Inconceivable!

George W. Bush has today recommended the inconceivable. He is proposing new legislation to bail out the financially inept Americans who, when buying the home of their dreams or investment property utilizing the riskiest of finance methods, viewed the reading, understanding and questioning of contactual fine print of the most massive financial obligation they'll ever make in their lives as "meh, that's not important".


Don't show me that! Show me my new freaking house!

Well, apparently guns were put to the heads of these individuals as they signed off on "no down payment", "sub-prime", "adjustable rate and/or interest-only loans". Did they care about long-term affordability? Fuck no. They just wanted into the club, slamming down their cash on to the proverbial Las Vegas roulette table, because interest rates will go down in the future. They MUST go down in the future!
And besides, my Realtor told me "you can always refinance in the future".

This move to legislate away the collossal financial fuck-ups of these morons sends the wrong signal. To everybody.

Now it's OK to throw reason to the wind. You don't have to pay back your mortgage!

Instead of renting a single family home, I should go out there and load up on a $650,000 single family, 3 bedroom, 2 bath piece-of-shit cement box house in Orange County, sign up to a two deed of trust, adjustable-rate mortgage and make it all mine! And if interest rates go up in the future, the loan adjusts and my house payments go from $1,999.99/mo to $4500.00/mo, then fuck it! I'll just call up California Senator's Barbara Boxer or Dianne Feinstein. They and 350 million American taxpayers will surely "pick up the tab", help me keep my house, and bail me out, because I'M A FUCKING ARROGANT MORON!

Hell, why not just go to my bank, withdrawal all of my money, spend it all on lottery tickets and hookers, then put in for a tax-payer bail out?!

Meanwhile lending standards are tightened across the nation, the cost of borrowing for all sorts of loans in America goes up for everyone, and uncertainty rages in the financial and currency markets.

AND - hey, I thought I'd save the best for last, Rancid Truth readers - your federal and income tax bill goes through the freaking roof, courtesy of that financially inept neighbor just down the street!

And you thought they had such a nice flower garden!

The Senators, Congressmen and President want some sort of "pat on the back" for sticking it to the American taxpayer.



Do Americans seriously wonder why this country is going to hell in such a gaudy handbasket?

Write you senators now and implore them to stop this insanity and reject any such legislation proposed by Bush, Shumer, Shelby, Dodd or Clinton.

Look, it's not because America is without compassion. But let's agree to establish a new rule. Let compassion and bail-outs be reserved for those who really need it - the poor, the uneducated, the sick, the elderly, those that cannot defend themselves.

Ms. Pat Vreedevogd-Combs of the NAR

Proudly cheerleading Americans into Homedebtorship, Foreclosure and Taxpayer Bail-Out

It is morally wrong to bail out "housing gamblers" (a.k.a anyone who believed the words of Realtors or mortgage lenders the last 7 years) with the money of hardworking taxpayers and voters who, instead of believing the National Association of Realtors (nice commendation, Ms. Combs) , chose to live within their financial means.

I would advise readers of Rancid Truth to write the malinformed President of the United States, but he has the unfortunate impairment of being unable to read, and unable to change his mind once he fucks something up so badly and beyond all recognition. But if you voted for George W. Bush and you believe he will listen to you, then don't let me stop you.

Hell, we should try everything at this point, and that includes anyone who chose to slap a "W in 2004" bumper sticker on their SUV.

NAR: Realtor ranks to decline 4% in 2007

Now that the easy mortgage money is flowing like mud around the country, the upbeat optimism that persists in the real estate sales professional may also be starting to wane. Too many realtors running down too few qualified buyers.

The California Association of Realtors is forecasting a year-end count of 185,000 members compared with more than 199,000 last year:

Badagliacco said she knows people like to "poke fun at the Realtor in the nice car," (like Markus Arelius at Rancid Truth blog!) but she expects there to be fewer objects for pokes and jokes in coming years.

In California, where home sales continue to decline, between 110,000 and 140,000 agents are sustainable long-term so she expects bigger drops in membership in the next two years.

Due to the national downturn in the real estate industry, the National Association of Realtors predicts a 4% decline in realtor ranks in 2007.

Net Depatures from California 2000-2006: 900,000 people

Wow! 900,000 people net have left the state of California over the last 7 years?

Why so many net departures from the Golden State?

The OC Register cites housing affordability as the main culprit.

Let's face it. Everyone wants to live here and experience the euphoria of signing that dotted line on the mortgage papers leading to condo serfitude at 10 times their annual gross income.

More evidence that OC home sales starting to tank

The International Herald Tribune reports a 12 year low of home sales in 6 California counties, including Orange County.

July home sales (total volume) in these counties actually increased .6 percent, but year-on-year July 2006 to July 2007 sales fell 27.4%

Thinking about buying a home? Watch for Rotten Neighbors

Just one more key question and risk to consider when wading in the night time waters of OC real estate.

Sure, there are the basic questions to consider like: How can I afford to buy a home?, how will I manage to finance it?, can I trust real estate agents and mortgage brokers to toe the line and look after my interests?

