Posted by: Timothy Ellis (The Tim)

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.

107 responses to “Here Comes the Gas Prices Discussion Again”

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  1. WestSideBilly

    Gas isn’t the only cost of commuting. Maintenance, depreciation/vehicle replacement cost, and increased chances for insurance claims should all be a factor. An exact number is hard to place, but if you want to use the IRS number of 55.5 cents/mile, you’re going from $8400 to $1700 give or take.

    I still don’t think that covers the increase in housing costs, but using fuel as the only cost is a bit unfair to the comparison.

    And yes, that’s not even factoring in the extra 1-2 hours per day you get to do something other than stare at the taillights in front of you.

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  2. Scotsman

    Don’t want to look like an idiot, but hasn’t the market worked all of this out as reflected in current price diferentials? And didn’t it take into account many more factors than just the cost of gas?

    If I had to guess I’d say the more important or heavily weighted factor should be time spent, not only commuting to work, but to shopping, activities, etc. The more money you have the more your time is worth- and the more likely you are to live closer to the core.

    As a counter argument, most of the guys I know out here in the country drive huge trucks that get terrible milage even though they often commute long distances to work. So maybe fuel prices have nothing to do with it- the real issue is lifestyle choices.

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  3. Kary L. Krismer

    By Scotsman @ 3:

    Don’t want to look like an idiot, but hasn’t the market worked all of this out as reflected in current price diferentials? And didn’t it take into account many more factors than just the cost of gas?

    To some extent, but again Tim is focusing on the change in the price of gas.

    When gas prices go up, people do change their behavior. Either that or Hummers were the worst built automobiles in the past 20 years and are not on the road now due to something other than the price of gas.

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  4. Kary L. Krismer

    I was commenting in another thread now long it took the press to realize that the local refinery fire would affect gas prices. Just now King5 reported on rising local gas prices, but didn’t mention the fire as one of the causes.

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  5. Ross Jordan

    By WestSideBilly @ 1:

    Gas isn’t the only cost of commuting. Maintenance, depreciation/vehicle replacement cost, and increased chances for insurance claims should all be a factor. An exact number is hard to place, but if you want to use the IRS number of 55.5 cents/mile, you’re going from $8400 to $1700 give or take.

    I still don’t think that covers the increase in housing costs, but using fuel as the only cost is a bit unfair to the comparison.

    And yes, that’s not even factoring in the extra 1-2 hours per day you get to do something other than stare at the taillights in front of you.

    I agree the hyperbole is a little extreme, but one should look at the cost of gas over an ownership period. For me, I wouldn’t consider purchasing a home if I wasn’t planning to live there at least a decade (due to the transaction costs)

    At 55.5c/mi, a 30mi (each way) commute costs: $8,650/yr. That’s $86,500 over 10 years, if prices stay the same.
    If prices go up 3%/yr: $99,254 for a 10 year period
    If prices go up 5%/yr: $108,899 for a 10 year period
    If prices go up 10%/yr: $137,986 for a 10 year period

    Depending where you fall on the peak oil debate, 10%/yr or higher may be reasonable (I don’t want to get into that debate though). In any event, and even if oil prices stay flat, the costs above are greater than the difference in some 30-mile apart home prices that I’ve seen; especially at the lower end of the market. Also, if you need to commute during rush-hour traffic, you’ll get considerably worse mileage in stop-and-go traffic.

    Also, commuting is probably not the only time you’d need to spend extra on gas: If you want to go to arts shows (even a movie theater, depending where you live), the airport/bus station, visit friends in the city, fine dining, specialty shopping, visits to specialists, hospitals, clinics and so on. This will vary by person, but it’s probably fair to estimate 25-50% additional miles over the commute.

    Finally, the oppurtunity cost of a long commute is something people should also be considering. Either more time to work (higher income potential), more relaxation/leisure time, less chance of accidents, lower insurance rates …

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  6. Ross Jordan

    By Kary L. Krismer @ 4:

    When gas prices go up, people do change their behavior

    Yes, but not a great deal. Gas is one of the canonical examples of a relatively inelastic commodity (which means that consumption does not change much with pricing).

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  7. phil

    This pretty much says it all…

    — The volume of fuel exports is rising. The U.S. is using less fuel because of a weak economy and more efficient cars and trucks. That allows refiners to sell more fuel to rapidly growing economies in Latin America, for example. In 2011, U.S. refiners exported 117 million gallons per day of gasoline, diesel, jet fuel and other petroleum products, up from 40 million gallons per day a decade earlier.

    There’s at least one domestic downside to America’s growing role as a fuel exporter. Experts say the trend helps explain why U.S. motorists are paying more for gasoline. The more fuel that’s sent overseas, the less of a supply cushion there is at home.

    (USA Today)

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  8. Kary L. Krismer

    RE: Ross Jordan @ 7 – Correct, but it depends a lot on what time frame you’re looking at. It’s more inelastic over the short term compared to longer periods of time. Using the big pickup truck as an example, you’re likely to pay $5.00 a gallon for some time before buying a new truck, and when you do it may be more that the old one is worn out, but you look for something with better mileage.

    Probably two to three years ago I was penciling out what a Prius would save us, and I determined it wasn’t worth it given the condition of our existing cars.

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  9. Kary L. Krismer

    RE: phil @ 8 – It’s amazing we can export that many millions of gallons PER DAY!

    Hopefully our demand is more inelastic than their demand!

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  10. phil

    RE: Kary L. Krismer @ 10 -
    Last year we managed to import – “From January to October, the country imported 2.7 billion barrels of oil” (USA Today).

    Two of my relatives are now doing 60+ mile commutes (each way), though not in WA. One is close to retiring and had the choice of the new job with a commute and a pay cut, or no job. As they don’t want to sell the farm (literally) and move for a couple of years, she’ll continue commuting with her nice new gas efficient Kia. The other had just bought a new house, when he lost his local job. At least he can ride his motorcycle in good weather and doesn’t have any city traffic to deal with.

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  11. WannaBuy2012

    When considering a longer commute these past few weeks (while pretending more inventory might actually appear some day), the cost of lost time with kids and spouse was a far greater concern than the inevitable rise in the price of gas.

    If I were to buy into a significantly longer commute then we would eventually sell one car and get a commuter car which is likely to be 50 to 100% more efficient anyway.

    For many folks the issue is more about being more environmentally responsible than it is about saving money. Example, there are many Prius drivers who do not drive that much and would have been able to get more car for fewer dollars. Ironically, if you run the numbers, some hybrid drivers could have done more for the environment by buying a similarly equipped traditional car and donating half the cost difference to purchase carbon credits or some other environmental cause. (Just a thought)

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  12. Ross Jordan

    By Kary L. Krismer @ 9:

    RE: Ross Jordan @ 7 – Correct, but it depends a lot on what time frame you’re looking at. It’s more inelastic over the short term compared to longer periods of time. Using the big pickup truck as an example, you’re likely to pay $5.00 a gallon for some time before buying a new truck, and when you do it may be more that the old one is worn out, but you look for something with better mileage.

    Probably two to three years ago I was penciling out what a Prius would save us, and I determined it wasn’t worth it given the condition of our existing cars.

    Though what you’re really saying is that improvements to vehicle efficiency and altenative fuels may lower gas consumption – not that consumers will make a lifestyle choice or behaviour choice to lower miles driven (even in the face of increasing gas prices). I’d agree with that, but note that efficiency improvements in efficiency are bounded by technology and market (If you bought a Prius as your first car out of college, you can’t really get higher efficiency in a replacement … at least not yet)

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  13. Matthew McKee

    I agree with Tim that gas prices will not change consumption for homes immediately, more likely to influence sales if the cost of gas rises continuously even past the election. However, for renters, who are able to react much faster will choose to move closer to work if they can. I could see that being of use to investors buying up rental homes and apartments.

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  14. wreckingbull

    It is a crime that more companies don’t allow telecommuting. I have been working from home for the last six years and can never go back. Fuel prices mean little to me.

