a week, but she makes about the same. So were a family in Morris County that makes about 85k gross. If we can do it anybody can!!

9/11/2006 12:14:12 PM"

Good for you and I am glad to hear it. BUT, here is the problem.

What if everyone decided to pullback and live your lifestyle?

We would have a recession overnight. Many jobs would be lost, stock and housing prices would hit rock bottom. We would have borderline depression. Many don't want that.

Its being stuck between a rock and a hard place. So, the powers that be rather have you in debt than in savings.

SAS

9/11/2006 11:28:00 AM  
Anonymous Anonymous said...

On another note,

I have no debt, and fully paid home, and I still wear $250 (not $300) jeans.

So, yes, that can be done too...

;)
SAS

9/11/2006 11:30:00 AM  
Anonymous Anonymous said...

I am doing my part too...just bought a brand new rx8 and i am still debt free...

9/11/2006 11:40:00 AM  
Anonymous Anonymous said...

"Show & tell" can get old mighty fast when your buried up to your eyeballs in monthly debt payments. All work and no cash make for sleepless nights.
Cash is King BABY!!!!

GOOOOTTTTAAAAAAA MAKE THE DOOOOOOOUGHNUTS!

BOOOOOOOOYAAAAAAAAAA

Bob

9/11/2006 11:44:00 AM  
Anonymous Anonymous said...

Saw plenty of Balloons floating around street corners this weekend and now cars in front of the Dumps!

Oh well, another NO COMMISH weekend for the starving "it's a good time to buy anytime with your money" realtors.

hehehehehe!

9/11/2006 11:47:00 AM  
Anonymous Anonymous said...

Anyone float out a few 30%er 24 hour test bids to those grubbing "it's not 2005 again" sellers?

Did they get all huffed up about it?
If so, Did you really give a damn anyway?

9/11/2006 11:49:00 AM  
Anonymous Anonymous said...

I can't believe we're back to a discussion of $300 jeans!
But it is true that if you travel out of this area, say to the midwest or Alaska, there is more of a focus on quality of life and not just consume, consume, and keep up with the Joneses. I've noticed in my travels to those areas that homes are much more modest, lifestyles (including clothes)more inexpensive, but people have RVs and boats to really enjoy in their spare time.It seems to not be so consumer goods driven as here.
Really nice.

9/11/2006 11:51:00 AM  
Blogger chicagofinance said...

Anonymous said...
GOOOOTTTTAAAAAAA MAKE THE DOOOOOOOUGHNUTS!
BOOOOOOOOYAAAAAAAAAA
Bob
9/11/2006 12:44:11 PM

yes!

http://www.krispykreme.com/glazed.html

9/11/2006 11:55:00 AM  
Anonymous Anonymous said...

"I can't believe we're back to a discussion of $300 jeans!
But it is true that if you travel out of this area, say to the midwest or Alaska, there is more of a focus on quality of life and not just consume, consume, and keep up with the Joneses. I've noticed in my travels to those areas that homes are much more modest, lifestyles (including clothes)more inexpensive, but people have RVs and boats to really enjoy in their spare time.It seems to not be so consumer goods driven as here.
Really nice.

9/11/2006 12:51:24 PM "

Their is a reason why the value system is different out here:

1) Its the buisness and financial capital of the word, so you attract that type of personality.

2) Its such a damn exspensive place to live, therefore produces alot more anxiety about money.

You won't such anxiety in Hot Springs, South Dakota.

Great town by the way...

SAS

9/11/2006 12:11:00 PM  
Anonymous Anonymous said...

I mean....

You won't find such anxiety in Hot Springs, South Dakota.

Great town by the way...

SAS

9/11/2006 12:14:00 PM  
Anonymous Anonymous said...

By the way, I was in Baltimore over the weekend. There was a banner ad, flying around Camden Yards; Ryland Homes, 40% discount plus options. Couldn't believe my eyes. You always see these at the shore, for happy hour,restaurants, go-go bar. I never saw 40% discount from a H-Builder flying around. How do you think those that bought in the last couple of years felt??? I bet their beer and hot dog didn't go down as smoothly as mine.

