Comments on: Death by Mortgage http://thurston.halfcat.org/blog/2006/09/01/death-by-mortgage/ We are the people your IT department warned you about Thu, 9 Sep 2010 09:44:56 +0000 http://wordpress.org/?v=2.0.5 by: Chandler Howell http://thurston.halfcat.org/blog/2006/09/01/death-by-mortgage/#comment-26819 Wed, 20 Sep 2006 13:07:52 +0000 http://thurston.halfcat.org/blog/2006/09/01/death-by-mortgage/#comment-26819 Stuart, You're the exception to the rule. Hopefully, the rule won't drag you down with it. While the stance that you can refinance would be true in a rising price scenario, prices are no longer rising in most markets due to excessive inventories. As a result, people <strong>can't</strong> refinance their mortgages due to being underwater on the note. Also, if that were truly the case, we would not see foreclosure rates at record levels, homebuilder confidence collapsing, mortgate application rates collapsing, and the market capitalization of homebuilder stocks trading below book value. Check out <a href="http://calculatedrisk.blogspot.com" rel="nofollow">Calculated Risk</a> for hard data. Anecdotally, I can say ther here in downtown Chicago, prices are already falling fast and yet the building goes on. A quick browse through realtor.com shows huge variance in asking prices for comparable properties--not a sign of a healthy market. I've seen the same "for sale" on properties in my neighborhood for months, the only change being new ones added. Oh, yeah, at a 47% accuracy rate (as of earlier this month), Jim Cramer <a href="http://www.cxoadvisory.com/gurus/Cramer/" rel="nofollow">underperforms a flipped coin</a>. And that's with a huge audience of people responding to his tips and creating favorable market movement. Stuart,

You’re the exception to the rule. Hopefully, the rule won’t drag you down with it.

While the stance that you can refinance would be true in a rising price scenario, prices are no longer rising in most markets due to excessive inventories. As a result, people can’t refinance their mortgages due to being underwater on the note.

Also, if that were truly the case, we would not see foreclosure rates at record levels, homebuilder confidence collapsing, mortgate application rates collapsing, and the market capitalization of homebuilder stocks trading below book value. Check out Calculated Risk for hard data.

Anecdotally, I can say ther here in downtown Chicago, prices are already falling fast and yet the building goes on. A quick browse through realtor.com shows huge variance in asking prices for comparable properties–not a sign of a healthy market. I’ve seen the same “for sale” on properties in my neighborhood for months, the only change being new ones added.

Oh, yeah, at a 47% accuracy rate (as of earlier this month), Jim Cramer underperforms a flipped coin. And that’s with a huge audience of people responding to his tips and creating favorable market movement.

]]> by: Stuart Berman http://thurston.halfcat.org/blog/2006/09/01/death-by-mortgage/#comment-26770 Wed, 20 Sep 2006 02:53:30 +0000 http://thurston.halfcat.org/blog/2006/09/01/death-by-mortgage/#comment-26770 An alternate view is that there is nothing wrong with ARMs and that a crisis is not forthcoming. People with ARMs (like myself) wanted to get the best rate and are prepared to accept fluctating market conditions (which our pay is indirectly linked to). Jim Cramer (of Mad Money fame) claims that we will just refinance ARMs at the current (low) rate. No disaster. Stu An alternate view is that there is nothing wrong with ARMs and that a crisis is not forthcoming. People with ARMs (like myself) wanted to get the best rate and are prepared to accept fluctating market conditions (which our pay is indirectly linked to).

Jim Cramer (of Mad Money fame) claims that we will just refinance ARMs at the current (low) rate. No disaster.

Stu

]]> by: Houston B. http://thurston.halfcat.org/blog/2006/09/01/death-by-mortgage/#comment-25215 Wed, 06 Sep 2006 02:22:24 +0000 http://thurston.halfcat.org/blog/2006/09/01/death-by-mortgage/#comment-25215 So that's the reason for leaving the burbs. it sounds like you got out just in time. I must admit I have wacched the articles on the bursting housing bubble with almost a perverse fascination over the last year, especially after our experience with the oil crash of the 80's and 90's. For that reason I am sitting tight where I am (in a tight house, i.e. small) for the time being. Housing prices in Houston are still fairly hot, in contrast to the coastal markets, and are still rising. It is interesting that you are currently renting from one of the very f'd borrowers that the article describes. You should have mentioned that as a footnote to your article, and the risk that you are taking by being the renter on the other side of an upside-down loan situation. B. So that’s the reason for leaving the burbs. it sounds like you got out just in time. I must admit I have wacched the articles on the bursting housing bubble with almost a perverse fascination over the last year, especially after our experience with the oil crash of the 80’s and 90’s. For that reason I am sitting tight where I am (in a tight house, i.e. small) for the time being. Housing prices in Houston are still fairly hot, in contrast to the coastal markets, and are still rising.

It is interesting that you are currently renting from one of the very f’d borrowers that the article describes. You should have mentioned that as a footnote to your article, and the risk that you are taking by being the renter on the other side of an upside-down loan situation.

B.

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