Before you read this post, go read Mr. Mortgage’s take on the great big refinance hoax. He nailed it.
Now that rates are low, everyone with a series 7 thinks we will undergo some massive refinance boom, similar to 2002-2004. The only problem: no one is going to get approved.
Hear me out. Anyone who bought a house, in a high interest rate environment, refinanced between 2002-2004—when Greenie dropped rates to 1%. Anyone who needed to lock in low rates did so back then.
Now if you were unlucky enough to buy a house from 2005-2007, odds are you are deeply underwater. What exactly are you refinancing? Your fucking house is a worthless piece of shit.
Naturally, refi applications are going to sky rocket over the coming months. However, the only people who will make money off of this development are the appraisers. Most people have no idea how fucked they are in their Mcmansion, circa 2006. Once the appraisers are dispatched by the refi broker, people will find out, in a very egregious way.
You fuckers will get declined in a very “upside down” way. In my opinion, this will lead to a whole new round of underwater mortgage owners turning in their keys to banks. And, it will result in home values getting marked the fuck down, across the board, as the appraisers run around, delivering bad news.
Let’s not even talk about the condition of credit scores.
Bottom line: the talk of a “refinance boom” is a fucking fraud. Anyone promoting this fairy tale should be shot and burned at a stake.
With regards to the market:
It’s time to consider the fact that there is no oil in Israel. Just an idea: you may want to sell your fucking oil/gas stocks here. As a matter of fact, do it twice.
With my money, I shorted more KIM and will work diligently to build my cash position up to 60%, so that I may get drunk on New Year’s eve, with peace of mind.
NOTE: DT has a cool round up of idiot bloggers (excluded your truly) and their favorite posts for 2008.
UPDATE: With some of my cash reserves, I shorted a little more LFC @ $44.80 and VNO @ $55.90.
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What happened to all the cash on the sidelines today? Odd no?
Hopefully , I can get a cash-out refi on my get snuggie.
https://www.getsnuggie.com/flare/next
Leave it to America to push more fucking paper around.
OT…saw a flick this weekend called Slumdog Millionaire. Five Stars ***** great movie.
Worked for me. Closing tomorrow on a refi of my 30 year fixed from 6.125% to 4.75%. $450 of free money in my pocket every month. Bought in July 07, put 20% down then, still have 20% down now. It’s not all bad out there, if you don’t live off change thrown at you by The Fly.
“shot and burned on a stake”: amen
kim shopping mall in margate fl losing business publix pulled out.
Every time I read something from Mr.Mortgage I have flashbacks to the Iraq Information Minister.
Pun:
You are one of the few.
Mr. Mortgage knows his stuff. He’s been right on every call the past couple years I’ve followed him.
I don’t know many people who are “up” in their house, who bought it after 2005.
Bought in April 2007. 10yr Interest Only at 6 and 5/8ths. Put down 12%.
Approved 2 weeks ago at 5 and 3/8ths. Appraisal gal just left the house.
We’ll see how it turns out!
The problem with all of you 2007 fuckers is that there aren’t many of you, considering the credit crisis was unfolding back then and home values were dropping.
Any other 2007 assholes want to chime in?
I live in Southern California which is one of the epicenters of this mess. Most homes in my area still need a jumbo refi. Have you looked at Jumbo rates? Even if we weren’t all under water, most of us would have no rate incentive to refi.
Good news for REIT lovers:
Shares of office REIT, SLG are trading ~6% lower today following the company’s announcement of a dividend cut after the close on Friday. SLG cut their Q4 dividend to $0.375 from $0.7875 previously issued for Q3. The company cited the current capital markets environment for the dividend cut, noting the reset will help conserve approximately $95 mln in 2009. They continue, “Given the illiquidity of the market, the reset of the current dividend ensures that the Company will have additional capital to take advantage of the highly attractive investment opportunities which we believe will materialize in our core market. Until such opportunities appear, we will continue to pay down our near term debt obligations.”
