[EnergyUnlimited]

Well, here you are:
http://news.bbc.co.uk/2/hi/business/6519051.stm
I am not American, therefore I really don't know possible consequences of that to US economy, but it was expected for sometime anyway.
What do you think about it?
Beginning of the end of housing bonanza?
Could Mr Bill or anyone else with good understanding of economy make few comments on this subject?

[TreebeardsUncle]

Chapter 11 is a reorganiation. Chapter 7 means the crooks are closing down shop.
g

[scienceteacher]

The party ended 18 months ago. This site has it all:
http://housingpanic.blogspot.com/

[Dukat_Reloaded]

$this->bbcode_second_pass_quote('', 'N')ew York (Fox News) April 1, 2007

David Lereah, Chief Economist of the National Association of Realtors, resigned his position today, effective immediately, as Lereah was under increasing pressure to resign due to rebellion amongst the 1.3 million strong NAR membership and mocking in the media and amongst housing blogs.

Mr. Lereah held a press conference earlier today at NAR headquarters in Chicago, also attended by his lawyer Lirpa Loof.

"For too long I did the bidding of my evil masters at the NAR" said Mr. Lereah, in a hushed tone to start the briefing. "They marched me out as the bubble grew bigger and bigger, month after month, to say 'it's different this time - the fundamentals have changed - housing prices never go down'. Well, we all know how that line of bull turned out."

"They even had me write a book, which looking back on it must seem like a real hoot, called "Are You Missing the Real Estate Boom", later retitled "Why the Real Estate Boom Will Not Bust". And yes, that book, and my series of misleading quotes to the press as the bubble burst, has made me the laughingstock of the nation, if not the world, and caused irreparable damage to the nation, to families and to our economy."

"But today, everything changes. I have resigned my position with the NAR, I renounce 100% of my quotes and behavior over the past five years, I admit the housing bubble was the biggest con, the biggest Ponzi Scheme in world history, and I ask America for forgiveness."

[emersonbiggins]

Amazing confession, but I'd rather hear one from Greenspan.
This guy'll do -- for now.

[max_power29]

$this->bbcode_second_pass_quote('Dukat_Reloaded', '[')img]http://images.amazon.com/images/P/0385514352.01.LZZZZZZZ.jpg[/img]

$this->bbcode_second_pass_quote('', 'N')ew York (Fox News) April 1, 2007

David Lereah, Chief Economist of the National Association of Realtors, resigned his position today, effective immediately, as Lereah was under increasing pressure to resign due to rebellion amongst the 1.3 million strong NAR membership and mocking in the media and amongst housing blogs.

Mr. Lereah held a press conference earlier today at NAR headquarters in Chicago, also attended by his lawyer Lirpa Loof.

"For too long I did the bidding of my evil masters at the NAR" said Mr. Lereah, in a hushed tone to start the briefing. "They marched me out as the bubble grew bigger and bigger, month after month, to say 'it's different this time - the fundamentals have changed - housing prices never go down'. Well, we all know how that line of bull turned out."

"They even had me write a book, which looking back on it must seem like a real hoot, called "Are You Missing the Real Estate Boom", later retitled "Why the Real Estate Boom Will Not Bust". And yes, that book, and my series of misleading quotes to the press as the bubble burst, has made me the laughingstock of the nation, if not the world, and caused irreparable damage to the nation, to families and to our economy."

"But today, everything changes. I have resigned my position with the NAR, I renounce 100% of my quotes and behavior over the past five years, I admit the housing bubble was the biggest con, the biggest Ponzi Scheme in world history, and I ask America for forgiveness."

[max_power29]

$this->bbcode_second_pass_quote('Dukat_Reloaded', '[')img]http://images.amazon.com/images/P/0385514352.01.LZZZZZZZ.jpg[/img]

$this->bbcode_second_pass_quote('', 'N')ew York (Fox News) April 1, 2007

David Lereah, Chief Economist of the National Association of Realtors, resigned his position today, effective immediately, as Lereah was under increasing pressure to resign due to rebellion amongst the 1.3 million strong NAR membership and mocking in the media and amongst housing blogs.

Mr. Lereah held a press conference earlier today at NAR headquarters in Chicago, also attended by his lawyer Lirpa Loof.

"For too long I did the bidding of my evil masters at the NAR" said Mr. Lereah, in a hushed tone to start the briefing. "They marched me out as the bubble grew bigger and bigger, month after month, to say 'it's different this time - the fundamentals have changed - housing prices never go down'. Well, we all know how that line of bull turned out."

"They even had me write a book, which looking back on it must seem like a real hoot, called "Are You Missing the Real Estate Boom", later retitled "Why the Real Estate Boom Will Not Bust". And yes, that book, and my series of misleading quotes to the press as the bubble burst, has made me the laughingstock of the nation, if not the world, and caused irreparable damage to the nation, to families and to our economy."

"But today, everything changes. I have resigned my position with the NAR, I renounce 100% of my quotes and behavior over the past five years, I admit the housing bubble was the biggest con, the biggest Ponzi Scheme in world history, and I ask America for forgiveness."

[tsakach]

Most major subprime lenders are located in Orange County, Califorinia, and in particular, a financial district covering a one square mile area in Irvine. All of the subprime lenders in this area are facing the same problem as New Century, some are in even worse shape.

People's Choice Financial, which operates a subprime-mortgage division, filed for Chapter 11 bankruptcy protection last month. Other subprime lenders, including Ownit Mortgage Solutions and Mortgage Lenders Network Inc., have also sought bankruptcy protection in recent months.

Subprime lenders were a major source of employment in Orange County, so a lot of people are looking for work at this time.

The meltdown in subprime lending will remove as many as 40% of the potential home buyers from the market, while at the same time increasing the number of homes for sale due to foreclosure.