BC Bob

9/11/2006 12:16:00 PM  
Blogger patient homebuyer said...

i am also debt free.
just went on a vacation to so. cal and it is just like nyc with the consumer society
thankfully i paid cash for my trip.
i also save at least 30-40% of my take home pay as well
i am not trying to impress anyone and i am not cool enough to wear all those expensive clothes and damn happy about it
good to see i am not an alien

anyone going to roger waters this week??

got 2 freebies for my wife and i from a wall street friend

9/11/2006 12:21:00 PM  
Anonymous Bottomfeeder said...

I made an offer this weekend on a FSBO beach house. The "owner" is asking $620. She paid $610 for it about a year ago. Found out she mortgaged 100%. First loan for $488+. Second loan [adj balloon] $122. I offered $450. She laughed nervously and told me she couldn't possibly since she would still owe an additional $160. I thanked her, told her to keep my number and have a great weekend. Im pretty sure I ruined her weekend. Not my problem she overpaid and mortgaged out 100%.

9/11/2006 12:40:00 PM  
Anonymous Anonymous said...

Bottomfeeder, your experience makes me wonder if we will actually see prices fall far and/or fast. If many people cannot walk away from their RE without paying a large penalty, they may pick a slow steady bleeding over immediate financial annihilation.

9/11/2006 12:56:00 PM  
Anonymous Anonymous said...

I agree, bottomfeeder. Sellers are going to keep their asking prices high. There is no incentive to lower because there are no buyers, at any price.

Any offers that come in are going to be 10k to 15k off. Why lower the price 15k when IF you get an offer it will be at least 15% off? They are thinking that 15% off of 500k is better than 15% off of 425k.

Buyers don't pay attention to fundementals. They follow the heard, in this case down.

9/11/2006 01:31:00 PM  
Anonymous Anonymous said...

"Any offers that come in are going to be 10k to 15k off. Why lower the price 15k when IF you get an offer it will be at least 15% off?"

"Buyers don't pay attention to fundementals. They follow the heard, in this case down."

Can you please explain what you mean???

BC Bob

9/11/2006 01:44:00 PM  
Anonymous Anonymous said...

rentinginnj,
thanks, i'm at least one issue behind, but i'll catch that one in my office pile for sure.... to much #%$#% traveling.

DD (curious anon)

9/11/2006 03:15:00 PM  
Anonymous Anonymous said...

"I agree, bottomfeeder. Sellers are going to keep their asking prices high. There is no incentive to lower because there are no buyers, at any price."

This makes absolutely no sense to me. Lets see - there is no demand - so prices stay high? What type of economics is this?

Chaka Chong

9/11/2006 03:36:00 PM  
Blogger NJGal said...

Do student loans count as debt? I guess they do. I have those, but am otherwise debt free and cash flow heavy.

I would pay them off, but low interest rates didn't just help ARM buyers - some of us have loans with interest rates lower than what we can get on our savings accounts. And since the rates don't adjust, hello!

And did anyone else notice that the $300 jeans was on fire this weekend? Someone's pants must have sparked his envy.

9/11/2006 03:52:00 PM  
Blogger chicagofinance said...

This makes absolutely no sense to me. Lets see - there is no demand - so prices stay high? What type of economics is this?
Chaka Chong
9/11/2006 04:36:44 PM

Real Estate prices are "sticky" on the way down.

http://njrereport.com/sd.ppt

9/11/2006 04:39:00 PM  
Anonymous Anonymous said...

I think what anon 2:31 means is that buyers now expect to make offers at 10-15% off asking price--whatever that asking price is. They are not looking at the fundamentals and deciding if a house is priced right to begin with --
these days no one pays list price, period. Thus, a seller would rather keep the asking price high (to get 85% of 500K instead of 85% of 425K.) They see a disincentive, in fact, to dropping asking price.

I also know what "there are no incentives to lower price as there are no buyers at any price" means. It means that sellers now believe that houses aren't selling because there is no demand at any price point (evidence to the contrary--volume is down but hasn't vanished). This is an especially strong belief among discretionary sellers who will not sell at just any price, but will sell at their price. They are not willing to wait and see where supply and demand intersect. They think they just need to wait for buyers to return to the market: this fall next spring, whenever.

Both these thoughts were running around my head while my house was on the market. I'm not saying they made sense, but they didn't seem completely crazy at the time either.

CJ Sell-out

9/11/2006 05:00:00 PM  
Anonymous Anonymous said...

