Tough Times!!!

[Domsz06]

glad to hear it. Hope to for sure see you on the water again!!

[Original Wing Nut]

Bowdoc,

I hope the best for you. I am also in construction and have seen good and bad times. I know at times people have judged my well being on weather or not I have things for sale or not. I always pay cash, even for the house, I have never had to sell anything due to putting food on the table or the like, but when things have been tight I have had several opportunities to get in on investment opportunities and so in most cases to double my money I have sold lots, trucks, snowmobiles or whatever I figured I could replace after a deal was done. Things come and go and can be replaced. hopefully things will turn and you can be back in a Tigé again soon. It seems for me when things have been the tightest is when I have looked the hardest into how to make things better, that's when the best things have happened for me.


As for the Mortgage crunch. I have a new phase that was just completed in my subdivision over the last two years. The kids (upper 20's) moving into these homes are absolutely crazy, $750,000 for a home at 95% loan to value on a 50 year arm interest only loan. I went over to help a neighbor move and the guys wife said they didn't need any help the furniture company would bring there stuff the next day. Yep, the next day Thomasville Furniture (high end store in our area) showed up with a whole house of new furniture. That's how were in the mess were in now. That home has now been forclosed and sold for much less about a year ago, that was even before the crunch. I hope we do get a correction otherwise I don't know how my kids are going to afford a home.

Good luck to all feeling the crunch.

[anhaney]

Nuk n Futs hit it on the head. There was alot of trading of useless paper which in turn meant funds and others needed to sell liquid stock and assets to keep on pushing the gains. This inflated the market and eventually lead to the record highs and subsequent drop we have seen in the past 3 months. Many, many people made millions off this. My thoughts on it go back to buying what you can afford. I know I can't afford a $400k house, so there is no way I would ever try and ARM one; especially if I had sketchy credit and contracts. I know there were many that were buying houses way to much for their income, equity lining in a few months, picking up boats, Escalades, lifted 3500's, etc....now they are foreclosing on their homes because they gambled and lost.

Your house should be 2.5 times your annual household income max. The only safe way to do it.

I read where 1 in 15 homes in Nevada are foreclosing.....unreal. Even down here in the South where the average home is about $95/sqft there are subdivisions that are just sitting empty b/c contractors were trying to make a buck.

You should see all the half built subdivisions here in Bakersfield. We were the fastest growing city two years ago and it all ended last year at this time. We were growing faster than Vegas and Phoenix. My boat is a complete mess right now because of the stupid contractors. They dug up the Fields prepaired them for homes then abandoned them. Now when the wind blows it is a mess. That happened last night.

My wife is a Realtor and has decided it was a good ride. It paid for the boat and we were able to purchase a much larger home with the extras she earned. My income is what we live on and when she sells a house (which she has not for over a year now), we get some extras.

Now she is focused on law school and getting through that. Her main job is to be MOM and she does a wonderful job at that. When she graduates law school our oldest will be graduating high school so it looks as though there will be several years of College, Missions, and, College ahead.

The market will rebound it kinda reminds me of the stock market boom 8 years ago.

Sorry you have to give up your boat but if I were in your shoes I would be thankful that I had the boat to give up. When the market gets great again save the cash and buy another one.

Anytime you need a ride bring your family and your welcome on our boat. Just don't sell your gear.

[Razzman]

Not all of California is a high risk proposition. I bought my modest little house new in '91 for $130K new and it's now worth 3x's that even in the market slump. But, the problem as i see it is the younger generations penchant for having to have the best and biggest of everything. The biggest and best houses, cars & boats even if they really can't afford them. Builders are building these 3,000 sf monsters that look like boxes but they're big and bold, with price tags to go with them.

They couldn't have afforded these houses or toys without creative financing. They have to have Hummers and Escalades, Mastercraft X2's and Nautique 236's. All stuff way over their budgets but status symbols because that's the way for them now.

Look at Craigslist in the San Francisco or Sacramento regions and you'll see tons of new boats for sale all (especially the high end ones) labeled "must sell fast" or "baby on the way" (my personal favorite scapegoat excuse). I've watched boats go from $55K all the way to $45K at a loss just to get out from under them. They buy them for the summer and squeeze through 6 months of payments and then dump them when the season closes before they're repo'd, gotta love it.

Here's a couple examples;

This boat was $38,500 a week or so ago; http://sfbay.craigslist.org/eby/boa/426449401.html Love this one, "family wants a pool", in the winter?

