Flooded Houston Homes Going For 40 Cents On The Dollar

An interesting article from Bloomberg on the distressed housing market in flooded-out Texas right now.

Bloomberg Businessweek | 10.13.2017

Bryan Schild drives through the byways of Houston looking for what could be the investment opportunity of a lifetime: homes selling for as little as 40¢ on the dollar. “We Pay Cash For Flooded Homes $$$$$$$$ Don’t fix it, sell it. Quick close,” read the signs piled in the back seat of his Ford pickup.

Schild stops by a ranch-style house where 74-year-old Paul Matlock lives with his wife, disabled from multiple sclerosis. Matlock is desperate to leave and is considering Schild’s offer of $120,000—half the home’s value three weeks earlier. A half-dozen other investors have made offers, one as low as $55,000. “The whole thing makes me feel like there’s a bunch of vultures sitting on my back fence,” Matlock says. “They’re waiting for the dead body to fall over.”

Those kinds of bets have often paid off. Buyers who snapped up co-ops and office towers when New York was near bankruptcy in the 1970s made a killing. More recently, companies including Blackstone Group LPand other marquee names bought foreclosed homes after the 2008 financial crisis and are sitting on billions in potential gains.

Bain Capital LP and billionaire Marc Benioff, co-founder of Salesforce.com Inc., are backing Beasley’s two-year-old company, Roofstock Inc. It runs a website where investors can buy and sell single-family rental properties. Beasley thinks owner-occupants may be interested in selling there, too, and that flooded neighborhoods are the Next Big Thing. “It’s much like the housing crisis, when the institutional guys came in to buy homes nobody wanted,” he says. Like other investors, Beasley and Schild view themselves as helping homeowners to move on and Houston to rebuild.

Others take a less rosy view. “What worries me is people making pretty dramatic decisions without the education to figure out what the alternatives are and without looking at the situation rationally,” says Andrea Heuson, a finance professor at the University of Miami who specializes in mortgages. Some of those considering Beasley’s strategy don’t want to be named for fear of looking like catastrophe profiteers, Beasley says.

Many homeowners would be forgiven for panicking. During hurricanes Harvey and Irma, wind and water damaged almost 1.8 million homes, causing uninsured flood losses of as much as $57 billion, according to CoreLogic Inc., a real estate data firm. Homeowners without federal flood insurance are most likely to be desperate. Those with policies don’t yet know how much they’ll get for their losses, which is key to deciding whether it makes sense to sell.

Investors don’t want to pay too much because they’re taking many risks. The storms are driving up not only financing costs but also expenses for labor and materials. Other challenges include mold, local efforts to restrict rebuilding, and rising costs for flood insurance, says Jesse Keenan, who leads the Harvard Graduate School of Design’s real estate program.

Back in Houston, Schild joins more than 1,100 real estate investors drinking beer, eating catfish, and swapping investment tales at the Redneck Country Club, a music hall. A giant bar is decorated with pictures of guns, mounted deer heads, and a chandelier made of Lone Star beer bottles.

The crowd is assembling for a monthly meeting convened by Eddie Gant, a real estate investor who specializes in “hard money lending”—offering short-term, high-interest-rate loans to house flippers and landlords. The topic is flooded houses. Standing in front of a giant American flag, Gant, 55, his head shaved and gleaming, wears a neon green shirt and black caiman-skin cowboy boots. “You wanna make some money?” he calls out to the cheering audience. “Be careful—you better buy low.”

One of Schild’s prospects is Joseph Hernandez, a disabled U.S. Army veteran married to a housekeeper. The couple are living in a hotel and saving money by eating only two meals a day. Schild has made them a painful offer. If they walk away from their two-bedroom house, worth $127,000 before Hurricane Harvey, Schild will pick up the mortgage payments, paying nothing else. Although he says he sympathizes with the Hernandezes’ plight, he thinks the offer is fair because he figures the home is now worth less than its $65,000 mortgage.

Hernandez is in a bind. He didn’t buy flood insurance because his house wasn’t in a high-risk area. He can’t afford to rebuild, and he’s been told he’s eligible for only $23,000 in federal assistance. If he turns over the deed, he’s looking at losing the entire $60,000 in equity he had before the flood. “It’s blurry, what’s coming,” he says. “We’ll probably have to sell to an investor, and that’s not good. We were forced out.”

