Housing Bubble Bursting?

[Mike Simpson]

"It would be very kind of you to not attempt to rewrite history;"

Ahhhh George...it's always a pleasure.

As far as history goes...I fear you're memory maybe fading Mr. President (rewriting history metaphor). I started posting in '99' (where's the time go?), and since then...there've been a number of resident Forumites who've continually expressed concerns regarding the economy.

Before we had the 'Stock Market Bubble'...fears were circulating on the Forum of another 'Great Depression' (synonymous with...'another Savings & Loan Debacle'). We were blissfully unaware of bubbles back then, and having uninventive minds...they resorted to second coming analogies.

This is how the Forum really got rolling...frustrated Appraisers around the nation began signing the Petition & sharing stories of improprieties being visited upon their businesses, and their concerns of what could happen if they were not afforded some protections.

These anxieties have continued (by some) unabated since the inception of the Forum.

"One other thing I should not have to point out is that if the New Paradigm is dying a slow death then by it's own definition it is disproving itself. If it really was a new paradigm wherein the old rules didn't apply and the trendline would reset and go forth from this much higher mark then it wouldn't die at all. At most it would have taken a little breather - aka the soft landing - and then take off again."

Paradigm--as I've defined it--is a period in time, an example in time, a model in time, a pattern or standard in time. Nowhere have I argued/debated that "the trend line would reset." At no time have I suggested that it would "take off again"...there's too many future variables for me to make such a call.

"Rising rates...dwindling refi's...slowing sales...better get ready...hope you've put some $$$'s away for a rainy day Bubble Boys & Bubble Girls...you just might get what you've been clamoring for."

I was being a 'Smarty-Pants'...although I do think a slow down, and a world of hurt is coming to a lot of folks...I don't think we need a pronounced POP for that to happen. Too much new blood & even the slightest stagflation (in some regions) will result in some pretty significant job loss (we've seen it before).

"It's like we've been saying all along - neither side of this debate will be proven or disproven until the entire cycle is complete, and we aren't even close to that."

I disagree with this assessment as well. I think we've already been through several cycles, but somehow the negative news stories continue to be presented unfettered, and it's always...two more...three more...four more years.

There's just too many unpredictable inconstants to make these kinds of silly Bubble predictions year, after year, after year, after year.

-Mike

 

[Randolph Kinney]

I was being a 'Smarty-Pants'...although I do think a slow down, and a world of hurt is coming to a lot of folks...I don't think we need a pronounced POP for that to happen. Too much new blood & even the slightest stagflation (in some regions) will result in some pretty significant job loss (we've seen it before).
-Mike

Oh my, what have I witnessed here? Mike S is saying a slow down? A world of hurt? To a lot of folks? Don't need no stinking POP sound?

This man has defected to the dark side. :new_all_coholic:

 

[George Hatch]

Mike,

Your memory is as convenient as your vocabulary. You better recheck your definition of New Paradigm because the one you're using this year is wrong.

Regardless, the fact remains that if the superheated markets return to their trendlines the New Paradigm and all of its iterations, including the Soft Landing and your "period of time" applications will be as disproven in the real estate markets as they were in the stock markets.

But keep up the backpeddling. We'll eventually end up on the same side of this discussion again.

 

[JSmith43]

The new paradigm I have spoken of referred to a return to a lower trading range for the bond markets that support mortgage rates.

Oil and international events may change everything. Dropping one each on two Japanese industrial centers ultimately ended W War 2 in the Pacific. Suitcase nukes can be made that powerful today.

I think the government intrusion into the lending business helped set the stage for a much more massive economic crunch than if it would have stayed out of the risk mitigation business and left it to professional risk takers in the market. That fostered a new paradigm, IMO, and ended with the S & L bail out after the insured deposits, forced S & L mergers and even the cooking of accounting rules by regulators to redefine insolvency, ultimately and predictably (to me) failed.

Civilization flunked that test and allowed politicians once again, to try government meddling on a new scale, Title11! (the risky licensing and regulatory scheme). I wonder if the era of licensing is a new paradigm? Yes, yes it is the puppy mill paradigm State sponsors of puppymillism and licensing (to protect the public trust, of course).

So many paradigms, so little time:icon_smile:

 

[Randolph Kinney]

So many paradigms, so little time:icon_smile:

Here is my new paradigm:

Angelo Mozello CEO of Countrywide tells investors "don't worry, all of our appraisers are insured" in their marketing pitch to the secondary mortgage markets, including Wall Street.

Think deep about this scenario: Wherever there is a RE loan, there is an appraisal. It costs little to type the appraisers name as a defendant, and only $50 to serve them. The appraiser is a natural part of the loss recovery plan. It is going to get very scary for the appraisal industry as we face more cooling in the real estate market.

 

[JSmith43]

Angelo Mozello CEO of Countrywide tells investors "don't worry, all of our appraisers are insured" in their marketing pitch to the secondary mortgage markets, including Wall Street.

