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-- America's Debt = "We're Screwed!"
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| Originally posted by jerZ07002 first, a home shouldn't be purchased with the intent of making a profit from a future sale. Second, one of the main goals of investing is to protect against inflation (along with earning a return). Third, real estate has historically been the safest investment with some of the largest returns. |
Everyone loves graphs so here's another (similar looking) one of sub-prime fallout...
^^^
More good stuff. Where do you get those wonderful toys?
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| Originally posted by atbell ^^^ More good stuff. Where do you get those wonderful toys? |
I just heard a GREAT term, on the Clark Howard Show, describing Americans who carry a VERY heavy credit load as a "Walking Junk Bond"
I believe the term was coined by Jonathan Clements, of The Wall Street Journal. It seems like a very accurate description of the "pickle" that we Americans are in.
Link to show notes:http://clarkhoward.com/shownotes/2008/04/24/13485/
Here's a good quote from a newsletter I just finished reading.
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| ...Well, I've watched what has developed over the last 50 years and, to me now, if I think of a word to describe American culture, it isn't "self-reliant." It is "entitlement." That is not a positive word. You're entitled to something. You're entitled to health care. You're entitled to Social Security. No, you're entitled to them as long as you can work and provide the necessary resources to cover them--without sending the next generation and the generation after that and the next generation after that into bankruptcy. This generation is stealing from future generations and that is not morally correct. What I'm getting at is that, as we expand these entitlements, as we expand the socialization of risk and the acceptance of moral hazards, we don't make the system stronger. We weaken the system. We give it crutches that eventually cannot support the weight of the responsibilities that are being put upon them. When those break, the penalties will be far more severe. So I don't know if the Bear Stearns bailout ends the story. I believe that the credit crisis is still severe. That the likelihood is that the type of economic recovery we have, coming out of this period of recession or slowdown, will be materially slower than what it was like when we came out of the 2002 recession. You won't have the benefit of the expansion of the structured finance arena. It's going to be far more constrained and more vanilla. There's going to be far more credit that's going to have to be retained on portfolio. That requires more capital and more reserves for loan losses... |
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| Originally posted by zookeeper I just heard a GREAT term, on the Clark Howard Show, describing Americans who carry a VERY heavy credit load as a "Walking Junk Bond" I believe the term was coined by Jonathan Clements, of The Wall Street Journal. It seems like a very accurate description of the "pickle" that we Americans are in. Link to show notes:http://clarkhoward.com/shownotes/2008/04/24/13485/ |
lol... this is kind of an eye opener in a lot of ways.
'R' word looms as US awaits release of official figures
Official figures are expected to confirm that the world's biggest economy has contracted in the first three months of this year, and if that is the case, the US would be just one set of negative numbers away from being officially in recession.
Throughout the year, US President George W Bush has been trying to convince Americans that a recession can be avoided. But his latest attempt at reassurance took on a less certain tone.
"If there's a magic wand to wave, I'd be waving it of course," Mr Bush said.
The US President was fending off increasingly tense questions about the health of the world's biggest economy, as he braced himself for confirmation of what many economists agree is inevitable.
Not surprisingly, Mr Bush was guarded, going nowhere near the 'r' word.
"The words on how to define the economy don't reflect the anxiety the American feel," he said.
"The average person doesn't really care what we call it, the average person wants to know whether or not we know that they're paying higher gasoline prices and that they're worried about staying in their homes, and I do understand that."
Pessimism rules
Mr Bush will have an acute understanding late Wednesday night (Australian time), when the first quarter national accounts are released.
They are expected to show the US economy contracted in the first three months of this year or at best, flat-lined.
But a second successive quarter of negative growth would constitute a technical recession, not that many Americans would be surprised.
Lynn Franco is director of consumer research at the Conference Board, which today released its latest gauge of American consumer confidence, now at its lowest level since 2003.
"I think consumers are sort of getting hit from all angles," she said.
"Right now consumers are extremely pessimistic, extremely cautious. We saw our inflation expectations soar to a level we've not seen since following Hurricane Katrina, in a combination of both prices at the pump and prices at the grocery store."
That is on top of the genesis of the current mess in the US - the meltdown of the subprime mortgage sector which has pushed housing foreclosures to record levels.
Rick Sharga is from housing research group RealtyTrac, and says housing prices have fallen by 13 per cent in America's top 20 market, and there is still no sign that the worst is over.