    If a company wants to get serious about how they are ‘green’, ‘helping the planet’, blah, blah, blah, the first thing they need to do is start letting employees work from home. They will find they can attract top talent at a bargain price by allowing this simple concession.

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  15. Joseph

    Commuting isn’t the only driving you’re doing, unless you love close in and walk to everything else. The further out you live, typically the further you have to drive to get to anything else you might need.

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  16. John Bailo

    Many employers are allowing 1 to all days to for telecommuting.

    Even if you can get 2 days a week working from home, that automatically removes some car costs from the equation entirely and makes the justification for suburban or even rural living.

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  17. Kary L. Krismer

    By Joseph @ 16:

    Commuting isn’t the only driving you’re doing, unless you love close in and walk to everything else. The further out you live, typically the further you have to drive to get to anything else you might need.

    That’s less true now than in the past. Back when I was growing up people in Bremerton would have to go to Tacoma or even Seattle to do serious shopping. Siverdale was a wide spot in the road. Now Silverdale is a major shopping center and even the area of East Bremerton which was nothing is now strip malls.

    Closer to home, there’s a lot of commercial space out in Covington, and there are many other examples of that.

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  18. Kary L. Krismer

    By Ross Jordan @ 13:

    By Kary L. Krismer @ 9:
    RE: Ross Jordan @ 7 – Correct, but it depends a lot on what time frame you’re looking at. It’s more inelastic over the short term compared to longer periods of time. Using the big pickup truck as an example, you’re likely to pay $5.00 a gallon for some time before buying a new truck, and when you do it may be more that the old one is worn out, but you look for something with better mileage.

    Probably two to three years ago I was penciling out what a Prius would save us, and I determined it wasn’t worth it given the condition of our existing cars.

    Though what you’re really saying is that improvements to vehicle efficiency and altenative fuels may lower gas consumption – not that consumers will make a lifestyle choice or behaviour choice to lower miles driven (even in the face of increasing gas prices). I’d agree with that, but note that efficiency improvements in efficiency are bounded by technology and market (If you bought a Prius as your first car out of college, you can’t really get higher efficiency in a replacement … at least not yet)

    Yes, but go back to my original comment about Hummers. There the choice has seemingly been to park them. I see more circa 1989 Rangers than I do Hummers.

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  19. wreckingbull

    RE: Kary L. Krismer @ 18 – I know this is no secret, but another thing for me that makes rural living easier is Amazon. I buy most of my non-perishable goods through them, with free shipping. Coffee, spark plugs, you name it.

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  20. softwarengineer

    Living in Downtown Seattle Next to Your Job Sounds Perfect As $5/gal Gas Hits Us

    At the grocery store too.

    BTW, ya got that downtown Seattle condo, you’re laughing your head off at the rest of us now, with high priced gas?

    Don’t laugh too hard, your lack of local large selection and lower priced grocery stores and high priced parking eat the savings up easily…and then some in my book. Enjoy your Subway sandwiches its Febru”any” month :-)

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  21. Kary L. Krismer

    RE: wreckingbull @ 20 – Yep. I recently ordered oil filters through Amazon Prime and didn’t opt for the free two day shipping, because I didn’t need them for about a week. They arrived the next day anyway.

    If you go through as much toner as I do, Amazon Prime easily pays for itself.

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  22. Howard

    By wreckingbull @ 20:

    RE: Kary L. Krismer @ 18 – I know this is no secret, but another thing for me that makes rural living easier is Amazon. I buy most of my non-perishable goods through them, with free shipping. Coffee, spark plugs, you name it.

    I don’t get how it is cheaper for me to buy diapers online and have them shipped to my house. Amazon or Target, depending on who has free shipping at the time.

    When I lived in rural Colorado (38 miles to a grocery store), we should have bought a cardboard bailing machine.

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  23. wreckingbull

    RE: Howard @ 23 There have been times using Northern Tool’s Hotline free shipping service, where I assure you shipping cost them $75 on a $50 product. I honestly felt bad about the whole thing.

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  24. patient

    High oil prices impacts housing alright. It makes everything drop in value since all road transportation costs rises. It impacts the price of almost everything you purchase, first thing you’ll notice is probably groceries. And that high commuting costs would somehow make it cheaper to buy an equivalent home in city than in the outying areas is redicolous. People will never be able to save money by buying in the most popular areas, the only argument I can think of would be if you have a bunch of kids you are willing to move from private to public school. But school ends some day and then you are straddled with high housing costs and college fees…

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  25. Kary L. Krismer

    By Kary L. Krismer @ 5:

    I was commenting in another thread now long it took the press to realize that the local refinery fire would affect gas prices. Just now King5 reported on rising local gas prices, but didn’t mention the fire as one of the causes.

    The fire was the first thing mentioned in an article on rising gas prices in California. Our local news really does suck.

    http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/02/22/BU5K1NAKHH.DTL

    A refinery fire in the Pacific Northwest has sent gasoline prices soaring past $4 per gallon in California,

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  26. Keith

    There are a lot of close in neighborhoods that are still cheap and are set up well for car free living. You just choose not to include them as an example. The Rainier Valley is cheap, has frequent light rail service to downtown, and lower crime than Kent. A recent study says that Seattleites would save $12k/Year by switching to Transit. Add in health and time benefits and its hard to argue for sprawl. $8/Gallon gas will turn the lights out on the exurbs.

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  27. Kilen

    One of the core criteria in my housing search is that it has to be bikeable to downtown without too much effort. (north seattle — probably nothing beyond 130th st.)

    Sure, I’ll pay more for it (likely quite a bit more!), but not needing to drive and getting exercise every day will be worth it.

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  28. phil

    RE: The Tim @ 29

    I agree, just look at gas prices in the UK – “Motorists are paying $9.67 a gallon for gas in Britain this week…” (upi.com). Prices have been high for years and the motorways are still jammed pack with cars. Found a link that says gas in the UK was $5.79 in 2005 (cnn/money).

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  29. Kary L. Krismer

    By The Tim @ 29:

    I ride transit every day for my commute, but that “study” was a steaming pile of crap. No way am I saving anywhere near $12,000 a year..

    Factor in buying a car every two years–one that doesn’t have good resale value and only gets 14 m.p.g. Then add in a DUI. That might get you there.

    Seriously, I wonder if they are assuming not owning a car at all for the transit option? That would save you a lot of depreciation, insurance, etc.

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  30. Scotsman

    RE: Kary L. Krismer @ 31

    I’m pretty sure they used a Hummer for the suburban auto of choice- either that or an Escalade.

    The property taxes on the house we rent are more than gas would be for a reasonable commute. It’s a little known fact that property taxes in the county are much higher than the cities. Friends in Bellevue pay half for an almost equal valuation. Gas prices are only one issue of many.

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  31. Matt the Engineer

    You have some good points, but it seems like you’re very close to some logic issues. You’re only looking at the price of gas – which I understand is intentional because we’re just looking at the effect of gas prices. But then you make the leap to “the cost of gas (however high it is) is still likely to be dwarfed by the housing costs of moving to a closer-in neighborhood”. If you’re comparing the cost of housing, you should be considering the entire cost of driving, not just gas. Otherwise you’re comparing apples to oranges.

    Will the cost of gas change the value of living close to work? Not dramatically, from just gas consumption alone (there are other large factors, but that’s a different discussion). But what you’re missing is that the math already tells you that living close to work is the best deal, even before rising prices are factored in. Driving is inherently expensive – and much more expensive than people consider – though gas is just one cost.

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  32. Kary L. Krismer

    Here’s why we have bad energy policy in our country. We have morons testifying in front of other morons.

    What would the price of oil be if left to conventional supply-and-demand fundamentals? Canada is the largest supplier of imported oil to the United States, which produces more than half the oil it consumes. Production and delivery costs for a barrel of Canadian oil are about $75 a barrel. The market-fundamentals cost for a barrel is in that ballpark; above that, speculation sets the prices.

