Best Housing Article I've read yet . . .

Not a whole lot I can add, this article sums it up clearly. Wake up US your house is on fire!!! Click on title above or cut and paste this:

http://www.nydailynews.com/opinions/2010/02/28/2010-02-28_burning_down_the_house.html

Wait until it's not 1 out of every 4 US homes under water but instead it's 1 out of every 2 which is where we will be by the end of 2011!

Foreclosure Bubble Being Created?

I just read this and thought I would share with you, the most concerning part, and there are many, is that with 90+ day delinquencies and foreclosures in process both doubling in the past year, the number of actual foreclosures completed dropped??? So what is coming???

Moody’s writes:

HAMP, Moratoriums, and Court Delays Expand Foreclosure Bubble: >>>>>

The backlog of seriously delinquent mortgage loan inventories continues to grow as foreclosure referrals and foreclosure sales are stalled by mediation efforts, growing foreclosure court delays, title and assignment difficulties and missing documents necessary to initiate foreclosure. As the accumulating delinquent and modified but re-defaulted loans progress through the default process, foreclosure and liquidation time lines will be exacerbated, resulting in higher holding costs and elevated loss severities.

The 2009 third quarter OCC Mortgage Metrics Report indicates an 80% increase in the number of foreclosures in process and a 125% increase in the number of loans 90 or more days delinquent compared to a year earlier (Figure 1). Over the same period, the number of completed foreclosures decreased by over 7%.

Servicers recently surveyed by us indicate that they are holding off on both foreclosure referrals and foreclosure sales in order to provide delinquent borrowers ample opportunity to be evaluated for a HAMP modification. Since the announcement of the program in March 2009, the foreclosure process has been stalled on over one million delinquent loans, resulting in a significant slowing in the pace of liquidations.

In addition, loans that do wind up in foreclosure are taking much longer to resolve due to court delays. Servicers have indicated that state courts are overwhelmed with foreclosure cases, lengthening foreclosure sale time lines by up to two years or more. Judicial foreclosure states such as Florida, New Jersey and New York have experienced some of the most notable delays.

The slowdown in foreclosure sales has applied brakes to the rapid decline in home prices as the market has not been flooded with distressed sales. However, the foreclosure overhang continues to pose a major risk. A long and slow resolution of stalled foreclosures will significantly increase loss severities.

Treasury’s roll out of the Home Affordable Foreclosure Alternative (HAFA) program should help resolve this to a degree. HAFA requires that servicers consider borrowers for short sales or deed-in-lieu prior to pursuing foreclosure sale.

This commentary is more technical in nature than my earlier post this morning. That said, there is one specific line grabs me:

A long and slow resolution of stalled foreclosures will significantly increase loss severities.

That, my friends, is not good business. As much as government officials may believe their programs and efforts are helping, they are not.

January Home Sales Plummet . . . Unexpectedly???

Click on title above to see AP article stating that last month's drop in home sales was unexpected and surprising . . . Really? No one here was surprised. A whole lot more correction ahead! Good news is home prices today are higher than they will be at any point in the next 10+ years as we will continue to see declines while the distressed properties work their way through the system. By late 2015 most of the troubled properties should be under the control of financial institutions which will, finally, end the slide. Once that bottom is reached it will most likely take another several years to dispose of those properties thereby creating an extended flat bottom. So if you are thinking of selling, you would be very wise to do so sooner, rather than later.

http://finance.yahoo.com/news/January-home-sales-fall-72-apf-1993954776.html?x=0&sec=topStories&pos=main&asset=&ccode=

Don't look back.

Click on the title above to review a great article by The Huffington Post on how large institutions are walking away from upside down properties and how more and more savvy homeowners are doing the same.

Commercial default rates more than double, worst not expecting until at least 2011.

Click on the title above to review a Business Insider article and think about the Commercial Real Estate Default Rate.

New home sales drop to record low. Duh!

Click on the title above or the link below to review a Reuters article on New Home Sales.

Ouch! has been saying for years that all but the most custom of custom homes will stop being built and that from a purely financial perspective land currently has a negative value in many parts of the country.

Look at the math: If I gave you a piece of land for free and all you have to do is pay to build a new home, labor, materials, permits, carrying costs, etc., and let's say that will cost you $200k. In most markets you will be competing against very similar homes (foreclosures, short sales, etc.) which are currently sitting on the market and not selling for $200k OR EVEN LESS. So what is the value of the land???