I have a close friend who purchased in early 2007 and refinanced a pretty good deal at 5.5 before Christmas.
My refi story- Refied in May from a 30 year to a 15 year @5.30, no cash out, lowered payments, hardly any closing costs. Real easy, took 5 minutes with a major bank probably because of our 20% loan to value (had house since 1993 and still up 250% in value).
Just asked for a SMALL Heloc (Home Equity Line of credit) and wouldn’t move the loan to value at all (about 25%) and they wanted our blood and more and that is with FICO scores in excess of 830. Wanted the money to help our son who will be turning golf pro in about 6 months. I told the bank to kiss my ass.
Bought July/2007. 20 % down. 35 yr. @6.25. It’s located in Canada(slimebag bank free since 1867)and generates a revenue.(rental).
A lot of people buying homes over the last 12 months have been buying below appraised value. eg you buy a home for $250k thats appraised at $275k. So even with prices dropping you can still refi if say the appraisal comes in at 250k. Nobody I know is paying full price for a home today. Hence there is an opportunity to refi if you bought in the last 12 mos. People who bought in 2005 and 2006 are royally screwed. Others not so bad. If you bought in 2004 or earlier you are fine. Mr. Mortgage lives in Riverside or SAN bERNARDINO CA and since prices have dropped like 70% there he thinks everyone across the nation is screwed. He’s an ASSHAT.
BTW I have bought and sold 3 homes this year for profits ranging from 30k to 70k.
Fuck all of you 2007 home owners. Furthermore, anyone who owns a house from 1993 and did not refi in 2003 is spastically retarded.
CAP:
2004 buyers are not okay. Quit thinking about the hillbilly town you live in, where home values have held up relatively well. In the big housing markets, 2004 homes are underwater or close to it.
Prior to 2003, people are okay, I think.
Every time I hear a post like this — which is basically saying:
Fuck the Fed, I will fight their bullshit all the way… I take the other side.
People will refi. It won’t save the markets… but the Dow to 6000 crowd better be really fucking patient. Trillions of funny money is being printed monthly…
It’s going to go somewhere. Can’t just sit in the banks forever.
Even Mr. Joel is not immune:
http://weblogs.newsday.com/realestate/blog/2008/12/billy_joels_centre_island_esta_1.html
Sir Douche (what a stupid name)
Who is going to refi? The people who need it?
I don’t think so.
Will the appraisers hurt or help the industry?
2007-2008 homeowners are a very small fraction of the overall market and are not the cause of concern.
It’s the 2004-2006 (bubble years) that need help. They, Sir, will get none. Moreover, anyone who bought a house, prior to 2002 already refinanced in 2003.
Yes, very retarded. Should have cashed out and bought CROX and LEH with the $$.
Rather retire with no mortgage and then downsize, then take the $$ and bury it in a can in the yard.
Why not refi in 2003? Asleep at the boat wheel?
Fuck the fed and their bullshit money. The money is going into a black hole never to be seen again. DOW 4000.
Most of you are too stupid to understand what I am talking about here. Too bad.
Let’s switch topics.
Your take on the oil at risk in Israel and why oil prices should be going higher here?
I may buy another house but I plan to wait another year because I think rates & prices will go lower.
I’m pretty much in agreement with the tone of the posts. If you bought an overpriced house in a hot market, you are screwed.
If you bought a house in Fly-over country (pun intended), with a good down payment and you still have a job, then you may get refinanced.
It will hardly equate to a boom, but it will be nice for those of us who can manage it.
Oil is going higher because oil-rich, newly cash-poor Arab states, have given Hamas the ok to instigate Israel into heavy handed, overboard-retaliation. They would love nothing more than to spark a conflagration resulting in a crude spike.