"I agree, bottomfeeder. Sellers are going to keep their asking prices high. There is no incentive to lower because there are no buyers, at any price.

Any offers that come in are going to be 10k to 15k off. Why lower the price 15k when IF you get an offer it will be at least 15% off? They are thinking that 15% off of 500k is better than 15% off of 425k."

This is what I meant. I don't see any demand right now. The word in the market is do not buy because prices are too high. Because of this sellers could leave their prices high in hopes that a sucker comes along.

If prices have dropped 20% since 8-05 I think that some buyers are not lowering the prices but willing to take significant discounts.

This line of thought is easier to sell to a seller that the traditional set your asking price and negotiate a few thousand dollars. It holds out hope that they will get close to asking price.

The real estate market is on life support right now. I believe that things are much worse than people think. If there is no demand, it doesn't matter how much supply there is.

I do not believe that buyers follow fundamentals. I think they follow the herd. People have been ignoring fundamentals and buying properties with negative cash flows for years. At the bottom they will continue to turn away from properties that produce a positive cash flow. They will follow the herd and rebound while the market is on it's way back up.

This make take years. We have a long way to go. I don't think that we will see the bottom until at least the summer of 2008.

9/11/2006 05:13:00 PM  
Anonymous bottomfeeder said...

I just wonder what these sellers [who must sell] will do. Will they rather have the house foreclosed on than come to the table with a short sale? If you must sell because you cant make the payments but you cant sell for what you bought the home for - what do you do?? I was thinking that someone will accept my lowball offer but now I'm thinking I will just show up for the sherrif sales.

9/11/2006 05:16:00 PM  
Anonymous Anonymous said...

If prices continue to drop, is there any incentive for mortgage companies to refinance and write off part of the loan before a sheriff sale?

The other day there was a link on ABN Amro's website for people having trouble paying their mortgage.

9/11/2006 05:37:00 PM  
Blogger MaxedOutMama said...

If you short-sell, you must either come up with the cash or get the lien-holder's agreement.

The reason some people aren't lowering their prices is because they can't!

9/11/2006 06:02:00 PM  
Anonymous Anonymous said...

If prices continue to drop, is there any incentive for mortgage companies to refinance and write off part of the loan before a sheriff sale?

There is not insenstives. Mortage companies are gonna loose truck loads of money...Why
Townhouse A: Bought for 315,000 3 year arm was taken out, now identical townhouses are going for 250K. Rate adjust people can afford it and now its forclosed. 300,000 is still owed on the place. Bank has to try and get its money back. Are you gonna buy a forclused place at 300K or the same place not forcliused for 250,000.00 and lowball a bit.
So banks are gonna have to drop the prices losing money. So no more incentives.

Also, I wanted to add right now is prolly the best time to buy....why APR are only gonna get worse as prices continue to drop. Look at the banks perspective. Lets say during the bubble they were giving our 100million dollars worth of loans at 4% interst.
Now the prices are dropping they wanna make the same amount as they did so they will have to keep the APR's up. And remeber if you are gonna buy now, throw them nice Lowballs 40% off. Just stay away from Remax, they lie and are in denial stating that the market is not dropping. I have spoken too 6 different agents from remax from all over NJ and they all LIE and say the market is not dropping on rising. Even showing them places in there towns that have dropped a substanital amount. Avoid remax

And one last thing... What kinda jeans are you people buying for 300.00?? I wear nice jeans, my 75.00 Girbauds which I only paid 40.00 for when the went on sale. I am sorry it has to be said if you pay 300.00 for a pair of Jeans you are a Jidiot. And you get the Jidiot of the year award.

9/11/2006 06:54:00 PM  
Anonymous Anonymous said...

"The reason some people aren't lowering their prices is because they can't!"

9/11/2006 07:02:15 PM

You're right. Many sellers are trapped with no room to maneuver. They have 2 choices; hope a miracle happens and they get their price or the other alternative, give it back. Many sellers don't have any room to negotiate.

BC Bob

9/11/2006 07:29:00 PM  
Anonymous Anonymous said...

"The reason some people aren't lowering their prices is because they can't!"

We have a smart one here. I like that answer blogger...

SAS

9/11/2006 07:34:00 PM  
Anonymous Anonymous said...

