Friday, December 23, 2005

MerryChristmas!!!

I want to wish everybody a Merry Christmas and say 'thank you' for reading my blog! Special thanks to those who have sent e-mails, left comments, and supported the e-tailers on my blog.

I will be enjoying the time off, and not spending much time on the computer. I suggest you do the same! ;)

If you get bored, you can read some of the older posts in my archives, and check out the links I have posted on the site. There should be more than enough housing info between my blog and the links I have provided.

If you need to do any last minute shopping...try Amazon.com. I know they have some great shipping deals to get those last-minute gifts delivered on time.

I heard Santa is delivering lots of plasma TV's, luxury cars, and other high-end "must have" items this Christmas. It will be interesting to see how people handle the higher credit card minimum payments, adjusting ARM's, and higher interest rates on the debt they are racking up. I'm sure there will be more than enough FB stories in 2006 that you won't want to miss...

Thanks again for stopping by!

SoCalMtgGuy

25 Comments:

Blogger r patrick said...

SoCal-

I was wondering what sets the rate? Ok I know the federal reserve ect. I have guessed what you and others have said it has to do with what the Bank can get from investing depostits.

So if we have everyone not saving where is the money coming from?

And what keeps me from setting up "Patrick's Mortgage company" and being a protfolio lender to an underserved though reliable part of the populace and charging much less than the banks?

12/23/2005 6:23 AM  
Blogger tollhousecookies said...

gey socal
happy holidays!
im seeing more and more appraisals coming in low (several every day)
then the ae is asking for an exception (ltv issue as you might expect on c/outs,
had one 'irrate bwr that the appr. came in lower than last yrs refi. why do we hire people who come in with consistently low appr.' the brm said. !! how bout you?

let me take a quick stab for r patrick-

long term mort rates (15 and 30 yr) actually are somewhat reflected in the 20 and 30 yr treasury bonds. adj morts (2/28s etc are based on short term rates (ie 6 mth LIBOR) the mort company uses a 2 or 3 yr swap to sell your loan to investors.

money (or liquity) is driven by low rates, it gets sopped up when rates raise. think about it:a car 'costs less' at 0% vs 10% right
this caused [prices to incr. as more people can 'afford' stuff
rates go up less people buy

'your mort co' do u really want to go there?
wait a few yrs and maybe you, me and socal can set one up, now is not the time as the spread btwn the swap and lt treas. is zilch,
home prices and leveling off to downward

12/23/2005 7:26 AM  
Blogger tollhousecookies said...

patricsorry thats '10' and 30 yr bond not 20

12/23/2005 7:27 AM  
Anonymous Anonymous said...

Socal

Have a great time off. Looking forward to more great posts.

12/23/2005 7:43 AM  
Blogger ocrenter said...

socal, have a good holiday season. thanks for all the awesome posts. I think the most memorable info I got from here is the $300 billion in 2006 and $1.3 trillion in 2007 that will be due for conversion to ARM. How on earth would I be able to find those numbers if not for your blog.

I eagerly await 2006 and your return!!!

(p.s. has been rather boring posting the same numbers of inventories... looking forward to some juicy increases!!!)

12/23/2005 8:08 AM  
Blogger 41cadillac said...

WASHINGTON (AP) -- Sales of new homes plunged in November by the largest amount in nearly 12 years, providing the most dramatic evidence yet that the red hot housing market over the last five years is starting to cool down.


The Commerce Department reported Friday that new single-family homes were sold at a seasonally adjusted annual rate of 1.245 million units last month, a drop of 11.3 percent from October, when sales had surged to an all-time high.

Last month's decline was even bigger than the 8.7 percent drop-off that Wall Street analysts had been expecting. While sales of both new and existing homes are still on track to set records for a fifth straight year in 2005, analysts are forecasting sales will decline in 2006 as the housing boom quiets down

12/23/2005 8:48 AM  
Blogger craven moorehead said...

Hey, when you get back, I want to hear more of those real-world FB stories.