    “It’s as simple as that,” said Gheit, who has testified before Congress and called for regulatory limits on speculation in commodities.

    http://seattletimes.nwsource.com/html/nationworld/2017563277_oil22.html

    Someone is blaming speculation, and they apparently don’t even understand basic economics or business principles.

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  33. Pegasus

    RE: Kary L. Krismer @ 36 – It is speculators and manipulators at work that have driven the prices up and everyone seems to know that except you and few others that believe everything the major media pumps out. When security firms and hedge funds can corner markets and regulators do nothing to stop it, it is not demand driving the price. Do you think it is an accident that for ten days now we have had a feeding frenzy on media stories on $5.00 now $6.00 gasoline? It’s a pump story spread to assist the manipulators in reaping their profits at the expense of the global population. Sometimes those stories are self-fulfilling. You can bet that many are running out filling their tanks and gas cans in order to save some money. As we have seen in the past many times this tightens supply only temporarily and is an excuse to raise prices. As your article points out the industry has claimed that the fair price for oil is much lower and they have claimed that for years. Should we believe the industry or the manipulators and their co-opted media?

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  34. Dirty Renter

    RE: Kary L. Krismer @ 36
    I’ve been listening to Mr. Gheit for years, and ‘moron’ doesn’t come to mind. In fact, when the screamers are going nutty, he is usually the measured, calm person in the room.

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  35. Kary L. Krismer

    RE: Pegasus @ 37 – It sure is nice of those speculators to give us time off from their greed. How does your theory (or lack of any theory) explain that?

    Speculation causing increases is near-total nonsense by those who don’t understand squat.

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  36. Pegasus

    RE: Kary L. Krismer @ 39 – Unfortunately you prove this is another arena of which you appear to know little but expound about endlessly.

    NEW YORK, Feb 23 (Reuters) – Total U.S. four-week
    average demand for refined products fell to the lowest level
    since April 1997, data from the U.S. Energy information
    Administration showed on Thursday.
    The four-week average demand for refined products like
    gasoline and distillates fell to 18.05 million barrels-per-day
    (bpd), 6.7 percent lower than a year ago.
    Four-week average gasoline demand fell 6.1 percent compared
    with a year ago while distillate demand was 5.9 percent lower
    than during the same week last year, according to the data.
    Meanwhile, crude inventories were at the highest level since
    September 2011, rising 1.63 million barrels to 340.71 million
    barrels, EIA said.
    Midwest refinery utilization rose 3 percentage points to 96
    percent of capacity.

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  37. Kary L. Krismer

    RE: Pegasus @ 40 – You think incomplete information proves something? It’s supply and demand! You’re only giving half the information, and for only the US, not the world. Besides, we’re talking about the price of oil when we’re discussing speculation. So you’re giving the wrong information. Other than that, great job.

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  38. Kary L. Krismer

    By Pegasus @ 37:

    Do you think it is an accident that for ten days now we have had a feeding frenzy on media stories on $5.00 now $6.00 gasoline? It’s a pump story spread to assist the manipulators in reaping their profits at the expense of the global population.

    You’re giving the press way too much credit. They are too stupid. As I’ve noted repeatedly here they didn’t even figure out the impact the local refinery fire would have on local prices. That was my first concern when I saw the reports of the fire. I wonder if they’ll notice now that local prices have skyrocketed?

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  39. Kary L. Krismer

    RE: Pegasus @ 40 – BTW, why don’t you give your economic analysis of how someone can drive up prices by buying something and hoping that prices increase after they buy? I’d love to hear that theory, and you’d be doing the rest of us a big favor because we could learn from your extensive knowledge of economics and business and all make a fortune by buying stuff.

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  40. Kary L. Krismer

    By Dirty Renter @ 38:

    RE: Kary L. Krismer @ 36
    I’ve been listening to Mr. Gheit for years, and ‘moron’ doesn’t come to mind. In fact, when the screamers are going nutty, he is usually the measured, calm person in the room.

    Maybe he’s being mis-quoted? That something can be produced for a lower cost and then sold at market prices does not prove that speculation makes up the difference.

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  41. Pegasus

    RE: Kary L. Krismer @ 43 – You are CLUELESS about how the commodity market works. Get a real education before you spout nonsense again and again about something you know nothing about.

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  42. Kary L. Krismer

    By Pegasus @ 45:

    RE: Kary L. Krismer @ 43 – You are CLUELESS about how the commodity market works. Get a real education before you spout nonsense again and again about something you know nothing about.

    I’m quoting this only to prove you had a completely non-responsive answer.

    If anyone here doesn’t know what they are talking about it would be you, except for the fact you haven’t said anything.

    Quit pretending you know things.

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  43. Kary L. Krismer

    This article addresses President Obama defending his energy policy, without actually mentioning what that policy is exactly.

    http://www.nytimes.com/2012/02/24/us/politics/obama-will-try-to-blunt-attacks-on-gas-prices.html

    One thing it brings up was the decision to release oil from the emergency reserves, and the timing of that. I wonder if part of what’s driving of the price is we’re now buying to refill those reserves? I’ve not seen anything on that.

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  44. Macro Investor

    By Kary L. Krismer @ 39:

    RE: Pegasus @ 37 – It sure is nice of those speculators to give us time off from their greed. How does your theory (or lack of any theory) explain that?

    Speculation causing increases is near-total nonsense by those who don’t understand squat.

    I can cite an oildrum article written by an industry insider who says it’s entirely speculation. And he explains exactly how it’s done. But you can find it yourself, if you are intellectually curious. But we know you won’t because you are so much smarter than everyone else, and more importantly, YOU KNOW EVERYTHING.

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  45. Pegasus

    RE: Kary L. Krismer @ 46 – You are always one of the first to defend the kleptocracy and their crooked ways while manufacturing bogus reasons as to why we should believe the bullchocolate. It is a proven fact that oil prices are manipulated. What do you think happened when oil prices exploded to $140 a barrel and then collapsed in six months to as low as $35 a barrel. Do think that was caused by real demand and Mom and Pop filling their tanks? Quit bloviating and try reading and learning something before you make a fool out of yourself again and again and again and again and again and…… You know nothing about commodities and it shows. Add it to your lack of knowledge about foreclosures, real estate, robosigning, etc., etc.

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  46. Pegasus

    RE: Macro Investor @ 48 – He can’t handle the truth especially after being wrong about EVERYTHING.

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  47. Kary L. Krismer

    RE: Macro Investor @ 48 – Apparently you’ve already forgotten what I’ve said about how little I respect your opinion on anything. But sorry, I’m not into wasting my time. Rather obviously I’m not convinced by anything that convinces you. I do, however find your handle name to be extremely ironic. You must be broke if you’re investing based on your understanding of economic and business issues.

    In any case just because someone wrote something it doesn’t mean it was true. Pegausus was citing to some legal analysis of MERS that was totally rejected by a local bankruptcy judge recently, because it was complete nonsense.

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  48. Kary L. Krismer

    By Pegasus @ 49:

    It is a proven fact that oil prices are manipulated.

    Just saying things doesn’t make them true. Being gullible makes you think things are true.

    Since you bring up robosigning, why don’t you go back and look at Judge Overstreet’s opinion on the two MERS deeds of trust, and see how that fits with the nonsense you were spouting about MERS last year?

    And again I’ll point out you still haven’t said anything to show how the manipulation occurs.

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  49. Macro Investor

    By Kary L. Krismer @ 51:

    RE: Macro Investor @ 48 – Apparently you’ve already forgotten what I’ve said about how little I respect your opinion on anything. But sorry, I’m not into wasting my time. Rather obviously I’m not convinced by anything that convinces you. I do, however find your handle name to be extremely ironic. You must be broke if you’re investing based on your understanding of economic and business issues.