Hernandez isn’t ready to take Schild’s deal. But Matlock, who rescued his disabled wife from chest-high water, is tempted by the investor’s $120,000 offer. Their home, now stripped to the beams, has flooded twice in two years. Schild says Matlock should be able to recover much of his loss on the house’s value through federal flood insurance. (In past storms, homeowners have complained the program lowballed them.) Before he leaves, he asks Matlock to spread the word. “Anybody looking to sell, tell them to call me,” he says. “I’ll give them a bid.”

BOTTOM LINE – Bargain-hunting investors are offering flooded homeowners a way out, but some owners may not be in a position to strike a good deal.

Samsung Electronics CEO and board member, Kwon Oh-hyun, has announced his resignation, citing (but not elaborating on) an ‘unprecedented crisis’ for the company.

Mr Kwon, 64, said that he had been thinking about resigning “for quite some time” and could “no longer put it off” after 32 years with the company – five of which he’s been CEO of Samsung Display.

“As we are confronted with unprecedented crisis inside out, I believe that time has now come for the company [to] start anew, with a new spirit and young leadership to better respond to challenges arising from the rapidly changing IT industry,” he said in a statement.

“There are no words to describe how proud I am that we built together one of the most valuable companies in the world. We have come a long way to create a company that truly changes how people live, work and communicate with each other,” Kwon’s letter continues. “But now the company needs a new leader more than ever and it is time for me to move to the next chapter of my life.”

He will remain on the board of Samsung Electronics until March 2018.

Corruption

The giant Samsung, made up of 60 interlinked ‘line organizations’ is one of South Korea’s largest family-run businesses, known as ‘chaebols.’ Two months ago, Samsung group’s heir apparent, Lee Jae-yong was convicted of bribery and corruption – giving donations of 41bn won ($36m; £29m) to non-profit foundations operated by Choi Soon-sil, a friend of South Korea’s former President Park Geun-hye, in return for political favours.

Lee was sentenced to five years in jail, however he is currently appealing his sentence.

Record profits

Meanwhile, Kwon’s departure comes as Samsung – the world’s largest smartphone manufacturer – posted record quarterly earnings, and projected second straight quarter of record profits thanks to surging chip prices, while projected operating profit has tripled in three months vs. the same time last year.

Samsung hasn’t announced a successor to Kwon, however the company has two other “co-CEOs,” BK Yoon and JK Shin. Both stepped back from daily operations in 2015 while retaining their titles.

This has got to be some sort of Truman show mass social experiment to determine how retarded Americans are.

CNN is reporting that Russian propagandists used the popular Pokémon Go game, in which players go on a real-world scavenger hunt to find and “train” Pokémon characters, to stoke racial tension by sending players to areas in which police brutality had taken place. Players were then encouraged to name their Pokémon after black victims, such as Eric Garner, who died after a NYPD officer put him in a chokehold.

To be clear, CNN is claiming that Russia tricked people into taking up a traditionally liberal cause, in alignment with BLM, to divide America through racial tension and drive voters into Donald Trump’s arms. The other logical conclusion, of course, is that said propaganda would have encouraged left-wing political activism – bringing sympathetic social justice warriors to the polls – ostensibly voting for Hillary Clinton.

CNN reports:

The campaign, titled “Don’t Shoot Us,” offers new insights into how Russian agents created a broad online ecosystem where divisive political messages were reinforced across multiple platforms, amplifying a campaign that appears to have been run from one source — the shadowy, Kremlin-linked troll farm known as the Internet Research Agency

A source familiar with the matter confirmed to CNN that the Don’t Shoot Us Facebook page was one of the 470 accounts taken down after the company determined they were linked to the IRA. CNN has separately established the links between the Facebook page and the other Don’t Shoot Us accounts.

The Don’t Shoot Us campaign — the title of which may have referenced the “Hands Up, Don’t Shoot” slogan that became popular in the wake of the shooting of Michael Brown — used these platforms to highlight incidents of alleged police brutality, with what may have been the dual goal of galvanizing African Americans to protest and encouraging other Americans to view black activism as a rising threat.