Israel and Gaza is a non-event. Oil is a one day wonder, if that. Saudis, Kuwait,etc. want Iranian ally Hamas out. Egypt has already condemned Hamas and Jordan, Saudis, Kuwait are pretty quiet about the situation (with the exception of an occasional flag burning or two.)
Ok, how about the other side of the argument?
How many people will get declined, then walk away?
How many will find out for the first time how far their home dropped in value?
Can you say “another round of writedowns”?
Remember, the appraisers have not been dispatched like this since the bubble years. They will be officially marking down houses in size.
Kass: 20 Surprises for 2009
By Doug Kass
RealMoney Silver Contributor
12/29/2008 11:59 AM EST
Without further ado, here is my list of 20 surprises for 2009. In doing so, we start the new year with the surprising story that ended the old year, the alleged Madoff Ponzi scheme.
1. The Russian mafia and Russian oligarchs are found to be large investors with Madoff. During the next few weeks, a well-known CNBC investigative reporter documents that the Russian oligarchs, certain members of the Russian mafia and several Colombian drug cartel families have invested and laundered more than $2 billion in Madoff’s strategy through offshore master feeders and through several fund of funds. There are several unsuccessful attempts made on Madoff and/or his family’s lives. With the large Russian investments in Madoff having gone sour and in light of the subsequent acts of violence against his family, U.S./Russian relations, which already were at a low point, are threatened. Madoff’s lawyers disclose that he has cancer, and his trial is delayed indefinitely as he undergoes chemotherapy.
2. Housing stabilizes sooner than expected. President Obama, under the aegis of Larry Summers, initiates a massive and unprecedented Marshall Plan to turn the housing market around. His plan includes several unconventional measures: Among other items is a $25,000 tax credit on all home purchases as well as a large tax credit and other subsidies to the financial intermediaries that provide the mortgage loans and commitments. This, combined with a lowering in mortgage rates (and a boom in refinancing), the bankruptcy/financial restructuring of three public homebuilders (which serves to lessen new home supply) and a flip-flop in the benefits of ownership vs. the merits of renting, trigger a second-quarter 2009 improvement in national housing activity, but the rebound is uneven. While the middle market rebounds, the high-end coastal housing markets remain moribund, as they impacted adversely by the Wall Street layoffs and the carnage in the hedge fund industry.
3. The nation’s commercial real estate markets experience only a shallow pricing downturn in the first half of 2009. President Obama’s broad-ranging housing legislation incorporates tax credits and other unconventional remedies directed toward nonresidential lending and borrowing. Banks become more active in office lending (as they do in residential real estate lending), and the commercial mortgage-backed securities market never experiences anything like the weakness exhibited in the 2007 to 2008 market. Office REIT shares, similar to housing-related equities, rebound dramatically, with several doubling in the new year’s first six months.
4. The U.S. economy stabilizes sooner than expected. After a decidedly weak January-to-February period (and a negative first-quarter 2009 GDP reading, which is similar to fourth-quarter 2008’s black hole), the massive and creative stimulus instituted by the newly elected President begins to work. Banks begin to lend more aggressively, and lower interest rates coupled with aggressive policy serve to contribute to an unexpected refinancing boom. By March, personal consumption expenditures begin to rebound slowly from an abysmal holiday and post-holiday season as energy prices remain subdued, and a shallow recovery occurs far sooner than many expect. Second-quarter corporate profits growth comfortably beats the downbeat and consensus forecasts as inflation remains tame, commodity prices are subdued, productivity rebounds and labor costs are well under control.
5. The U.S. stock market rises by close to 20% in the year’s first half. Housing-related stocks (title insurance, home remodeling, mortgage servicers and REITs) exhibit outsized and market-leading gains during the January-to-June interval. Heavily shorted retail and financial stocks also advance smartly. The year’s first-half market rise of about 20% is surprisingly orderly throughout the six-month period, as volatility moves back down to pre-2008 levels, but rising domestic interest rates, still weak European economies and a halt to China’s economic growth limit the stock market’s progress in the back half of the year.