If you have liability and taxes simply by owning it, and you will incur a loss by building on it and then selling it...how does it not have a negative value? Ouch! has told us for several years that we simply have too many dwelling units in most of the country. If we needed more would new home sales be hitting record lows???

http://finance.yahoo.com/news/New-home-sales-drop-to-record-rb-2868445540.html?x=0&sec=topStories&pos=main&asset=&ccode=

Home purchase loan demand lowest since 1997.

Click on the title above or the link below to review a Reuters article and learn about the Home Purchase Loan Demand.

What has Ouch! taught us for years about the relationship between housing demand and prices 6 to 12 plus months later???

http://finance.yahoo.com/news/Home-purchase-loan-demand-at-rb-1475575272.html?x=0&sec=topStories&pos=7&asset=&ccode=

Confusion on housing market???

Click on the title above or the link below to review an article from The Wall Street Journal.

Robert Shiller speaks on possible impacts of Fed no longer buying mortgage backed securities, the expiration of buyer tax credit, and borrowers being angry enough to stop making mortgage payments. What impact will all of that have on housing? Ouch! is emphatic that we are simply in the eye of the hurricane and that more and more people will take William Wallace's suggestion of celebrating a mortgage independence day which will ultimately lead to real estate valuations returning to 1996-1998 levels nationally. Stay tuned...

http://blogs.wsj.com/developments/2010/02/23/case-shiller-adds-to-confusion-on-housing-market/

Number of troubled banks growing.

Click on the title above or the link below to review an Associated Press article about our banks "problem" list.

Troubled banks in 3Q 2009 = 552

Troubled banks in 4Q 2009 = 702

If our number of troubled banks is increasing by almost 30% in just 1 calendar quarter, what does that tell us about the rest of our economy?

In 2009 there were 140 bank failures, the cost to the FDIC was so great that the FDIC is now making remaining banks pay over 3 years of insurance premiums in advance. When you can't afford 140 bank failures, what will you do if even half of the 700+ currently troubled banks fail???

http://finance.yahoo.com/news/Banks-report-small-profit-but-apf-3740844773.html?x=0&sec=topStories&pos=7&asset=&ccode=

Housing prices set to begin next leg down later this spring

Click on the title above to review an Investor's Business Daily article and think about the Double Dip In Housing Prices.

Surprising??? Drop in Consumer Confidence . . .

Click on the title above or use the link below:

http://finance.yahoo.com/news/Stocks-retreat-after-apf-1353113612.html?x=0&sec=topStories&pos=main&asset=&ccode=

According to the attached AP article economists were expecting only a very slight down tick in consumer confidence from a reading of 56.5 to maybe 55 or so. When the number came in at 46 (about a 20% drop!!!) economists were surprised. Seriously?

Think of all the people you know, how many of them are financially in better shape today than they were 1, 2, 3 even 5 or 10 years ago? I have asked this question to people all over the country and most struggle to find even one or two people they know who are better off. It is my position that over 99% of Americans are financially worse off today than at any point in the recent past. What can you do to help? Be concerned, be informed and provide help when possible. What would happen if you simply wrote to everyone you know, shared this link and said something along the lines of "If this is you or someone you care about, maybe the info at www.TRGHelp.com will help you or those you know"

What's the worst that can happen if you make an effort to show you care?

Andrew Jackson-1837 farewell address

Almost 200 years ago a wise leader said . . .

"These ebbs & flows in the currency & these indiscreet extensions of credit naturally engender a spirit of speculation injurious to the habits & character of the people. We have already seen its effects in the wild spirit of speculation in the public lands & various kinds of stock which within the last yr or 2 seized upon such a multitude of our citizens & threatened to pervade all classes of society & to withdraw their attention from the sober pursuits of honest industry. It is not by encouraging this spirit that we shall best preserve public virtue & promote the true interests of our country; but if your currency continues as exclusively paper as it now is, it will foster this eager desire to amass wealth without labor; it will multiply the number of dependents on bank accommodations & bank favors; the temptation to obtain money at any sacrifice will become stronger & stronger, & inevitably lead to corruption, which will find its way into your public councils and destroy at no distant day the purity of your Government."

Hmmm wonder if we could have seen our current economic mess coming before the last year or two? Seems like Mr Jackson did!