    In any case just because someone wrote something it doesn’t mean it was true. Pegausus was citing to some legal analysis of MERS that was totally rejected by a local bankruptcy judge recently, because it was complete nonsense.

    By answering, you just called yourself a liar.

    You are intensely sensitive about anything that anyone says, when it disagrees with your know it all opinions. That is why you are online 24 hours a day, typing away on multiple blogs like a cocaine addicted chimp.

    I doubt anyone in “real life” can stand being in your presence. That’s why you have this “lonely guy” blogging habit.

    Honestly, speculators have no impact on commodities. Ray, cue up the family guy video — PLEASE.

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  50. Keith

    Tim:

    Do you still own a car, make a car payment, pay maintenance, insurance, etc? The study is referring to switching to transit entirely — not adding transit to your use of a car.

    You are arguing that higher gas prices won’t change the behavior of people who live in ring suburbs. I disagree – If we have European level gas prices we would likely adopt European driving tendencies: less driving – living closer, etc. I’m always shocked by how much people change their behavior over even a $1/gallon boost in prices.

    Part of your argument is that closer always is more expensive… which is false. I’m just pointing out that you are using faulty single example to support your argument that gas prices won’t significantly affect behavior.

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  51. Pegasus

    RE: Kary L. Krismer @ 51 – Hehehe…I brought up MERS on this forum before anyone else ever did and you and old OEM didn’t have a clue about it and the problems it was and is still causing. Yes I have posted decisions about MERS, some pro and some con. Just because a judge in Wa. State rules a certain way does not excuse their behavior on a national basis. I always said that if the kleptocracy continues that they may legalize all of the bad and illegal things that MERS did or did not do. It is the way the system works. Look at the recent banker settlement for a good example. Not all judges are independent thinkers and some are definitely pro-kleptocracy until the public starts chanting. Suddenly they realize that they are under scrutiny and start doing the right thing. Funny how a little sunlight can sometimes work.

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  52. Matt the Engineer

    RE: The Tim @ 35 – Yes, the $500k wouldn’t buy you $500k of new house right now. But keep in mind that that half million dollars is just gone at the end of 30 years in the exurban case – sent mostly to foreign powers. In the city home case that money still exists in your house, and you get to keep it in the end. So if instead of jumping to the $500k in extra home you take steps along the way, you’ll come close to ending up with the full amount.

    Anyway, I agree we are arguing different cases. But you did wander from the gas-price argument and jump into to the concept of housing cost in close-in neighborhoods, which means we get to bring the real costs of car ownership into the argument (since it isn’t just gas prices that are relevant in that scenario).

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  53. Ross Jordan

    By Kary L. Krismer @ 52:

    By Pegasus @ 49:
    It is a proven fact that oil prices are manipulated.

    Just saying things doesn’t make them true. Being gullible makes you think things are true.

    Well, the stated goal of OPEC (who controls a great deal of the world’s oil supply) is to safeguard it’s members interests. That basically means they control supply to keep prices high (And ostensibly stable). If you don’t think controlling supply is manipulation of oil prices, I’m not sure what would be.

    Yes, oil prices are definitely manipulated.

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  54. Kary L. Krismer

    By Macro Investor @ 53:

    By Kary L. Krismer @ 51:
    RE: Macro Investor @ 48 – Apparently you’ve already forgotten what I’ve said about how little I respect your opinion on anything. But sorry, I’m not into wasting my time. Rather obviously I’m not convinced by anything that convinces you. I do, however find your handle name to be extremely ironic. You must be broke if you’re investing based on your understanding of economic and business issues.

    In any case just because someone wrote something it doesn’t mean it was true. Pegausus was citing to some legal analysis of MERS that was totally rejected by a local bankruptcy judge recently, because it was complete nonsense.

    By answering, you just called yourself a liar.

    Part of the reason I don’t respect your opinion is because you clearly don’t have an understand anything. That apparently goes to understanding the what the word “respect” means.

    I can respond to something you post without respecting what you say. If I had said I don’t care what you say, then responding might indicate that wasn’t true.

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  55. Kary L. Krismer

    By Pegasus @ 55:

    RE: Kary L. Krismer @ 51 – Hehehe…I brought up MERS on this forum before anyone else ever did and you and old OEM didn’t have a clue about it and the problems it was and is still causing. Yes I have posted decisions about MERS, some pro and some con. Just because a judge in Wa. State rules a certain way does not excuse their behavior on a national basis.

    What I was specifically referring to was the analysis of how the note somehow separates from the deed of trust and becomes unsecured. That was addressed and rejected by Judge Overstreet.

    Also, as to MERS I’ve repeatedly commented on how the results could be different in different states, and one of the problems I had with them was trying to come up with something that worked in all states without authorizing legislation. That said, I also said I didn’t see a problem with it here, and so far that’s been correct per the legal decisions out of Washington state and the Ninth Circuit.

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  56. Kary L. Krismer

    By Ross Jordan @ 58:

    By Kary L. Krismer @ 52:
    By Pegasus @ 49:
    It is a proven fact that oil prices are manipulated.

    Just saying things doesn’t make them true. Being gullible makes you think things are true.

    Well, the stated goal of OPEC (who controls a great deal of the world’s oil supply) is to safeguard it’s members interests. That basically means they control supply to keep prices high (And ostensibly stable). If you don’t think controlling supply is manipulation of oil prices, I’m not sure what would be.

    Yes, oil prices are definitely manipulated.

    I’ve mentioned OPEC (and/or cartels) just this week in another thread, but the discussion was of speculators in the futures market affecting prices.

    http://seattlebubble.com/blog/2012/02/17/weekend-open-thread-2012-02-17/comment-page-1/#comment-157404

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  57. Pegasus

    RE: Kary L. Krismer @ 60 – Your answer has nothing to do with your previous attempt at a false smear…..”In any case just because someone wrote something it doesn’t mean it was true. Pegausus was citing to some legal analysis of MERS that was totally rejected by a local bankruptcy judge recently, because it was complete nonsense.” ….but that’s on par with your continued difficulty in dealing with the truth and logic especially when you are confronted head on with it. Now you are just twisting and turning trying to distance yourself from your previous false statement. Remember when I posted about MERS previously the judge had not ruled on anything. I don’t pretend to be Carnac unlike yourself and divine a future court decision. You are yaffing at the moon again.

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  58. Ross Jordan

    By The Tim @ 57:

    By Keith @ 54:
    Do you still own a car, make a car payment, pay maintenance, insurance, etc? The study is referring to switching to transit entirely — not adding transit to your use of a car.

    Yes, I still own a car. A car that has never cost me anywhere near $12,000 a year, even when I was using it to commute daily. I closely track every penny I spend and can back up my claims with real numbers. I am pretty sure that both my car and truck combined cost me nowhere near $12,000 a year. I spent $5,500 each to buy them, and replace my vehicles maybe once every 10 years. I spend maybe $1,000 total on both a year (max) in repairs / maintenance.

    Granted, those are about the numbers I spent on my own vehicles, but I’d suggest your expenses are way below the mean.

    If you use the IRS “standard mileage rate” cost per mile of $0.555/mi, and use the DOT average of 13,476 miles/yr, then the average cost per driver is $7479.18 per year. Considering just adult (non student/non senior) drivers would push this up even higher.

    http://www.fhwa.dot.gov/ohim/onh00/bar8.htm

    BTW, AAA also producers a cost of driving study, and it finds and average cost per mile rate of 58.5 cents. (Using that cost per mile would give average cost per driver of $7883.46)
    http://www.aaaexchange.com/Assets/Files/201145734460.DrivingCosts2011.pdf

    -Ross

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  59. Keith

    Tim:

    It is an average, after all. If the average car in Seattle costs $26k and is kept for an average of 6 years (those are both educated guesses) you will start to see where that $12k/year number comes from.

    And you are still skipping costs — how much do you pay for gas in a year? How much do you pay to park? Tolls? Tickets?