6. A second quarter “growth scare” bursts the bubble in the government bond market. The yield on the 10-year U.S. Treasury note moves steadily higher from 2.10% at year-end to over 3.50% by early fall, putting a ceiling on the first-half recovery in the U.S. stock market, which is range-bound for the remainder of the year, settling up by approximately 20% for the 12-month period ending Dec. 31, 2009. Foreign central banks, faced with worsening domestic economies, begin to shy away from U.S. Treasury auctions and continue to diversify their reserve assets. By year-end, the U.S. dollar represents less than 60% of worldwide reserve assets, down from 2008’s year-end at 62% and down from 70% only five years ago. China’s 2008 economic growth proves to be greatly exaggerated as unemployment surprisingly rises in early 2009 and the rate of growth in China’s real GDP moves towards zero by the second quarter. Unlike more developed countries, the absence of a social safety net turns China’s fiscal economic policy inward and aggressively so. Importantly, China not only is no longer a natural buyer of U.S. Treasuries but it is forced to dip into it’s piggy bank of foreign reserves, adding significant upside pressure to U.S. note and bond yields.
7. Commodities markets remain subdued. Despite an improving domestic economy, a further erosion in the Western European and Chinese economies weighs on the world’s commodities markets. Gold never reaches $1,000 an ounce and trades at $500 an ounce at some point during the year. (Gold-related shares are among 2009’s worst stock market performers.) The price of crude oil briefly rallies early in the year after a step up in the violence in the Middle East but trades in a broad $25 to $65 range for all of 2009 as President Obama successfully introduces aggressive and meaningful legislation aimed at reducing our reliance on imported oil. The price of gasoline briefly breaches $1.00 a gallon sometime in the year. The U.S. dollar outperforms most of the world’s currencies as the U.S. regains its place as an economic and political powerhouse.
8. Capital spending disappoints further. Despite an improving economy, large-scale capital spending projects continue to be delayed in favor of maintenance spending. Technology shares continue to lag badly, and Advanced Micro Devices (AMD) files bankruptcy.
9. The hedge fund and fund of funds industries do not recover in 2009. The Madoff fraud, poor hedge fund performance and renewed controversy regarding private equity marks (particularly among a number of high-profile colleges like Harvard and Yale) prove to be a short-term death knell to the alternative investments industry. As well, the gating of redemption requests disaffects high net worth, pension plan, endowment and University investors to both traditional hedge funds and to private equity (which suffers from a series of questionable and subjective marking of private equity deal pricings at several leading funds). Three of the 10 largest hedge funds close their doors as numerous hedge funds reduce their fee structures in order to retain investors. Faced with an increasingly uncertain investor base, several big hedge funds merge with like-sized competitors in a quickening hedge fund industry consolidation. By year-end, the number of hedge funds is down by well over 50%.
10. Mutual fund redemptions from 2008 reverse into inflows in 2009. The mutual fund industry does not suffer the same fate as the hedge fund industry. In fact, a renaissance of interest in mutual funds (especially of a passive/indexed kind) develops. Fidelity is the largest employer of the graduating classes (May 2009) at the Wharton and Harvard Business Schools; it goes public in late 2009 in the year’s largest IPO. Shares of T. Rowe Price (TROW) and AllianceBernstein (AB) enjoy sharp price gains in the new year. Bill Miller retires from active fund management at Legg Mason (LM) .
11. State and municipal imbalances and deficits mushroom. The municipal bond market seizes up in the face of poor fiscal management, revenue shortfalls and rising budgets at state and local levels. Municipal bond yields spike higher. A new Municipal TARP totaling $2 trillion is introduced in the year’s second half.
12. The automakers and the UAW come to an agreement over wages. Under the pressure of late first-quarter bankruptcies, the UAW agrees to bring compensation in line with non-U.S. competitors and exchanges a reduction in retiree health care benefits for equity in the major automobile manufacturers.