"I am sorry it has to be said if you pay 300.00 for a pair of Jeans you are a Jidiot. And you get the Jidiot of the year award."

Whats a jidiot?

Last jeans I bought were about $250. I happend to like canali jeans.

Are they exspensive? To some..yes....to me....no, I just like them, so I buy them.

Remember, exspensive is all relative to how much money you have in your pocket and in the bank.

If that makes me an idiot...so be it...thats fine by me.

;)
SAS

9/11/2006 07:40:00 PM  
Anonymous Anonymous said...

"Whats a jidiot?"

I was a little lost on that one also.

BC Bob

9/11/2006 08:20:00 PM  
Anonymous Anonymous said...

If that makes me an idiot...so be it...thats fine by me.

;)
SAS

9/11/2006 08:40:42 PM



SAS,
It doesn't make you an idiot, it makes you a jidiot.

BC Bob

9/11/2006 08:23:00 PM  
Anonymous Anonymous said...

Hey I was really enjoying this site until all the talk of $300 jeans, all I can say is if you have a good ass you can wear $20 jeans and still look good. We are buyers on the sideline waiting for prices to drop, last year we saw so many pos,TG. market is finally changing,we are dept free, and saving our money,we have a decent downpayment. Our freinds bought in at high prices last year, IO, now they work so much overtime to pay their mortgage , they never get to enjoy their beautiful home. Saw a couple of places I liked,I may give some really low ball offers, although my real estate agent is telling me I will offend the sellers to the point they won,t talk to me, oh well.

9/11/2006 08:23:00 PM  
Anonymous Anonymous said...

"although my real estate agent is telling me I will offend the sellers to the point they won,t talk to me, oh well."

9/11/2006 09:23:36 PM

Well if they don't talk to you all they have to talk to is their dog. There are no other buyers barking!!!!!!!

BC Bob

9/11/2006 08:26:00 PM  
Anonymous Anonymous said...

I'm compelled to defend NYC from a non-wall st perspective, as I moved here right after school, loaded with loans, precisely because everything (including salaries) were more than the rest of the country. They're long paid off. On a percentage basis I'm paying through the nose for housing, but the net, quantitatively, is still substantial compared to anywhere else in the country. Certain contributors won't believe it, but a comfortable life with two kids IS available here on an under-6 fig income, in a decent (if not large) place. Best of all, I can wear my $350 - $400 jeans without shame or debt, in concert with all my trust fund friends.

9/11/2006 08:34:00 PM  
Anonymous Anonymous said...

We choose to live in one of the more expensive regions in the country....I personally have been 'creative' in getting everything that I need, I have too much debt, but the bills get paid. It's called life. No, we haven't redone our kitchen yet.

9/11/2006 08:38:00 PM  
Blogger MaxedOutMama said...

Anon, you asked "If prices continue to drop, is there any incentive for mortgage companies to refinance and write off part of the loan before a sheriff sale?"

It depends on the circumstances. Basically to the lienholder it's a cost/benefit decision. They will try to recover whatever they can given your finances and the law.

If the borrower has a chance of paying, the lender almost always much rather refi or do a workout. (If the borrower has money and can pay a fee and, in some cases, a higher rate of interest.) If doing a refi/workout will put them in a better recovery position, they might. For example, in CA there are some benefits to the lienholder to refi - it turns a purchase-money non-recourse mortgage into a recourse loan, so that the lienholder can go after other assets of the borrower. If you are the type of person that has those assets, they will have an incentive to refi. But I'm pretty sure that CA's an either/or state, so that you can either foreclose or chose civil recovery, but not both. Therefore if you don't have other assets or a high income, they'll probably foreclose, agree to a short sale or make some sort of keys-back deal. But not if you have a high income or other assets they can go after.

If you are really underwater, you can try to get the lienholder to take the property back and forgive the debt. If they know they can't recover costs, that may be their best option, because they don't want to run up the costs of going through the foreclosure process. How expensive that is varies from state to state and the particular details of the transaction.

If you can present a lienholder with a relatively good sale, they might do it. But they usually want a full income statement and a disclosure of all assets before doing that, if they have a recourse option. If they think they can recover more money, they won't agree. You'll have to sign an agreement to pay at least some of it.