"Forty-six of the 50 states and 90 of the 100 largest metropolitan areas have seen increases in the past quarter," he said.
"Arizona, Connecticut and Massachusetts have shown a fair amount of recent growth.
"Almost 650,000 households received some sort of foreclosure notice in the first quarter, which works out to being about one in every 194 US households receiving a foreclosure filing during that period."
And many Americans who are struggling to buy life's basics - let alone pay a mortgage - are lining up for financial advice.
Atlanta consumer credit counsellor, Scott Scredon, has some hard advice for families battening down budgets, now that the boom days of easy credit are coming to an end.
"The golden rule is to live beneath your means, obviously spend less money than you make," he said.
"Do you need cable television and if so, do you need 250 channels? If you have children, especially if they're 12 years old or older, do you need three, four, five cell phones in the household?"
Awaiting Fed action
While US consumers are looking for direction, economists are expecting more action from the US Federal Reserve overnight. It has already cut official interest rates by a total of three percentage points since September.
The betting is that Fed chairman Ben Bernanke will cut once again.
Roger Bootle, like most economists, expects the benchmark rate to fall to 2 per cent.
"I think they'll probably cut by a quarter, but I don't think that's going to be the end of it," he said.
"The market seemed to think that there'll be some sort of pause afterwards and that may well be right."
He thinks they could fall even further, but that the US central bank will now start debating the balance between dealing with a recession, and fighting off inflation.
"There are two camps really on the Fed board. Two intellectual camps in general - all those that are worried more about inflationary risks, and those that are more worried about the downside risks of the real economy," he said.
"We will have quite a few rate cuts and as it were, this could then sort of hold the balance between these two opposing views.
"I guess the hope would be that further news would emerge over the next couple of months to make it clear which way things were going, and my own view is that the economy is going to be proved to be pretty soft.
"I'm hopeful that inflationary pressures will subside as the year moves on, but I still think myself that US rates are coming a lot further down."
The uncertainty in the United States continues to be reflected in Europe, where Germany's Deutsche Bank has posted its first quarterly loss in five years.
The outlook is so foggy that the bank will not give a forecast for its full year profit result because of the unprecedented financial circumstances.
The bank says it simply cannot see that far ahead.
ABC News Australia
Magic wands, banks that refuse to forecast... 
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| Originally posted by Lilith Magic wands, banks that refuse to forecast... |
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| Originally posted by zookeeper To quote the Seinfeld episode, with the "low-flow showerheads"... Kramer: "I don't like the sound of that!" I think all I can do now is laugh or else I'll cry....and I just put $72.00 worth of gas in my car. Even my English friends are saying that I'm paying alot for gas. on the bright side...I'm using my bike more than I have in years |
But the magic wand guys!
It'll work for sure, heck oil was $20 a barrel 10 years ago, now its magically $120 which means its doing something doesn't it... if you're in the oil business or have friends there.
Full tank for me is about $120 in the big car, needless to say, the little 4cyl banger is getting a lot more use.
