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Old 11-01-2007, 10:18 AM
 
609 posts, read 1,894,230 times
Reputation: 420

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This cant be good.

Foreclosure Filings Soar in 3Q: Financial News - Yahoo! Finance (broken link)

California, it up 36% from last quarter and up more than 100% from last year.
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Old 11-01-2007, 10:30 AM
 
Location: Las Flores, Orange County, CA
26,346 posts, read 82,993,631 times
Reputation: 17515
I still don't understand how all these mortgage companies (and this includes the big boys like Countrywide) didn't see this coming. They probably employ hundreds of PhD economists and statisticians. It is more than joe homeowner getting burned right? Isn't the Countrywide CEO making news about his own big losses? How could these mortgage companies not realize that many, many people will not be able to continue to make their payments once the ARMs reset? There have always been ARMs and I would imagine there was a rational for offering them. I don't get it.

Any experts have a simple explanation for a non-finance person?
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Old 11-01-2007, 10:59 AM
 
8,273 posts, read 26,331,727 times
Reputation: 4407
Quote:
Originally Posted by Charles View Post
I still don't understand how all these mortgage companies (and this includes the big boys like Countrywide) didn't see this coming. They probably employ hundreds of PhD economists and statisticians. It is more than joe homeowner getting burned right? Isn't the Countrywide CEO making news about his own big losses? How could these mortgage companies not realize that many, many people will not be able to continue to make their payments once the ARMs reset? There have always been ARMs and I would imagine there was a rational for offering them. I don't get it.

Any experts have a simple explanation for a non-finance person?
They saw it coming. They made their money. Now they take their losses. This is about business, not protecting joe six-pack.
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Old 11-01-2007, 11:05 AM
 
56 posts, read 247,107 times
Reputation: 31
Its going to get worse,alot worse and I would not be surprised to see house prices fall another 50%. Right now banks which own the foreclosed houses are trying to sell at unreasonable prices soon they will realize they cant sell at these prices and will HAVE to lower which makes the others worth less (comps) I dont think it will stop until the year 2000 prices have been met. Also another problem in the mix is they now want 10-20% down, who has $30,000 or more laying around and anyone who does have it is smart enough to not buy right now. Low interest rates will not help very much because of the downpayment they now demand from you. Just my 2 cents
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Old 11-01-2007, 11:27 AM
 
Location: FULCI LIVES!!!(but not in Indiana)
413 posts, read 1,703,168 times
Reputation: 198
Does this mean someday we will be able to actually buy a little house in L.A.??? I'm dumb at all that mortgage arm talk, it's all greek to me. Put it in 1st grade terms for me, please. Will L.A. homes ever drop down to 200K?
Oh... I just noticed someone said $30,000. down? Ok, that puts me back into the rent for life catagory
Wait a minute, wait! Let me check between the seats in my car...THERES that 30 grand, I knew I put it somewhere!
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Old 11-01-2007, 11:54 AM
 
56 posts, read 247,107 times
Reputation: 31
Jake all i can say is dont get a ARM. It might get you in a house but most likley wont keep you in a house. Study up on it and learn it. Talk to others about it. I enjoy watching what is going on. Its not fun to see others suffer but i am learning from the mistakes made. I am renting now for the first time since 1996. I cashed out and am waiting for the bottom. There a ton of blogs about it go to my homepage it might interest you and then again it might not. good luck with things
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Old 11-01-2007, 11:56 AM
 
609 posts, read 1,894,230 times
Reputation: 420
Quote:
Originally Posted by Jakehorror View Post
Does this mean someday we will be able to actually buy a little house in L.A.??? I'm dumb at all that mortgage arm talk, it's all greek to me. Put it in 1st grade terms for me, please. Will L.A. homes ever drop down to 200K?
Oh... I just noticed someone said $30,000. down? Ok, that puts me back into the rent for life catagory
Wait a minute, wait! Let me check between the seats in my car...THERES that 30 grand, I knew I put it somewhere!
The poster should have said 20% and not 30k. If you want to buy a 600k home, you need 20% of that as downpayment. Some folks may have 30k lying around, but how many really have 120k lying around???

Last edited by tigerclaws; 11-01-2007 at 11:57 AM.. Reason: misspelt
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Old 11-01-2007, 12:00 PM
 
609 posts, read 1,894,230 times
Reputation: 420
Quote:
Originally Posted by Charles View Post
I still don't understand how all these mortgage companies (and this includes the big boys like Countrywide) didn't see this coming. They probably employ hundreds of PhD economists and statisticians. It is more than joe homeowner getting burned right? Isn't the Countrywide CEO making news about his own big losses? How could these mortgage companies not realize that many, many people will not be able to continue to make their payments once the ARMs reset? There have always been ARMs and I would imagine there was a rational for offering them. I don't get it.

Any experts have a simple explanation for a non-finance person?
The CEO's bonuses are tied to the amount of sales they generate. During good time, they try to maximize the sales numbers (by taking inappropriate risks) and take their payoff. Assuming the good times last 3-4 years, they have really made a killing. Once reality catches on, the worst case scenario is that they are fired and get a severence package. Look at Merrill Lynch CEO who got $200Million for getting fired???? !!!!
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Old 11-01-2007, 12:28 PM
 
Location: FULCI LIVES!!!(but not in Indiana)
413 posts, read 1,703,168 times
Reputation: 198
I thought the entertainment industry was cut-throat, real estate looks worse. 200 million the get fired?!?! That beats the cardboard box a week paid vacation.
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Old 11-01-2007, 12:33 PM
 
Location: Las Flores, Orange County, CA
26,346 posts, read 82,993,631 times
Reputation: 17515
Quote:
Originally Posted by Sassberto View Post
They saw it coming. They made their money. Now they take their losses. This is about business, not protecting joe six-pack.

Taking losses isn't normally a good business strategy.

I realize it isn't about protecting joe homeowner. But isn't it hurting the mortgage companies too? Doesn't selling these mortgages that are resulting in mass foreclosures hurting the bottom line? Not sure how the graphic below will live but Countrywide was in the mid 40s a year ago, now it is about one third of that. Did selling those ARMs affect CFC's stock price? Where those good business decisions?

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