Then there's the age-old question that never seems to get answered until it's too late:

Jeeze, what if I move in next to a rotten neighbor?

Well help is soon on the way. RottenNeighbor.com is a new website that just might help prospective homebuyers in certain communities in the United States avoid the critical error of residing next to the loud, late night jacuzzi parties, all-night Mexican party music, aspiring rap-artist, barking dogs and vehicle owners who ignore parking etiquette and other homeowner association faux pa's.

Why Orange County has serious housing issues

The house of Nostradamus, St. Remy, France

If you want to gain insight into why Orange County California is, and likely will remain to be, anti-thesis to the American dream, read this article now from the Dr. Housing Bubble Blog eloquently entitled "Nostradamus in the House".

This piece explains the current housing affordability crisis and possible future scenarios that could either exacerbate, or relieve the crisis to some extent.

The serious challenge for Orange County California today and going forward is that the cost to become a dreamy-eyed American homeowner is complete out of sync with the reality of local gross annual incomes, let alone take home pay. If one wishes to experience a textbook case of household budgetary crisis after signing a typical home mortgage, well look no further. Orange County is the right place to do your research.

Yes, indeed, there are many wealthy individuals and families living here, but we still have a median income in Orange County, which is very telling. The majority of people in residing in Orange County, the median, earn just gross $60,000 per year.

Affording a monthly mortgage payment with homes price at $600K to $700k (homedebtorship) is difficult enough with incomes failing to rise in proportion to home prices every year. Now with the restriction of lending standards and indeed, a reduction of the specially-invented-for-California "unorthodox" mortgage instruments, which were previously abundant and available to anyone that could fog a mirror, the mere idea of "homeownership", or even the "second place option" where most people like to gloat, called "homedebtorship", may be falling further and further out of reach for most residents here.

From the illegal immigrant resident to the local factory worker to the MBA college grad and local tech sales executive, the affordability question remains largely unanswered.

And Realtors Wept - Part II

As a follow-up to the previous post And Realtors Wept, the hits keep coming:

American Home Mortgage has offically declared bankruptcy today according to Bloomberg.

Where is that cushy mattress when you need it?

California Leads Nation in Foreclosures in July 2007

There's something special about being ranked No. 1 in the nation.

Not talking USC football here. (Although Rancid Truth hereby predicts a 12-0-0 season for the Trojans in 2007. Remember you heard it hear first).

No, unfortunately California earns the No. 1 distinction in another, more dismal category: home foreclosures.

California year-to-date pre-foreclosures are at 132,101.

For July, 23,662 foreclosures were filed in the state. Florida is a close second to the Golden State with 21,120 filings in the same month.

"The numbers are dismal, but we had better get used to it because the
blood-letting will likely continue for another 12-18 months," says Foreclosures.com President Alexis McGee. "It's a tough reality, but many more overextended homeowners not even in default yet won't be able to refinance because of tightened credit markets and will eventually lose their homes to foreclosure."

Scary.

So you want to destroy your own mortgage company? Just follow these simple instructions.

Morgan at the Blown Mortgage blog provides his readers a critical overview of what likely occured behind the scenes of the prolific mortgage lender meltdowns in the United States the last several months. See his recent post: How To Torpedo Your Mortgage Company in 15 Easy Steps.

And a nice healthy dose of industry-scathing sarcasm, I might add, to jump start your week!

Rising Rates + Stricter Lending Standards = Fewer Qualified Buyers

Take heart, my real estate flogging friends.

There IS still a pool of prospective homebuyers still out there.

But indeed, that watering hole of prospective home buyers is about to get a whole lot smaller.

Ah, and then finally - a valuable nugget of common sense and operational wisdown from Wells Fargo and Wachovia banks!:

"Raising rates and imposing stricter standards on some of their most creditworthy borrowers as slumping demand in the mortgage bond market chokes off funding."

"Making it tougher for the most creditworthy borrowers to get mortgages may worsen the two-year-old housing slump and threaten U.S. economic growth by reducing the number of people who can buy houses or how much they can afford to pay."

This means that fewer people in Orange County, and the state of California for that matter, will qualify for a home mortgage loan at all. Those that manage to qualify for a mortgage loan, given the inconvenient median gross income in Orange County of $75,000 per annum, will not be funded to buy homes in the $500K to $750K range. It's highly questionable whether the average Orange County resident (local renter or new arrival) will be able to fund even a $400,000 home.

This begs to question who is going to show up with an "S" on their chest and buy up the rising inventory of OC homes priced in the stratospher of $550 to $800K?

And where will these lending restrictions leave sale prices?

There's only one direction.

Down town.

And if one considers the May 2006 numbers, there were only 495,000 licensed real estate agents in California (one real estate agent for every 52 adults in the state). The self-proclaimed "competitive industry" is going to get a whole lot more competitive. We're talking stifling competition.