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  60. Kary L. Krismer

    Pegasus, I don’t know how that doesn’t apply. You previously posted about this theory of how the notes were all unsecured because of MERS. Judge Overstreet cited to the thing you claimed indicated that, and she rejected it.

    The theory was absurd, but you would have to understand the difference between realty and personalty and the differences of perfection of real property interests and notes to understand that. Read pages 12-17 of Judge Overstreet’s decision.

    http://www.wawb.uscourts.gov/opinions.htm?j=1 (Reinke)

    And no, I didn’t predict Judge Overstreet would write a decision. I was stating what I believed the law to be in Washington state. Per Judge Overstreet I was right. The case is up on appeal. An appellate court might feel differently. You indicated the law was different. So far you were wrong, but again an appellate court might support you.

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  61. Kary L. Krismer

    RE: Ross Jordan @ 63 – Ross, see post 61. It was in moderation and you might have missed it.

    As to your post, the IRS numbers are an interesting way to go. I was thinking instead of going with the cost to lease a car. You can lease a lot of cars for under $300 a month, including taxes. Add in $100 a month for license and insurance (high) and you’re only up to $400 a month. $100 a month for maintenance is also probably high, but that would leave you with $500 a month for gas. At $5.00 a gallon and 20 mpg, that would allow you to drive 2000 miles a month and still be under $1,000 a month.

    And again I would point out that for that all to apply you’d have to have no car, so with a car there wouldn’t be all that savings from commuting to work via public transportation.

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  62. WestSideBilly

    It’s obviously possible to spend much less than $1000/month on a car. But if you look at averages, it’s not far fetched.

    Average new car payment ($29k car / 5 years @ 6%) = $560
    Average insurance payment on newish car = $120 (the average for ALL cars is over $100/mo in WA state; $120 is probably low)
    Average fuel usage: $220 (1100 miles @ 25 MPG). This can vary a lot obviously, and a bit more driving (like a 60 mile round trip commute, which is 1200/month alone) can push that 1100 up to 2000 or more.

    That’s $900/month before licensing, maintenance, car washes, etc on an average vehicle driven an average distance by an average driver. The $12000/year cost seems very reasonable to me, and if you’re talking about a suburb commuter is probably low.

    Compare against about $100/month for a monthly bus pass…

    That said, the $12k savings would only be doable by completely giving up the car, not just driving it less, as Tim mentioned.

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  63. Ross Jordan

    By The Tim @ 68:

    And even though you didn’t ask: $1,346.18 on repairs/maintenance (e.g. oil changes), and $928.06 on insurance. Adding in things like license tabs I get to $3,849.47 for total outlays on the car plus truck in 2011. Divide in the $5,500 I spent per vehicle amortized over the 10 years I’ll keep them and you tack on $1,100 for a grand total of about $4,950 for two vehicles. Divided by 2 = $2,474 per vehicle.

    For my family of two drivers:

    Total cost (2 vehicles): $4,950
    Total miles driven in 2011: 15,756
    Cost per mile: $0.314

    You have very good record-keeping. (And though I don’t have as good record keeping, I’d guess I have similar expenses). However, to play devil’s advocate and be thorough:
    - Does your purchase cost of $5500 include sales tax (or is it accounted in “things like license tabs”). Also did you include bi-annual emissions testing?
    - 10 year lifespan on a $5500 car may be optimistic (though probably not unrealistic if you maintain your vehicle diligently). In any event, maintenance costs would go up with age. In some cases, significantly. Also, fuel economy may trend worse with age.
    - There are some expenses which may not be covered by insurance policy, or require at least paying a deductible (for example, if your vehicle is insured for collision only, certain accidents may not be covered, but can occur with high enough probability to consider).
    - Financing? I assume you are not financing your vehicles, but that would be an expense for the majority of owners.
    - Other car expenses: Car washes/vacuuming/detailing; car accessories; cost of parking, garaging, risk of vandal/theft

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  64. deejayoh

    I’m glad to see this thread has turned into the “How much does The Tim spend on his cars each year” thread. Maybe Pegasus can bring us back to MERS

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  65. Kary L. Krismer

    By WestSideBilly @ 69:

    Average new car payment ($29k car / 5 years @ 6%) = $560

    IMHO, if you need to borrow $29,000 for a car, you should be buying a less expensive car.

    It’s like buying a $1,000,000 plus house. IMHO if you’re doing that you should have a significant down payment of at least $200,000, if not more.

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  66. Kary L. Krismer

    RE: deejayoh @ 71 – In fairness, I probably brought up MERS.

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  67. Ira Sacharoff

    By Kary L. Krismer @ 72:

    By WestSideBilly @ 69:
    Average new car payment ($29k car / 5 years @ 6%) = $560

    IMHO, if you need to borrow $29,000 for a car, you should be buying a less expensive car.

    It’s like buying a $1,000,000 plus house. IMHO if you’re doing that you should have a significant down payment of at least $200,000, if not more.

    Yeah. No one needs anything newer than an ’89 Ranger pickup.

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  68. whatsmyname

    RE: deejayoh @ 71
    Does this mean it is too late to point out that Tim’s auto cost analysis does not include the lost opportunity for finding pennies and dimes in the bus seat cushions?

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  69. Pegasus

    RE: Kary L. Krismer @ 65 – Please post a link to your false allegation. You can not. You are a proven liar. Certainly not the first time you have lied here but now you are completely manufacturing bullchocolate. Fully expected from an attorney who can’t seem to figure out that everyone knows what you are doing. What happened to discussing gas prices that you are wrong about? More than a little diversion on your part to try to distance yourself from your previous false statements. It’s your MO. Lie and distort when caught. Now you are having to resort to completely making up things that others supposedly said. Shame on you!

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  70. One Eyed Man

    RE: Pegasus @ 55

    As I’ve mentioned before, you deserve credit for bringing MERS issues to light. But you also mischaracterize the most of the questions that I raised about your claims concerning MERS. Before you pat yourself on the back too many times or claim that you know it all, you should probably consider the following three things:

    First, MERS is probably a perfectly legitimate (and legal) way to deal with the assignment of the beneficial interests in mortgages under Washington law (and probably in the vast majority of states). The failure of mortgage bankers and investment bankers to properly do the things necessary to make MERS work, like deliver original documents and complete assignments and declarations, is a separate issue from the legitimacy of the MERS system if implemented as intended. Massachusetts and the states that have found the MERS system more problematic than Washington are probably in the minority.

    Second, we’re all still waiting for you to provide any evidence that thousands, if not millions, of original mortgage notes were destroyed to cover up some grandiose plot by inept bankers to defraud america. If somebody destroyed millions of original notes, how come no one has come forward, voluntarily or by sub poena, and testified that they destroyed huge numbers of original promissory notes. Perhaps you intended to manipulate the aluminium market by fabricating an increased demand for tin foil hats. ;-)

    Third, we’re all still waiting for any evidence that robo-signing or any other related MERS issue resulted in vast numbers of borrowers losing their homes when they weren’t in default as legally required for a foreclosure, or that vast numbers of borrowers didn’t get proper notice of the foreclosure and the right to be heard in court. Please note that I never said robo-signing is proper (in most cases its probably perjury) but that’s far different than saying that huge numbers of people who were not in default lost their houses or that they didn’t get the appropriate notices and right to be heard in court if not in default.

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  71. wreckingbull

    One added benefit to riding Metro is that it makes your immune system bullet proof. When I rode the 17,18, and 5, I was deathly sick the first 6 months, but never sick again for 9.5 years. Those swampy winter days really put the system into overdrive.

    Now that I don’t ride, I have turned into a wus.

