By The Tim on May 31, 2010
Here is your open thread for Monday May 31st, 2010. You may post random links and off-topic discussions here. Also, if you have an idea or a topic you’d like to see covered in an article, please make it known.
Be sure to also check out the forums, and get your word in the user-driven discussions there!
Posted in Open Thread | Tagged open_thread
Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.
Found out recently that my landlord is currently 60 days late on the mortgage. We knew this was coming, but didn’t expect it until early next year. I’ll keep you posted as events unfold. There are a host of reasons why I think our situation will take an long, long time to unfold, but we’ll see. In the meantime, Karl has a timely post about the levels of fraud in the banking system re: processing and foreclosing on overdue loans, along with a run-down on some of the legal complications that are beginning to surface. There’s a lot to think about in this one post- worth everyone’s time:
http://market-ticker.org/archives/2359-And-The-Housing-Fraud-Continues.html
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Scotsman –
I think it might make some sense to do some analysis – what would happen if people and the govt started living within their own means.
How much would the spending have to go down from the society and from the govt?
How many jobs would disappear?
To what extent would salaries go down?
To what extent would this cause social unrest?
I am sure you can come up with a decent math model. I am sure Bernake came up with this model already but it looks so bad that printing seems like the only way out. This is the issue that you do not see – the govt knows what you know. They choose a different route in order to protect the society for as long as possible and hope for a miracle.
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Scot @ 1
So are you going to do the same thing and quit paying him? How much time left on your lease? How did you find out he was not paying?
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By Pegasus @ 3:
That would not be a good idea. The landlord not paying the mortgage is not a defense to not paying the rent. And if the landlord started an unlawful detainer action, that could make if very difficult for Scotsman to find a new place.
Scotsman probably should see an attorney to determine what his risk is (e.g. the loss of the deposit and “last month’s rent paid), and assuming this is a SFR property, what rights he has to say after any foreclosure sale. Assuming this is multi-family property, it’s unlikely that he would actually need to move, because the new owner is going to want an occupied building. Also, it probably wouldn’t be a bad idea to contact the landlord to verify that the deposit is held in a separate account, as required by a rather toothless state law.
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Maybe the car driving through is included…
http://www.redfin.com/WA/Everett/11031-4th-Ave-W-98204/home/2582614?utm_source=myredfin&utm_medium=email&utm_campaign=listings_update&utm_nooverride=1
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Here’s something I wrote some time ago in response to someone else facing foreclosure by their landlord. It was basically a list of questions/information that an attorney might want to know before advising their tenant client what to do:
“1. Do you have a lease or a month to month? Absent having a lease, or perhaps having moved in with a month to month after the default occurred, it’s hard to see how the tenant would have any damages from the foreclosure of the landlord’s interest. They would had no contractual right to stay beyond the notice provisions required by law, and thus no damages. This might be different in Seattle, where the landlord is more limited as to the right to kick a tenant out.
2. If it is a lease, when does it expire? If it expires prior to the foreclosure date, and there’s no option to renew, then again it’s hard to see how the tenant was damaged. But again, if it was entered into after the default, perhaps there are other claims the tenant could make. Move in/move out costs might become an element of damages.
3. How does the lease rate compare to market rates, and what are the costs associated with moving? Those are questions that would go to whether the tenant has any significant damages from the potential foreclosure. If say the lease was a sweetheart deal, then they might have significant damages. If the lease rate was extremely high, or perhaps a lease entered into by a couple where one has since left, the lease terminating early might actually be a good thing for the tenant.
4, What is the date each monthly term starts, and how does that compare to the foreclosure date? This relates to the last month where the tenant does have some real concerns. I believe Washington law allows 20 days for the tenant to stay after the sale [this ignores recent additional rights that are sometimes allowed under new state and federal statutes]. Assuming the monthly period starts the day before the sale date, then the tenant could risk losing about 10 days rent if the property does end up getting foreclosed. Some decisions might have to be made there. For example, perhaps paying a late fee to make sure the sale does not occur on the scheduled date before paying rent. But if that is done, then a prospective landlord might be turned off by even the one period of paying rent late. There’s some risk to that course of action.
5. Has the tenant talked to the landlord, and if so, what have they said? About the only obvious claims of the tenant that come to mind are that the tenant might have would be either a fraud claim (where the tenancy was started after the default) or an anticipatory breach of contract claim. Both issues are problematic, and so it would be best to know the landlord’s stated plans and explanations.