And this one was labeled "$41,700 firm - payoff amount" last week; http://sacramento.craigslist.org/boa/421576055.html Again he's firm on that price.

The houses they just walk away from. I just saw in the paper last week where there were 467 foreclosures in the town proper last month! All due to "creative financing" i'm sure! I know for a fact the people next door rented the house because they couldn't handle the mortgage jump from $1600 to $2800 when their ARM increased!

I really feel for these people but let's face it they did it to themselves. They say the housing situation will recover in '09, we'll see.

[anhaney]

Yes Razzman I couldn't agree with you more. We were fortunate and when My father died back in 1998 we took his life insurance he left me and invested in property back then. We have those properties as rentals right now and there are people knocking on our renters doors asking if they are moving out soon.

Maybe we should get greedy! raise the rent NOT! We have great tenants that pay the rent and take care of the property. We don't complain. I know on one of the properties if they ever move out it will be a big mess but O'Well. . We own all the properties and have no debt.

It is getting close to time to buy some more. Just need to let the bottom fall out of the market a little further.

[mtnsmith]

Bowdoc, it's good to hear you are in high spirits about having to sell your toy. I never like selling any of mine, but sometimes it is required. My last toy I had to part with was a Jeep wrangler I built up to take on the swampy forest land of Florida and hopefully take up to Tellico, NC...I had to sell that when I decided to quit my full-time job to go back to school full-time. Do you-all mostly boat on Lake Lanier? I am trying to talk my wife into a trip up there this spring, I might have to hit you up for a little first hand info on visiting the lake. We were up at Lake Blue Ridge last year, beautiful country for sure.

[ragboy]

Look at Craigslist in the San Francisco or Sacramento regions and you'll see tons of new boats for sale all (especially the high end ones) labeled "must sell fast" or "baby on the way" (my personal favorite scapegoat excuse). I've watched boats go from $55K all the way to $45K at a loss just to get out from under them. They buy them for the summer and squeeze through 6 months of payments and then dump them when the season closes before they're repo'd, gotta love it.

I can't tell you how many things I have purchased like that. My Yukon XL, my GMC Sierra, and all of my ATVs have been 1-3 years old, people dumping quick for the cash. If you have the cash, craigslist is a gold mine from people going in over their heads.

[tabone1]

Sorry to hear about your luck A lot of good things said here and I agree with all of it. My ... In 10 years of origination I sat back and watched my peers get rich on mortgages while I just earned a humble living because I refused to offer these "exotic" or subprime loans to my customers if it is was not in their best interest. If they insisted I sent them to one of my rich friends (who are now being foreclosed on) to get their mortgage. When you look at the terms of the loan and project a few years in the future, it is apparent that the ONLY good that comes of these loans is an immediate high that goes away in 6 months to 2 years (sometimes 5!). But they are not victims, they made a bad choice and now realize it (a little too late).
Wall Street firms made these loans available under the impression that someone would not borrower that much money without being reasonably sure they would repay it. They are not in the business of losing money and for closure is $$$pricey$$$. I do not think it is the governments job to tell us under what terms we can borrow money. Everyone in the transactions had the best intentions; unfortunately it did not work out. However there are millions of victims in this fiasco and none of them are being foreclosed on. It is the homeowners that were conscious of how they financed their home and continue to pay their note on time. It does not matter how low rates go, they can not refinance into one because values have dropped so much they now owe more than their house is worth despite the fact they put 10 or 20% down 3 years ago when they bought it.
I really doubt the government is going to pony up to save the people being foreclosed on. They are opening up FHA (max loan amount varies by county approx 200,000 to 360,000) but are using a common sense approach that will only allow a small amount of exotic loan holders to qualify. There is some pressure on Fannie Mae and Freddie Mac to temporarily increase loan limits to well above the current $417,000 and it may happen. Beyond that their is not a lot the govt. can do. Bottom line is their are a lot of people who can not afford their homes under conventional terms. Unless the govt. is willing to give them another loan at 3% and make it interest only for the rest of their lives, many of the people being foreclosed on can not be helped. Cocaine was legal at one time. When people realized the effects it had and the potential for a few crack heads to bring down the neighborhood, they made it illegal. The only difference in mortgages, institutions are losing money hand over fist right now and I doubt they are going to do that again so any legislation would be an exercise in futility.
The largest number of "subprime" mortgages with teaser rates that adjust will adjust in Mid to late 2008 so expect foreclosures to peak then and sharply fall off in 2009. In 2010 we will see another wave of hybrid loans come to a head that will probably have a measurable impact on California. These are the negative amortizing loans that made it possible for someone to buy a home in the higher priced areas. The way the loans work is you start with a ridiculously low payment. Make the minimum payment and the balance on your loan gets bigger. With a starter home going for over $600,000 it is a necessary loan for many if they want to live within an hour or two from their job. The minimum payment goes up gradually for the first 5 years. After year 5 the payment "recasts" to a normal payment. So that 600k loan that was only $600 a month to start adjusts tiny increments until year 5 when it shoots up to the $4,000 a month range. If there is not a way to refinance that starter home at that time, a whole bunch of people with good credit will be forced to give up their homes. I am going to shut up now, this is a hot topic with me. Bottom line, I don't think it is fair to blame anyone, everyone had the best intentions going into the loans. They all misjudged the affects. Were human and make mistakes sometimes. I did on a wake board this morning As for the real estate market, I think California is unique and a huge question mark. The rest of the country is probably skipping off a bottom right now or will be soon and things should heat up in 09. When all of those "neg-am" loans start adjusting we could see another small wave of problems enter the market similar to what we are seeing now. Good news is the population is still growing in America so more houses are going to have to be built. I heard a few people say the market just needs a little time to correct itself and I agree. Everyone needs a place to live so all of these people being foreclosed on are still going to end up somewhere, just at a lower price. I would guess that construction should pick up soon. Just need a few more recent homeowners to move back into their old apartment and then let the growth of a great country continue. The Fed and their rate tool will require me to take a breather. Maybe I'll share some thoughts on that another day. In the mean time I wish you and your family the best bowdoc.