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  72. Pegasus

    RE: One Eyed Man @ 77 – Your point, as it always is, is that the rule of law need not apply in taking someone’s home for a variety of garden reasons and excuses. We can just overlook all of the behavior on the part of the controllers of foreclosures. You had NO CLUE as to how badly MERS had screwed the pooch. I remember asking you to do some research before further comments. Fannie Mae ordered the banksters to stop using MERS in foreclosures about two years ago after pretending their problems did not exist for years prior to that when they knew they did. Huh? Tell me why Washington State suddenly changed the trustee requirements from having to act as a fiduciary in a foreclosure to just having to act in good faith after years of bad paperwork? This happened AFTER it became apparent that the world of phony paperwork was already collapsing. I never applied the MERS situation directly to Washington State laws nor did I get into separating the note from the mortgage. That was a twist from Kary when he was losing an argument. At one time Washington State required proof of standing to foreclose. Now you can just sign an affidavit stating you have the standing. Why is that? If the documents don’t exist how do you really prove a chain of ownership to foreclose? It is not like a MERS like entity could not be a legal and helpful system to real estate contracts. It is because of the way they ran it, completely ignoring laws, destroying documents, lying about having real documents, signing up robosigners as agents for MERS with NO discrimination, etc. It is the same people that own MERS are the very same people that brought us robosigning, subprime mortgage fraud, fraudulent issuance of mortgage securities, mortgage servicer fraud, non-placement of mortgages in trust pools as required, multiple pledging of a mortgage owned by someone else for loans, borrowing money against a mortgage that no longer exists, etc. The list goes on forever and yes people, years ago, admitted to destroying the original documents. In the mean time people like yourself and Kary constantly defend these less than moral behaviors. Why is that? Are you getting paid or are you living off from these grifters, part of the team or, God forbid, are you really that stupid to continue this dance defending the criminals? Most of America has figured it out and someday they may come looking for the crooks and their facilitators.

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  73. Kary L. Krismer

    By Pegasus @ 76:

    RE: Kary L. Krismer @ 65 – Please post a link to your false allegation. You can not.

    It was in one of the BS links you posted to in the past. Seattle Bubble isn’t exactly easy to search–especially if all you’re searching for is a link. Don’t you remember the things you posted to? You really should get a better memory before you claim someone else has lied or resorting to trolling activity.

    BTW, cannot is one word. And that sentence leaves a bit to be desired in other ways.

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  74. Kary L. Krismer

    By One Eyed Man @ 77:

    First, MERS is probably a perfectly legitimate (and legal) way to deal with the assignment of the beneficial interests in mortgages under Washington law (and probably in the vast majority of states).

    State law really does make a difference on many issues. States which tend to be particularly odd are Louisiana, Oregon and Hawaii.

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  75. Kary L. Krismer

    By Pegasus @ 79:

    RE: One Eyed Man @ 77 – Your point, as it always is, is that the rule of law need not apply in taking someone’s home for a variety of garden reasons and excuses. We can just overlook all of the behavior on the part of the controllers of foreclosures. .

    The point being made is that if you’re going to be foreclosed anyway, there is no real damage! In contrast, the issue I’ve been hitting on is banks foreclosing those in the armed services out of their homes. In that situation there was real damage, but you’ve been silent on that. So you’re focusing repeatedly on the issue that in the recent settlement got everyone $1,500-$2,000, while I was focusing on the issue that got everyone $100,000+. You don’t have a clue what’s important!

    I do need to correct something, however. In the past I’ve said it’s more important in a judicial state to make sure that the party foreclosing is the correct party, because you don’t want to have a judgment entered against you by the wrong party. Judge Overstreet’s decision, in dicta, says the same issue might be relevant here. That if the wrong party non-judicially forecloses a deed of trust, the anti-deficiency provisions might not apply. I haven’t looked at the statute to see if I agree.

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  76. Kary L. Krismer

    By Pegasus @ 79:

    Tell me why Washington State suddenly changed the trustee requirements from having to act as a fiduciary in a foreclosure to just having to act in good faith after years of bad paperwork? This happened AFTER it became apparent that the world of phony paperwork was already collapsing..

    It had nothing to do with MERS, and the provisions were even changed a few years before the most recent changes. The changes have been made because many of the trustees act both as attorneys for the bank and as trustee for the deed of trust. As trustee they have to make decisions on such things as when to continue a trustee sale.

    The tweaks to the provisions were pressed because the trustees were being sued over those decisions. It’s hard to act as the attorney for the bank and an independent third party. Personally I think it would be better to prohibit a party who is acting in the capacity of attorney for the bank to be the trustee, but that’s not how they amended the statute.

    Once again you simply don’t understand what’s going on, and think MERS is somehow important here in Washington. It isn’t.

    Finally, as much as I don’t like the Legislature’s most recent solution, I don’t think being a fiduciary is necessarily correct either. The Legislature in recent years has had the habit of being lazy and just declaring everyone a fiduciary of everyone else. In the Distressed Property law they made certain buyers the fiduciary of the seller! Total nonsense.

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  77. Kary L. Krismer

    By Pegasus @ 79:

    The list goes on forever and yes people, years ago, admitted to destroying the original documents. In the mean time people like yourself and Kary constantly defend these less than moral behaviors. Why is that? Are you getting paid or are you living off from these grifters, part of the team or, God forbid, are you really that stupid to continue this dance defending the criminals?.

    Do you really think that if a note is lost or destroyed it cannot be foreclosed? It’s possible it might not be able to be non-judicially foreclosed, but I’m not sure what that would get a homeowner, besides a deficiency judgment. Is that what you want?

    OEM and I are not defending MERS, we just happen to be lawyers and understand the law. We don’t go off making absurd claims about what the law is, and recognize when such absurd claims are being made, and respond to those making absurd claims. That is why we respond to your posts. So that you don’t mislead people.

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  78. Kary L. Krismer

    Local gas prices have been skyrocketing, and King5 as of last night still hasn’t connected up the refinery fire to those extreme price changes. They also think T-Mobile lost almost a million subscribers last quarter because they don’t have the iPhone. Do these news people even follow the news?

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  79. Kary L. Krismer

    RE: Kary L. Krismer @ 85 – They even know about it, but simply are not mentioning it during the broadcasts.

    http://www.king5.com/news/local/Refinery-fire-could-boost-gas-prices-in-Washington-140047883.html

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  80. One Eyed Man

    RE: Pegasus @ 79

    First, Tim, if you feel the need to move this to the open thread as off topic, I agree, and won’t be offended.

    Second, Pegasus, you clearly miss my point. You think I defend bankers. I don’t. I just think that banksters (along with lying borrowers and corrupt mortgage brokers) are a natural by-product of american capitalism. My problem with you is you think Bankers created the financial crisis. I think that lying borrowers and loan officers are all a by-product of our system and just as much to blame as the banksters for the financial crisis. In essence Joe the Plumber (if he signed a liar loan app) is as much a part of your so called kleptocracy as any rich bankster.

    1. Despite your allegation, I’ve never said or even implied that “the rule of law need not apply in taking someone’s home.” I have said that capitalism encourages robosigning (perjury due to lack of personal knoweledge by the signing party) because its cheaper and easier and probably always existed in the foreclosure business until the foreclosure crisis brought it to light in the court system. Nor have I said that bankers didn’t commit fraud. I have said that Banker “control fraud” is very costly to prove and isn’t as easy to prove as you claim. Even your idol, William Black, acknowledges that pursuing banksters is too costly and requires too much investigation for state AG’s to be able to do it.

    2. Your claim that “At one time Washington State required proof of standing to foreclose,” is in my opinion, incorrect. The deed of trust act never required anything like that.

    3. You’ve asked the question: “Tell me why Washington State suddenly changed the trustee requirements from having to act as a fiduciary in a foreclosure to just having to act in good faith after years of bad paperwork?” The answer is that it probably didn’t. Historically in Washington, the consensus among legal authorities was that the level of duty required of the trustee to the grantor of the deed of trust was unclear, ill defined, and something less than a normal fiduciary standard. The assmuption in your question related to the duties of a trustee on a deed of trust are at odds with the generally accepted interpretation of the case law offered by the Washington State Bar. The following is a quote from the Third Edition of the Washington Real Property Desk Book, Vol. 3 Page 47-12, published in 1996 (a seven volume treatise on real property law published by the Washington State Bar).