[emersonbiggins]

Damn you April Fool's!

[TommyJefferson]

Good one Dukat.

[snax]

I don't think that a decline in the profitability of sub-prime lenders is indicative of greater financial trouble for the economy as a whole so much as a symptom of it.

While there will be more companies to fall, much of the cause of that has been aggressive overlending to 100% value and beyond. I don't care what state the economy is in. When people have no equity in a property, they are far more likely to walk away from it. Making such loans is just flat stupid. Many of the companies making these loans likely won't even cover the inflated closing costs they hoped to stick people with.

[TreebeardsUncle]

American business is about throughput:
that means maximizing the number of transactions and minimizing the amount of time spent per transaction. In this case the mortgage brokers and lenders were also very effective in maximizing the amount of each loan. This enabled the baloon to be blown up quite big.

[snax]

It's just unfortunate that thousands are getting laid off, stockholders are getting screwed, and the CEO is likely walking away with MILLIONS in compensation. Nobody is really watching the store anymore.

[ohanian]

$this->bbcode_second_pass_quote('snax', 'I')t's just unfortunate that thousands are getting laid off, stockholders are getting screwed, and the CEO is likely walking away with MILLIONS in compensation. Nobody is really watching the store anymore.

[TommyJefferson]

$this->bbcode_second_pass_quote('snax', 'I')t's just unfortunate that thousands are getting laid off, stockholders are getting screwed, and the CEO is likely walking away with MILLIONS in compensation. Nobody is really watching the store anymore.

[TreebeardsUncle]

Actually, that is the way things are supposed to work. Governement is here to more efficiently enable the transfer of the wealthy from the many to the few. The next big rip off will be in taking money from old baby boomers and giving it to health insurance executives, pharmaceutical executives, and hospital and convalescent home administrators.

G

[snax]

$this->bbcode_second_pass_quote('TommyJefferson', '')$this->bbcode_second_pass_quote('snax', 'I')t's just unfortunate that thousands are getting laid off, stockholders are getting screwed, and the CEO is likely walking away with MILLIONS in compensation. Nobody is really watching the store anymore.

[gg3]

Good for you, Snax, in at least doing your homework. But if you're not a lawyer or didn't hire one to read the light-gray 6-point type, then you and your wife might still end up out on the streets with sore butts.

What you miss is that the people who write those contracts are experts at fleecing sheep, to the point where, according to a report aired on KCBS radio news (hardly a radical or even liberal outlet), you would need THREE graduate degrees to be able to understand the contract language. I assume those degrees are a) a JD, which qualifies you as a lawyer, b) at least a Master's in Economics, and c) an MBA.

In Libertarian terms that's a deliberately tilted playing field, all the more so because you can't even "bring along a lawyer" and be properly equipped, unless your lawyer also has the other two degrees! But the proof of the pudding is in typography that is designed to conceal. Not just the use of a 6-point font, but printing it in light gray ink. That stuff to me is prima-facie evidence of intent to defraud, precisely because it is totally unrelated to any legitimate business purpose.

In the past one could claim that using a small font was an attempt to save printing and suchlike costs by squeezing a bunch of stuff into fewer pages. Today those costs are a fraction of a cent per page. Thus the difference between the tiny font and a readable font is probably on the order of a total of TEN CENTS for the entire document.

Ten cents on a transaction that is typically worth about $400k. Let's see, that's 0.00000025 of the value of the transaction, or 1/4,000,000. One four-millionth. Anyone starting to smell a rat yet?

Then we get the light gray ink. Can anyone here suggest a legitimate business reason for that? I didn't think so. That telltale smell of rat is getting stronger and stronger by the minute.

(Aside from making it hard to read, the light gray ink serves another purpose. "Sorry, Mr. and Ms. Smith, I tried to put it on the copier and enlarge it so you could read it, but this just doesn't come out on the copier at all!" Surprise, surprise!)

One part of that light gray 6-point type will typically say that the contract supersedes any other oral or written representations by the lender. That means, the lender can engage in blatantly misleading selling practices and get off the hook or at least have legal grounds for fighting a lawsuit over the issue. So all the nice sweet-talk the guy gave you isn't worth a fiddler's fart, much less the hill of beans the fiddler ate before farting.

Sitting across the desk from this, is a young couple who have never bought a house before. Often they are the first generation in their families to attempt to buy a house. And even if they brought a lawyer with them, they have no clue where to hire an MBA and an economist. They have no basis for comparison, and no basis for evaluation. As far as they're concerned, "this is how it's done."

Just like a virgin in her first year of college, who decides to go to a party and ends up in the uncomfortable embrace of a drunken frat boy with notches carved on all four bed posts, who tells her to bend over as he pulls out the jar of Vaseline, and says "this is how it's done."

[snax]

I can't argue with your points at all. No doubt there are plenty of sharks out there just looking to close the next deal.

I think the frat boy analogy can work both ways however if people have taken the time to educate themselves. (Just reverse who has the Vaseline and another 'toy' discretely hidden on the dresser.)

It's a sad state of affairs, but unless people DO read the fine print, they will usually be handing the vaseline jar to the other party so to speak, no matter what the transaction. In our case, our broker told us up front what we already knew, which was to be ready to refinance into a conventional loan when the two year fixed period is up or we would be throwing ourselves under the bus. Sure enough, it's in the fine print.

[TommyJefferson]

Snax, it's ok as long as you entered the contract with your eyes wide open.

Voluntary contracts are the basis of a free society. They should be given respect, both when agreeing to the obligations of one, and when offering them.

I agree with GG. Contracts so complex and illegible that they can only be understood by a person with a magnifying glass and advanced specialized education borders on fraud.