Can't get enough of those F'ing things. In 2006, I bet you'll have plenty of those stories to tell.

12/23/2005 10:26 AM  
Anonymous Anonymous said...

Marvellous Blog chap, many thanks been enjoying it. Have a great xmas and I look forward to more insightful stuff in the new year.
Despite the fact I can afford to buy and my wife is expecting it has given me the peace of mind in knowing that renting for a fraction of the cost is the best thing for all our futures right now.
What do you think to the argument/theory that greenspan will be unable to inflate his way out of trouble due to globalisation. (i.e. this making us more uncompetitive against chinese and indian labour costs and merely exacerbate the problem.
Thanks again and have a great christmas

12/23/2005 11:28 AM  
Blogger r patrick said...

TollHouse-

Back when I bought I remember reading an article about how devout Muslims are not supposed to pay interest, and there are Mortgage companies designed to basically "rent to own" your home so that you are within the rules.

Now I have a couple of friends that have been blue collar for years but have steady work for decades and have been priced completely out of the market.

Ideally if we get a slowdown and severe price reductions ( 100-150 K houses on LI again ) they should be able to afford the monthly REAL payements. But while they are gving their current landlord their rent they can't get ahead to get the down payment. And there is no "Bank of Dad, to have a 40K downpayment slipped into their bank account one day before the closing"

From what Socal says there will be a major retrenchment of banks, and we will go back to needing 20% down payments for buying property, which based on crashed LI prices would be about 20-30K.

I do not want to be their landlord, and I don't want to expose myself to too much risk. Finally just giving them the money is stupid on my part and insulting to them.

But what if I buy the house and charge them costs+325savings+100 for my efforts. The savings goes into CD's or something. The math being worked out to that in 5 years they have the 20K downpayment and buy it off of me.

Or I set up Patrick's mortgage corp and issue them a 15Yr mortgage at a really low interest rate. Same effect only they get to be homeowners from the beginning.

12/23/2005 11:29 AM  
Blogger foreclose_me said...

Re: Muslim banking

There was a story about a bank beginning to offer Muslim loans in the USA. The punchline is that it was run by Jews.

When you think about it, it is actually a great idea to offer Muslim loans. Why is that, you ask? Because the 'interest' is simply built in to the purchase price of the home that you are 'renting to own.' So, in effect, you've got a 100% pre-payment penalty.

Smart one, Mohammed!

http://www.businessweek.com/magazine/content/05_07/c3920015_mz003.htm#ZZZKFNFJQ4E

12/23/2005 12:56 PM  
Blogger betamax said...

Wow, the yield curve is flat today!

Merry Christmas anyway!

12/23/2005 2:09 PM  
Blogger WArenter said...

socal-
Merry Christmas. Thanks for the blog.

12/23/2005 5:11 PM  
Blogger NetNerdvana said...

So if we have everyone not saving where is the money coming from?

Ill answer this one:

The money is created electronically in the banking/credit system. Little fingers go to a keyboard.... *typey, typey, tap, tap, five, zero, zero, zero, zero, zero, zero* OOPS one too many zeros ... *Backspace*, Enter.
KABLAMMMO!!! 500,000$ more "liquidity" in the system....

Neat huh? They make the money up out of thin air, get paid interest on it and you have to get up the morning, go to work and someday, *maybe* pay it back.

what keeps me from setting up "Patrick's Mortgage company" and ...

You don't have a computer that can make money out of thin air and your freindly neighborhood bankster does!
No "savings" required.

12/23/2005 6:12 PM  
Blogger r patrick said...

Ok so the bank just keeps making loans with no regard to on-hand or deposit currency? I remember reading "Money of the Mind" about how in the 1910's various banks made loans to other banks to allow them to remain solvent.

I thought the banks "bought" via low interest rates the money from the Fed. This is the Fed rate Greenspan controls. Or they bought treasuries with their deposits and made the money to cover the interest.