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WRAPUP 3-U.S. growth surprises but consumers stressed Wed Apr 30, 2008 3:23pm EDT (Adds Fed action, details on support from inventories, paragraph 9, updates market reaction) By Glenn Somerville WASHINGTON, April 30 (Reuters) - A buildup in inventories kept the U.S. economy afloat in the first quarter despite the weakest consumer spending since 2001 and reduced business investment, a government report on Wednesday showed. Gross domestic product grew at a 0.6 percent annual rate in the first quarter, the Commerce Department said. That matched the fourth quarter's advance and topped forecasts for 0.2 percent growth, but did not end a debate on whether the country was sliding into recession. The Federal Reserve weighed in later with another small cut in official interest rates to counter what policy-makers characterized as weak economic activity. Some economists said the GDP report suggested the U.S. economy was on a bit firmer ground than had been thought, but others braced for worse times ahead as businesses ratchet back production further to try to sell off inventories. "There are some very troubling signs in this report," said economist Paul Ashworth of Capital Economics Ltd in London. "The GDP figure is being flattered by the strength of demand abroad and an involuntary inventory accumulation." Stock prices were higher in mid-afternoon in volatile trading. Stocks had a positive tone from early trading, buoyed by hopes that employment will hold up. ADP Employer Services said it found private-sector companies added 10,000 jobs in April, a sharp contrast to forecasts that they would cut jobs. The government is set to issue its report on April employment this Friday and forecasts are that 80,000 more jobs will be cut. Jobs were lost in each of the first three months this year. HOUSING STILL WEIGHS The economy is burdened by a crisis-stricken housing sector that has dimmed consumer optimism and fueled worry that spending will shrivel in coming months, raising risks of a recession. Businesses whittled down inventories in the fourth quarter but they were rebuilt in the first quarter. Without the positive 0.8 percentage point contribution from inventories, the economy would have contracted in the first quarter. The GDP report showed that final sales to domestic purchasers weakened in the first three months this year at the steepest rate in 16 years, which raises odds that businesses will have to lower output to sell those inventories off. Some companies, like General Motors Corp. (GM.N: Quote, Profile, Research) have already announced cuts in production. GM said earlier this month it will cut 2008 truck production by 138,000 vehicles. "We expect that the coming inventory correction will send growth into negative territory, save a truly heroic effort by the U.S. consumer to spend their way out of the current malaise with their $600 rebates," said Joseph Brusuelas, U.S. chief economist at IDEAglobal in New York. Tax rebates that are part of a government economic stimulus program began to flow this week to upwards of 100 million Americans. While the Fed's policy-setting Federal Open market Committee lowered rates as expected, it also indicated it now wants to pause in its rate-cutting campaign. It said that it has put in place a "substantial easing of monetary policy" that should support moderate growth ahead. The Fed has cut its benchmark federal funds rate by 3-1/4 percentage points since mid-September to 2 percent to shore up the economy and calm unsettled financial markets. UNSETTLING PRICE RISES The Fed specifically noted that energy and commodity prices were rising and inflation expectations were up -- all reasons to avoid reducing rates again unless forced to do so. GDP is the broadest measure of total economic activity within U.S. borders. Many of the first-quarter report's details implied weakening that analysts fear will lead to a recession. The GDP figures are an initial measure of first-quarter performance and will be revised twice in coming months. Consumer spending that fuels two-thirds of economic activity through consumption of goods and services, grew at the weakest rate since the second quarter of 2001, when the economy was last in recession. The weakening in an already distressed housing sector was even more striking. Spending on residential construction plunged at a 26.7 percent rate, the biggest quarterly drop since the end of 1981. A separate report suggested the weakening labor market was keeping labor costs under wraps. The Labor Department said U.S. employment costs grew at a 0.7 percent annual rate in the first quarter, marking a slight slowdown from the fourth quarter. Figures from the Mortgage Bankers Association on Wednesday suggested the housing market was far from recovery. The MBA said its index of mortgage application activity dropped 11.1 percent last week to its lowest level since late December. (Additional reporting by Mark Felsenthal and Lisa Lambert in Washington and Burton Frierson, Al Yoon and Richard Leong in New York; Editing by Andrea Ricci) |
Yet, more gloomy predictions for our neighbours down South from The Economist...
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America's house prices are falling even faster than during the Great Depression AS HOUSE prices in America continue their rapid descent, market-watchers are having to cast back ever further for gloomy comparisons. The latest S&P/Case-Shiller national house-price index, published this week, showed a slump of 14.1% in the year to the first quarter, the worst since the index began 20 years ago. Now Robert Shiller, an economist at Yale University and co-inventor of the index, has compiled a version that stretches back over a century. This shows that the latest fall in nominal prices is already much bigger than the 10.5% drop in 1932, the worst point of the Depression. And things are even worse than they look. In the deflationary 1930s house prices declined less in real terms. Today inflation is running at a brisk pace, so property prices have fallen by a staggering 18% in real terms over the past year.  |
While you where all mindlessly distracted watching the black guy and the retarded cheerleader duke it out like some demented, 2nd rate sideshow act for fun and amusement on televisions over the last however many months (make it stop!), the rest of the world has been rolling along just... well rolling downhill really.
Shares plummet, oil hits record
June 8, 2008 - 12:23AM
US SHARES plunged yesterday, making it the worst day in 15 months for the Dow Jones Industrial Average. The Dow slumped after the US Government said the May unemployment rate had reached its highest level in 22 years, and oil prices shot to another record, renewing fears that the US economy faces 1970s-style stagflation.