The evidence…

CNN reports that the “Don’t Shoot Us” campaign Facebook page was linked to one of 470 Facebook accounts deemed to be linked to a Russian propaganda effort. The campaign’s YouTube videos lead people to donotshoot.us, which links to a Tumbler account. In July 2016, the Tumbler account announced the Pokémon Go contest to go find areas with reported police brutality

Their evidence that “Don’t Shoot Us” is Russian? A guy named Daniel Reed, who described himself as the “Chief Editor” of DoNotShoot.us, emailed interview answers for an article to student-journalist Arpita Mitra of the website IPF (International Press Foundation) in a Word document, which Mitra forwarded to CNN. Upon analyzing the document’s metadata, CNN claims the Russian word “Название” (“name“) was found in the document’s properties. 

From that, CNN says two cybersecurity experts who reviewed the document said it was likely created on a computer or program running Russian as its primary language.

DUN DUN DUN…

The motive…

CNN can’t really figure out why the Russians would take up primarily liberal social justice causes, writing “It’s unclear what the people behind the contest hoped to accomplish, though it may have been to remind people living near places where these incidents had taken place of what had happened and to upset or anger them.”

Who participated?

Nobody, apparently.

CNN has not found any evidence that any Pokémon Go users attempted to enter the contest, or whether any of the Amazon Gift Cards that were promised were ever awarded — or, indeed, whether the people who designed the contest ever had any intention of awarding the prizes.

There you have it – Russians influenced US politics by taking up liberal social justice activism in alignment with Black Lives Matter, their endgame being to stoke racial tensions and somehow, some way, influence the election in favor of Donald Trump.

I wonder if Comrade Silverman is in on it?

Florida has just produced its smallest crop of oranges since WWII after hurricane Irma wiped out almost half of the state’s legendary orange crop with its 160 mph winds, according to the USDA

Gene McAvoy, an agriculture expert with the University of Florida said “About 70 percent of what they were projecting is lost across the board.”

The news sent OJ futures spiking, and is expected to result in higher prices for oranges and orange juice at the store.

Courtesy of ZeroHedge

The November OJ futures contract is up around 20% since the end of August, surpassing the initial spike from Irma.

CNBC reports: 

“We’ve actually taken out the highs from the hurricane rise,” said Jack Scoville, vice president for Price Futures Group in Chicago. He noted that the futures made it to about $1.60 a pound as Hurricane Irma was hitting but once the storm passed prices fell back to around $1.42 a pound.

McAvoy also said that overall citrus losses in Florida are around 70 percent statewide – and up to 90 percent in the south where the hurricane made landfall. “As you move north in the state, it goes lower,” he said.

Irma destroys much of Florida citrus crop | @SenBillNelson @marcorubio speaking in Polk county about the issue at 9am @10NewsWTSP #Irma pic.twitter.com/k0mnOjCqDQ

— Shannon Valladolid (@ShannonMarieTV) September 13, 2017

California is also a problem

Thanks to heavy rains last spring which helped end the massive drought in CA, many citrus trees lost their blooms – and many more have been weakened from years of drought.

“The California citrus crop is smaller than it’s been in the past five or six years,” said Joel Nelsen, president of the California Citrus Mutual, which represents more than 80 percent of the state’s citrus industry. “We’re attributing that to two things: the rain in the spring knocked off a lot of blossoms and … trees are still tired from the drought.” -CNBC

The good news is that while CA and FL production has been hampered, the citrus industry can import oranges and other fruits from Spain, Morocco, and other regions.

ZeroHedge is out with another report on the San Diego Hepatitis A outbreak, which on the verge of reaching “statewide epidemic status” after killing over a dozen people and infecting over 400.

The disease is transmitted through contaminated food, or touching surfaces containing infected feces before touching one’s eyes, nose, or mouth. California’s outbreak is being spread primarily person-to-person, almost exclusively within the homeless community.

To combat the outbreak, San Diego has been pressure washing sidewalks with bleach in order to sanitize the streets.

And now, the LA Times reports that the outbreak which began in March is spreading through homeless tent cities from San Diego to Sacramento.

At least 569 people have been infected and 17 have died of the virus since November in San Diego, Santa Cruz and Los Angeles counties, where local outbreaks have been declared.