Upcoming change in Fed buying mortgage paper.

Click on the title above to review The Wall Street Journal article and think about how the Fed Plan to Stop Buying Mortgages Feeds Recovery Worries.

Strategic Defaults and the Foreclosure Crisis.

Click on the title above to review an US News & World Report article and ask yourself why haven't more people done this? What has to happen before they will?

Lenders pursue deficiency judgements.

Click on the title above to review a CNN article and learn why Mortgage lenders pursue homeowners even after foreclosure.

Growing number of home owners simply walking away from mortgages.

Click on the title above and review a New York Times article and think about No Help in Site, More Homeowners Walk Away.

Lowest rates in history still can't prop up home demand

Click on the title above to review a Reuters article and learn why Home loan demand drops despite drop in rates.

Mortgage delinquencies hit ANOTHER record.

Click on the title above to review an Associated Press article and think about Mortgage delinquencies tick higher in 4th - qtr 2009.

“the U.S. is facing a "crisis of confidence" among global investors and recommends credit default swaps on U.S. Treasuries."

Yahoo Finance - HERE IS THE LAST PART OF THE ARTICLE, READ IT CLOSELY - "the U.S. is facing a 'crisis of confidence' among global investors and recommends credit default swaps on U.S. Treasuries."

Ortel made a similar recommendation to clients back in August 2008. The price of those instruments rose in value during the second half of 2008 and early 2009, then declined as the crisis abated. But sovereign CDS have risen again in value in the wake of debt crises in Dubai and Greece, and Citigroup notes U.S. swap spreads have widened at the second-fastest rate since Jan. 1, trailing only the euro zone.

THIS MEANS THAT THE WORLD SEES THE LIKELIHOOD OF US DEFAULTING ON DEBT, AS MEASURED BY CDS SPREADS, IS INCREASING FASTER THAN ANYWHERE IN THE WORLD OTHER THAN THE EUROZONE - REALLY? THE WORLD IS GETTING MORE AND MORE NERVOUS...HMMMM

Click on the title above to review the entire Yahoo Finance article.

Robert Kiyosaki discusses why he thinks Dow 5000 is possible in 2010

Click on the title above to review a Yahoo Finance article from Rich Dad Poor Dad author Robert Kiyosaki and learn why he's concerned about the Dead Cat.

"An investment of Knowledge pays the best interest." - Benjamin Franklin

The following is a recent conversation between Kirk Nace and Jeff Tumbarello.


Kirk: What are you investing to increase your knowledge? Time? Money? Are you striving to become more informed about your chosen filed or profession each and every day?


Jeff: I am sleeping 2 hours less a night and spending a ton of spreadsheet time, flipping the market every way I can. I understand the market just fine. I am more trying to understand the patterns of the market for days to come.


Kirk: If you study what happened yesterday and what is happening today, will it be of more or less value than thinking through what will happen tomorrow, understanding why and then positioning yourself accordingly? Jeff, the SWFL market is currently in the eye of the hurricane, there will be another 5 + years of down, increasing taxation will play a huge role in that. Once a bottom is reached (at around 1995 pricing levels, lower in some areas) it will be maintained for a decade or longer. You are a gifted analyst, are you seeing this in your spreadsheets, charts and numbers?


Jeff: I see a different trend line than you do. We are at 2002 pricing. Last year we were at 2001 pricing. SWFL popped first, which is our blessing. SWFL has a different set of demographic drivers than the rest of the country. We are the catcher's mitt in bad times. As the rest of the country joins the party we have been at for 3 years, we will appear a more attractive alternative. The big picture is bleak. When I look back for a historical trend line I see either the early 1970's; the social picture fits it more. Or the best timeline I see without many of the social correlations being 1925 land boom, 1927 land bust, 1929 stock market bust, 1932/1933 the world came apart. Most people think that the depression began on Black Friday. That started the chain of events...We will see.


Kirk: The recent bursting of the credit bubble started in the 1920's. One of the presentations I have been doing lately begins there, addresses the FL (and somewhat national) land boom/bust and brings things up to date clearly outlining where we will be going for the next 20 + years. No area is isolated any longer. Sovereign debt issues in Europe, S America and elsewhere have a direct impact on credit and rates globally which in turn impacts demand. I first shared with clients in October of 2004 that FL, AZ, NV and parts of S CA, etc would see a peek in prices within 6 to 12 months and then a correction of 35% or more. With each passing day I realize more and more how I underestimated the severity of this correction. It isn't about the real estate market, it's about accountability, living beyond our means, a sense of entitlement and no consideration for our choices or actions. You will see 1995 prices again, AND you will see attempts both here and abroad to inflate our way out of our debts. Those efforts will lead to revolutions, long overdue revolutions and from those revolutions we will see the seeds of a better future planted.