    “The court has stated, however, that the ‘trustee’s management responsibilities under a deed of trust are less extensive than those of trustees in other fiduciary settings.’ Cox v. Helenius, 103 Wn.2d 383, 389, 693 P.2n 683 (1985). The trustee cannot undertake a course of conduct that misleads either the grantor or the beneficiary. What the court seems to be imposing with its ‘almost fiduciary’ label is a duty of fair play and evenhandedness on the trustee’s part.”

    The view of the authors of the above referenced treatise would appear to be that the addition of the “good faith” language to the Deed of Trust Act probably didn’t change the law, it merely clarified thru an addition to the statute what the level of duty was.

    4. Now for today’s sermon on being bitter about cheating theiving capitalists. As I’ve always told you, in addition to the banksters, there were several million moms and dads who were principals in the crime of loan fraud on the liar loans. The claim that “banksters” knew that the liar loans were based on fraud is the primary proof that selling MBS’s and CDO’s etc. was securities fraud by the banksters. William Black has previously stated that to be the case. And your hero, William Black, paints the borrowers as being victims, but that’s his bias as the legendary proseutor of white collar bankster crime.

    Painting the borrowers as victims is a convenient fiction for someone who makes his name by catching big fish. I disagree with Black and with you to the extent that you believe banksters are more culpable than liar loan borrowers.

    IMO the vast majority of liar loan borrowers weren’t innocent. They knew they lied on their loan applications and they knew it was wrong. The keptocracy you whine about isn’t limited to the rich and powerful. It goes to the very heart of Amerika and the mom’s and dad’s who dream of getting rich by telling a “white” lie on their loan app so they can enter the home appreciation lottery. They may have lied to get the dreamed of investment profit on a 400K home appreciation lottery ticket or perhaps just to get a house because they wanted to avoid their preceived stigma of being renters, or perhaps some more noble reason, but it doesn’t change the fact that their signature on the loan app was fraud and perjury. They knew it was false.

    The mortgage originators may well have promoted and assisted the borrowers in commiting perjury so that they could make a point or two on every additional loan. And the investment banksters probably knew and failed to disclose that their industry’s own studies showed that a large percentage of the no-doc loans were based on fraudulent apps.

    They’re all bad guys. The investment bankster may have made the most money, but the actions of the mortgage originator and the borrowers were every bit as much criminal. We don’t have enough jails, judges, juries or tax dollars to put them all away. And convicting a thousand banksters in the early 1990′s didn’t deter a new crop of banksters from doing it again in the 2000′s.

    In 2008, the government chose to focus on and treat the wounded financial system to prevent potential immediate economic melt down rather than to leave the financial system and the economy bleeding to death while they chased the perpetrators down the street. Unfortunately that’s probably part of the price of social darwinism (i.e. capitalism). A large percentage (hopefully not a majority,but a lot) of American’s will cheat when given a low risk opportunity to profit, especially if they think its a “victimless crime.” If you can come up with a good way to stop it from happening again, I’ll listen to you. But selling fair play and morality to capitalists probably means preaching to republicans about the need for more regulation and a bigger budget for regulators. I don’t think you’ll get more regulation or a bigger budget passed any time soon.

    If all you really want is revenge in the form of a pound of flesh from banksters, that probably won’t change anything related to America and its future. As I said, the thousand convictions in the 1990′s didn’t deter people 10 years later. If you want to educate people as to what happened, I applaud and support you. But if you’re just mad and want revenge (punishment) against bankers (and think they should be treated differently than the criminal borrowers and mortgage originators) with no real goal of eliminating future problems, you’re not likely to get what you want. As the Eagles said, “Don’t wade too deep in Bitter Creek.”

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  81. Kary L. Krismer

    By One Eyed Man @ 87:

    3. You’ve asked the question: “Tell me why Washington State suddenly changed the trustee requirements from having to act as a fiduciary in a foreclosure to just having to act in good faith after years of bad paperwork?” The answer is that it probably didn’t. . . .

    “The court has stated, however, that the ‘trustee’s management responsibilities under a deed of trust are less extensive than those of trustees in other fiduciary settings.’ Cox v. Helenius, 103 Wn.2d 383, 389, 693 P.2n 683 (1985). The trustee cannot undertake a course of conduct that misleads either the grantor or the beneficiary. What the court seems to be imposing with its ‘almost fiduciary’ label is a duty of fair play and evenhandedness on the trustee’s part.”

    The view of the authors of the above referenced treatise would appear to be that the addition of the “good faith” language to the Deed of Trust Act probably didn’t change the law, it merely clarified thru an addition to the statute what the level of duty was.

    Thank you for refreshing my recollection. I remembered two amendments to the statute, and erroneously recalled that the first added the fiduciary language. In fact it was a court case that raised that issue.

    The fiduciary language in the Cox case lead to two amendments of 61.24.010. The 2008 amendment added the following language:

    (3) The trustee or successor trustee shall have no fiduciary duty or fiduciary obligation to the grantor or other persons having an interest in the property subject to the deed of trust.
    (4) The trustee or successor trustee shall act impartially between the borrower, grantor, and beneficiary.

    In 2009, paragraph 4 was changed to:

    (4) The trustee or successor trustee has a duty of good faith to the borrower, beneficiary, and grantor.

    So rather than being impartial, they had to act in good faith.

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  82. Kary L. Krismer

    By One Eyed Man @ 87:

    2. Your claim that “At one time Washington State required proof of standing to foreclose,” is in my opinion, incorrect. The deed of trust act never required anything like that.

    Correct. The added language of 5810.SL (2009) can be found in red-line form here:

    http://search.leg.wa.gov/pub/textsearch/ViewRoot.asp?Action=Html&Item=3&X=224094047&p=1

    Note that there was a stronger version of the bill (5810.e) which apparently went nowhere. It would have provided:

    (i) That before the notice of sale is recorded, transmitted, or served, the trustee: (A) Has proof that the beneficiary is the actual holder of any promissory note or other obligation secured by the deed of trust; or (B) has possession of the original of any promissory note secured by the deed of trust with the proper endorsements so that the entity initiating the foreclosure sale has the authority to enforce the terms of the promissory note. In the event that an original of a promissory note is lost, a copy of any promissory note secured by the deed of trust and a notarized statement, made by the beneficiary under the penalty of perjury, that the original promissory note has been lost may be provided.
    (ii) Proof that the beneficiary is the actual holder of the promissory note or other obligation secured by the deed of trust must be made by way of an affidavit made by a person with personal knowledge of the physical location of the promissory note or other obligation.

    So what Pegasus is claiming never was the law, but it was once proposed to be law.

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  83. Kary L. Krismer

    By Pegasus @ 79:

    It is not like a MERS like entity could not be a legal and helpful system to real estate contracts. It is because of the way they ran it, completely ignoring laws, destroying documents, lying about having real documents, signing up robosigners as agents for MERS with NO discrimination, etc.

    As long as we’re addressing things Pegasus got wrong. in the Judge Overstreet opinion MERS never had possession of either note. That was for the loan servicer, and a Freddie Mac representative testified that was their policy. Other entities could have MERS hold the note, but the point is lost documents are not unique to MERS, and often have nothing to do with MERS.

    Way back when I think it was Seafirst bought out Rainier bank, they had a ton of problems trying to find documents. Mergers create such problems.

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  84. MichaelB

    How much is your time worth? If you are a techy like Tim, at least $50/hour, maybe a lot more! If you are a lawyer like Kary – well, not very much (just going by the number of post you have on Seattle Bubble, Kary)…

    What is the median commute to the median house?

    How much is it worth to be home in your median home, when the kids get home from their median school? Oh, that’s right, home schooling…

    Fact is, the median person doesn’t have time to post on the median blog. They have too much debt to pay off…

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  85. Kary L. Krismer

    By MichaelB @ 91:

    How much is your time worth? If you are a techy like Tim, at least $50/hour, maybe a lot more! If you are a lawyer like Kary – well, not very much (just going by the number of post you have on Seattle Bubble, Kary)….