6. Does the lender have an assignment of rents clause, and if so have they done anything to collect on it? To answer the first part the attorney would probably need to contact a title company, and then research the current status of the law assuming no action has been taken by the lender.
7. How large is the building being foreclosed? If a single family residence it’s much more likely the new owner would require the tenant to move than if the building is a 40 unit apartment house. Empty apartment houses are not very valuable.
. . .
Thus, the question asked does not have a simple answer, and anyone facing that situation would need to consult their own attorney (or perhaps a tenant services group). The answer the attorney gives could turn on any one of the questions above, or another question. Or it might turn on a city ordinance. Each case would be fairly fact specific.”
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RE: Scotsman @ 1 –
Let’s start with some basics: http://chestofbooks.com/finance/banking/Elementary-Banking/Bank-Accounting.html
Elementary Bank Accounting says that the bank has to balance the ledger, which it most assuredly does. As a matter of fact, if you watch the Market Ticker, bank stocks are doing very well. They do well because we all give them money. All of us contribute to the Banking System every day.
You can not go a day without making another contribution to banking. They are everywhere. Since the introduction of electronic banking we all pay the fraction of 1% to do anything that requires money.
Banks are now global. While Credit Unions may only steal locally, larger banks can loot anywhere in the world.
People get all excited by how much a bank is “giving” them in interests, but you actually give the banks the money to play with, and they return a fraction of a % on investments they make.
The biggest confusion is that mortgages are just a scheme, at this point. The assets from foreclosure are being sold for a premium by dribbling them out. A guy from Ray’s office just paid $162K for a used new construction out in the boonies of Puyallup. $162K for the middle of nowhere! The bank made $162K for nothing.
I have absolutely no doubt that the bank ledger sheets look really good. I have no doubt the FED will get every dime from these guys.
As far as your rent, you have to pay according to your lease, or on a month to month. You stop paying, and the land lord evicts you. The landlord then blames you for his default. After the foreclosure it’s the same. You might have some time, but I doubt it.
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His lease will probably run its course if he has one. He gets 90 days after notice from the new owner and the clock has just started running. He has got over 200 days left living there. If the lease is longer than that the landlord will breach the lease. Scot should certainly get his info available on his deposits from the landlord. Where held and under what title. Is it segregrated and the account number. Those funds have priorities even in front of bankruptcy. If the landlord will not provide all of this(some required by law) than he is probably not going to give it back without a fight. Everyone suing each other may sound great to an aggressive lawyer but reality is that if a guy can’t really pay his mortgage because of lack of funds there isn’t much point in suing turnips or banko’s. And no Kary I was not telling Scot to stop paying rent. I asked what he was going to do.
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Actually, I wanted to talk about war.
Let’s say that we are at war for economic reasons, like since the beginning of time. The military is there to protect our way of life, and we export our way of life around the world. That way of life includes the bar be ques we will be having today. It’s the good life, La Dolce Vida.
We all, here in this great country, have the ability to work for food. We can, at our choosing work for less, save, trade, barter, and yes, even legally steal. We have the ability to do any kind of deal, and our pirates are heroes, legal heroes.
Defending the people is an honorable thing. There are bad men in the world that need to be restrained. If some force invaded our country however, no matter how well intentioned, they would be killed, by the people they were sent to defend.
With a military budget of 30% of our economy, I would think we would be dollars ahead by cultivating commerce, rather than just fighting an ideology.
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RE: Pegasus @ 8 – I’m not really following your time line. I have yet to be able to keep the new state and federal laws straight in my head, but the 90 days you mention probably has not started running because there’s been no foreclosure yet. If the landlord is 60 days late, then there’s still at least 120 days before foreclosure. The foreclosure date cannot be less than 180 days prior to the date of default. But few foreclosures have ever occurred that close to the 180 day rule. So we really don’t know how much time is left.
I would agree a lawsuit is probably not a good idea. When I was talking about damages I was thinking more about negotiating the situation with the landlord.