Dr. Monique Foster, a medical epidemiologist with the Division of Viral Hepatitis at the U.S. Centers for Disease Control and Prevention, told reporters Thursday that California’s outbreak could linger even with the right prevention efforts.

“It’s not unusual for them to last quite some time — usually over a year, one to two years,”Foster said.

While San Diego is ground zero for the outbreak, over 80 people have been diagnosed in Santa Cruz and L.A. counties – leading many to wonder how it began.

Plastic bag ban?

With the passage of Proposition 67 in the November 2016 election, California became the first state in the nation to institute a state-wide ban of single-use bags – which went into effect the day after the election on November 9.

It stands to reason that with no more cheap, convenient, and ubiquitous plastic bags to use, homeless people are now spreading hepatitis-rich feces all over the streets.

The outbreak in San Diego also comes on the heels of a massive reduction in transitional housing for the homeless, which has increased concentrated ‘tent cities.’

According to the San Diego Union Tribune, many locals feel the Hepatitis outbreak was avoidable.

“This whole crisis is man-made,” said Michael McConnell, a La Jolla coin dealer and advocate for homeless residents. “The response is certainly much too late, based on when they knew they had a serious problem. Even today, all they’ve done is the most easy stuff. They have taken zero bold action.”

 “The reason the outbreak has spread so rapidly is because homeless are living in more concentrated areas,” said Dr. Jeffrey Norris, the St. Vincent De Paul medical director who has been managing the charity’s response to the public health threat. “They often have to defecate in their tent, or next to their tent, and that exposes their neighbors on the street. Hygiene becomes incredibly difficulty.”

San Diego was supposed to have set up hand-washing stations, however foot dragging and red tape leave the homeless community without a way to clean up after defecating. “The city has failed in the worst possible way,” McConnell said. “The city and the county have failed in the worst possible way.”

After actor Matt Damon had to answer for pressuring a New York Times reporter to drop a negative story on disgraced Hollywood Mogul Harvey Weinstein, his good buddy Ben ‘get them titties out‘ Affleck was called out by two women who claim the actor sexually molested them, while a third says he was well aware of Weinstein’s predatory behavior.

After Affleck’s virtue signaling statement that he was “saddened and angry” at Weinstein’s behavior (without actually naming him), actress Rose McGowan – featured in the bombshell NYT report on Weinstein’s inappropriate behavior – called BS on his statement…

pic.twitter.com/f5AgemRXds

— Ben Affleck (@BenAffleck) October 10, 2017

Ben allegedly didn’t “do” much to make sure it didn’t happen to Rose (again)…

@benaffleck “GODDAMNIT! I TOLD HIM TO STOP DOING THAT” you said that to my face. The press conf I was made to go to after assault. You lie.

— rose mcgowan (@rosemcgowan) October 10, 2017

And on Wednesday, actress Hilarie Burton responded to a tweet that Affleck had grabbed her breasts during an appearance on MTV’s “TRL” (Total Request Live):

For which Affleck apologized:

I acted inappropriately toward Ms. Burton and I sincerely apologize

— Ben Affleck (@BenAffleck) October 11, 2017

Only to be accused hours later of molesting another Hollywood female, makeup artist Annamarie Tendler, at a Golden Globes party three years ago.

One has to wonder if Ben is “saddened and angry” that he just got called out?

Holy flop, Batman!

Grope Allegation Against Batman Ben Affleck Creates PR Nightmare for 'Justice League' https://t.co/CsGMw7NNEl

— Google "CNN,175,Sue" (@NolteNC) October 11, 2017

Ben Affleck must step down as Batman

— Jack Posobiec ?? (@JackPosobiec) October 11, 2017

Cybersecurity firm Proofpoint has uncovered a year-old scheme to infect PornHub users with malware while they’re blowing off steam; a ‘malvertising’ ad campaign which tricks users into downloading a ‘software update’ for Chrome, Firefox and Adobe Flash which tracks users and sends information to a third party.

Newsweek reports:

The so-called malvertising campaign reportedly exposed millions of potential victims in the U.S., Canada, the U.K. and Australia but has since been shut down after PornHub and its ad network were notified of the activity.

The malvertising group behind the latest campaign, nicknamed KovCoreG by the researchers, used their ads on the porn site to redirect users to a scam site that asked them to download a browser update.