The law varies in each state. A lot of time it's the second lienholder who is the block. Let's suppose you had a primary and pulled money out in a HELOC. That's a second lien. The second lienholder may be looking at taking a massive proportionate loss (50-100%) of their principal in a down market. They have little incentive to agree to a short sale, because the first lienholder gets paid first.

Of course, in such a situation the primary lienholder often has a good incentive to foreclose if you don't pay them, because they are going to recover. In such a situation the thing to do is pay your taxes, the property insurance, and the first mortgage. Then you negotiate with the second lienholder for a workout you think you can handle. If they can't recover in another way from you, you might have the second lienholder over the barrel. An awful lot of 20's are going to be written down in the next few years!

Collections and short sales are going to be a growth industry, that's for sure. Because so much of this depends on state law, it's important to get good legal advice. And I'm not an attorney, so don't accuse me of shilling. In metro areas there are usually some realtors who have experience with short sales, and sometimes they're a good option.

In a lot of cases the loan has been sold or securitized, so that the servicer may not be the lienholder. That can affect your leverage too, in several ways, and is by no means always in your favor. I think GMAC is set on revenue enhancement measures. If you have a mortgage with them, do up an amortization schedule and square up every month.

Btw, under federal law draws can be stopped on a HELOC if the appraised value drops too far. The regulatory agencies issued a guidance last year instructing banks to monitor credit quality on their their HELOC holders each year (pull credit reports). If the value of the bank's held assets in the portfolio drop too far, the regulators can tell them to stop advances on some of the lines before the bank would be able to otherwise.

This is gonna get ugly.

9/11/2006 08:48:00 PM  
Anonymous Anonymous said...

To Anon 9:40
Finally a real life response we can all appreciate, free of opinions. Enjoy !!!!

9/11/2006 08:55:00 PM  
Anonymous Anonymous said...

To Anon 9:40
Finally a real life response we can all appreciate, free of opinions. Enjoy !!!!

9/11/2006 08:57:00 PM  
Anonymous Anonymous said...

I just wanna know..

What the hell is a jidiot?

That some new lingo these days?

SAS

9/11/2006 09:10:00 PM  
Anonymous Anonymous said...

jidiot

A jeans idiot, perhaps?

9/11/2006 10:09:00 PM  
Anonymous Anonymous said...

Saw a couple of places I liked,I may give some really low ball offers

Let us all know when a seller actually accepts one of these low ball offers you're all planning to make.

Until you have a deal, it's just a pipe dream--on both sides. You're being as unrealistic as a seller who's expecting 2005 prices.

The decline may indeed come, but history shows it won't happen quite so fast.

Make sure you sign that lease for another year, and just hope that Simon Legree doesn't raise your rent too much.

9/11/2006 10:12:00 PM  
Anonymous Gary said...

Be careful about just how excited you are for a potential 30% price adjustment in real estate.

No need to smile and clap your hands like a 3 year old.

There's a good chance that you'll be in the same soup lines as those you are wishing ill will on.

There's nothing good about a huge housing crash.

9/11/2006 11:09:00 PM  
Anonymous Anonymous said...

There's nothing good about a huge housing crash.

Absolutely correct. And I suspect that in some ways, a housing crash will disproportionately affect many of the younger people who rail against baby boomer "greed" on this board.

Utter foolishness, some of the dancing in the aisles being seen on this board.

9/11/2006 11:18:00 PM  
Blogger Richard said...

>>The decline may indeed come, but history shows it won't happen quite so fast.

i agree. i believe our host does as well. while some things might be 'different' this time, until i see prices take a bigger tumble than historical downturns it's still just opinion.

9/11/2006 11:27:00 PM  
Anonymous Anonymous said...

"There's nothing good about a huge housing crash."

I have to disagree with you fellow bloggers.
If you see the writing on the wall, and position yourself correctly...you can make bucket load of cash.

Others will get hurt, but I cover my own ass first.

Also, a good housing crash will help put a sense of reality in people's minds.

SAS

9/12/2006 06:05:00 AM  
Anonymous Anonymous said...

I have to disagree with you fellow bloggers.
If you see the writing on the wall, and position yourself correctly...you can make bucket load of cash.

Others will get hurt, but I cover my own ass first.


Well, at least you're honest, unlike some on this board who sanctimoniously claim that they want to see a crash for the good of future generations!