Jeff: FDR and his agenda was the primary driver of the elongation of the GD. All he needed to do was pick up the pieces and drive on. Instead he set about making this into a Socialist Country. His agenda alone made this debacle last longer than it should. We also have a faster downward velocity currently than then. That is the X factor. The next President will have FDR's timing. Obama came to town with FDR's plan and Hoover's timing. I guess when the brain trust that advises you, spent their college years on psychedelic drugs, I would not hold that against them. As to the future. I do not know...I take a defensive posture based upon the worst case outcome. I think in a worst case outcome we're approaching 1933, but with a whole lot more mouths to feed and a much larger government infrastructure armed to the teeth and committed to maintaining both distance and their "lifestyle". If you can't: Eat it, Take Shelter in it, Barter with it, Defend Yourself with it, Wear it for a purpose or Escape or Move in it...DO NOT BUY IT. I may be overreacting. I would rather be that fool to my children, than the other fool who did not plan for their future. I hope we have a good deal of non-violent upheaval and change. My children deserve a better world than this mess. If we as adults fail to take action, then shame on us!


Who is Jeff Tumbarello and why should we be concerned with what he thinks? Jeff as worked with the following media outlets as a subject matter expert.


General Real Estate, Real Estate Statistics, Real Estate Investing & Foreclosures for NPR, Bloomberg, Huffington Post, The Wall Street Journal, NBC, ABC, Wink, Fox, Fort Myers News Press, Naples Daily News, Fort Myers Weekly, and Gulf Coast Business Journal.


Jeff is the local expert and source of data for the current trends in foreclosures. He also has performed market metrics and product modeling for the capital markets and several private equity firms. He has been a Trainer & Speaker for the Florida Housing Coalition.


In 2003, Jeff and 3 other SWFL Real Estate Investors founded the South West Florida Real Estate Investment Association.


Jeff is a veteran of the USMC and served in Desert Shield and Desert Storm as an Infantryman with First Battalion Third Marines. He is from Stuart Florida and is blessed to be married to his beautiful wife Cristina and has 3 incredible children ages 8, 10, and 12.

The Next Step - Getting ever closer to financial Armageddon

Wall Street Journal Article click on title above or cut and paste this into your browser . . . http://finance.yahoo.com/taxes/article/108866/muni-threat-cities-weigh-chapter-9?sec=topStories&pos=4&asset=&ccode=

Discusses how cities and other municipalities are being forced into bankruptcies.

Let's look at how we got here and where we are going:
step 1 Most people live above their means relying on credit
step 2 Most companies respond to demand and borrow to grow
step 3 Most municipalities, states and even federal govt decide to do the same
step 4 People can't pay their bills. Defaults and bankruptcies increase
step 5 Companies can't pay their bills. Defaults and bankruptcies increase
step 6 Municipalities and other governmental bodies can't pay their bills . . .

what do you think happens next?

According to this article Chapter 9 bankruptcy filings increase.

If municipalities can't pay their bills, will they go to their states for help?
Oh wait, what if the states can't even pay their own bills?
Well then you just go to the Federal Govt right?
Uh oh, what happens when the Federal Govt can't pay it's bills?
Well I guess, the rest of the world will gladly extend even more credit to us, I mean, after all we are The United States of America. Have you seen what is happening to the willingness of the rest of the world to lend money (extend credit) to financially irresponsible nations like Greece, Italy, Spain, Argentina, Latvia, Lithuania, Ireland, Portugal, Iceland and yes financially irresponsible countries like The United States of America? Hmmm

I wonder if my friend Kirk Nace is right. For several years he has been sharing with those close to him that we will live to see the day when the USA follows the path of the FORMER USSR. In fact, I think he is working on a book (damn I wish he would actually finish some of his books!) entitled "I Remember When The States Were United."

If we can't borrow anymore, we won't be able to spend anymore. If we can't spend any more how many millions and millions of people are going to be thrilled when their social security, or their welfare, or their medicare, or their pensions simply stop?