The one-two punch of those catalysts sent investors fleeing from stocks to the safety of government bonds, worried that corporate profits will be under siege for longer than forecast.
The benchmark S&P 500 fell 2.6percent for the week to close near a two-month low.
US crude's dramatic leap of $US10.75 to $US138.54 - its biggest one-day rise in dollar terms - fuelled concerns about inflation and consumers' spending power, a key driver of economic growth. Helped along by the US dollar's weakness and tensions in the Middle East, oil thundered past the high hit in late May.
General Electric (GE) and other economic bellwethers slid after a Labor Department report showed the unemployment rate in the US rose in May to 5.5percent, its highest level since October 2004 and an increase from April's jobless rate of 5percent. The report also showed the economy shed jobs for a fifth straight month.
SMH
*clunk*
A little more from The Guardian on specifics...
Bond prices moved sharply higher as expectations of any near-term increase in interest rates subsided. Gold futures jumped 2%, to $891 an ounce as investors, taking fright, sought a safe haven.
There were substantial job losses last month in construction industries, where 34,000 cuts were made, in manufacturing, where 26,000 jobs were lost, and among providers of professional services, where 39,000 jobs went.
"The overall trend is clearly weakening, with the unemployment rate having increased by a full percentage point over the past 12 months," said James Knightley, an economist at ING Financial Markets. "This will continue to depress consumer spending - the fiscal package is being fully swallowed by higher gasoline prices - and will, in our view, help to keep activity depressed for longer than financial markets are currently discounting."
Nigel Gault, chief economist at Global Insight, said: "The rise in unemployment throws some cold water on the idea that the Fed will soon raise interest rates to prop up the dollar and rein in inflation. The Fed is in a difficult spot with first-half growth not far above zero, but inflation climbing. We believe that the economy is too fragile for a rate hike before 2009."
So if you're one of the lucky ones out there with a job, if you work in aforementioned industries and considering a career move, now might be a good time to do it.
I still wouldn't touch the stock market with a 10ft pole and neither should anyone who considers themselves a 'amateur speculator' (well by 'amateur speculator' I mean, 'average idiot' who thinks they know what they're doing) as you're going to end up broke-ass, in tears and probably wondering why you didn't bet on horses with your spare pennies.
If you do have some spare pennies, hang onto them.
If you don't have some spare pennies, get some.
Currency trading is still probably the safer bet if you're looking to do some short term, no-brain forecasting in that area as opposed to shares and commodities, though if oil dips suddenly in the next few weeks you could probably do worse than buy up in it as its likely to spike again as soon as someone so much as looks cross-eyed at Iran.
In other news from The White House as to why the US is a wreck at the moment...
*crickets*
Yep, no surprise there as there's 'a really, really serious war on damn it' and George Bush is still looking for his magic wand. Soon as he finds it or his god tells him to bomb someone for their oil, I'm sure he'll let you all know about it.
In other news from the maximum security twilight home for cats as to why the US is a wreck at the moment.
If you think its pretty bad right now and don't think it can get much worse you'd be DEAD wrong! Save some money, be really wary at having anything to do with real estate, try to minimise debt and take out some income insurance to keep you in cat biscuits if things go wrong if you have a job that is in one of the above mentioned sources of employment and keep your ear to the ground where you work for mentions of any lay-offs.
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| Originally posted by Lilith Yep, no surprise there as there's 'a really, really serious war on damn it' and George Bush is still looking for his magic wand. Soon as he finds it or his god tells him to bomb someone for their oil, I'm sure he'll let you all know about it. |
Always interesting to dredge up this one, must admit I didn't expect it to go 'bang' quite to the level it did but I guess its a sign of some distinct lack of confidence in the US government.
In fact, I'm damn impressed really.
Course, I'd dare anyone to vote in another 'fiscal conservative' now... 
Go on!
They've even taken a leaf out of the Dems book got themselves a home grown flag waving cheerleader for you to ogle like drooling morons while ignoring the country managing to plumb new depths of financial ruin.
Worrying fact of that, I'd probably trust Hillary to run a fruit stand and probably not run off with all the apples, this one would be lucky to spell apple.
To tell you all the truth, the reason I haven't posted in such a long time is that I've been working ALL the time, trying to get some kind of a retirement savings that will last me more than a couple of years.
I can truly say that I AM FRIGHTENED!