Shallow pockets theory? (money out of an appraiser with a minimum E & O with all the loopholes) or just plain shark vs shark getting $$ out of an insurance company (as opposed to shark vs sympathetic victim)?:icon_smile:

I could come up with more believable statements. Perhaps I should volunteer to be his speech writer. I have to assume he didn't get enough sleep or coffee because, no way is that his best effort. In fact, I wonder if it was meant as a joke where the traders (or whomever the audience was), had a knee slapping laugh.

The printed word, a few sentences out of full context, can't be relied upon to convey the actual message delivered to the audience. Randolph, can you easily find and share the quote source? I'd like to read the article, if there is one associated with the quote.

 

[Mike Simpson]

"But keep up the backpeddling. We'll eventually end up on the same side of this discussion again."

Sorry...I'm not backpedaling. I never said, the New Paradigm would continue forever, and I've serious doubts we'll end up on the same side of this discussion anytime soon:

Unfortunately, it would appear we've a limited ability to go back in time & pull threads from the past. It seems we're limited to 8 pages since the most recent changes to the Forum--coinciding with the removal of 'The Crusader Thread' (or else I'm missing something).

That's regrettable because, if we could go back further in time we could pull forward some of the more extreme predictions made by some of the more gladiatorial Forumites: How can we forget 20-80% crash in home values lasting 8-15 years?

"Your memory is as convenient as your vocabulary."

So you'd have everyone believe...that our more pugnacious Resident Forumites HAVEN'T been consistently dreary in their views since the inception of the Forum?...since before the Bubble word was so prevalent in our vocabularies?

I dunno George...seems like a hard sell to me. Everyone's sharper than you give em credit for. 'The Truculent Ones' simply imbedded the word Bubble in place of their 'Second Depression,' or 'Another S&L Bailout' warnings. They saw 'Bubble' in print or heard it on the news & started using the term in their posts (it's reminiscent of your "Chattering Monkeys" analogy).

"Oh my, what have I witnessed here? Mike S is saying a slow down? A world of hurt? To a lot of folks?"

Sorry Randolph...don't get excited. The world of hurt I was referring to is in regards to Loan Officers, Processors, Underwriters, and yes...even Appraisers losing their jobs.

I wrote February of '05'--I believe it was--that I expected half of all Loan Officers to lose their jobs by early 2007. With half their clients gone...what do you think would happen to Residential Appraisers whose primary incomes came courtesy of appraisals for mortgage purposes?

"Wherever there is a RE loan, there is an appraisal."

That's inaccurate. For quite sometime now...the need for services from Appraisers has been dwindling. I expect that trend to continue.

-Mike

 

[moh malekpour]

Angelo Mozello CEO of Countrywide tells investors "don't worry, all of our appraisers are insured" in their marketing pitch to the secondary mortgage markets, including Wall Street.[

where is the link to above quote. I just got a letter from my E & O insurance indicating 22.5% rate increase because they got too many claims against them. I wonde if that quote has given them another reason to jack up their rates. I have never had any claim against my insurance in 15 years yet I have to pay 23.5% more now for other appraisers mess.

 

[Randolph Kinney]

Roger, Moh, I regret to say that I copied this from someone who now tells me this is what he heard from someone supposedly attending a presentation by Angelo Mozilo who claims that he said something like this in response to a Q & A, when asked about the potential loss from loans. Therefore you can discount the veracity of the quote as being actually from Angelo Mozilo or that he believes insurance will play a major role in loss mitigation.

However, I believe it to be valid to opine big players like Countrywide will go after appraisers on defaulted loans, especially if there is anything they can make a claim on with the E & O insurance appraisers may have. That seems like common sense. And, indeed, it may well be the new paradigm for appraisals; you have to have proof of insurance before a lender will accept your appraisal.

 

[Randolph Kinney]

"Oh my, what have I witnessed here? Mike S is saying a slow down? A world of hurt? To a lot of folks?"

Sorry Randolph...don't get excited. The world of hurt I was referring to is in regards to Loan Officers, Processors, Underwriters, and yes...even Appraisers losing their jobs.

I wrote February of '05'--I believe it was--that I expected half of all Loan Officers to lose their jobs by early 2007. With half their clients gone...what do you think would happen to Residential Appraisers whose primary incomes came courtesy of appraisals for mortgage purposes?

So, you are telling me only those people associated with making loans will lose their job? No one else? Is that correct?

"Wherever there is a RE loan, there is an appraisal."

That's inaccurate. For quite sometime now...the need for services from Appraisers has been dwindling. I expect that trend to continue.

-Mike

Unless the loan had an LTV so low, there is going to be some kind of valuation. Otherwise, what you are arguing about are loans that are made on credit score. Loans were made going back in time when the property was first purchased and they most likely did include an appraisal. If you have any statistics to present, Mike, on the total number of loans made with out an appraisal versus total number of loans made with an appraisal in the last two years, I would be interested.