Painful ARM Twisting: Resets of adjustable mortgages will leave costly stretch marks

Market Watch ^ | 8/6/2006 | Chuck Jaffee

[ex-Texan]

I completely understand. Local government seeks to cash in on the housing bubble. Corruption rules. Talk to Toddboy or Stlyin about the truth if you wish. They have their heads stuck in the sand deeper than ostriches. On purpose. When real estate goes down 40% (or more) they will still be saying it is all an illusion or just a temporary glitch. Of course, they are famous naysayers on FR. Must be involved in the real estate or mortgage biz but they would never admit it. Not in a million years.

[HockeyPop]

Here's an excerpt from a So Fla article today. Homeowners are also getting slapped with skyrocketing hurricane insurance premiums. If the legislators get tough then the insurers will pull out of the state.

"State failures leave policyholders without a net"
By Kathy Bushouse
South Florida Sun-Sentinel

August 6, 2006



Florida's property insurance market is a mess, despite legislators' attempts to fix it for more than a decade.

The price of home and condominium insurance has soared to dizzying levels. Insurers have dumped longtime customers and slashed coverage for others. The state's home insurer of last resort now is the biggest property insurer in Florida.

More and more homeowners and businesses are forced to ponder whether they can afford the Sunshine State anymore.

Much of this is the Legislature's handiwork

http://www.sun-sentinel.com/news/local/southflorida/sfl-zinsurecrisis06aug06,0,7279582.story?coll=sfla-home-headlines

[ex-Texan]

Not in a doom and gloom mode today. Just a "wake up people" mode. If were in a true gloom and doom mode, I would have posted this report: Oil Price and Gold Price Linked.

But, then, most people would understand what Iran's and al Qaeda's real motive is aimed at today: To raise asset prices and commodities to outrageous levels by means of terrorism and reduce the value of the USD. If you are aware of what is really happening today, then you may have made hundreds of thousands in currency trading.

[Oorang]

I'm just north of you (Washington) so somewhat comparable markets. When the glut of springtime "for sale" signs popped up folks in my rural area were saying "$200k for a 20 acre parcel!"; "this house is listed for 800k!", etc. I kept asking "are they selling at those prices?". Everyone looked at me as if I was a dunce. The thinking is the realtor says it will sell for this (inflated) price, who cares about reality. Uh-huh.

[HockeyPop]

"But, then, most people would understand what Iran's and al Qaeda's real motive is aimed at today: To raise asset prices and commodities to outrageous levels by means of terrorism and reduce the value of the USD. If you are aware of what is really happening today, then you may have made hundreds of thousands in currency trading."

I think al Qaeda is more ideologically driven. However, Iran, Russia, China, Venezuela and others are in it to manipulate the markets and destabilize our economy even if it requires using proxies like hezbullah to do it. As for the gol-oil link, I'm not seeing it. I'm long energy and big pharma and short discretionaries...my favorite being Whole Foods Market which to me is a liberal freak show since they refused to carry and sell live lobsters under the guise of animal cruelty.

[ex-Texan]

Al Qaeda is in Iran's pocket. Russia, China, Venezuela are in the game for profits. Iran was seeking to destabilize the USD all along. They are playing the "Look! Over there!," game. The U.S. was forced to react to Saddam's WMD threat. Russia smuggled the WMD to Syria and buried some of them in Iraq and Lebanon. The entire game was aimed at causing the U.S. to expend billions in Iraq. Now there is evidence the total U.S. expenditure was $ 3.5 trillion not just the $ 350 billion that was publicized last year. Some wise people have made tons of money trading USD against the Canadian dollar in the past thirty days. "Canadian dollars?," most people just say, "Humpf!" Canada is rich in oil. But, then, why be obvious if you are Iran? Persians are experts in misdirection, double dealing, lying and finding others to fight their wars for them (E.g. Hezbollah and Hamas).

[Toddsterpatriot]

When real estate goes down 40% (or more)

Is that going to be nationwide? When will this happen?

Of course, they are famous naysayers on FR.

I see you haven't lost your sense of humor.

[Toddsterpatriot]

Now there is evidence the total U.S. expenditure was $ 3.5 trillion

You have a link to this evidence?

[grey_whiskers]

That won't be necessary. I don't live in California.

In the meantime, perhaps it would be worthwhile for me to explain to *you*:

The trend is going in the direction of more foreclosures.

While that does not prove that things are going to snowball, it might be a first step, and thus bears watching.

Cheers!