I just watched AT LEAST several years of hard earned savings go up in smoke, the other day.
I've always been able to put "money issues" in their proper place and not let it interfere with my "good times"....now, I wake up and it's there, I go to sleep, and it's there. I'm watching everything, every dollar, every dime, every nickle, every funny noise the car makes I think is going to be another $1000.00! I'VE NEVER BEEN THIS WAY! AND DAMMIT I DON'T LIKE IT AT ALL!! WTF IS GOING ON WITH THIS COUNTRY!!!
I have an American friend who lives in Ecuador, as a writer, and he lives MUCH better than I do! I'm REALLY thinking about relocating! The "third world" is really not so "third" anymore! WE are going to be the third world
Well, off to the financial guy to find out if my new retirement plan is to die at my desk!
Re: America's Debt = "We're Screwed!"
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| Originally posted by zookeeper Debt will be the true downfall of United States. What do you think? |
I do enjoy Uncle Jay's assesment of the situation.
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| Originally posted by Fir3start3r Yet, more gloomy predictions for our neighbours down South from The Economist... >>Source<< Good gawd....it's a free fall! |
Glenn Beck seems to get it.
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| Originally posted by Trancer-X Glenn Beck seems to get it. |
Bump. Just a little redux and a shout out to Juzfugen, last seen on the side of the road sporting a "Will Work For Food" sign.
Last post: 3/27/2008
Last Comment: "its a bad ass tune"
I think he realized he was more suited to not give financial/real-estate advice.
RIP Juzfugen. I hear there are emerging opportunities in the foreclosed housing auction market.
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| an. 28 (Bloomberg) -- With a sharp nod, Robert Parkin bids $500,000 at the auction of a brick colonial house in Upper Marlboro, Maryland, that the builder once valued at $1.1 million. Seconds later, a competitor counters at $510,000, and Parkin must decide whether to raise his limit on the unfinished, 4,878- square-foot property with a stop-work order taped to the window. This auction, 19 miles (30.6 kilometers) southeast of Washington, is one of hundreds a day carried out on front lawns and in hotel ballrooms nationwide by liquidators such as Williams & Williams Marketing Services Inc. of Tulsa, Oklahoma. With 2.3 million residences in foreclosure, the sales are pushing down prices to early 2004 levels in the hunt for new buyers. “If you’re looking for expediency to get people back in homes, un-board neighborhoods, clean up the rats, this is it,” says Pamela McKissick, 62, the president of closely held Williams & Williams. Banks, brokerages and government-sponsored mortgage finance companies such as Fannie Mae hire the company to sell houses one at a time or to liquidate entire portfolios. Auctions are resetting real estate values at the neighborhood level, while President Barack Obama tries to find a way to limit foreclosures and revitalize the worst housing market since the Great Depression. Bargain hunters such as Parkin, a 50- year-old aerospace engineer who is shopping for a personal residence, and mom-and-pop investors on the prowl for rental properties, aren’t waiting for federal aid. They are buying foreclosed properties for as little as 10 cents on the dollar. Lenders seized 9,787 houses a day in December, or almost seven a minute. Even after the 26 percent drop in residential prices since June 2007, there are enough unsold homes to last 9.3 months at the current sales rate. Falling Prices Housing values may decline a further 15.5 percent this year, based on December 2009 contracts tied to the RPX residential real estate index. The RPX, developed by New York-based Radar Logic Inc., measures the average price per square foot of residential sales in 25 U.S. markets. After median house prices fell 15 percent in November, the most on record, home sales rebounded 6.5 percent last month, the National Association of Realtors said Jan. 26. Distressed sales accounted for almost half the total. The California Association of Realtors said yesterday that the price of a single-family house in the state plunged 41.5 percent last year. The Commerce Department may report tomorrow that new-home sales fell 2.5 percent last month, based on a Bloomberg survey of 69 economists. Barroom Brawler Auctions are the best way to determine the true value of real estate, says Dean Williams, 47, the owner of the auction house that bears his name. Sales through agents promote the owners’ asking prices, while lenders emphasize the affordability of monthly payments, he says, during an interview in Tulsa, surrounded by shelves of books including “Intellectual Freedom Fighter” and “Radicals for Capitalism.” His lip is scarred from a bar-room brawl 28 years ago. “We’re creating values