How will they react?

Can you say REVOLUTION?

I think it was Thomas Jefferson who many years ago said that in order for a Democracy to succeed there should be a good revolution every 20 years or so. Are we waaay overdo?

Get ready for MUCH higher taxes

Click on the title above to review an article by a Financial Times Columnist and Brace Yourself for a Decade of Higher Taxes.

Headline is foreclosures slow, reality is market values will continue to drop indefinitely

Click on the title above to review a CNN Money article and think about Foreclosures slow in January but still up from last year.

Government buddies make more money as losses incurred by tax payers grow.

Click on the title above to learn how the FDIC Responds to TBWS Indymac Video that was posted on February 9, 2010.

China is selling US treasuries, and no one else wants to buy our debt.

How much further can we dig ourselves into a hole now that our shovels are being taken away?

Click on the title above to review the Associated Press article and think about Foreign Demand for Treasury securities.

Thomas Jefferson Thoughts to Share

A few words shared by one of our wisest founding fathers . . .

'To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves & abhors is sinful & tyrannical”

"The oppressed should rebel, and they will continue to rebel and raise disturbance until their civil rights are fully restored to them and all partial distinctions, exclusions and incapacitations are removed." --Thomas Jefferson: Notes on Religion, 1776. Papers 1:548

"God forbid we should ever be twenty years without such a rebellion.
The people cannot be all, and always, well informed. The part which is
wrong will be discontented, in proportion to the importance of the facts
they misconceive. If they remain quiet under such misconceptions,
it is lethargy, the forerunner of death to the public liberty. ...
And what country can preserve its liberties, if its rulers are not
warned from time to time, that this people preserve the spirit of
resistance? Let them take arms. The remedy is to set them right as
to the facts, pardon and pacify them. What signify a few lives lost
in a century or two? The tree of liberty must be refreshed from
time to time, with the blood of patriots and tyrants.
It is its natural manure."


How many of you sheeple will eventually become fed up an take a stand to create change? Go back to last June and read what I shared about "Mortgage Independence Day."

How our HUGE federal deficit has actually become so significant that it threatens national security

Click on the title above to review a Wall Street Journal article and think about how our Deficit Balloons Into National-Security Threat.

EU decides to bail out Greece thereby encouraging others to continue to take excessive risks, to file false financials and to generally not be respons

Click on the title above to review a CNBC article and learn how Greece Deal Opens Door for More Bailouts.

Discusses sovereign debt as compared to Fannie Mae, Freddie Mac, Aig, etc things that make you go hmmm

Click on the title above to review a Yahoo finance article and think about the Unintended Consequences.

Insight into Germany's choice in dealing with Euro Zone mess

Click on the title above to review an article from Stratfor Global Intelligence on the situation in Europe.

Would you invest your retirement dollars in this?

From AP article "Bernanke said another economic support program aimed at driving down mortgage rates and bolstering the housing market is on track to end in March. By then, the Fed will have finished buying $1.25 trillion in mortgage securities from Fannie Mae and Freddie Mac. It will also have finished buying $175 billion in debt from the mortgage giants.” click on title above or cut and paste at bottom for full article

When the Fed stops this program who will step in to buy these securities?
How much of your retirement money would you like to invest on mortgage backed securities for buyers with 620 credit scores, no real down payments, 5% interest rates and knowing that we are still at least 2 years from the peak of foreclosures?

If you wouldn’t want to lend your money to those borrowers who will?

Oh wait, I know, sovereign wealth from other countries around the world will rush in to buy it up because they aren’t worried about other debt instruments they have purchased from places like Dubai, Iceland, Ireland, Italy, Greece, Portugal, Spain, Latvia, Lithuania, etc right???


http://finance.yahoo.com/news/Bernanke-outlines-plan-for-apf-1769220923.html?x=0&sec=topStories&pos=main&asset=&ccode=

Video on how FDIC is funneling money to their friends in high places

Click on the title above to watch a video from ThinkBigWorkSmall and think about The Indymac Slap In Our Face.

Economic Stress hits peak in Dec 2009 – If we are getting better why is there more stress?

Click on the title above to review the AP article on US economic stress.

Explanation of what is really behind unemployment rate

Click on the title above to review Yahoo Finance article and better understand what unemployment rates are really saying.