It's no longer who you know in that PDA roladex. It'll be who you know who has liquid money in the bank, a steady job for over 6 months, a good-to-fantastic freaking credit rating - and this other little annoyingly absent pre-requisite called "an interest in buying a home right now" during this shittiest of real estate markets ever known.

Assuming realtors find that qualified, and more importantly, informed but motivated, prospective homebuyer, how much home is he/she qualified to purchase? How does that match up with the inventory list of homes and their actual for-sale prices?

Not well, one must admit.

On the other end of the equation, OC homesellers are expecting a little something too. Not much really, just their $300,000 markup on the home sale transaction. I mean, afterall, they earned it. They deserve it. And when they bought the house from the realtor a few years ago, that realtor promised it.

The greed. The deception. And the revulsion, once the rancid truth rears it's ugly head.

Sure, you can lie some of the time. Just not all of the time. Sometimes you need to say the truth to maintain credibility and stay in business.

Orange County Realtors, just say it: "It's not a good time for me to take your money right now. It's not a good time to buy a home. It's better for you to wait."

You can say it.

They know.

It's all coming to a head.

What a wicked web have we woven!?

And Realtors wept

American Home Mortgage, one of the largest and most well-known mortgage lenders in the United States of America, just announced the layoffs of 7,000 of it's 7,750 employees. AHM has also stopped accepting mortgage loan applications following a cease and desist order from the states of New York and Connecticut as an investigation into violations of mortgage banking laws at the company goes into overdrive. More will be known as to AHM's business future following hearings August 24th to determine whether the cease and desist order will be permanent and whether AHM can even keep it's lending license going forward.

AHM CEO Michael Stauss:

"It is with great sadness that American Home has had to take this action which involves so many dedicated employees. Unfortunately, the market conditions in both the secondary mortgage market as well as the national real estate market have deteriorated to the point that we have no realistic alternative."

More evidence that the real estate market is slowly, but surely unraveling.

Let's hope the guy behind the curtain comes out with a mattress to ensure that soft landing repeatedly promised by the NAR, that group of oh so in-the-know, trusted advisors.

Jim Cramer Re: Troubled Mortgage Lenders: "You Can't Trust Any Of These Companies"

Some classic Cramer lines regarding the sub-prime fiasco and advice for stockholders in the housing market to be the "first man out" now:

"These companies are at the mercy of banks."

"They're future is out of their control."

"Why don't more people talk about this? Because it inspires tremendous panic. It's first man out lives."

Wow. This is really messed up.
I love you Cramer, but what the hell?

My response to this would be: "No freaking Shit, dude! Nice for you to show up for the funeral! Where have you been?".

It's all well and good to walk out of your house, hand over the keys to Larry at the bank, and call up your broker to dump all your housing stocks, but one should question whether it's accurate to suggest that anyone will be the first one out anymore. I mean, come on, over 90 national or well-known regional American mortgage lenders have tanked already.

More importantly, when does the music stop and who will be standing there holding the bag of flaming shit when it does? The mortgage lender? The bank? The adept stockholder?

Think again.

My friends, it will be you. And it will be me. American taxpayers will be holding the bag, ultimately. I'm afraid this time there's no sneaking out of the restaurant to force the "other guy" to pick up the tab. Some might make out OK short-term by selling off their housing stock before the rub out, but we're all going to get nailed in the end. It's inevitable. How else can I put this? 'This brutha is gonna smutha yo mutha'.

Now watch.

The Fed will not raise rates in a vain attempt to prevent additional housing market panic.

Inflation will continue to rage. Prices for goods and services in the USA are going to rise substantially.

There is a freaking war still on, with no end in sight. Gotta pay for the new US embassy, the surge, the bribery of the Iraqi army, and elected officials.

The US dollar's value will be so eroded, American buying power will continue to decline.

The US government can't keep borrowing without offering stronger backing and security.

Federal and state income taxes will have to be raised, and not by a little bit either.

Banks, mortgage lenders, stupid homedebtors and everybody else tied to the irrational exhuberance of the housing run up will expect hand outs from "that building the walks around and does shit" (Lewis Black's favorite metaphor for the American government.)

The cost of money will rise significantly as rates of interest must be adjusted higher to prevent a complete US dollar bust and prevent an inflationary tailspin.

Foreign investors will be attracted to higher rates of interest, but not to the US dollar currency.

Lending standards, qualification processes will become even more restricted. Unconventional lending instruments will be pulled from bank and mortgage lender offerings. The flow of easy credit without question and without merit will grind to a screeching halt nationwide and then worldwide.

Housing inventories will continue to rise.

Home price may even rise moderately for a time in some overvalued markets, but it will not be relevant because American take-home incomes are so far out of alignment.

Realtors can line up zombies to their Zig-Zigler, stone-cold heart's delight. It will not matter. The majority of prospective homebuyers, even if they just came out of a coma and still punch drunk from the 2002-2006 irrational exhuberance and Realtor Kool-Aid, will not be able to afford or qualify for the types of loans required to buy $700K, $600K, hell even $450K cement shitbox condos.

The whole shit will come crashing down on our heads.

Got helmet?