Free Houses for Everyone!! Yippeee!!

On a holiday eve, the Treasury announces that they will back Fannie & Freddie to unlimited losses. Yes, you read that right...they will not cap how far or how much they'll back bad mortgages, essentially to infinity. This has caused investors and speculation to scramble about what this means...

One potential answer? Free mortgages!! That's right, big loan forgiveness (similar to how student loans can be forgiven) appear to be a-coming. May wanna start buying some homes if you are the gambling type.

“Given this outlook, we believe that the main driver of this significant change is the flexibility it gives the government to take more aggressive action to support the housing market, including potentially going down the road of allowing some form of principal writedown,

American Dream?

The American dream....buy a big house, live in it for a while, then default on the payments and go rent a similar house for cheaper......

Risky Business: Betting on a home's value

There are some sure bets that are prudent to take, such as:
1) Tiger Woods kicking your ass in golf
2) The next Hugh Grant movie likely to suck
3) Kanye West to say something dumb
4) Laws against doing things on your cellphone having no effectiveness on behavior

But one thing that USED to be a sure bet and is no longer....the value of your house. From the Washington Post:

"We have cases where houses are being appraised at less than the cost to build them," Howard said. "People are just being really, really conservative."

Some housing industry insiders also say that the appraisal process has become more complicated since the implementation of a new set of rules, known as the Home Valuation Code of Conduct, in May. The rules, put in place by Fannie Mae and Freddie Mac, aim to shield appraisers from pressure to submit a desired estimate of a home's value to hasten its sale.

Banks & their foreclosures part deux

Interesting info from CNBC's Diana Olick:

I spoke with Ted Jadlos of LPS Applied Analytics. He says there is no clear evidence of purposeful accumulation by the banks of these foreclosed properties. They are, he believes, working through the huge onslaught of new defaults as fast as possible, but it takes time. He says they are selling REOs at a fast clip as well, within about three months of taking them as REO.

Jadlos notes: Just getting to the average isn’t saying all that much. We need to be close to the four year low to be fully entrenched in a meaningful recovery. Based upon foreclosure and REO timelines, it’s going to take at least 18 months to flush the system of our current problems. But to flush the problems in only 18 months, more problem loans need to leave the system relative to the new problem loans of today and tomorrow. That does not appear to be the case right now—we aren’t clearing faster than new problems are emerging.

All About Housing: Inside Mortgage Agents Report

Comprehensive 80 page report on housing, the banks that do the lending for housing, and all sorts of useful nuggets, such as:

 The market for home purchases can be divided into segments of 26% for
damaged REO, 23% for move-in ready REO, 14% for short sales, and 36% for
non-distressed properties.
 Forty-three percent of homebuyers are first-time homebuyers, 29% are current
homeowners, and another 29% are investors.
 First-time homebuyers account for the majority of move-in ready REO sales while
investors account for the majority of damaged REO sales.

Plus, a breakdown on how the big banks deal with their short sales.

TARP Money for apartment complexes?

The bill, which is called the TARP for Main Street Act and was sponsored by House Financial Services Committee Chairman Barney Frank (D-Mass.) and Rep.Velasquez (D-Brooklyn and Manhattan), would use TARP funds that have been returned by banks and plow it into programs that, according to the bill, would create "sustainable financing" for the complexes as well as provide funding for property rehabilitation.

Fannie & Freddie: We probably aren't going to pay taxpayers back

And there you have it, folks. 85 billion down the drain. Fannie & Freddie's regulator says their book is so large that its unreal to expect the quasi government agenices to pay back its debt. When will Social security and Medicare come out with their similar findings?

No matter where you stand on the end of the housing bubble or just a temporary increase, long term it looks like the US made a bad bet in bailing out Fannie & Freddie.

Housing must go down. It's as simple as that

This one is a pretty basic economic post based simply on supply and demand. More foreclosures are in the pipeline, There are more sellers than buyers, and builders way overbuilt and it will take 3 to 5 years to clean out the excess inventory. There are over 3000 building lots approved just in my county of residence. That is around a 5 to 8 year supply, and possibly more as the buyer pool dries up. With all the government intervention slowing down the inevitable crash I just wonder WHEN IS THE TIME TO BE AN INVESTMENT BUYER ONCE AGAIN? If you listen to the media they would like you to believe the bottom is near. They are trying to mislead the sheeple that it is a great time to buy with low rates and an 8000 dollar tax credit. They are trying to bail out the bankers at your expense. Unless you can buy well below market value, now is NOT A GOOD TIME TO BUY A HOME! It's as simple as that. Read the link. It's an interesting read.

I saw some really crazy stuff today

I was looking at some short sale opportunities today. It's a rather large portfolio with a pretty typical trainwreck story. Today I looked at 20 properties in some old industrial cites of SE PA. It's amazing the decay of what was once some amazing housing stock, as far as craftsmanship goes. It is really sad what it has become, and the destitution of the population living here.

