Mid-Week Open Thread (2009-07-08)

Here is your open thread for the mid-week on July 8th, 2009. 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!

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About 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. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

25 comments:

  1. 1
  2. 2
    Kary L. Krismer says:

    That’s a shock! ;-)

  3. 3
    Flying Ape says:

    10 year treasuries had an amazing auction today. Looks like investors are already taking a position on how bad Q2 earnings could be. If earnings are worst then what investors expect this “rally” or anyone calling a bottom to this recession will look foolish. With huge demand for long term treasuries, at least we should expect mortgage rates to remain low or come down. I wonder if anyone buying a house during this “spring bounce” jumped the gun, thinking they would be priced out of an affordable mortgage. How ironic if the “Buy now or be priced out FOREVER!” mantra lives to this day.

  4. 4
    Kary L. Krismer says:

    Just about three weeks ago some people were thinking that interest rates were going to skyrocket, because they’d gone up a bit rather quickly. Panic! Panic!

  5. 5
    Sniglet says:

    Just about three weeks ago some people were thinking that interest rates were going to skyrocket

    That wouldn’t have been me. I think I’ve been pretty consistent with saying that interest rates might actually go lower as deflation grips the economy harder late this year or in 2010.

  6. 6
    Kary L. Krismer says:

    I purposefully didn’t limit that to “some people here” because it was broader than that. There was a lot of panic that rates would shoot up. But no, I didn’t mean you.

  7. 7
    Sniglet says:

    How much of this mortgage fraud is new (i.e. occuring in the last year) and how much is just a matter of bubble malfeasance coming to light?

    I find it hard to believe there are very many struggling home-owners who actually have equity that crooks can cheat them out of. Even the scam with short-sales seems like a difficult one to pull off considering how hard it is to get lenders to approve short sales these days (and they almost never approve low-ball offers).

  8. 8
    David Losh says:

    RE: Sniglet @ 7

    You need to look at the over all bank situation, Banks are claiming they are being defrauded.

    Some loan originators could manipulate value to get a bigger cash out refinance. If you want your money out of a property you can refinance it and walk away. At a selling cost of 10% and a Loan to Value of 80% there is very little equity at risk by simply refinancing and letting the property go into foreclosure.

    Banks are trying to get some recourse for the losses they will be piling up when they sell properties for less than what is owed. Claiming they have been defrauded seems pretty standard.

    What I’m waiting for is the investors who bought Notes or Mortgage Backed Securities to take the Banks, and Lenders to court. I find it very hard to believe some one making loans for a living just gave away money and expect they have no liability.

    I don’t understand why Wells Fargo isn’t in court answering why they have such huge amounts of foreclosures or non performing loans. Bank of America and Chase are two others that I have an absolute contempt for. None of these big banks are doing anything to help themselves or the consumers and they just keep doing business as usual.

  9. 9
    Kary L. Krismer says:

    RE: Sniglet @ 7 – It’s not necessarily equity scamming. It’s using strawmen to buy places at inflated prices. Typically it’s a group of professionals working together, such that it’s a common agent, escrow, appraiser, loan officer on multiple transactions, perhaps with different strawmen on each transaction. They’ll buy a place, then get it to appraise for 200k more than it’s worth, and pocket the money.

  10. 10
    ray pepper says:

    In re to banks. After sifting through the financials week after week and watching Banner Bank (Banr) strike a triple bottom I’m ALL IN **BANR at 3.00. 5k long. Its priced for absolute failure. For those trading the markets dig deep into BANR:

    http://finance.yahoo.com/q?d=t&s=BANR

    At 3.00 and with STSA trading at 2.40..I think its the best bet in town……tgt price 6.00 by EOS.

  11. 11
    S-Crow says:

    Ray, explain what you mean by priced for failure and STSA and EOS for those who don’t trade? If someone buys these stocks and local banks are taken over by FDIC then what will happen to the stock people own in these companies?

  12. 12

    I’ll translate: STSA is Sterling Financial, another local bank. EOS is Eaton Vance, a company that employs financial analysts, and makes predictions.
    Owning stocks is a big risk. When a stock is “priced for failure”, the expectations for that company’s successful turnaround are very low, so if they do successfully turn around, the reward will be great.
    Like some home listings of beat up dumps say ” Not for the feint of heart.”

  13. 13
    ray pepper says:

    Close Ira…STSA is Sterling. However, EOS is a term for “end of summer”. S-Crow I have been a trader for 20+ years. Stocks are tremendous investments as long as you never fall in love with them and realize you never own a stock. They are an investment tool. Just like you never own your home. We are all renters. Just semantics.

    Anyway Yes, BANR and STSA could go to 0 with FDIC taking over. Even more so is the unyielding write offs that WILL occur here in the PNW on real estate. Will they have enough cash to sustain? Can get they get more capital? Remember, I’m from Nevada and I have lived through and seen the 75% declines. Entry level homes I see for 260k NOW in Kent/Auburn make me laugh for they are now worth less then 80k-100k in the Reno area.

    However, based on other banks with similar mkt caps and the recent decline in stock value from 6.50 to 3.00 today I see a bounce that will be % wise very high. I hedge all my long positions with SRS and currently spend alot of time praying for TKTM to return to 3.00. A CASH COW of epic amounts.