Finally, if we want to get technical, I didn’t say you said he should stop paying rent. I merely said that stopping the payment of rent would probably not be a very good idea. ;-)
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RE: Scotsman @ 1 –
Federal law signed into law last year requires tenants to be given 90 days notice to evict from the foreclosure auction date in most month to month tenancies. There are some exceptions, so read the law and/or consult an attorney. But given that auctions are frequently delayed and then 90 days notice is required, I think you have a little bit of time.
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RE: Ira Sacharoff @ 11 – There’s also a similar state law that went into effect about the same time (thus one entity didn’t know what the other was doing). From memory I think one allows 90 days, one 120, one requires the payment of rent during that time, the other doesn’t. The differences are part of the reason I can’t keep them straight.
BTW, one attorney I heard even suggested that there are reasons the new landlord might not want to collect rent during this period. So there might be a bonus to a tenant in this situation if you ran into such a buyer.
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State new law was 60 days after foreclosure. Fed law was 90 days notice from new owner. My time line is/was that it takes at least 196 days from default to foreclosure sale. Scot said the loan has not been paid for 60 days. Loan is at default one day after payment due. 196-59 = 137 until the soonest for foreclosure. Add the ninety 90 after…227 days at the soonest.
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Also that new Fed law says that If the new owner is not going to move into your home then you can stay until your lease ends. Since most foreclosures go back to the bank he might get to complete his lease if he has one.
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I think we’ll have plenty of time. We’re still at least 30 days from foreclosure, an event that may or may not happen for some time. I figure we’re good at least through Sept. The landlord’s loan is through a bank that went under soon after the bubble burst. I’d have to look up the name, but I know they were having a lot of trouble finding records for past loans, etc. so it may be a while. Our plan is to just keep paying rent until we hear from the bank, then try to deal with them. I’m sure our deposits are long gone and not worth the effort to chase down. If we can buy what once was a $500K+ property for something around $325 we probably will just because moving at this time would be a pain.
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In order to recover your deposit you might see if you can reach an agreement with your landlord to reduce/eliminate the rent the month prior to a foreclosure sale. It could be a simple agreement, but would need to be in writing to avoid the possibility of an unlawful detainer.
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On another topic, I watched Risky Business last night. I’m not sure what city that was supposed to represent (Chicago?), but clearly the house was intended to represent that owned by an upper middle class family. The kitchen was incredibly basic by today’s standards. The film is from 1983. Anyway, just another reason why means and medians have increased over the years.
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Country Stock Market Performance Year to Date
http://www.bespokeinvest.com/thinkbig/2010/5/28/country-stock-market-performance-year-to-date.html
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More stupidity out of the Seattle City Council:
http://seattletimes.nwsource.com/html/localnews/2011994634_rentals31m.html
Here is the state law that is going into effect, which Seattle seems to think somehow needs improving:
http://apps.leg.wa.gov/documents/billdocs/2009-10/Pdf/Bills/Session%20Law%202010/6459-S.SL.pdf
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Kary,
These homes have been pending for several months. Can you please tell me if these are short sales? I’m wondering why it’s taking so long for these sales to close. Thanks!
http://www.redfin.com/WA/Seattle/3425-40th-Ave-W-98199/home/128636
http://www.redfin.com/WA/Seattle/3919-W-Parkmont-Pl-98199/home/125861
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RE: DavidB @ 20 – The first one doesn’t claim to be, but I can’t readily determine whether it might be. The second one actually sold back in April and the agent apparently has not updated the system.
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Kary, thanks.
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Salgado’s ‘Nightmares’ Over as Spain Tackles Banks, Labor Rules
http://www.businessweek.com/news/2010-05-31/salgado-s-nightmares-over-as-spain-tackles-banks-labor-rules.html
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You Look Like a Complete Fool if You Demonize the new AZ Foreign Visitor Law
Article in part:
“…Passport requirements, both in the United States and around the world, are quite strict. The rules dictate who can apply for a U.S. passport, what is required to obtain one, the proper way to use it and the procedure to renew it. U.S. passports are issued by the United States government to its citizens. They verify identity and citizenship while traveling abroad. A passport is now required to travel to all foreign countries….”
http://www.ehow.com/about_4797277_passport-requirements.html
So why are Seattle’s “wild-eyed extremists” threatening boycotting AZ for their simple passport law requirement? LOL
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I think the problem is that on this thread most people believe that sthg is the right solution and give arguments that are generalized.
1) We do not know to what extent the US govt will need to cut spending? And how will it affect the overall economy? How would raising taxes help and how this would affect the economy etc.