beyond just short-term profit,” he says. “Those values, we feel, are efficiency, transparency, competition, stewardship.” During the last real estate recession in the early 1990s, brought on by the collapse of the savings and loan industry, a temporary federal agency, the Resolution Trust Corp., served as a central clearing house to dispose of foreclosed houses, offices and stores. No such authority exists now, leaving private buyers and sellers to work out their own deals. ‘Greedy Speculators’ Forced sales reduce previously recorded property values and erode the $391 billion in local governments’ property tax rolls. Auctions exacerbate the crisis, says Ira Rheingold, executive director of the National Association of Consumer Advocates, a nonprofit attorneys group in Washington. “They are just furthering the depressed market, because what they are doing is selling properties really, really cheap,” Rheingold says. “I don’t know that it does anything for the market except make some greedy speculators rich.” Lawrence Summers, Obama’s director of the National Economic Council, pledged in a Jan. 15 letter to congressional leaders that the administration will commit $50 billion to $100 billion to try to keep people in their homes. While government assistance may slow the record pace of foreclosures, it won’t stop them. “I’m anticipating that we’re going to see a frightening increase in foreclosure activity in the first part of the year,” says Rick Sharga, a senior vice president at the RealtyTrac real estate data service in Irvine, California. “Everybody underestimated just how severe this would be.” Williams & Williams says it aims to triple its peak sales to 10,000 houses a month this year. In 2008, the company says it generated $1.1 billion in revenue on 13,872 auctions. Internet Bidders About 14 percent of the transactions are won by bidders on the Internet, and the Williams & Williams switchboard receives 30,000 calls a month, the company says. Its commissions average 6 percent. Auctioneers themselves can earn as much as $1 million a year. Williams, who bought the business from his father, Tommy, in 2003, bankrolled the December introduction of an affiliated broadcast venture, the Auction Network, in 87 million households and on the Internet. Auction Network sells everything from antiques to condominiums and is developing a niche marketing the personal effects of celebrities such as Ozzy Osbourne, the late comedian Bob Hope and silent film actors Mary Pickford and Douglas Fairbanks Jr. While a team of Williams & Williams auctioneers was moving through Maryland and Virginia on Dec. 16, a competitor, Irvine, California-based Real Estate Disposition Corp., was wrapping up an eight-day, 18-city tour at which it sold 2,842 homes for $210 million, according to Chairman Robert Friedman. Swap-meet Partners Friedman and Chief Executive Officer Jeffrey Frieden, both 47, met as teenagers when they were working at a swap meet. They started privately owned REDC in 1990 to help dispose of properties left by the S&L bust. They auctioned distressed real estate for seven years before mothballing the practice. Two years ago, they started again. In November, the Trident IV private equity fund managed by Charles Davis, chief executive officer of Stone Point Capital LLC in Greenwich, Connecticut, bought a 50 percent stake in the California auction house. Terms weren’t disclosed. By packing hundreds of bidders into ballrooms at dozens of auctions a day, REDC says it sold an industry-record 32,799 housing units for $3.4 billion last year. Bank auctions, foreclosures and loan restructurings have eliminated “about 60 percent of the bad subprime loans” that triggered the industry’s collapse, Friedman says in an interview. The rest will be worked out this year, he says. New Foreclosure Wave Now, a new wave of foreclosures is capsizing borrowers with better credit in higher-cost houses who “got caught up in the subprime frenzy and maybe overshot the mark,” Friedman says. “I envision that wave to last probably another 18 to 24 months.” Foreclosures and liquidations accounted for 34 percent of the residential market in Los Angeles last year, 30 percent in Phoenix and 27 percent in Washington, according to Radar Logic. “Money is made, unfortunately, by the M&Ms of life: Mistakes and misfortunes of others,” says Monte Lowderman, 41, a Williams & Williams auctioneer from Macomb, Illinois. The Upper Marlboro property was the third of 14 that Lowderman’s three-man crew sold for $2.4 million that day. They traveled in a rented Toyota sport-utility vehicle on a six-day swing from Virginia to Massachusetts. The house once belonged to Jeffrey Whitner, a 43-year-old independent contractor who ran out of time and money to complete the job. He planned to use it to showcase his building abilities, he says. Whitner discovered the empty hilltop lot by driving around the neighborhood in February 2004. He