I know…it has been too long
Yes, I know….it has been quite a while since the last post.
I apologize. I have been out of town quite a bit, and I have been working on starting a new company.
That said, this thing is going to take YEARS to pan out. I could write commentary everyday about what is going on, but I have other things occupying my time. Unfortunately, this blog doesn’t ‘pay the bills’ for me. I enjoy doing it, but it can no longer be the priority it once was. There are a thousand people ‘covering’ this now. I gave you (the readers) information on what I thought was going to happen and why, BEFORE it was ‘popular’. I presented information and let you make decisions based upon that information. Right now, I don’t have as much to add. As you have seen, we are in the early stages of how I thought things would pan out. That said, I will keep posting, but you will have to bear with me right now.
I am working on a company that I think is going to be able to add a lot of value to people. I will give more information as the time comes.
Like one of the posters said, I have helped many people save hundreds of thousands of dollars. The comments and e-mails I receive from people really make me feel good and are a testament that I did help people. Too bad I didn’t get a portion of the money I ’saved’ people 
I am out of town again this week, but look for a new post coming when I get back into town.
That said, couple of quick things…..
- Did anybody see the 60 Minutes segment on the Real Estate industry? It focused primarily on RE agent commissions, and how the NAR and other RE lobby groups are using their power to lobby governments to make legislation that makes it much harder, if not impossible for ‘discount’ brokerages to take hold. They will do anything to protect their 6% commission.
- I was watching CNBC and a there was a discussion that the ‘fog a mirror’ credit standards were NOT isolated to just the subprime mortgage market. It has also infected the private equity and corporate markets as well. They were saying that the money is ’so easy’ that people have forgotten to look at credit worthiness and the ‘ability to pay’. I didn’t catch the whole segment, but I would have to agree with them. Leverage can be a great tool when the times are good, but it will crush you when things turn.
- Anybody know of a friend of acquaintance that is ‘treading water’ right now hoping the market goes back up in the next 2 to 3 years so they will be able to refinance? That is why this thing is going to take years to pan out. A lot of people are NOT in a pinch yet…because they still ‘have a few years’ until they need to refi.
Anyway, thank you for reading my blog and understanding my situation. Your continued support is much appreciated.
Stay tuned…
SoCalMtgGuy
May 15th, 2007 15:16
Nice to see you back, as for people treading water I have a few friends (always said their house is worth $$$ because the one down the street sold for $$$) that I’ve talked too that have started to realize their house is not worth what they thought it was during the buying frenzy years. They also noticed all the For Sale and For Rent signs popping up around the area now like weeds, all I tell them now is pay your bills and watch what’s going to happen.
May 15th, 2007 21:24
SoCalMtgGuy-
Can you make a promise to post an “inside” story at least once a Month, perhaps on or about the middle of the Month? You are correct, the [us] folks that have followed your blog are simply watching this tropical depression grow into a Hurricane.
But it does give some of us a certain satisfaction to see that neighbor who refi’d twice every year for the past 4 years, served with an eviction notice by the L.A. County Sheriff. Perhaps they can live in the 2006 Mercedes, or the 2005 Hummer, or the 2005 Honda van, or the 2004 Escalade?
May 16th, 2007 13:32
Treading water describes ALOT of people on the Central Coast. As expected the local rag prints only quotes from Realtor about how SLO County is special.
However, the numbers do not lie. People are in trouble.
http://centralcoasthousingbubble.blogspot.com/
May 16th, 2007 17:43
No worries man… good luck with your business!
I did see that special on 60 minutes and I found it pretty entertaining. They interviewed a realtor who quit and decided to work for redfin (the discount broker) who said that as a realtor she frequently felt guilty because she’d get fat $12K commissions on houses she didn’t really do anything to sell. This was followed up by an interview with a current realtor who responded to most questions regarding the fairness of her commission with a deer in the headlights look.
I’m not sure that realtors are going the way of travel agents, but I think they’re going to have to share the market with discount brokers and be a lot more competitive in the price arena. The major problem they have is thinking they are a necessity, when in fact they are only a convenience. In a declining or uncertain economy I can see a lot of people forgoing conveniences.