13. The new administration replaces SEC Commissioner Cox. Upon his inauguration, President Obama immediately replaces SEC Commissioner Christopher Cox with Yale professor Dr. Jeffrey Sonnenfeld. The new SEC commissioner recommends that the uptick rule be reinstated and undertakes a yearlong investigation/analysis into the impact of Ultra Bear ETFs on the market. Later in the year, the administration recommends that the SEC be abolished and folded into the Treasury Department. Dr. Sonnenfeld returns to Yale University.
14. Large merger of equals deals multiply. Economies of scale and mergers of equals become the M&A mantras in 2009, and niche investment banking boutiques such as Evercore (EVR) , Lazard (LAZ) and Greenhill (GHL) flourish. Goldman Sachs and Citigroup announce a merger of equals, but Goldman maintains management control of the combined entity. Morgan Stanley (MS) acquires Blackstone. Disney (DIS) purchases Carnival (CCL) . Microsoft (MSFT) acquires Yahoo! (YHOO) at $5 a share.
15. Focus shifts for several media darlings. Though continuing on CNBC, Jim “El Capitan” Cramer announces his own reality show that will air on NBC in the fall. At the time his reality show premieres, he also writes a new book, Stay Mad for Life: How to Prosper From a Buy/Hold Investment Strategy. Dr. Nouriel Roubini continues to talk depression, but the price of his speaking engagements are cut in half. He writes a new book, The New Depression: How Leverage’s Long Tail Will Result in Bread Lines. “Kudlow & Company’s” Larry Kudlow proclaims that it’s time to harvest the “mustard seeds” of growth and, in an admission of the Democrats’ growing economic successes, officially leaves the ranks of the Republican party and returns to his Democratic roots. Yale’s Dr. Robert Shiller adopts a variant and positive view on housing and the economy, joining the bullish ranks, and writes a new book, The New Financial Order: Economic Opportunity in the 21st Century.
16. The Internet becomes the tactical nuke of the digital age. The Web is invaded on many levels as governments, consumers and investors freak out. First, an act of cyberterrorism occurs that compromises the security of a major government (similar to the attacks this year emanating from the Chinese military aimed at the German Chancellery) or uses DoS against media and e-commerce sites. Second, a major data center will fail and will be far worse than the 1988 Cornell student incident that infected about 5% of the Unix boxes on the early Internet. Third, cybercrime explodes exponentially in 2008. Financial markets will be exposed to hackers using elaborate fraud schemes (such as liquidating and sweeping online brokerage accounts and shorting stocks, then employing a denial-of-service attack against the company). Fourth, Storm Trojan reappears. (Same as last year.)
17. A handful of sports franchises file bankruptcy. Three Major League Baseball teams fail in the middle of the season and seek government bailouts in order to complete the season. The Wilpon family, victimized by Madoff, sells the New York Mets to SAC’s Steve Cohen. The New York Yankees are undefeated in the 2009 season, and Madonna and A-Rod have a child together (out of wedlock).
18. The Fox Business Network closes. Racked by large losses, Rupert Murdoch abandons the Fox Business Network. CNBC rehires several prior employees and expands its programming into complete weekend coverage. Two popular CNBC commentators “go mainstream” and become regulars on NBC news programs.
19. Old, leveraged media implode. The worlds of leverage and old media collide in a massive flameout of previous leveraged deals. Univision and Clear Channel go bankrupt. The New York Times (NYT) teeters financially.
20. The Middle East’s infrastructure build-out is abruptly halted owing to “market conditions.” Lower oil prices, weakening European economies and a broad overexpansion wreak havoc with the Middle East’s markets and economies.
Oil:
Pres Obama’s new approach to fighting terrorism:
Starve them to death, one barrel at a time.
I will say it again: Kass is a fucking asshat.
He is the most bullish “bear” I have ever seen, in all of my years on Wall Street. That fucker was bullish for most of 2008. He sucks a big one.