    At these levels there is a tremendous amount of money to be made both long and short in the market and its been a traders dream for the last 2 years. Never fight the FED and Mtg Cramdown is inevitable. The Banks will bounce heavily in my opinion. For Banr to go from 3.00-4.00 is a huge % move and far more realistic then a home bought at auction appreciating 35%.

    Banr just maybe the GEM to be in.

  14. 14
    S-Crow says:

    Ray, what makes Banner Bank a better stock than Frontier Bank which is trading around 75-80 cents today –new low’s. They both are heavily invested in local & regional building. What happens to the stock if these banks are taken over by FDIC? Who would bid take over their operations—Chase? Bank of Edmonds? Peoples Bank? Bank of Everett? US Bankcorp?

  15. 15
    bullelk7 says:

    RE: S-Crow @ 14

    If FDIC takes over….stock is worthless. They are last in line for any payout, and when liabilities exceed assets, nothing left.

  16. 16
    Sniglet says:

    Typically it’s a group of professionals working together, such that it’s a common agent, escrow, appraiser, loan officer on multiple transactions, perhaps with different strawmen on each transaction. They’ll buy a place, then get it to appraise for 200k more than it’s worth, and pocket the money.

    Has this kind of scam still been taking place over the last year, or is this just the template for malfeasance during the bubble years? I just find it hard to believe that there is a willingness to turn a blind eye towards shady activities anymore. During the bubble lenders and investors really weren’t all that dilligent in enforcing probity since rising housing prices made everything work out anyway.

  17. 17
    ray pepper says:

    Hmm. I wrote 2 responses and they were deleted. I have not tracked FTBK but after researching it and the charts I jumped in for 15k at .755. I like it. It fit my parameters for a POP. I set my stop loss orders and I actually DO like it Better then BANR.

    I may owe you one my friend! At least another shirt!

    BTW..I hit the BIG TIME TODAY!

    http://www.raincityguide.com/

  18. 18
    The Tim says:

    By ray pepper @ 17:

    Hmm. I wrote 2 responses and they were deleted.

    Sorry Ray our hosting provider has been performing really poorly lately with all kinds of database server errors and so forth. I just signed up for a new host last night and will be migrating the site this weekend, after which reliability (and hopefully speed) should improve dramatically.

  19. 19
    Softwarengineer says:

    INFLATION OR DEFLATION AHEAD?

    Here’s a good article in part:

    “…All in all, deflation is ugly and not conducive to attractive investment returns. It is also not what governments want and need right now. With a mountain of debt hitting the streets of Europe and America over the next few years, as the cost of fixing the credit and banking crisis is financed, one can make a strong case for rising inflation actually being the favoured outcome if you look at it from the government’s point of view. The problem, as the Japanese can attest to, is that deflation is excruciatingly difficult to get rid of, once it has become entrenched. I am in no doubt which of the two evils I would prefer, but we may not have the luxury of choosing our own destiny…”

    The rest of the URL:

    http://www.marketoracle.biz/Article11844.html

    Personally, I’ve always betted on wage degradation reducing prices in general. But, there’s unknowns too, like the psychology of pulling out of safe haven government bonds and into potential inflation assets before the price spikes; i.e., the recent sucker’s bear rally in stocks, gold and oil….

    When oil was spiking, even this blog site had many pointing at inflation, even RE: Seattle home prices.

    The bottom line, we’d like to give every home buyer 3% fixed morgage loans, albeit asking investors to save at
    -1% to make this pipedream true? Neither are going to happen IMO, interest rates for savers aren’t going any lower and either are mortgage loans. We’ve hit bottom.

  20. 20
    Sniglet says:

    The bottom line, we’d like to give every home buyer 3% fixed morgage loans

    Actually, a low initial purchase price that is very affordable, with a relatively high interest rate on the loan, is preferable to having high prices and low rates.

  21. 21
    Softwarengineer says:

    RE: Sniglet @ 20

    YES SNIGLET

    Getting a recent like 5% fixed rate $400K home instead for 10% fixed and paying $200K instead [with the same mortgage payment] is far better; and much easier to pay off the principle ASAP, assuming you can keep your wages from collapsing.

    But I’m talking a foreign language now, being a good money planner in America…LOL

  22. 22
    Kary L. Krismer says:

    RE: Sniglet @ 16 – I don’t know if it’s still going on or not. I’d have to be reviewing Notices of Trustee’s sale to see, and I haven’t done that for quite a while.

  23. 23
    Tyler says:

    Does anyone know of a company that provides services of installing/removing of the standard real estate posts where the “For Sale” signs are hung? I am looking for a point of contact that could possibly provide a large coverage area, or a network of them that cover the U.S. I am assuming that the realtors don’t all dig the holes themselves and lug around the 4×4 posts in their brand new BMWs (well, maybe 2007 era bubble beamers).

    Thanks in advance

    (I would have posted this in the forum but, my approval has been lingering……)

  24. 24
    Kary L. Krismer says:

    Sign Pros is probably the largest local one.

    http://signpros.net/

    Real Estate Delivery is another.

    http://realestatedeliveryservice.com/index.php?main_page=product_info&cPath=6&products_id=30

    There’s at least one other, but I can’t think what it’s called.

    And BTW, I don’t even haul them around in my 20 year old pickup.

  25. 25
    Tyler says:

    RE: Kary L. Krismer @ 24

    Thanks, Kary. Very much appreciated.

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