[RCCCB]

This should answer a lot of debating around here.

This great 7 minute video by some local guys explains law changes on April of 09 that stopped them from coming to market.
Kind of Enron-ish IMO.


YouTube - Las Vegas Real Estate Update-Where are all of the bank owned properties?

[coldbeer]

Who will watch all the empty houses and protect them from vandalism?

[RCCCB]

Originally Posted by coldbeer

Who will watch all the empty houses and protect them from vandalism?

The video said the banks either rent them back to the people being foreclosed on or to others.

With the new Obama math approved into law in April, the banks can say on their books that the $45k house they aren't selling is worth still $245k so the banks still come off as profitable and solvent. In truth the banks are wiped out.

You should take the 7 minutes to listen to the video. Lots more in there as well.

[checking out]

Search "uber-rich" on this thread and on the web. If they ain't buying it up then why should the middle class. The "sale" on flipping and "moving up" was a BIG LIE. The BIG MONEY ain't moving.

Hopefully the default swaps have stopped, or at least those corporations that do it are not receiving my tax money.

IMHO that vidoe was all about the accounting boondoggle that props up the failing banking industry. Loans are only as good as the jobs and wages that support repayment...don't see them jobs though and wages are pitiful based on cost of living even with a flat/recessionary trend. Hopefully the dollar will survive or you'll only loose half of what you thought you had.

[RCCCB]

Originally Posted by checking out

Search "uber-rich" on this thread and on the web. If they ain't buying it up then why should the middle class. The "sale" on flipping and "moving up" was a BIG LIE. The BIG MONEY ain't moving.

Hopefully the default swaps have stopped, or at least those corporations that do it are not receiving my tax money.

IMHO that vidoe was all about the accounting boondoggle that props up the failing banking industry. Loans are only as good as the jobs and wages that support repayment...don't see them jobs though and wages are pitiful based on cost of living even with a flat/recessionary trend. Hopefully the dollar will survive or you'll only loose half of what you thought you had.

Yes, the housing bubble caused by government Democrat manipulation of loans did F up the economy and market. But this vid wasn't about that at all. It was about two new Democrat laws to let the banks fake solvency.
The video wasn't about the rich, poor, flippers or anything like that.
It tells you there are tons and tons of bank inventory out there not being sold on the market because by new laws they can claim it is still worth much more if they don't sell it.

Take a look and listen to the video, it goes places I didn't know it would and was very informative.

[tony soprano]

Originally Posted by RCCCB

Take a look and listen to the video, it goes places I didn't know it would and was very informative.

I've commented a couple of times on mark to market accounting. The post below was made shortly before mark to market was suspended. Prior to the rule being suspended, we were caught in something of a negative feedback loop. Loan losses were creating inadequate capital ratios, so banks were dumping housing inventory as quickly as possible to raise cash reserves. Of course, that would further depress housing prices which would require banks yet again to raise more cash by dumping inventory as quickly as possible. Lather, rinse, and repeat.

//www.city-data.com/forum/7889594-post22.html

[MediocreButArrogant]

Originally Posted by tony soprano

I've commented a couple of times on mark to market accounting. The post below was made shortly before mark to market was suspended. Prior to the rule being suspended, we were caught in something of a negative feedback loop.

What you're describing is actually positive feedback - feedback which tends to amplify changes, causing instability. Negative feedback tends to attenuate changes, leading to stability.

Mark to market is a complex issue. Do you value an asset based on what you could sell it for today, or do you value it based on a discounted future revenue stream? I don't know if there is a correct answer - I've heard very smart people argue both sides. Real world example: I have some money invested in a mutual fund that writes senior loans - ultra short term secured asset-backed loans. When the credit crisis hit, and the loans the fund had written were only worth $0.60 on the dollar if they were to try to sell them, I had a massive loss on paper due to mark-to-market accounting. However, the intrinsic value of the loan should be based on the ability of the borrower to repay, and the loans were defaulting at about the historic average, so once some sanity returned to the credit markets, the value of the loans skyrocketed, as did the fund's share price. It's up 60% YTD after being down about 40% the previous year, but the roller-coaster ride is really due to accounting and not due to the fund's loan underwriting - the loans are performing about as well now as they have historically. If I was smart, I would have poured a lot more money into the fund when it was down, everyone I talked to said it was crazy how low the loans were valued and it was a huge buying opportunity. Funny thing - under normal conditions these types of investments are normally recommended to those for whom capital preservation is important.

[tony soprano]

Originally Posted by MediocreButArrogant

What you're describing is actually positive feedback - feedback which tends to amplify changes, causing instability. Negative feedback tends to attenuate changes, leading to stability.

Gah. Of course, you're right. It's been a very, very long day.

Mark to market is a complex issue. Do you value an asset based on what you could sell it for today, or do you value it based on a discounted future revenue stream? I don't know if there is a correct answer - I've heard very smart people argue both sides. Real world example: I have some money invested in a mutual fund that writes senior loans - ultra short term secured asset-backed loans. When the credit crisis hit, and the loans the fund had written were only worth $0.60 on the dollar if they were to try to sell them, I had a massive loss on paper due to mark-to-market accounting. However, the intrinsic value of the loan should be based on the ability of the borrower to repay, and the loans were defaulting at about the historic average, so once some sanity returned to the credit markets, the value of the loans skyrocketed, as did the fund's share price. It's up 60% YTD after being down about 40% the previous year, but the roller-coaster ride is really due to accounting and not due to the fund's loan underwriting - the loans are performing about as well now as they have historically. If I was smart, I would have poured a lot more money into the fund when it was down, everyone I talked to said it was crazy how low the loans were valued and it was a huge buying opportunity. Funny thing - under normal conditions these types of investments are normally recommended to those for whom capital preservation is important.

Yeah, I've heard both sides argued very well also. Ultimately, I don't think there was a whole lot of choice in at least temporarily suspending the rule. And if I were smart, I would have left the money I used to buy my Vegas place earlier this year, in the market.

[MadManofBethesda]

Originally Posted by RCCCB

Yes, the housing bubble caused by government Democrat manipulation of loans did F up the economy and market.

Yeah, because Bear Sterns, Lehman Brothers, and all the investment bankers and hedge fund managers who played with credit default swaps were mostly liberal democrats.

[Tiger Beer]

The scary part about this is that by selling it, then the banks show lost value, whereas by keeping the houses, they never show the losses.

Hmmm...informative video. "They don't have a choice" in NOT keeping them - scariest yet.

Longterm...well, sounds like the housing debacle will remain for much longer than it should.