[JoeGar]

Few people remember the late 1970s. At that time, I got a 10% mortgage loan only because it was a VA loan. I had friends with conventional mortgage loans that were as high as 14%. (During Jimmah Cahtah's Presidency, the prime rate went to 22%.)

[Toddsterpatriot]

That won't be necessary. I don't live in California.

That offer was more for Ex-Texan. He likes to link to articles that make the opposite point of what he intends.

The trend is going in the direction of more foreclosures.

After years of record low levels of foreclosures, I wouldn't be surprised if levels increase.

it might be a first step,

Bravo, you haven't had the ex-Tex kool-aid.

[Mamzelle]

re: I'm going to try really hard to have sympathy for people who've over extended their credit....)))

I can feel sorry for them. I was lucky enough to be able to mature in a culture that only lent to the creditworthy. I'm in good shape, but looking around at this highly-leveraged home economy, I'm scared. And I'm mad as heck at the profligate lending practices.

By the time I qualified for credit, I was at least a grownup. That was when it was hard to get a department store credit card of any kind, and you really had to be established to get a bank credit card. Today--They seduce college kids into debt--kids who are legally of age but have no income!

And every other commercial on TV is another seduction into overspending and debt--I just saw one advertising "interest only" loans.

If i'd had all this "free money" dangled in front of me when I was young and inexperienced, I wonder if I might have fallen prey.

Banks need to return to lending only to the creditworthy. They are professionals, and should be held to professional standards.

[Jacquerie]

Here in Fla property taxes cannot increase more than 2% on an annual basis so I'm still paying close to what I was paying back in the early '90s

The max is 3% on homesteaded property only. Taxes are unrestricted on investment/nonhomestead. Our local redneck county commissioners publicly take delight taxing out of staters to death. What's left unsaid is that business and employment growth are abysmal.

[pepperdog]

Yeah, the last time around here was the early 80's, the oil bust. Lots of empty homes and mortgage companies whining about how they were going to go bust too. They knew those homes weren't worth anywhere near what they were loaning but they were greedy, as were the borrowers. Tough stuff! But what really griped me was that the taxpayers had to bail them out. Now it's happening again and what do you want to bet the old taxpayer will take the hit.

[Seamoth]

Unfortunately for him, I don't think DailyKos links are allowed on the News forums.

[Hydroshock]

RE has already gone down 20% in many parts of CA.

[HockeyPop]

I'd rather have "redneck" commissioners doing the legislation than the bonehead liberals I've got sucking the blood out of my city and my pocket. As for how "out of staters" are getting fleeced, you'll have to explain that one to me. Primary residences in Fla can be homesteaded and cannot be touched by creditors. Fla is a debtor state going back to reconstruction to protect it's citizens from carpet bagging Yankees.

[HockeyPop]

Reading your post more carefully, I understand where you're coming from and agree with your position. We've had so much Carribbean and third world immigration over the last 30 years that county and city politics is craven to the tax and spenders who are running things into the ground.

[Rokke]

"If i'd had all this "free money" dangled in front of me when I was young and inexperienced, I wonder if I might have fallen prey."

Did you smoke weed, drop acid and drink booze like Teddy Kennedy when you were younger? Did you have sex at the drop of a hat, rack up abortions like it was a sport, and build up an immunity to all but the worst sexually transmitted diseases because you were exposed so often to them? Did you drop out of high school because it was "easier" to not go to school? If you went to college, did you blow off most of your classes and make Animal House look like reality?

I'm just going to guess that the answer is no. But a lot of folks did when they were "at that age". Kind of like the same folks that make the stupid decision to reach for the "free" money that dangles all around them today. There is a reason some people succeed in this country while others spend a lifetime digging themselves out of holes. I admire those who succeed. And I really don't feel sorry for those who make decisions that result in their failure. We were all young and stupid once.

[expat_panama]

The trend is going in the direction of more foreclosures....   ...watching your home value drop and still having to pay triple the property taxes of your neighbors who've bought in the 90s...   ...Foreclosures are going up every month. Soon to reach log jam proportions.

I like getting upset as much as the next guy, but somebody's going to have to tell me just what it is that's making the world end this week.  

What we've got here are ain't-it-awful news stories coming out of California (so?) while nationwide the average homeowner has been seeing mortgage debt falling as a percentage of home value.  For me to be able to say that average Americans have "overextended their credit" I'd have to either love slandering Americans or hate studying them.

Cherry picked bad news factoids may be a staple for the DBM, but for serious business decisions we need serious data plots for the nationwide trend for foreclosures --which is down, along with other forms of consumer credit delinquencies.