SAS, I am skeptical of much of what you have to say, but I believe you have characterized yourself quite accurately.

9/12/2006 08:01:00 AM  
Blogger delford said...

It is kind of odd, now that we have posters cautioning against people desiring a large housing crash, and how bad it will be etc.

If people have not sucked the equity out of their homes, and lived with in their menas, they will be fine.

The early 90's saw a large decline,and people survived, yes there will be caualities but there always are, and as far as this thing not happening quickly, do no hold your breath.

They went up rapidly, they can decline rapidly the difference between the early 90's and now that will in my opinion make the decline swifter, the use of exotic financing,and the large amount of sub prime borrowers, they are sub prime for a reason.

And yes I am one of those sanctimonious people who are thinking about the next generation, the younger people coming up, they should not have to pay for others msitakes, and they have the right to be able to choose to live in this area if they choose, at some kinf of affordable level.


This attitude now of oh people will get hurt, so lets find some way to protect them them from getting hurt, but lets screw the people coming up. The only way to help some current home owners is to hurt future ones, and that is simply not fair. I undestand some of the younger pwople who got caught up in this madness, but there are people int heri 40's and 50's who got caught up in this who should have remembered what happened before, but of course its different this time, when asked why its different, they do not know, its just different. Sympathy for them, I do no think so.


Unfortunately we need a good cleansing of the market, to get rid of the recklessness and insanity that transpired over the last few years. That will involve casualities, but peopel will survive.

9/12/2006 08:52:00 AM  
Anonymous Anonymous said...

The traditional slash and burn method of farming, you are saying, Delford?

There may be other ways to pull out of this, but I agree with much of what you say, because our economic and political system is not set up to be creative and to morph. We don't have another plot of land on the side for crop rotation right now, do we?

There is a pie. If you give today's 40-60 year olds a break now, you're taking pie away from the kindergarteners.

How can we make the pie bigger?

Some individuals are taking matters into their own hands. People with money. Big warehouses in the Northwest, with a lot of rocket-type stuff and big brains going in.

Others are hunkering down, donating money for charity, and not specifically trying to make the pie bigger through investment. Just trying to ease the pain with the money already made.

The answer is that these are policies. Actions based on beliefs.

If we believe a strong, educated middle class is vital, then our policies must be changed, to stop pushing the burden on future generations. Creative growth, or a period of belt tightening.

If we believe that a middle class serves no purpose, then 1984 is our future. After that, who knows. Maybe the rise of another nation.

I've developed a stand on this, but only since I had a child. Before, it was a like a fog of selfishness kept me from seeing. This is only me. Others with children don't see things the same way.

Right now, there is no creative out for us. So I'm on the belt-tightening side.

Pat

9/12/2006 09:31:00 AM  
Anonymous Gary said...

"If people have not sucked the equity out of their homes, and lived with in their menas, they will be fine."


Huh?

What if they lose their jobs? They've got that covered too?

A recession hurts a lot more than just people's real estate.


And SAS, if you're self-employeed and not beholden to anyone for any kind of income and have a lot saved up, then sure, you'll be golden.

Not all of us are that lucky.

I work for someone else.

9/12/2006 11:14:00 AM  
Blogger delford said...

Gary; They will still survive. I do not want to see anybody lose their home that did not take part in this madness, but this new line of thinking that the housing market should not should crash becasue there will be a recession,and stupid people along with smart people may get hurt, just makes no sense.

This all could have been prevented, had not the Fed kept rates too low for too long, and then started raising in baby steps, but they did, and as such we are where we are.

This is capitalist country, ther are booms nd busts, there are cylces, and sometimes they get out of control, and that is what happened, and now the price has to be paid. It really is that simple.

Funny while it was up up and aay the home owners had no empathy fot the people who did not own homes, they pontificated about how this was the market,and thats they way it is, and the governmentt should not be involved in any of this, and if you cannot afford the area you should move,and on an on.

Now that the market is declining,and the shoe is on the other foot so to speak, it is a different story. Everybody is a cpaitalist on the wasy up, but on the way down they become a champion of government intervention, in other words a socialist.

9/12/2006 12:47:00 PM  
Anonymous Anonymous said...

Gary,

Chin up.

SAS

9/12/2006 08:00:00 PM  

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