2) Can the US cut spending in certain industries like military?
3) To what extent are consumers in debt and how much does it cost to service this debt?
4) To what extent did the monetary base shrink and to what extent can the US print money in order not cause hyper inflation?
Other things to discuss are:
1) To what extent China will tolerate inflation in the US as a way to get out of debt? What options do they have and which option is optimal for them?
2) How about the rest of the world?
3) To what extent crisis in Europe can affect the US economy in general? How much trade is there with Europe? How much risk is there that it will fall substantially due to strengthening of the dollar for example?
Scotsman, Pfft – it would be key to come up with reliable #s and discuss each point to see if Obama administration is taking the right route to tackle this crisis.
Everything else is kind of ideology which is nice and stuff but is very unreliable and emotional.
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Ooooh- I can see the future- Canada leads the way:
http://news.yahoo.com/s/nm/20100531/hl_nm/us_health_3
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By Scotsman @ 26:
Don’t worry: Even if premiums here double I would still pay less for my wife and me than she would have had to pay alone(!) in the US =)
Also note this: “Universal healthcare is central to Canada’s national identity”
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As California goes, so goes the nation?
” The state of California’s economic crisis continues to deepen as jobless claims rose to their highest level in years — and triple that of just two years ago in the beginning of the recession:”
http://hotair.com/archives/2010/06/01/california-jobless-claims-hit-modern-record-high/
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RE: Daniel @ 27 –
It’s more than the premiums- it’s the taxes and hidden costs not to mention the qualitative issues.
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RE: Scotsman @ 29 – you no know, eh?
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Reading all these comments convinced me to pick up the domain pessimismbubble.com
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By Scotsman @ 26:
looks like cutting back on deficit spending will cost some canadians their jobs. at least when they lose their job they won’t lose their healthcare.
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“U.S. manufacturing grew in May at a faster pace than forecast as factories added workers to meet the greatest export demand in two decades as well as a revival in domestic orders.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aIO8hjpuNorA
who said the jobs would come from exports? I did. it is doing that while the dollar has been rising. just wait until the dollar falls.
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Coppock Curve Hints At An Aging Bull Market
http://www.tradersnarrative.com/coppock-curve-hints-at-an-aging-bull-market-4155.html
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RE: Scotsman @ 1 –
Scotman..if nobody has given this to you please read and understand it…You are sitting fine for a very long while:
http://www.nolo.com/legal-encyclopedia/article-30064.html
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By Scotsman @ 29:
For the cost of US wars you can finance Canadian health care many times over.
Taxes here are quite OK in my income bracket and their tax agency is so eerily friendly. Almost as sickening as all those helpful bus drivers. To bad I cannot visit Austria this summer and ground myself by a bunch of rude people shoving old ladies out of the way on their way to the last seat on the street trains.
But before you blab some more second hand nonsense: My wife had a “waiting list” condition 7 days after our coverage started. Turns out the waiting list Republicans and the medical industry tried to scare off voters with was just for elected surgery to prevent future trouble and she was treated right away at no cost to us (well about 110$ for meds), for a procedure that would have put us in the hole 30-50k under similar conditions (new coverage and what could be considered a preexisting condition) in the US.
But be free: Just believe the nonsense about rumors someone else heard from their aunt. I don’t need to: I had health insurance in 4 different countries my wife was a health care provider in the US for years and my father is a medical doctor. Once you know first hand that 1/2 of the scares are bogus you kind of loose trust in the rest.
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By Kary L. Krismer @ 17:
It’s Lake Forest, just north of Chicago. This is an upper-middle to wealthy neighborhood.
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By pfft @ 34:
Coppock curve is the laggiest of lagging market indicators. If you want to know what is happening 20 years ago, read the Coppock.
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By softwarengineer @ 24:
While you focus on immigration and oil spills, the most powerful people in the world are meeting in Stirges, Spain from June 3 – 6. Do you even know what they are talking about for three days? No? Why would that be?
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By David Losh @ 9:
We are about to go to war with Iran. Do you plan on doing anything about it? If not, why not?
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By Ben Edwards @ 37:
Thanks. I remembered a reference to a lake neighborhood, which is why I guessed Chicago. And clearly it was an upper end neighborhood since the schools discussed were mainly Ivy League.
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