California's Discount Foreclosure Sales Point to Housing Bottom

michaelblomquist at 22:06 2008-07-31 said:

More hopeful thinking.

http://www.michaelblomquist.com/images/DataquickNODQ12008.jpg This graph and Option ARMs indicate a delayed bottom. If we are at the beginning of the end; they forgot to mention that it is a triple header.

Loss severity for Option ARMs will be ridiculous. We are not even in a recession yet. Most likely China and others are keeping conditions relatively rosy through the Olympics and election, then...It's a whole new game.

I know of a sale scheduled to close in a few days. WAMU takes the following hit 1st ($675k) & 2nd ($98k) Past taxes $9,000 sales price of $560k. That is over $235k (closing costs) on one deal and they did NOT require a promissory note for the deficiency. I have seen WAMU and others take recent hits in excess of $1.2 million on 1 borrower.

Many of these borrowers all had new cars, flat screens and prior tropical vacations. There is no way they are going to be able to support the economy and their lifestyles without the equity lines.

Very few of the reporters or our government officials consider prior peak foreclosure periods. Obviously, draining inventories is important, but we have already seen distortions to these numbers. There is little meaningful discussions about the impacts to our economy and job markets; just more hope.

Each and every prior foreclosure peak had to do with either high interest rates or high unemployment. This current foreclosure crisis is amidst the backdrop of historically low unemployment, low interest rates and low inflation; especially in the BIGGEST bubble markets of CA & FLA.

Previously we had economic events to help pull us out of other recessions and foreclosure peaks. Computers in the 80s & internet in the 90s.

http://michaelblomquist.com/images/Shiller1890.jpg There maybe a few we could keep, but newbees can't be any worse.

http://www.firecongress.org/ [/img] Permalink

ddtuttle at 04:35 2008-08-01 said:

While I might consider having Bill manage my money, I don't think he's credible on this subject. I have the distinct feeling he is behind the structure of the Phony and Fraudie bailout. Specifically, they SHOULD have gone in to the conservatorship in their charters. But that would have meant shareholders, bond holders and MBS holders all taking a haircut mandated by the conservator. PIMCO holds so much of that stuff that I believe he lobbied to keep the entities whole. It was never about China getting a little less on their money. This bailout will be massively inflationary, so Bill will still look like a good manager on a dollar for dollar basis. But were all going to loose massive amounts of net worth to inflation on this debacle. I'm sure he feels obligated to support Paulson and Bernanke by talking up the whole situation. He's just talking his book. Permalink

truehollywood at 05:21 2008-08-01 said:

ddtuttle

I agree with you on this. I think it doesn't hurt that he has Greenspan on the payroll. I still think foreign investors are pushing too. Permalink