Jobless rate falls to 9.7%

[fabsroman]

Originally Posted by Fredke

Actually, I was in error. I did use the median household income, but carelessly wrote median family income instead. So the answer to your question is that I was just being careless.

At the expense of sounding like a moron, what is the difference? Doesn't a family live in a household? Does household only take into account the parents and not the kids' income whereas family takes into account parents and kids' income? I guess I might learn something tonight.

[fabsroman]

Originally Posted by Fredrico

Infrastructure and power requires critical funding by the governments. This is one thing the Obama administration is full ahead on. It's like TVA and the WPA projects FDR set up to create jobs during the Thirties.

I hate to say it, but in TX and here in NVA, those Mexican immigrants, legal or illegal, are the best workers around. They bring skill and dedication to their jobs, and they're getting paid decently for it, if not what a union contractor would demand. I can also guarantee if their numbers have dropped since the recession, they'll be back to take part in rebuilding American when finances get back on track.

I just read the first sentence of of pluser's post and I will have to agree with him. The level of craftsmanship is nothing short of terrible. My townhouse was built in 1997 and it has a couple spots where the corner bead is coming away from the drywall, which means I have to take the entire bead off, put a new one on, spackle it, and repaint the walls. The nail pops are nothing short of incredible and the spackling job looks like waves in the walls. At some spots, the joint paper is actually cracking away from the wall. The spackling on one of the windows rises towards each corner instead of staying flat and level the entire way.

Regarding illegals, there were plenty of them in the trade. My dad has been doing home remodeling since I was 5 and a good deal of my practice deals with home remodelers and new home construction contractors. There were plenty of 1099's being issued when there should have been W-2's instead. This was an issue across the board for all contractors. They had to hire illegals to compete with the other contractor down the road. Also, a lot of contractors were working under the "cash money" concept.

Now, as far as them being hard workers, I will say it is about 50/50. Half are hard workers and the other half are just looking for a quick buck. Hoowever, I would put most Americans in the 25/75 category, meaning 25% work hard and the other 75% are looking for a quick buck.

[Fredrico]

Originally Posted by fabsroman

I cannot even finish reading this one because I cannot make it out of the first paragraph. The banks were never looking to foreclose on real estate that was appreciating and would have an appreciated value when foreclosure was imminent. If the property had appreciated and was holding value, why wouldn't the homeowners themselves sell the house? The loan balance would be paid at closing and the homeowners would get the remaining profits.

How do you explain the banks that loaned on the second mortgage, as they were left holding the bag with nothing to show for it, and they never would have ended up with the house in the first place because they weren't the first mortgagor. How do you explain the home equity loans that are essentially in the same shape, if not worse, as the second mortgagor?

Yep, it is ALL the banks' fault. I thought we had already gone through this ad nauseam.

How is it that the banks were the only greedy ones? Have you seen the size of the homes that some people bought using a 5/1 ARM with the hope that the home would continue to appreciate and they would be able to refinance. Just saw one 7,000 sf house in Sykesville sell after a foreclosure for $650,000. They had paid $950,000 for it in 2005. Give me a break. At least I can see that it was people in general that were greedy instead of just bankers. I throw politicians and the regular old joe in there along with the bankers.

Funny how the house flippers were making a bunch of money doing this and you don't put any blame on them. How about the realtors and home contractors that were making the prices go through the roof. In early 2004 we looked at a new house in Gainesville, VA and met with a sales rep to talk about prices one Sunday. When we were getting up to leave she said that we should sign a contract that day because new prices come out every Monday and they are always going up. I just had to walk out at that point. In 2007, we went to look at a new development in Woodbine, MD where they had the homes listed at $750K. We walked into one of the model homes in a different development where they were doing the sales at, and the sales rep told me they had just sold 5 lots in the development we were looking at. I asked him which ones they were, and after he pointed them out to me I told him that was a shame because we were only interested in 2 of the lots and it looked as though they had already been sold. Guess what, since that conversation, I have only seen 2 homes built in that development and it has been at the rate of about 1 a year. Guess the other 4 lots fell through, or the guy was lying to try and pressure me into a sale. You decide. However, I'm sure he wasn't doing it out of greed, since he works on commission. You should have seen what our realtor suggested on this place when we were talking about drafting up a contract for it. That story is way too long for tonight, and I think I have already written it on here about 50 times. Yep, it was only the bankers that were greedy. Granted, my wife and I werre approved for a $450K loan back in 2004, and when I ran the numbers on the payment the only way we would have been able to afford it is if we wanted to eat beans and rice for the next 30 years. That could have been my greedy mortgage broker. Luckily, we only used about 2/3's of what we were approved for.

I lump the banks, mortgage companies and realtors in the same ball of wax, working beautifully together to inflate the bubble, with anxious home buyers frantically trying to keep up, so they could grab a home before the prices went out of sight. The idea of investing in a house has always been the main reason to buy, instead of rent. Most homeowners hang onto their houses for many years, as our parents did. The house increased in value at the same rate as inflation, and the rest of the economy, wages, etc. When it came time to move to a new job location, they'd sell at a profit, pay off the old mortgage, and have a sizeable down payment for the next house.

In the 90s, maybe fueled by the economic prosperity brought about by the computer revolution, larger family incomes with both parents working, eventually bank deregulation and easy credit, prices started rising at a faster rate. Whether a response to the market or the desire to maximize profit (greed), banks let down their guard against risky lending, including the derivatives tradings, the mortgage companies did the same, while houses got bigger and bigger. People bought them, naturally. You gotta live somewhere.

If some lender pats you on the shoulder and thrusts a pen in your hand, like the experiences you describe, not everyone walked away like you did. They said "YEAH!" and signed up for an opulent lifestyle a few years earlier would have not been offered. That's how bubbles inflate, realtors saying, "Sure! Sign here!" Not to mention the credit card companies saying, "Here! 20,000. credit line! Go buy something!"

I'm not surprised a great many home buyers were anxious to refinance as soon as they could, and take out second mortgages. They desperately needed the cash to keep up! How many homeowners facing foreclosure tried to sell their houses and downsize? From the numbers, not enough. But did values decrease with all the foreclosures going on, or were they already on the way down when sales started dropping? Which came first? At a certain point, owners are stuck between paying off twice what they could sell the house for, or defaulting and walking away with no equity in the house, leaving the banks holding the bag. A lot of people are doing the latter.

There are whole sections in Memphis, TN, I read about, of vacant houses foreclosed upon. They are now owned by banks. The mortgage companies didn't say,"Oh, gee we're sorry you can't make payments on your house anymore. So we'll buy it from you at market value and deduct what you owe us." I don't believe it works that way. The former owners are evicted with none of their equity, as I understand it. The banks don't give them a damn thing. They hold onto the property until some realtor comes along and finds a buyer, or they auction it off. In Memphis, this has enabled, with government subsidies, some original owners to buy back their homes at a greatly reduced mortgage! How's that for a "market correction?"

Too bad if the bank had to sell a house the former hapless owner was paying an inflated 100,000 mortgage on, to the highest bidder for 25,000. Now it has to pass on the 75.000 loss to 401K, mutual funds, or derivatives they held. Am I missing something?

[fabsroman]

Originally Posted by Fredrico

There are whole sections in Memphis, TN, I read about, of vacant houses foreclosed upon. They are now owned by banks. The mortgage companies didn't say,"Oh, gee we're sorry you can't make payments on your house anymore. So we'll buy it from you at market value and deduct what you owe us." I don't believe it works that way. The former owners are evicted with none of their equity, as I understand it. The banks don't give them a damn thing. They hold onto the property until some realtor comes along and finds a buyer, or they auction it off. In Memphis, this has enabled, with government subsidies, some original owners to buy back their homes at a greatly reduced mortgage! How's that for a "market correction?"

Too bad if the bank had to sell a house the former hapless owner was paying an inflated 100,000 mortgage on, to the highest bidder for 25,000. Now it has to pass on the 75.000 loss to 401K, mutual funds, or derivatives they held. Am I missing something?

No, but the banks did allow homeowners to do short sales, where the bank still lost out and the banks allowed the owners to walk away from the debt scott free. Granted, some states are non-recourse states, so the homeowners could walk away from the debt regardless, but Maryland is not one of those states. If the home went into foreclosure, it is 99.9% of the time because the home was not worth more than the mortgage. If it was, why wouldn't the owner put the home up for sale and get whatever they could for it before the foreclosure occurred. In Maryland, it is taking about 9 months for a foreclosure to go from filing to auction, so if the owner has a significant amount of equity in the home and just cannot make the payments, why not sell it for a little less than market value and ge to keep some equity? The banks rarely, and I mean rarely, foreclose on a property and make a profit from it.

Now, when they do lose that hypothetical $75,000 you are talking about, how exactly do they pass it on to a 401(k)? Are you trying to infer that the loss is passed along to a 401(k) because the bank's stock price takes a hit when it incurs an operating loss for a given year? If that is what you are inferring, then I can understand it. Otherwise, I have no clue what you are talking about. It is the same with everything else in a 401(k). If a company does poorly, then the stock price takes a hit. If Ford extends credit to the wrong people and then finds the debts to be uncollectable and the collateral cars to be almost worthless, then your 401(k) takes a hit if it happens to own Ford stock. Same goes for the banks.

[Fredrico]

Originally Posted by fabsroman

I just read the first sentence of of pluser's post and I will have to agree with him. The level of craftsmanship is nothing short of terrible. My townhouse was built in 1997 and it has a couple spots where the corner bead is coming away from the drywall, which means I have to take the entire bead off, put a new one on, spackle it, and repaint the walls. The nail pops are nothing short of incredible and the spackling job looks like waves in the walls. At some spots, the joint paper is actually cracking away from the wall. The spackling on one of the windows rises towards each corner instead of staying flat and level the entire way.

Regarding illegals, there were plenty of them in the trade. My dad has been doing home remodeling since I was 5 and a good deal of my practice deals with home remodelers and new home construction contractors. There were plenty of 1099's being issued when there should have been W-2's instead. This was an issue across the board for all contractors. They had to hire illegals to compete with the other contractor down the road. Also, a lot of contractors were working under the "cash money" concept.

Now, as far as them being hard workers, I will say it is about 50/50. Half are hard workers and the other half are just looking for a quick buck. Hoowever, I would put most Americans in the 25/75 category, meaning 25% work hard and the other 75% are looking for a quick buck.

My brother tells me the Mexicans he's worked with are a little bit better than their American native counterparts in working on those fancy houses. Maybe they're cherry picked from a larger group of not so talented workers. Shoddy work is often also a result of impatient contractors, stressing speed over quality. I've known drywall guys who always brag about how fast they can do a house. They seem to be the least rewarded for quality. Contractors aren't the only ones paying on 1099s and with cash. Small time businesses sometimes don't even have a paymaster. The owners writes the checks. The work is hourly, part time, sporadic. The last guy I worked for, in effect on retainer 5 days a week but averaging 20-30 hours, looked at me as "an independent contractor," with no contract.

You don't have a very high opinion on American workers! Out in the primitive wilds of ETX I'd say generally most workers at least pretend to be responsible and thorough. Some of them are more intelligent than others applying those principles, and they kind of look out for the ones who are more challenged! Probably true everywhere, even Europe and Japan!

[Fredrico]

Originally Posted by rocco

No disagreement coming from here.

Well, we did a story on Fannie May back in 2004. They were signing poor people with very small or no down payments, into low interest mortgages from internally held funds. Fannie May and Freddie Mac were actually set up as enablers long before banks and mortgage companies started to reach further down into that market, as I read it. The two GSEs, as you put it, replenished their lending capital by investing in the same instruments the other mortgage companies and banks were doing. Hence, when the banks collapsed, so did they. Capital dwindled. Loans were defaulting.