And then they also lent out the money at a much higher rate for loans. Though the FDIC allowed banks on only need to have 10-15% available for withdrawal/short term at any time?

example?
Bank of Patrick

Savings accounts:
Patrick 50,000 @2%
Mom 20,000 @2%
Bob 20,000 @2%
Joe 10,000 @2%

Loans
Keith 20,000 ( down payment loan )@5%

Portfolio
10k cash
50k treasuries 4%
20K loans
20K stocks and bonds ( ~5% )

This is how banks I thought worked

-2k to the accounts
+2k from the treasuries
+1k from the loan
+1k from the stocks
-1k operating expenses

1K profit! I am sure it adds up when you have a million accounts and billions of dollars....

12/24/2005 8:25 AM  
Blogger mtnrunner2 said...

I thought it works like this:
I purchase a loan from a bank, in my case California Mortgage Mart. They fund it and resell it within a month, in this case to American Home Funding. Now I presume: AHF then packages my loan with many others, sells them as mortgage backed securities (MBS) to pension funds, foreign banks, hedge funds, etc. So the money comes from investors. Where do they get the money? China gets it from us buying their goods. Pension funds, hedge funds? I don't know where they get it, because wherever they get it MUST, by definition of the liquidity bubble, increasing its savings, and we all know that US savings is negative. So where do the US investors in MBS get their money? Perhaps most of it comes from China, Japan.

12/24/2005 2:58 PM  
Blogger 41cadillac said...

Is it not true that hedge funds full of USA mortgages are sold to lets say Japanese investors.

So now if forclosures in these bundle of mortgages increase. Then the value of the hedge fund decreses. So on and on we go.

Any comments?

12/25/2005 10:36 PM  
Blogger 41cadillac said...

Fantastic Flipper Story:

Local condo flippers may be in too deep
By Scott Van Voorhis
Thursday, December 22, 2005 - Updated: 08:52 AM EST

The Hub’s jittery condominium market faces another storm cloud: hundreds of unsold units in new condo towers that brokers and mom-and-pop investors had bought early on in hopes of flipping for quick profits.

Some have exited, as planned, with thousands in windfall profits. But others may not be so lucky amid falling sales and dropping prices in an overloaded condo market, real estate executives say.

Thousands of new condo units, in glitzy downtown towers and modest suburban projects alike, are opening up across the Boston area. And more than 10 percent of these units have been snapped up by investors of various stripes, according to Brian Rugg, who puts out an influential market report at ERA Boston Real Estate Group.

With the market sliding, a flood of condo flips could grease the market’s downward slide, executives warn.

“Putting more supply in a soft market, that obviously would create more volatility in prices on the down side,” said Thomas Meagher, head of Northeast Apartment Advisors.

One project where condo flippers can clearly be seen at work is East Boston’s newly minted Porter 156, a one-time lightbulb factory where loft-style units sell for prices ranging from the high $200,000s to well past $400,000.

Amid this rush to cash out, Rhonda Kelley, a local music publicist, counts herself among the lucky ones, flipping her condo for $439,000 shortly after Porter 156 opened this fall and pocketing more than $100,000. But she winces when she looks at the myriad of online postings from other would-be Porter 156 flippers.

“There are a huge number of flippers,” Kelley said. “If I didn’t close quickly, I would be up against 30 or 40 units in a matter of a week.”

Still, Porter 156 is far from unique, with condo speculators flocking to an array of new Boston towers and projects.

Looking to cash in, Will Montero, a top Boston real estate broker, has created his own condo flip investment pool that includes cash from Ohio doctors, San Francisco investors and overseas financiers.

Over the past three or four years, Montero and his fellow investors have snapped up as many as 40 condos in some of the city’s top new high-rises: Fort Point’s Channel Center, South Boston’s Court Square Press and various Leather District buildings. Some were buy and holds, others quick flips.

Not to mention East Boston’s Porter 156, where Montero finds himself with two units to unload.

But he has no plans to quit flipping, even with signs that the condo market’s best days may be gone.