May 17th, 2007 09:26
I know a Realtor in Ohio who got into the business in 2004. Before that, her and her husband had been hourly workers. She never really seemed to sell that much but she bought her and her husband both new Mercedes (the expensive ones), a million dollar farm, a 35 foot yacht, a vacation home in Gatlinburg, and they were always taking trips. I couldn’t figure out where the $$ were coming from.
They bought 3 new homes in Florida, each priced pre-construction for 1 to 1.5 million. They used zero down, stated income/ asset loans. They did cash-out refinances and equilines on each running up the balances to up to 3 million a piece. This cash they used to buy the luxuries and also make the payments. When they needed to make payments they took another draw or did another refi.
They now have $73,000 in bills due for this month. Problem is, they cannot get anyone to cash-out refi again and the equilines are maxed out. They assumed values would keep rising. She has one real estate listing and nothing pending. Looks like there will be 5 more NOD going out next month.
May 17th, 2007 09:28
Oh, I forgot to add:
2 of the 3 homes in Florida have never been lived in. They just sat vacant not even rented. They were nothing more than ATMs anyway.
May 18th, 2007 16:54
Thank you for your insight into this housing mess, and good luck with your business aspirations.
May 19th, 2007 11:11
SCMT — it’s your blog, you can do what you want with it. All I’d ask is that you don’t make promises you can’t keep. For example, your March 11 post started out like this:
“Over the next week or so, I am going to show you…literally, why the subprime mortgage industry is imploding.”
And then your next post a couple of weeks later said “I know many of you are waiting for the next dose of subprime mortgage madness…don’t worry…it is coming”
Then nothing until May.
It goes directly to your credibility when you keep on making promises and then blowing them off. Under-promise and over-deliver, not the other way around.
May 20th, 2007 17:55
“A lot of people are NOT in a pinch yet…because they still ‘have a few years’ until they need to refi.”
I feel more people are in a pinch more than any of us predicted, so get ready for so huge implosion.
This real estate mess will correct itself sooner than anyone has imagined. It will not take a few years.
Just my thoughts.
Melody
May 20th, 2007 19:12
Low interest rates and a strong job market are the only things keeping this entire real estate market from imploding completely. Interest rates are still historically very low, allowing many people to “squeeze” into more home than they can really afford. The unfolding of the subrime lending situation is cooling the market somewhat. But if interest rates head north and/or the jobs market goes south, you will see a major correction. Oh yeah, $4/gallon gas doesn’t help either.
Ya know, I was born in 1965 and I have always said that my generation has never really seen tough times like those of our forefathers. I hope the American economic machine keeps chugging along with only minor hiccups, because I don’t think most people are positioned (mentally or financially) for a long term economic downturn. I hope it doesn’t happen, but we really are due.
May 21st, 2007 14:31
I agree with rslux. Only promise what you can deliver.
Also, the frequency of posts if so dire, that I rarely come back here anymore. I only check this blog once every 4-6 weeks now. The infrequent posts have maybe reduced the visits to the site. I suggest that you make a short post once a week, or a medium sized one every 2 weeks. Keep people coming back… It’s not necessary to post everyday.
But you are a great writer. I still think you could charge a subscription fee for your blog.
May 21st, 2007 17:35
scharzad:
WHO CARES how often you check back? what — the world revolves around YOU??? get a grip, and a life. no one cares what you do but you. “Only promise what you can deliver.” Again, who are you to criticize? if you don’t like it, don’t EVER check back. better that than having to read your obnoxious posts. what a loser!
May 22nd, 2007 08:30
Morning All:
Here is the feel good flipper story of the day, curtosy of cnnfn:
http://money.cnn.com/2007/05/22/magazines/moneymag/retirement_interrupted.moneymag/index.htm?postversion=2007052212
Its a short summary of how not to flip in a bubble.
Slick
May 22nd, 2007 19:43
Melody said:
“I feel more people are in a pinch more than any of us predicted, so get ready for so huge implosion.
This real estate mess will correct itself sooner than anyone has imagined. It will not take a few years.”
I agree.
In fact, one of my coworkers has a mortgage that is set to ‘adjust’ in July.