    LOL. Actually, I have to deal with DOT trustees quite frequently, so understanding the rules they operate under is important. Also, I do a lot of bankruptcy work in real estate, so understanding some of the process is also important.

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  86. Pegasus

    RE: One Eyed Man @ 87 – Regarding paragraph 3

    Effective June 12, 2008, Washington Substitute Senate Bill 5378 amended Washington’s Deed of Trust Act (RCW 61.24.005 et seq.) as follows:

    SSB 5378, Section 1, amends RCW 61.24.010 to add two new subsections:
    Subsection (3) legislatively reverses Cox v. Helenius, a landmark Washington Supreme Court decision in which the court ruled that a foreclosure trustee in Washington owes limited fiduciary duties to the borrower as well as the lender. The new subsection provides that a trustee “shall have no fiduciary duty or fiduciary obligation to the grantor or other person having an interest in the property subject to the deed of trust.”
    Subsection (4) muddies the waters by imposing a new duty upon the trustee. The trustee will be required to “act impartially between the borrower, grantor and beneficiary.” There is no guidance in the amendment or in the legislative history concerning what conduct or omission might be deemed to breach this duty.

    This is a statement from David Fennell, Esq., Routh Crabtree Olsen, PS. in 2008. Ya think the trustees might understand the previous law and the changes better than you and Kary?

    Its pretty obvious the law was meant to change the requirement of being a fiduciary based on Cox v. Helenius, a landmark Washington Supreme Court decision to something with a lessor degree of liability because it specifically killed it. They further defined that role later in 5810.SL in 2009 using “The trustee or successor trustee has a duty of good faith to the borrower,beneficiary, and grantor.

    Also here is the actual statement from Cox v. Helenius in 1985 lest you two clowns try again to twist the truth:

    Because the deed of trust foreclosure process is conducted without review or confirmation by a court, the fiduciary duty imposed upon the trustee is exceedingly high.

    [4] Washington courts do not require a trustee to make sure that a grantor is protecting his or her own interest. However, a trustee of a deed of trust is a fiduciary for both the mortgagee and mortgagor and must act impartially between them. G. Osborne, G. Nelson & D. Whitman, Real Estate Finance Law § 7.21 (1979).

    The trustee is bound by his office to present the sale under every possible advantage to the debtor as well as to the creditor. He is bound to use not only good faith but also every requisite degree of diligence in conducting the sale and to attend equally to the interest of the debtor and creditor alike.

    http://scholar.google.com/scholar_case?case=15623327310247524879&hl=en&as_sdt=2&as_vis=1&oi=scholarr

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  87. Pegasus

    RE: One Eyed Man @ 87 – Never said that the borrowers never had a part in the liar loan debacle but one guy lying on a loan app is in no way comparable to an entire industry that controlled the issuance and then the fraudulent sale of that bad paper knowing all along it was going to default and then made financial bets against what they were portraying as a solid investment. You are naive if you don’t believe that the financial powers did not create the global collapse.

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  88. Kary L. Krismer

    RE: Pegasus @ 93 – Learn to read.

    Neither of us said that fiduciary wasn’t the standard or that fiduciary wasn’t a higher standard. What we discussed was how the change in law arose, correcting your false claim that it was somehow related to MERS and the paperwork issues. You wrote:

    Tell me why Washington State suddenly changed the trustee requirements from having to act as a fiduciary in a foreclosure to just having to act in good faith after years of bad paperwork? This happened AFTER it became apparent that the world of phony paperwork was already collapsing.

    I explained in post 83 why the law was changed. I explained in post 88 how the law changed. The material you quoted about impartiality explains why the law was changed a second time as set out in post 88. That has nothing at all to do with what you originally said was the reason for the change.

    Finally, if you understood how trustee’s sales worked in Washington, you might understand when trustees are likely to get sued. That’s their concern.

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  89. Pegasus

    RE: Kary L. Krismer @ 89 – Kary… you are just quoting the newer law where the requirement for proving standing was reduced to just signing an affidavit to prove standing. Amazing that after all the bad paperwork they would allow the very same perps to just sign an affidavit to prove standing. The citizens of Washington are not being protected when the laws are changed to a lessor standard especially in light of all of the phony documents. Are you saying that prior to that no one had to have standing in order to foreclose? Nonsense.

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  90. Kary L. Krismer

    RE: Pegasus @ 93 – BTW, quit trying to pretend you’re telling me something I don’t already know. I wrote about this change way back in 2008, and cited to the Cox decision.

    http://blog.seattlepi.com/realestate/2008/08/11/apparently-being-a-fiduciary-isnt-such-a-good-thing-legislature-related/

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  91. Kary L. Krismer

    By Pegasus @ 96:

    RE: Kary L. Krismer @ 89 – Kary… you are just quoting the newer law where the requirement for proving standing was reduced to just signing an affidavit to prove standing. Amazing that after all the bad paperwork they would allow the very same perps to just sign an affidavit to prove standing. The citizens of Washington are not being protected when the laws are changed to a lessor standard especially in light of all of the phony documents. Are you saying that prior to that no one had to have standing in order to foreclose? Nonsense.

    Look at the red-lined statute linked in post 89. Prior to the change there was no requirement of an affidavit. Actually currently there is no requirement of an affidavit, the statute just says that’s sufficient evidence, not that it’s required. The bill which didn’t pass, which I quoted in post 89 would have required an affidavit.

    Prior to those changes arguably a trustee’s sale could have been started by a telephone call.

    Finally, again go back and read Judge Overstreet’s decision. From memory neither involved an affidavit to start the process. Instead the trustee’s logged onto a computer system. I’d have to double check, but I believe both were started after the change we’re talking about.

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  92. Pegasus

    RE: Kary L. Krismer @ 95 – Baloney. Here is what OEM said which is completely false and you tried to pretend he was correct:

    “Tell me why Washington State suddenly changed the trustee requirements from having to act as a fiduciary in a foreclosure to just having to act in good faith after years of bad paperwork?” The answer is that it probably didn’t. Historically in Washington, the consensus among legal authorities was that the level of duty required of the trustee to the grantor of the deed of trust was unclear, ill defined, and something less than a normal fiduciary standard.

    Read the case before you open your yapper:

    Because the deed of trust foreclosure process is conducted without review or confirmation by a court, the fiduciary duty imposed upon the trustee is exceedingly high.

    [4] Washington courts do not require a trustee to make sure that a grantor is protecting his or her own interest. However, a trustee of a deed of trust is a fiduciary for both the mortgagee and mortgagor and must act impartially between them. G. Osborne, G. Nelson & D. Whitman, Real Estate Finance Law § 7.21 (1979).

    The trustee is bound by his office to present the sale under every possible advantage to the debtor as well as to the creditor. He is bound to use not only good faith but also every requisite degree of diligence in conducting the sale and to attend equally to the interest of the debtor and creditor alike.

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  93. Kary L. Krismer

    RE: Pegasus @ 99 – From my 2008 blog piece linked above:

    What’s really amazing about this change is that arguably it did nothing! While Washington courts considered the trustees fiduciaries, they did not have full fiduciary duties. In the landmark 1985 case of Cox v. Helenius, the court stated: “Washington courts do not require a trustee to make sure that a grantor is protecting his or her own interest. However, a trustee of a deed of trust is a fiduciary for both the mortgagee and mortgagor and must act impartially between them.” And: “We agree with a recent Alaska decision which emphasizes that a trustee’s management responsibilities under a deed of trust are less extensive than those of trustees in other fiduciary settings.”

    Stated a little more clearly, the Cox decision used the word “impartially” to describe the duty and the statute was first changed to use the exact same word to describe the trustee’s duties. Arguably it did nothing, and that might have lead to the second change a year later.

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