paid $86,000 to buy it from an 80-year-old widow, public records show. $1.1 Million Appraisal The builder obtained a $651,300 interest-only construction loan from SunTrust Mortgage Inc., a unit of Atlanta-based SunTrust Banks Inc., property records show. That gave him enough to complete 95 percent of the construction, he says. Whitner says he obtained a $1.1 million appraisal on the project and in September 2007 was closing in on new funding to finish. Then the real estate market collapsed, and his bank credit line vanished, he says. Between starting and losing the project, Whitner fell a year behind on child support for his 12-year-old son, owing as much as $3,600, and ran up $11,034 on an unpaid credit card and personal loan, according to a Prince George’s County, Maryland, judgment. “Maybe I put too much pride in the home and wanted to make it perfect for the owners,” Whitner says. SunTrust foreclosed on Oct. 26, 2007, court records show. Ten days later, Whitner defaulted on the mortgage for the $228,000 condominium where he lived in Bowie, Maryland. “I got really depressed,” he says. Burning Building Lowderman, who is about to auction the Upper Marlboro house, spits chewing tobacco into a paper cup. “What we’re seeing today, in my lifetime, it’s happened once already,” he says. His father, Jack, worked with Tommy Williams in an Illinois farm-and-livestock auction firm until the 1980s agricultural crisis doomed the partnership. Tommy Williams resettled in Tulsa, where his sales exploits are family legend. He says he once auctioned a burning building. When son Dean graduated from Georgetown University law school in Washington in 1989, he began flipping properties for profit, buying houses and having his father auction them. Williams & Williams was born. Dean Williams says he honed his economic views reading the Libertarian author Ayn Rand, and named his 8-year-old son for the self-made businessman Hank Rearden in Rand’s 1957 novel “Atlas Shrugged.” “Our focus,” says Williams, “is much longer than prices going up or down, even in a crisis of this magnitude.” Unlit Townhouse At an unheated, unlit townhouse in Capital Heights, Maryland, Lowderman’s auction team has already disposed of a residence that stood empty for eight months. The sale took seven minutes and elicited a winning bid of $139,000. That was less than half the $305,000 it sold for in December 2006 and 9 percent below the price a previous owner paid in 2003. The winning bidder in this and all auction sales must make an immediate 5 percent down payment and arrange financing within a month. The transaction is subject to the seller’s approval. If Fannie Mae, the seller of the Capital Heights property, accepts the offer, it will record a loss equal to half the loan’s balance, according to public records. The Washington-based government mortgage finance company, which hired Williams & Williams, has absorbed a $56 billion beating on mortgage-related losses, Bloomberg data show. The mistakes pushed it into conservatorship last year. Fannie Mae couldn’t be reached for comment yesterday. The original lender, HSBC Mortgage Corp., a unit of HSBC Holdings Plc, has recorded $33.1 billion in subprime losses. ‘Cash is King’ “There’s people who’ve lost a bunch of money,” says Juston Stelzer, 29, who works with Lowderman as a “ring man,” recognizing each bid at auction by belting out “Hey!” and “Yes!” “But cash is king right now. And there’s going to be some people get filthy, filthy wealthy,” he says. It’s decision time for Parkin, standing on an unfinished floor in the unheated front room of the Upper Marlboro house. As he peers into the muddy, unplanted yard, the winter sun frames him in a spotlight. Parkin says he’s stepped into $1 million tract houses that don’t feel as hospitable as this one, with its granite counters, stone fireplace and floor-to-ceiling windows. Lexus and Ford “Maybe it’s the analogy of closing the door of a Lexus and closing the door of a Ford,” he says. Mechele Silva, 39, a physician who lives nearby, says she used to peek in the windows to glimpse the builder’s progress. “It was so much nicer than the old houses that we lived in,” says Louise Pearson, 84, another neighbor. While the first minute at auction raised the offering price more than fivefold, the next 60 seconds tick by without a bid. “I had never done an auction in my life,” Parkin says. “I didn’t want to get myself in a position I couldn’t handle. Then he offers $520,000 and reclaims the lead. The competitor’s face falls. The auction ends. Lowderman asks for applause. “When I won, I had this rush: What did I do?” Parkin said later. “It was this blend of excitement. And terror.” |
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| Originally posted by Shakka last seen on the side of the road sporting a "Will Work For Food" sign. |
Shakka: Look up TIC - Tenants In Common
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