May 22nd, 2007 20:45
Can we maintain some perspective and give SoCalMtgGuy a break? He has been performing a valuable community service (humanitarian, actually) by creating and maintaining this blog over the past couple of years. And he’s done so on his own time, without compensation. We’ve all benefited tremendously already from the work he has put into the blog and even if he never posts again, we have still derived great benefit from his efforts to date. Let’s give him credit for that and cut the man some slack.
May 23rd, 2007 06:31
Even the pros can’t make a prediction. Subprime meltdown was more violent than expected.
http://money.cnn.com/2007/05/22/real_estate/subprime_melltdown_yielded_fast_changes/index.htm?postversion=2007052308
May 23rd, 2007 09:49
bw,
For your co-worker that has there loan “adjusting” in July, I would bet a steak dinner that when they refinance they will get a negativly amortized loan, that will postpone there problem and allow them to keep there home, but make there finacial situation worse in 2-3 years.
May 24th, 2007 10:45
Here’s the latest news:
“The median price of a new home sold in April plunged 10.9 percent from a year earlier to $229,100. The new price reading was also down 11.1 percent from the March reading.
It was the sharpest year-over-year drop in median new home prices since December 1970 and the biggest month-to-month drop on record.”
[Link]
May 24th, 2007 20:20
nor cal MB,
At the rate that things are falling part in San Diego, CA, I seriously doubt that my fellow co-worker will be able to refi out of the loan.
June 1st, 2007 18:07
Just spoke to a person that did a 100% IO mortgage w/ PMI. Borrower told me the loan officer said they could drop PMI after one year. Also had a 5 year ARM, with a 3 year PPP. Didn’t know that they had a PPP, had to explain to the borrower that the only way PMI could be dropped was to show a 25% appreciation which could only be done with an appraisal. I did an automated valuation model which showed a place at their condo sold for about the same amount of $ that their place sold for last year. Hopefully, they will be able to refi in the window between years 3 and 5. Maybe there won’t be a negative escrow position. Other thing, if the borrower can’t refinance and rates stay where they are (not likely, but you never know), hello 9.75%.
June 1st, 2007 18:38
With Congress threatening trade tariffs on Chinese imports, and China threatening to sell off US Treasury securities in retaliation to the trade tariffs, I seriously doubt that rates will ’stay where they are’.
June 7th, 2007 12:49
test
June 11th, 2007 11:24
Hi SoCalMtgGuy
I am writing from Canada. Do you have any knowledge at all of what is happening here? From reading your posts it sounds like we are in about end of 2005 beginning of 2006 US time here.
Scary stuff….
June 11th, 2007 20:13
Hey,
Here in Denver the higher end homes 700K+ are moving briskly, while the lower end homes are slow in selling. Kind of makes sense with the whole subprime situation. New buyers must be having a harder time getting started. Keep an eye on rates, the only thing holding everything together.
June 24th, 2007 19:01
i live on the westside of l.a. i rent. prices are not going down here! they are going up a little bit even. everyone loves the school here but still, i keep reading about san diego and south florida and bakersfield and vegas and… is it possible that in a desirable neighborhood the prices will not go down? i was waiting for a 30 to 40 percent nominal drop. am i waiting in vain?
June 26th, 2007 09:09
Waitingpatiently, is it possible that prices will not go down in a desirable area? No, they’ll drop, and many of the people in that neighborhood are leveraged to death (although you’d never guess based on the toys in the driveway).
Most people in America live paycheck to paycheck. Even the pseudo-rich live that way - the only difference is that their paychecks have more zeroes. Still, they’re milking this twisted system for all it’s worth and then they’ll fail like all the generations before them. Keep an eye on the newspapers and watch the sales. It will take your region longer to fail, but it will fail, too.
June 27th, 2007 20:52
SoCalMtgGuy,
I am a frequent lurker, but this is my first post. I have enjoyed your writing, and you are, in part, to thank for my decision to rent after a relocation to Sonoma County, California in 2005. My observation is that prices are down about 10% since my arrival. Thanks for your help.
Marc
October 12th, 2007 14:37
If there are any lawyers needing a expert witness as a mortgage broker please check out: http://www.expertwitnessmortgagebroker.com/
February 15th, 2008 10:28
florida mortgage rate comparison…
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