Different variations were used with Chrome, Firefox and Internet Explorer to trick the user to download the update.

Instead of downloading the update, the user inadvertently installed Kovter, a variant of malware that allows hackers to track a victim’s traffic and personal information. Most users may not have even noticed a change in their systems when the malware downloaded, according to the researchers.

Javvad Malik from of security firm AlienVault, said: “Malvertising campaigns are a favoured avenue for many attackers. In 2016, Google removed 12 million bad ads which, aside from malware, included illegal product promotion and misleading ads.”

Meanwhile, PornHub said they “acted swiftly” to remove the infected content and eliminate the risk to users who may be tricked into installing malicious updates.

“While the payload in this case is ad fraud malware, it could just as easily have been ransomware, an information stealer, or any other malware.”

In other words – instead of just tracking user habits, the PornHub exploit could have raped wallets.

Kobe Steel Group has lost 34% of its market value in two days as a serious scandal engulfs the Japanese metals company. Last weekend, Kobe announced that it had falsified data on the quality of aluminum and copper it sold, igniting a firestorm affecting the global supply chain and throwing Japan’s reputation for precision manufacturing into doubt.

The announcement is likely to affect hundreds of companies, including automakers such as Toyota, GM, and Ford, as well as aircraft manufacturers Boeing and Mitsubishi heavy industries. Roughly 19,300 tons of flat-rolled and extruded aluminum products, 19,400 units of aluminum casting and forgings, and 2,200 tons of copper products were affected.

On Wednesday, the scandal deepened, as Kobe Steel announced that iron powder products had been affected as well. Iron powder is used to cast all sorts of high-stress engine and other mechanical parts, such as camshafts, shock absorbers, and transmission parts.

Employees at four Kobe factories had altered inspection certificates from September 2016 – August 2017 in order to make it appear as if the metals had met manufacturing specifications required by customers – including requirements for safety-related tolerances such as tensile strength.

Complicated business

Now, affected industries will have to forensically determine if metal they’ve purchased has come from Kobe Steel – a daunting task, as multinationals tend to source from many suppliers and producers. If and when substandard materials are discovered, it will undoubtedly lead to massive recalls on planes, trains, automobiles, building construction materials, bridges, ski lift cables, and a variety of other applications in which failure means potential death.

Loss of honor and reputation

The New York Times writes:

“The falsification problem has become an issue that could destroy international faith in Japanese manufacturing,” said Japanese financial newspaper Nikkei on Tuesday.

Japan’s reputation for quality and precision has helped its metals industry to hold its own against China – the world’s #1 manufacturer of steel.

Kobe Credit Default Swaps (CDS) through the roof

Five-year CDS on Kobe Steel have gone up 400% in two days, reaching 248 basis points according to the Financial Times.

Kobe Steel said that “tens” of employees were responsible for the falsifications. What a disaster.

As fire rages across Northern California, killing 15 and forcing over 20,000 people to evacuate after burning at least 73,000 acres, Napa valley wine enthusiasts are bracing for a rise in wine prices from smaller producers, as well as a phenomenon referred to as “smoke taint,” which occurs when smoky particulates in wildfire-affected areas are absorbed by grape vines and berries.

Often referred to as “off-flavors,” connoisseurs sometimes describe “smoke taint” flavors as “‘smoky,’ ‘bacon,’ ‘campfire’ and ‘ashtray,’ are usually long lasting and linger on the palate even after the wine is swallowed or spit out,” according to a smoke taint primer from ETS Laboratories, which performs scientific analyses for the wine industry.

With zero containment of the active fires in Napa and at least five vineyards destroyed so far, it is impossible to gauge which remaining wineries will be most affected or how much of the 2017 crop will be affected by smoke taint. Despite the fact that much of the 2017 harvest already in, fruit left to ferment in open-air containers as well as grapes left on the vine to extract maximum flavor are at risk.

The Reno Gazette Journal reports:

“Some of these grapes are left to hang to create more sugar content, more ripeness, more voluptuousness, to create the Napa style,” said Christian O’Kuinghttons, a sommelier and cellar master in Reno, Nev., with ties to the California wine country lying about 3 1/2 hours west.

“You could have smoke taint with whatever is left to be harvested. The vines have no other choice but to breathe it in.”