“It’s a pretty interesting game,” Montero said. “Real estate blows away anything in the stock market for the average investor.”

12/26/2005 6:33 PM  
Blogger 41cadillac said...

You load sixteen tons, what do you get Another day older and deeper in debt Saint Peter don't you call me 'cause I can't go

12/26/2005 6:46 PM  
Blogger 41cadillac said...

WITH CAPS I AM SHOUTING! "WAKE UP UNITED STATES OF AMERICA".


Sixteen Tons -author Merle Travis, Sang by Tennesse Ernie Ford
Some people say a man is made outta mud
A poor man's made outta muscle and blood
Muscle and blood and skin and bones
A mind that's a-weak and a back that's strong....
You load sixteen tons, what do you get?
Another day older and deeper in debt
Saint Peter don't you call me 'cause I can't go
I owe my soul to the company store ...
I was born one mornin' when the sun didn't shine
I picked up my shovel and I walked to the mine
I loaded sixteen tons of number nine coal
And the straw boss said "Well, a-bless my soul" ....
You load sixteen tons, what do you get?
Another day older and deeper in debt
Saint Peter don't you call me 'cause I can't go
I owe my soul to the company store .......

12/27/2005 6:16 AM  
Anonymous Anonymous said...

on the muslim banking note.. not all the "muslim" friendly lenders are jacking up home prices and selling them back on an equal payment plan. there's other programs out there:

another popular method for muslim banking is to have joint partnerships with the bank where the borrower pays a "profit rate" on the portion that is not owned, and every month the payment goes to the rental charge and to principal over a 30 or 15 year basis, similiar to the traditional mortgage amortization.

h

12/27/2005 8:08 AM  
Blogger Rob Dawg said...

SoCalMtgGuy,
Hey! It's 8:30 on Tuesday. Shouldn't you be back writing bad paper and providing us addicts with a daily dose of FB stories?

Just kidding, keep up the good work at your own pace and enjoy your obviously well earned downtime.

12/27/2005 8:32 AM  
Blogger SoCalMtgGuy said...

Robert...

HA HA! Believe it or not, there wansn't a lot of "loan activity" the past few days! ;)

Remember, I deal with brokers. If the brokers aren't around, then there isn't a whole lot I can do.

Most brokers are closing out their pipelines right now. Some are cold calling, but they aren't liking the response they are getting. Mostly "can you call back AFTER the holidays/New Years".

It will be interesting to see what the "new year" brings. The industry seems to be banking on things "taking off again" in the spring....but you know how I feel about that.

I will get some fresh content up later today. One of the words of wisdom that was passed to me was: it is better to post less, but have good content, than it was to just make posts for the sake of "having content".

Thanks for stopping by...and keep checking back!!

SoCalMtgGuy

12/27/2005 12:29 PM  
Blogger 41cadillac said...

Good information coming. It is a hay day. I have never participated in a real hay day but they must be fun with the roasted potatoes in the ground from the open bond fire with hot sausage on the stick over the fire.

AP
Dow Ends Down 106, Nasdaq Closes Down 23
Tuesday December 27, 5:22 pm ET
By Ellen Simon, AP Business Writer
Dow Finishes Down 106 at 10,778, Nasdaq Finishes Down 23 at 2,227 As Yield Curve Inverts


NEW YORK (AP) -- Stocks tumbled Tuesday as the bond market gave signals that in the past have preceded economic slowdowns. The Dow Jones industrial average lost more than 100 points.
The yield curve, the spread between the yields of short-term and long-term bonds, inverted for the first time in five years. That means short-term interest rates were higher than long-term interest rates. Investors have been watching the yield curve closely because, in the past, inverted yield curves have preceded recessions.

12/27/2005 3:32 PM  
Anonymous Anonymous said...

Congrats! 10-yr yield falls down to 4.34%, right before the Spring buying season! SWEEEEEEET! Long live the housing market.

12/27/2005 4:56 PM  
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+2349030153850

12/09/2016 2:28 AM  

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