I must admit sometimes I wallow in my own self pity of how a failing business can bring me down. I had a wake up call today. I may have some financial struggles, but I am not struggling to survive. Looking at these properties today I saw what true struggles are. The 1st building we went in to was obvious that people were breaking in to drink, do drugs, and crash. There was no power or water in the house, and it appeared they used candles for light. The next property around the corner was quite startling. The front door was open, and the house was rather clean. The power was on, the water running, and it appeared someone was cooking in the kitchen when we walked in. About 3 trash bags worth of clothing and a few jackets were lying right by the front door. A few dolls and a small doll house were on the living room floor. There was about 3 or 4 days worth of basic food in the fridge. Upstairs there was a single mattress, and a tiny air matress, and TV with DirectTV box hooked up. This is a home that was supposed to be vacant and not cleaned out yet. The tenant was evicted in May. There was even mail sent to the address concerning her food stamps. When we pulled away we saw a woman and small girl appear on the sidewalk from the neighbors. We drove around the block and saw them standing out front. It was obvious they were afraid of what happened.
The next few properties weren't secure either. It appeared all the back doors were pried open, and the locks on the front doors were changed, because none of our keys worked. The one house looked like someone was dealing out of the kitchen since it was tough to get out back, and the train tracks were right out back for a quick getaway. I actually chambered a bullet in the barrel of my pistol. I have never carried it chambered before. The neighbors were all checking us out with concern. Two white guys taking pictures and going in and out of buildings seem to make people nervous. The blight of these areas is worse than ever, yet for one reason or another alot of people still choose to live there. The rent must be really cheap.

These properties were bought between 02 and 04. They were bought pretty well, and it apperars the guy did a lot of cash out refi's(who didn't, I know I raped a few buildings to buy some more) The amount owed on these properties is rather staggering, compared to what they are worth. There was most definetly some fraudulent appraisals pushed through, by greedy underwriters. Our offer prices might be 25% of the debt owed, and even then I don't know if they are worth it. To be quite honest, if these properties go back as REO's I truly wonder if anyone will ever live in these properties again, or will they just be boarded up, and decay to nothing. Slowly but surely a once thriving industrial city will become functionally obsolete, and decay to nothing. I have seen a lot of $hit in the 13 years of being a RE investor and landlord. What I saw yesterday was the worst I have seen.

Landlord in Chief??

U.S. government officials are weighing a plan that would let borrowers who have fallen behind on their mortgage payments avoid eviction by renting their homes instead

Under one idea being discussed, delinquent homeowners would surrender ownership of their homes but would continue to live in the property for several years, the sources told Reuters.

Officials are also considering whether the government should make mortgage payments on behalf of borrowers who cannot keep up with their home loans, tapping an unused portion of a $50 billion housing aid kitty. As part of this plan, jobless borrowers might receive a housing stipend along with regular unemployment benefits, the sources said. (Reporting by Patrick Rucker; Editing by Diane Craft)

FBI reports 1.4 billion in 2008 mortgage fraud

CNBC's Diana Olick(she's a hottie) just did a report on the FBI's report of rampant mortgage fraud investigations. Our clueless leader President Obama just signed a half a billion dollar mortgage fraud investigation and prosecution bill. Why the heck would we spend 500 million on this now??!! The damage has been done. This is like trying to put out a house fire by pissing on it. What a joke. Where was the FBI, the SEC and our clueless leaders when Julio(an illegal immigrant) with no verifyable income, and no way to repay a loan was given a mortgage for 500k. Where were they when Joe Blow bought a new Mercedes and a big screen with a 100% LTV cash out refi where the property appraised even though there were no comps to support the appraisal. I remember in 2006 when a client of mine wanted to buy a 1.2 million dollar house. She had a 750 credit score and made about 45k a year selling Amway multi level marketing. She was approved for a 97% LTV option ARM loan even though her entire yearly income barely covered the negative amortized payment. Thankfully I talked her into buying a 300k home for 225k so the sellers could settle a deceased estate. I found the fact that she actually qualified for this loan appalling, and it was at that moment I knew this housing run was caused by pure geed and fraud.
So NOW we find out that there was rampant mortgage fraud LOL. I could have told you that back in 2005. I guess possibly I should be an FBI agent, or even better our next president. I could have save our country billions of dollars by telling them of all the fraud going on. Oh wait, that's right, I did try to tell everyone. The fact is no one wanted to listen.

Welcome to Contrary Riches

Would like to welcome all readers of Housing Panic, SootandAshes, the Big Picture, Mish's Global Economic Analysis, and all other blogs/bloggers out there. Both myself and Bottom Feeder in Philly have beeen regular posters on several blogs and we decided to start this one when our fav blogger Keith of Housing Panic decided to take a foray into the world.

This blog will focus on getting us all wealthier. We have no agenda other than to dissect the lies and promote the REAL ways of finding real wealth. We may or may not be at the start of a depression. Regardless, we hope you'll follow our stock pics, real estate picks, investment talk, and add your own input to enhance the richness of the blog.

A little about myself....I am an individual investor who has dabbled in a variety of investments, including owning single family homes, multi-unit homes, an apartment building, a car wash, a variety of stocks (some that have done well, some that haven't), and a big believer in the 5 branches of wealth system. I've considered myself at times a contrarian and at other times the kind of investor that jumps on a trend before it ignites and jumps off right before it fizzles out. Both Bottom Feeder and I love to argue and debate all matters of business and finance. I have a health care background and am a big believer in the blogging medium.