[sparky216]

Sorry to hear that.
not to make any one mad or insult anyone, but if you can't write a check for it why are you looking at it in the first place. Americans think wow i just made 50 grand this year i'll go take a loan out for a new truck and a boat. i don't get it.

That is a gross overstatment for a very complex issue. Most americans do not say "wow I make 50k now off to the Tige dealer". Many, myself included, purchased homes with the intentions of making money not owing a HOME!!! This fueled the boom, but every boom will have a bust. Lucky for me and many others we just got out before the bust. I don't know many people who can write out a $300,000 check for a house or even a $30,000 check for a new truck. Financing has it's place in this world, just need to be smart about it. This will correct, I just wish the freaking Feds would do what they need to do because the longer this plays out the more it will hurt.

[chpthril]

Bowdoc, it's good to hear you are in high spirits about having to sell your toy. I never like selling any of mine, but sometimes it is required. My last toy I had to part with was a Jeep wrangler I built up to take on the swampy forest land of Florida and hopefully take up to Tellico, NC...I had to sell that when I decided to quit my full-time job to go back to school full-time. Do you-all mostly boat on Lake Lanier? I am trying to talk my wife into a trip up there this spring, I might have to hit you up for a little first hand info on visiting the lake. We were up at Lake Blue Ridge last year, beautiful country for sure.

Mtnsmith, if you guys put something together for Lanier, give a shout, we are only 3 hrs away and the wife has family in the area.

[CP3]

Mtnsmith, if you guys put something together for Lanier, give a shout, we are only 3 hrs away and the wife has family in the area.

Dont leave me out

[da.bell]

We bought our house less than a year ago. Today, I can still get my money out of the house however, I wouldn't make a big profit. This year, we are re-fin'ing the ARM's (5/1) that we got. This will reduce our mortgage and knowing that the house still costs a little more than we bought it for, it is a great feeling. We are fortunate to have a great Realtor!!!! Unfortunately, we fired the mortgage broker and went back to a broker that I have known and done business with for 5 years.

[dogbert]

I'm not loosing my house or anything like that. I built my own house 10 years ago. I sell construction products to new residential builders, and with the down turn I must re-buget and the first thing that must go is the toys.

Might want to consider relocating. The housing market around here is still going strong. The only downside is traffic gets worse. But, I just moved our office, so my commute is less than 20 min.

[Domsz06]

That is a gross overstatment for a very complex issue. Most americans do not say "wow I make 50k now off to the Tige dealer". Many, myself included, purchased homes with the intentions of making money not owing a HOME!!! This fueled the boom, but every boom will have a bust. Lucky for me and many others we just got out before the bust. I don't know many people who can write out a $300,000 check for a house or even a $30,000 check for a new truck. Financing has it's place in this world, just need to be smart about it. This will correct, I just wish the freaking Feds would do what they need to do because the longer this plays out the more it will hurt.

I completely agree. There is good times to finance and bad times. I grew up around a father that saved every penny, and he paid cash for everything, 40 acres, 2200 sq ft house, 2 cars, etc etc. But the difference is the way we lived, we never went out to eat, I got one pair of shoes a year, two pairs of jeans, etc etc. Now I'm on the other end, I have no problem financing, esp if I know I can have something 6 months earlier, and not loose any money. I also know that I make xx dollars at one job, and xx dollars cash at the other job so I know what I can pay each month. It's also how I plan on buying a portable directional pool/spa this winter so I can work out in as well as a new boat probably next year. Having all the toys paid off, except the z and the house make it a huge nicety so I can still save huge to my nest egg, but have my toys. Yes I work two jobs to have them, but It makes the time I get to use them even better.

The market will come back around, and I wish I could buy some homes as it would help me turn into a gold mine later.

[chpthril]

Just came across this on the net:


"The Orlando Sentinel, Fla., Beth Kassab column: Foreclosures and the art of the short sale...
Published: 9/21/07, 10:30 AM EDT
By Beth Kassab
Sep. 21--Robert Orsolits is a guy you want to be nice to. Especially if you're one of the thousands of local homeowners failing to make your monthly mortgage payment.

Orsolits is the president of Bank Owned Services, a foreclosure and bank-owned asset and real estate management company.

Translation: part of his job is to advise banks on whether to work with you and help keep your credit intact or take your house with credit-blemishing force.

In today's busted housing market, Orsolits and the lenders are more sympathetic than you might expect. That is, if your sob story for how you got in over your head passes muster.

The bottom line is lenders are more likely to work with broke homeowners who have a reason for missing payments -- such as job loss or illness -- than investors who speculated their way into trouble.

Banks try to avoid foreclosure. The court proceedings are expensive, and it means they have to add a property to their books that they never wanted in the first place.

For those reasons, Central Florida is experiencing an increase in advertisements for "short sales." Just under 200 homes are being offered as short sales in Orange County right now, listings show.

Here's how a short sale works: Say you owe the bank $100,000 on your mortgage, can no longer make your payments and put your home on the market. You receive an offer for $80,000. In a successful short sale, the bank allows the sale to go through and writes off the remaining $20,000 of the mortgage.

"If I have to take you to foreclosure and pay those fees then hold the house on the market for nine or 10 months, I'm into this thing $130,000 with interest," Orsolits explained.

So, in a short sale the buyer gets a deal. The seller, who must prove he has no liquid assets, escapes a credit-bruising foreclosure action. And the bank gets at least some of its loan paid off without having to eat the costs of foreclosure.

It sounds good, but it's not easy.

Short sale attempts have increased but often fall through, especially when the seller also has a second mortgage to satisfy, says Greg Gary, president of Grace Title Inc.

"Unless you're a master negotiator, it's hard to get Bank A to agree with Bank B on a price," Gary told me.

And don't think it's an easy out if you're behind in your mortgage payments.

The amount of debt forgiven on a short sale may be taxed as income. And while the banks may allow a short sale, they may not be willing to forget about it and walk away.

Banks often go after sellers for what they are still owed.

"I'm going to turn around and sue the borrower for the short amount," Orsolits said. "We do it with investors a lot."

The real big-picture value of short sales is they could help wipe inventory out of an oversaturated market. This is necessary in order to bring the market back into check.

While the Fed surprised us this week with a half-point cut of the federal funds rate, fixed mortgage rates have actually increased .125 points in the past two days -- an indication that the Fed's action does not necessarily mean widespread relief to the housing market.

The half-point cut, far bolder than the expected quarter-point trim, will be read by many as a drastic attempt to stave off a recession.

Still, consumers are reining in spending. When people no longer perceive themselves to be as rich as they once were (and we all know this part of the housing bust fallout), the economy slows down.

Even Mr. Orsolits doesn't have a fix for that.

Beth Kassab can be reached at 407-420-5448 or bkassab@orlandosentinel.com.

To see more of The Orlando Sentinel or to subscribe to the newspaper, go to http://www.OrlandoSentinel.com. Copyright (c) 2007, The Orlando Sentinel, Fla. Distributed by McClatchy-Tribune Information Services."