Posted by: Chris Palmeri on July 18
So I’ve decided to take a stab at real estate investing. I found a duplex for sale in Los Angeles. The property is a short sale. The owner bought it in November 2005 for $417,000. He put no money down and promptly took out what looks like another $60,000 in a home equity loan, most likely to remodel it. How he got a home equity loan on a property he had no equity in is beyond me. All the loans were supplied by Countrywide.
When I saw it, the property was listed at $385,000. It’s cute, nicely remodeled. The neighborhood also looked nice and it’s blocks from a pretty college campus. The part of town as a whole is largely blue collar and nearby there are issues with gangs, but more and more artsy types are moving to the area.
I offered $350,000 plus all closing costs, an amount my Realtor and the listing agents suggested was too low. Days later I saw the price knocked down to my $350,000 offer on a real estate Web site. I called the listing agent furious that he was trying to smoke out other offers by advertising my low bid to the world. The agent told me he had reduced the price to $350,000 in the MLS but that turned out not to be true. I grew concerned that other things he had told me might not be true. What if the apartments weren’t really renting for what he said? I withdrew my offer.
Did I do the right thing?
Posted by: Peter Coy on July 18
Some of you may remember Tim Mullaney, who worked for BW for a number of years and wrote some nice guest blogs for Hot Property. Tim has since moved on to bigger and better things--or different things, anyhow--and now has his own blog called It's Only Temporary. The blog name, he says, comes from
Anyway, here's one blog and here's another that he wrote upon discovering that the house he grew up in is being sold as a foreclosed property. He had a crazy idea about buying it himself but I think he's gotten over that.
Posted by: Prashant Gopal on July 17
A survey of builders released yesterday indicated that builder confidence in the new-home market in July hit a new low for the third-month in a row.
The National Association of Home Builders/Wells Fargo Housing Market Index in July dropped to the lowest level since the series measuring builder confidence began in 1985.
Today, a report on June housing starts seemed -- at first -- to make the builders seem like an overly pessimistic lot. U.S. housing starts surprised analysts by jumping 9.1% to an annual rate of 1.066 million in June.
But the Commerce Department made clear Thursday that the jump in permits and starts was caused by a change in the New York City's building code. Builders were rushing in June to apply for building permits before more strict construction codes were put in place.
So, it makes more sense to look at the single-family home construction data. Single-family housing starts in June dropped 5.3% and permits fell 3.5%.
Patrick Newport, U.S. Economist for Global Insight, said the figures are pretty dismal but not surprising. Single-family permits were falling by 5% a month six months ago. So a 3.5% drop is a bit of an improvement.
It will likely be some time before builders have something to cheer about. Newport points out that builders are having more problems financing projects with the tight credit market and the looming collapse of some regional banks.
"They will have problems getting credit to put up new homes and that may delay any recovery," Newport said. "The recovery could come late this year or early next year but it may be further out than that."
Posted by: Peter Coy on July 17
At first glance it's hard to see much resemblance between Ben Bernanke, the chairman of the Federal Reserve, and Bernie Mac, the comedian. Bernanke is an economist from Princeton University, while Bernie Mac is a television and movie actor whose character in The Bernie Mac Show was ranked #47 in TV Guide's list of the "50 Greatest TV Dads of All Time." Ben Bernanke will occasionally offer a mildly humorous aside in, say, semiannual congressional testimony, but I think he would get trounced in an open mike contest by Bernie Mac, who is #72 on Comedy Central's list of the 100 greatest standups of all time.
So given the considerable differences between them, why do I think Ben Bernanke should be nicknamed Bernie Mac? Simple. Under Bernanke, the Federal Reserve agreed July 13 to allow Fannie Mae and Freddie Mac, the twin mortgage-finance giants, borrow from the Fed if need be in an emergency. In essence, then, the Fed is standing behind the obligations of Fannie Mae and Freddie Mac, in the same way that Fannie and Freddie guarantee to stand behind the mortgage-backed securities they issue. There is some kind of iron law in Washington that once you get into the loan backing business, you get a silly nickname: Not just Fannie Mae and Freddie Mac, but Ginnie Mae, Sallie Mae, Farmer Mac, etc., etc.
Earlier this year, after the Fed helped finance the takeover of Bear, Stearns & Co., some people, like James Pethokoukis at U.S. News & World Report, campaigned to nickname the Fed "Feddie."
But with "Bernie Mac," you get much more: the spin on Bernanke's last name, plus the Mac from Freddie Mac, plus the association with the 72nd greatest standup of all time. Bernie Mac it is!
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P.S. After I wrote this but before I posted it I trolled the Web to see if anyone had the idea before I did. Here are the closest things I found, a fake news story (hat tip to Daily Kos) and a column, both about Ben Bernanke bailing out the comedian.
Posted by: Chris Palmeri on July 16
I got a call from an Indymac borrower who asked that his name not be used. He and his wife bought a three bedroom townhouse in the Los Angeles suburb of Chatsworth for $525,000 in March 2006. He says that two weeks after closing on the home he got a letter from Indymac asking him to confirm info on the mortgage application. “Suddenly it had all these numbers we'd never seen before,” he says. They included income inflated by 30%.
He called his independent mortgage broker and was told it was just normal procedure; they do this so they can sell the loans. The broker provided him with a letter from Indymac asking the broker for the changes. By the time the bank had asked the borrower to confirm the new numbers, he says he’d already moved in. He signed the papers. “We unwittingly participated in this fraud out of fear,” he says.
Today the townhouse has dropped some 20% in value. With the economy slow, the independent software engineer is having troubled making the $3,800 a month house payments. He’s looking to renegotiate the loan. Yesterday he called an Indymac customer service hotline and was told the hold time would be seven hours.
“I was very frustrated reading in the papers that it was the borrowers that brought down Indymac,” he says. “There was definitively an effort on Indymac’s part to fraudulently complete my loan. I’d have been a lot happier if they had just denied it.”