The only thing that matters:
http://www.aksalser.com/game.htm
Fly is right in my opinion, some qualified people refinancing in some areas of the country doesn’t equal an explosion or comeback of the real estate market.
The “boom” in refi’s is just the latest spin. Anybody remember a year ago when all the headlines were proclaiming that we would see a recovery in the stock market and in real estate prices in the second half of 2008? Oops now they’re saying the second half of 2009.
Ahhh well. Being real estate rich and cash poor is overrated, lemme tell ya.
“Pres Obama’s new approach to fighting terrorism:”
Actually Fly, wouldn’t that be Pres Bush’s approach?
Actually, I don’t care who gets the credit, I just want to see all of them suffer.
Fuck the moon god loving cockroaches!
for commercial real estate, appraisers have been writing down values since the middle of the year. those fuckers have killed so many deals. a lot of CRE owners are facing the facts as we speak and the retards that bought a 5 cap Starbucks in TX, or the investors who leveraged into hospitality investments are hurting right now.
Agreed. I know a couple of appraisers, and one of them does nothing but talk about how shocked people are when he tells them what their house is worth now, versus 2004-2007.
The other one merely communicates in a series of grunts and moans when I ask him about the market.
Besides the effect on homeowners, soon to be renters, how about the effect on municipalities? That will be fun for the local governments, watching the property taxes decline.
Fly said: How many people will get declined, then walk away? How many will find out for the first time how far their home dropped in value? Can you say “another round of writedowns”?
Exactly. Also add another round of municipal or county near bankruptcies when everybody that does stay in their house figures out they should petition the county property tax assessor to reduce their official valuation in order to reduce their property taxes, thus cutting the inflow to counties and cities.
Also, soon enough, brokers will not be able to talk to appraisers. There will be no more colluding.
Boca – you’re right. These brilliant minds they bring on CNBC always say the recovery is a year out. It’s hilarious when you see old clips of CNBC commentators from a year ago talking about how glorious the recovery will be right now.
Some states like Fl. and Cal (I think) have a state Constitutional cap on yearly increases of appraised value of homestead prop. so they won’t be affected by lost revenue from decreased valuations simply because they never rose that much (appraised value). However, lost revenue for stuff like lost intangible and doc stamps on real property transactions is huge. Especially because states like Fl. were spending $$ like drunken sailors when this revenue was coming in.
FAZ is paying today too … a solid 25% gain since I bought it several days ago. If I sell it before the year end, it will add to my disgusting, perverted, sick … fucking theft of a year.
FAS holders suck ass!
I love seeing these reverse mortgage commercials on TV. Seems like there is more and more of them these days. I guess you have to be over 65 years old to do it.
“Sell your house to pay for your bills!”
Did Caddy just say Florida did not increase too much in value?
Fly, so you feel Israel / Palestine is a non event for OIL?
Ed:
Fuck you.
Regards,
Fly
Oil showing some serious strength today. Imagine where it would be if it wasn’t for israel/palestine and paki/india.
Ive always respected your opinion Fly (well..except your bullish call on Ethanol). That was a sincere question..anyway
HA HA, too funny…
USO and OIH gave up most their gains.NOV in the red.RIG is up.
Fly,
You do realize fannie and freddie and the like are going to be offering no appraisal refis in 2009. They have already floated this. Its a joke, but a desperate government will do what it has to do.
So we will be watching 300K mortgages on 150k homes being refi. Which is ludicrous for any idiot willing to do it but the government will encourage it.
Some areas, such as the ones in California lost 50% of their home value (and any/all equity in that property. Just like stocks, if you lose 50%, you have to make 100% back just to break even!
The last Cali housing bust lasted 15 years. Unfortunately, the bust today involved stupid man-made shit that magically allowed people to afford $500,000 houses. This will last for years. After commercial real estate comes industrial real estate and land development.