While methods exist to remove the smoke taint flavoring, they “take away all the character of the wine,” O’Kuinghttons said.

Atlas Peak Fire

The main fire in Napa County is the Atlas Peak Fire, which started late Sunday night. Atlas Peak, in the foothills of the Vaca range, lies northeast of the city of Napa. The Atlas Peak appellation is known for growing varietals like cabernet sauvignon, cabernet franc, merlot, malbec and petit verdot that producers fashion into boldly flavored reds.

The Atlas Peak fire spread from the Vaca foothills to the southwest, roughly along Silverado Trail, a major Napa Valley artery, until it reached the outskirts of the city of Napa. The blaze has encompassed about 25,000 acres.

According to the Associated Press, affected wineries in the Atlas Peak Fire zone include Signorello Estate, a now-destroyed producer of reds and red blends, and William Hill Estate Winery, a producer of chardonnay and Bordeaux-style reds whose sign and landscaping were singed but whose winery survives.

PlumpJack Winery, at the edge of the zone to the north, posted to Facebook on Tuesday that “by some miracle, all four of our Napa Valley wineries were untouched by the devastating fire,” although “both PlumpJack and Odette Estate wineries are without power and inaccessible.”

The main fire in Sonoma County, the Tubbs Fire, also began late Sunday, near the city of Calistoga in Napa County, before spreading over the border to the city of Santa Rosa and surrounding areas. The fire has engulfed more than 27,000 acres.

Tubbs Fire

On the Napa side, a portion of the Calistoga appellation lies within the Tubbs Fire zone. The appellation, with vineyards as high as 1,200 feet in elevation, is known for its cabernet sauvignon, zinfandel, merlot and cabernet franc, all red varietals, and its sauvignon blanc, a white varietal.

Chateau Montelena Winery, famed for winning the white wines in the 1976 Judgment of Paris tasting, when upstart California wineries bested several vaunted French houses, lies within the Calistoga appellation.

On Monday, the winery posted to Facebook that “the winery remains out of harms way, but with fires still burning, roads closed and many of our employees evacuated,” all tours and tastings have been canceled.

On the Sonoma side, the Tubbs Fire zone includes an area tightly populated by wineries in the southern portion of the Russian River Valley to the north of Santa Rosa. According to the Associated Press, Paradise Ridge, a producer of sauvignon blanc, chardonnay and pinot noir, has been destroyed.

‘Too early to tell’

Even wineries left untouched or lightly touched by actual flames can be affected by smoke taint from surrounding fires. And some wineries will face far worse than taint: the partial or total destruction of their vineyards by wildfire.

“The only thing the winery can possibly do is treat the soil and replant,” O’Kuinghttons, the sommelier and cellar master, said. “It’s going to take five to seven years or even more to get fruit that is even comparable to the fruit you used to get. You’re looking at a seven-year drought for wine. That’s concerning.”

Economics of wine

Riley added that consumers should not assume an automatic rise in wine prices next year as a result of the wildfires.

A smaller winery affected by the fires, one that produces only a few thousand cases annually, could very well increase its prices for the 2017 vintage and several vintages beyond, Riley said.

But “if it’s a large winery, if they are financially stable and can handle (the effects of the fire) long-term, they may say, ‘We’ve got other assets, we’ve got vineyards in Chile,’ and hold their prices. There’s a lot of economics involved.”

NEW: Red Flag warning in effect for northern California Wednesday into Thursday for gusty winds and low humidity, Cal Fire reports. pic.twitter.com/AN9TfYpGhN

— NBC News (@NBCNews) October 10, 2017

After the New York Times report on sexual predator Harvey Weinstein broke, the floodgates appear to have opened – as several Hollywood stars have come forward with their stories of abuse at the hands of executives.

Actor Terry Crews went public with his own tale of abuse over Twitter in a series of tweets Tuesday afternoon, revealing that he was groped by an unnamed male Hollywood executive at an industry party last year.

Crews says he almost beat the guy down, but didn’t out of concern for negative press – tweeting “240 lbs. Black Man stomps out Hollywood Honcho.”

The unnamed exec apologized the next day, and Crews let the incident go over fear of being blacklisted.

Read Terry’s tweets below: