You just can’t make this shit up: Obama administration pushes banks to make home loans to people with weaker credit. Why not? It worked out so well the last time.
The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.5 comments
President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.
In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.
Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.
Officials are also encouraging lenders to use more subjective judgment in determining whether to offer a loan and are seeking to make it easier for people who owe more than their properties are worth to refinance at today’s low interest rates, among other steps.
Obama pledged in his State of the Union address to do more to make sure more Americans can enjoy the benefits of the housing recovery, but critics say encouraging banks to lend as broadly as the administration hopes will sow the seeds of another housing disaster and endanger taxpayer dollars.
“If that were to come to pass, that would open the floodgates to highly excessive risk and would send us right back on the same path we were just trying to recover from,” said Ed Pinto, a resident fellow at the American Enterprise Institute and former top executive at mortgage giant Fannie Mae.
We are all ‘greater fools’ now: How can you sell your house to a big family when big families don’t exist any longer?
Markets go up. Markets go down. But the whole house of cards is built on the idea that population will grow. What happens when it doesn’t?
From Business Insider:
It’s what I like to call “the most depressing slide I’ve ever created.” In almost every country you look at, the peak in real estate prices has coincided – give or take literally a couple of years – with the peak in the inverse dependency ratio (the proportion of population of working age relative to old and young).
In the past, we all levered up, bought a big house, enjoyed capital gains tax-free, lived in the thing, and then, when the kids grew up and left home, we sold it to someone in our children’s generation. Unfortunately, that doesn’t work so well when there start to be more pensioners than workers.
The entire welfare state is built on the idea that young people can be milked of their wealth because they’re too busy being young to notice.
Alas, the welfare state also awards adults either for not reproducing or for reproducing in only the most wealth-destructive ways. The consequence (entirely foreseeable) is that the number of dependents-by-choice goes up while the number of de facto slaves declines — by people either opting out of producing wealth or opting in to the welfare state’s “free” benefits or, as here, by not being born in the first place.
This will not end happily…5 comments
Has your town pissed away a fortune on the so-called ‘creative class’? Bad news from Richard Florida: “On close inspection, talent clustering provides little in the way of trickle-down benefits.”
Among the most pervasive, and arguably pernicious, notions of the past decade has been that the “creative class” of the skilled, educated and hip would remake and revive American cities. The idea, packaged and peddled by consultant Richard Florida, had been that unlike spending public money to court Wall Street fat cats, corporate executives or other traditional elites, paying to appeal to the creative would truly trickle down, generating a widespread urban revival.
Urbanists, journalists, and academics—not to mention big-city developers— were easily persuaded that shelling out to court “the hip and cool” would benefit everyone else, too. And Florida himself has prospered through books, articles, lectures, and university positions that have helped promote his ideas and brand and grow his Creative Class Group’s impressive client list, which in addition to big corporations and developers has included cities as diverse as Detroit and El Paso, Cleveland and Seattle.
Florida himself, in his role as an editor at The Atlantic, admitted last month what his critics, including myself, have said for a decade: that the benefits of appealing to the creative class accrue largely to its members—and do little to make anyone else any better off. The rewards of the “creative class” strategy, he notes, “flow disproportionately to more highly-skilled knowledge, professional and creative workers,” since the wage increases that blue-collar and lower-skilled workers see “disappear when their higher housing costs are taken into account.” His reasonable and fairly brave, if belated, takeaway: “On close inspection, talent clustering provides little in the way of trickle-down benefits.”
Rotarian Socialism doesn’t work? Not even when you geyser those subsidies at really hip, pomo Rotarians? Who knew…?
My client went shopping for houses on Trulia.com, and only 75% of those she found were bogus listings…
My note to her: “Trulia and Zillow both present inactive listings as though they were active to fool the public into thinking that they have more inventory than the agents they exploit for advertising money, even though their listings come straight from the MLS systems. Mere real estate brokers would be fined out of business for pulling these stunts.”
Despair you nothing, though, hard-working dogs. Every time Trulia or Zillow are caught pulling these bait-and-switch stunts, one more active real estate shopper is turned off of their sites forever. Nice going, suits…11 comments
Are Zillow and Trulia thrashing savagely in a blood-red ocean? Here’s a clue: Both of them are jumping the shark.
It is Citron’s primary thesis that Zillow is a Web 1.0 business presenting itself as a Web 2.0 investment. The entire premise of Web 2.0 is that smart managing and publication of information interactively to users can scale tremendously, while costs remain fixed. But unlike Netflix, LinkedIn, and even Facebook, Zillow isn’t voyaging forth into an ever-expanding horizon of unlimited sized markets opening up on the internet. It generates virtually all of its revenue from U.S. real estate agents. And it does so the old- fashioned way—by cold-calling them on the telephone. It’s been operating since 2006 more or less as it does today, and was consistently unprofitable, until the last two quarters.
[….] It is a “heavyweight” sales company masquerading as a “web 2.0” leveraged technology play. The only way it has to grow revenues right now is with the increasing intensity of the sales effort. It’s not light and leverageable like LinkedIn, or OpenTable (Sales and mktg 21.4% of revenues) Zillow is more similar to Groupon than a Web 2.0 company such as LinkedIn or Open Table.
Expressed another way, it is apparent to Citron that Zillow is buying revenues with an intense telesales effort. Put in its simplest terms, they spent an additional $3.8 million on sales expense last quarter, and only generated $4.8 million in new revenues!
By comparison, Open Table spends 21% of revenues on sales, and even LinkedIn spends 33%. This comparison shows how much Zillow is dependent on old school phone room sales—not Web 2.0 online leverage.
While management might spin a fun story about their company growing revenues at a rapid pace, the proof is in the numbers. The cost of sales demonstrates that customers do not buy Zillow ads; they are sold Zillow ads, which should be disturbing because they address a target niche market unlike OPEN or LNKD—and cost of sales should be lower.
Citron notes that MOVE.com, formerly Homestore.com, referenced above, could not make money during the real estate boom of the mid 2000’s. At the time, they were the only online destination for brokers to buy leads. (Citron wrote about MOVE when its market cap was over two billion “with a B”; today it is 350 million “with an M”).
How does anyone expect Zillow to thrive in that identical business, with competition from Realtor.com, Trulia, and a host of smaller competitors, all fighting for wedges of the same finite customer base? The inescapable market reality is that the business model of selling leads to real estate brokers just does not scale…read on.
Do read on. The Citron report is devastating to all of the Realty.bots.
Is it true? The suits deny it, of course, but for the minions of publicly-traded companies, it is a felony to tell the truth about business prospects. That Zillow and Trulia have hired a herd of Judas Goats — six-figure flunkies paid to write rah-rah-rah weblog posts — seems telling to me.
Meanwhile, note these bold new initiatives:
Trulia.com will give you a chance to win a Mercedes E550 just for building out your agent profile. That’s a car worth something like $75,000 in exchange for contributing free content to Trulia’s site. Why isn’t it worth your while to populate your profile without the incentive? Uh…
But wait. There’s more. Zillow.com will give you a chance to win a $10,000 Amazon.com gift card just for completing a Zillow Premier Agent web site. And this is not worth doing without the incentive because…? Yeah.
These are both instances of jumping the shark, and they’re both very loud statements that the big bosses at both Zillow and Trulia think their product — advertising paid for by schmucks like you — isn’t worth the money they charge for it. How can we know that for sure? Because free advertising is not the prize offered in their contests. Not even second-prize. Not even tenth-prize. Instead, your opportunity is to be their bitch and then not win a car or a gift card. The lottery is a sucker bet, too, but at least the lottery doesn’t hold you hostage forevermore.
Are the Realty.bots really in trouble? I have nothing invested in them in any way you can measure investment. But people who will say things like this
Think about the possibilities … $10,000 worth of free stuff.
will say just about anything…23 comments
Reacting to this post from yesterday on a better way to handle video testimonials, Don Reedy brought us this idea in the comments:
Greg, this is really easy, and does take planning, but not much time.
I’ve started trying to communicate with prospects, people I just meet coming and going, and folks in escrow by using my laptop, recording a 30-45 second message, posting as an “unlisted” video to YouTube, and then linking a picture of myself with a “play button” on my torso to that link.
I embed the picture with link in emails. They fly through, are almost always clicked on, and provide that belly to belly contact emails don’t always do. And yes, often that simply results in future actual phone calls, but the goal of creating value to and for the client is surely helped along by this methodology.
Here is the photo of Don he sent to me in an email:
And here is the video I see when I click on that image:
As constructive criticism, I think I want the photo to be bigger with a bigger YouTube-like Play button, plus also a reiterated call to action in text form: “I’ve made a ‘video voicemail’ just for you. Click ‘Play’ to see it.” For the video, I want Don’s head and shoulder bigger — closer to the webcam — and higher in the frame.
Those are quibbles, though. I love the idea, and the “Yeah!” special effect is fun. It might work to tack on a business card at the end, along with a link-back, in the video and in the description section, to any client-specific web pages.
This is cool, though: Using rough-and-ready tools to put a very personal touch on voicemail-like contacts. Using smartphone video with one-touch YouTube posting, Don’s technique would be useful for all kinds of client follow up.
As an example, here’s the ‘script’ for a movie you’ll have to screen in your imagination:
Hey, Jim and Shirley. Greg Swann here with a quick video voicemail about the houses I looked at for y’all today. I’ll have a web page for you later today with photos of the homes I visited, but here’s the Cliff’s Notes: Westwing Mountain may be the answer to our prayers. The homes are a little pricier, but they’re newer and most of them are in great shape. And the views are simply breathtaking… [insert slow panorama here] Watch your email for my pix. Talk to you soon.
Not as fast as a voicemail, but it delivers the goods where a voicemail can’t. I rate that a win.
This is a cool idea, a Scenius present from Don. How do I know it’s a Scenius-in-the-making? Because if you think about this Don’s way, you’ll come up with a dozen great ideas of your own.8 comments
A while back, I wrote a post on BloodhoundBlog about using pocket-sized video cameras to record and propagate video testimonials. That kind of job is now better done by smartphone video cameras, but you can still buy a Flip camera if you have money burning a hole in your pocket. (But, if that really is your problem, I would be ecstatic if you would buy me a Looxcie headset-size video camera instead.)
Any way you capture the video, here is the procedure I talked about then:
1. Capture the video. Because you’re doing an interview, you can guide the testimonial to elicit the information you want to convey to other clients.
2. Post the video on your YouTube page.
3. Embed the YouTube video on your testimonials page. (I have code that will place a randomly-selected miniaturized-video, as pictured above, in your weblog’s sidebar, so that your clients see a different testimonial every time they come to visit.)
Here is the big duh I left out of that original post:
4. Share the link to the YouTube video with the subject of the testimonial.
When you made the film, you told your clients that you wanted for them to share the news of their good experience with their friends, colleagues and family members. How much easier can you make it for them to follow through than to give them access to their own video-recorded testimonial?
If you make a playlist of all your video testimonials, prospects referred by past clients may end up looking at more than one of your videos. Needless to say, each of those videos should link back to your main blogsite. But the big bonus of working this way is to make it very easy for your satisfied clients to share their satisfaction with their warm network.
How do I know this is a bug duh idea? Because it only took me four-and-a-half years to think of it!5 comments
I love Walmart. I am very happy to call myself a member of the middle class, and I take huge delight in cruising the aisles at Walmart, scoping out all the incredible deals.
I don’t buy a lot of stuff, though. Away from TechToyz, I lead a pretty Spartan existence. But I love to see all that incredible wealth stacked floor to ceiling, knowing that it is the much-maligned engine of freeish-market capitalism that makes all that stuff available to me.
I’m not a Black Friday kind of shopper. We’re not all that Christmas-y, and I do not like to be crowded, not ever. But the phenomenon of Black Friday, especially at Walmart, is fascinating to me.
We had to stop in at a Super Walmart late Wednesday night, and I took the opportunity to snap a few dozen photos of that store’s preparations for Grey Thursday and Black Friday. Every wide aisle in the store was lined with pallets full of shrink-wrapped merchandise, millions of dollars worth of stuff waiting to be sold between now and Monday.
There were more staffers than customers in the store, and they were all busy getting ready. Black Friday takes its name from the sad fact that the day after Thanksgiving is the day most retailers reach the stage of profitability for the calendar year. In other words, storekeepers large and small work almost eleven months of the year before they make any profit at all.
Walmart might do better than that. Apple’s retail presence does a lot better. But retail is a hard way to make an easy living, and my bet is that it will get harder as the parasitic weight of government crushes more and more of the economy.
Meanwhile, smug people like to sneer at Walmart for selling Americans goods they want to buy at prices they want to pay. I’m happy that some people are so rich that they can afford to spurn and scorn Walmart. But I’m happier still that Walmart is around to provide incredible values every day for people who work hard for their money and want to make it go as far as it can.
Happy Black Friday, Walmart. You treat us better than we deserve.7 comments
Here’s my quick take on the presidential election, from a video made one day prior to the event: Mitt Romney is going to win an Electoral College landslide. My state-by-state prediction is shown below, but it’s not based on any sort of arcane science. I’m just betting that married people with kids and jobs will vote to fire Barack Obama for gross incompetence.
Note that this is not an expression of racism, as you will surely hear from the perpetually-sore-losers of the chattering classes. I’m just betting that the people with the biggest stake in the game of human life will vote against the most perniciously anti-life candidate ever to seek the office of the presidency.
But at the same time, Romney’s win will not be any sort of repudiation of Marxism, contrary to Michael Walsh’s claim at National Review Online. It’s just the correction of a bad hiring decision.
In this week’s video, I argue that the self-loving thing for you to do is to accept that fact that each human being is sovereign and indomitable, and that, therefore, self-control is all the control that can ever exist among human beings. In the course of that argument, I cite an essay of mine, Meet the Third Thing. I also recite an old poem, which I will transcribe here for what may be the first time it has ever appeared in print:
What if I’ve been wrong?
What if I’ve been wrong all along?
What if everything I’ve said,
everything I’ve done,
everything I’ve thought about is wrong?
What if I’ve been wrong all along?
Here is this week’s video:
For an audio-only version of this video, take yourself to the SelfAdoration.com podcast on iTunes.9 comments
I am ignoring this place, and in this I am clearly not alone. I have other things commanding my attention. If y’all want to talk about real estate, you know what to do.
Meanwhile, with the kind of surgical concision we have learned to expect, South Park takes on the Lance Armstrong modified-limited-hangout brilliantly:
Watch the whole episode. It rocks, I promise.2 comments
Man Alive! is six months old this week. A video I made on Monday celebrates the book’s demi-anniversary by eviscerating two mutually-contradictory theories of human free will.
Meanwhile, I’m in the early stages of writing a new book on moral philosophy, this one concerned with moving your self rightward on the number line discussed in Chapter 7 of Man Alive!
Cathleen and I were talking about a piece of this pie last night, the idea I call Cultivating Indifference. She asked me if I am really unhurt by other people’s (sometimes virulent) criticism of me. I am, although I understand why people might find this hard to believe. But here is how my thinking runs:
If you say something about me, it is either true or it isn’t. If it’s true, I am improved by your observation, however it comes packaged. My goal is to do better in everything I do, so if someone points out that I have been in error, I am glad to know it.
And if the claim is not true, I am unmoved. I keep my own counsel in everything I do, and I never change anything in my thinking or my behavior without a good reason.
If the criticism is offered in good faith, I will explain my thinking. And if it is simply malice, a verbal spear intended to wound me, I will know that the person throwing that spear is not to be trusted, and my life will be improved by that bit of new knowledge.
In all cases, I am concerned with nothing but my self, so other people’s behavior toward me is only interesting to the extent that it offers me opportunities to improve my own mind and conduct.
To my mind, this is completely rational. I like it when folks I admire return my admiration, but I don’t give a rat’s ass if unlikeable people don’t like me. It would be a red flag for me if they did!
Anyway, here’s a rockin’ tune from Cage the Elephant that expresses my attitude on this subject perfectly:2 comments
“Americans will downsize and live multigenerationally, in order to offset the fraud they know exists in real estate. Until there is wage growth, and that could be years or decades away, people will not trust any upward movement in real estate values.”
A searing indictment of The Bernanking System in Business Insider:
Once people start to come out of negative equity, even more of them will sell and try to get out from under the cloud they are under. So, the housing bubble orchestrated by the Fed and by the hedge funds and by the wealthy could free up massive inventory. The average person fears negative equity. The Fed will not erase that memory.19 comments
The only way people will risk negative equity is if their house prices are cheaper than rent. But the artificial inflation of housing prices will do nothing but push the average Joe away from housing.
Keep in mind that about 4.4 million houses were sold in 2011 and only 2.4 million mortgages were taken out for purchase. That is a mortgage depression and the rise in house prices has not changed that mortgage depression.
People are learning that the uptick in prices is a scam, both by banks withholding massive inventory, and by the Fed making more easy money available to the rich. Once they own most of the inventory, they will be forced to initiate a housing bubble or they will be stuck with the properties.
When Man Alive! was first published, a number of people were distressed that I didn’t take a harder line on religion. My reason for doing as I did was pretty simple: Although I am a very strident atheist, and although I have nothing but contempt for theology and for all religious apocrypha, I like, respect and admire many people who say they are religious — including my own Best Beloved, my wife, Cathleen Collins.
I care a lot less about what you say you believe than I do about how you actually behave. If you are capable of leaving me alone to live my life as I choose, I don’t care what you say are your reasons for behaving as you do. By contrast, if you claim you are in agreement with my own ideas about the nature and structure of reality, and yet you cannot manage to keep your nose out of my business, then I care a great deal your actual behavior, regardless of your putative agreement with my philosophy.
This topic is of moment this week because our friends in the lands infested with Islam have put on another display of the impotent irrationality that is represented to be the substance of their religion. I don’t make fine distinctions about anegoistic doctrines: Whether your claims are based in religion, in politics or in some absurd academic dogma, if your behavior is atrocious, you are engaged in self-destruction in spite of your self.
We go through all this in the video, but the solution to every problem posed by anti-human dogmas is four-words simple: Fuck you. I quit. When the sane believers of every sort of doctrine work up the nerve to say those four words to their would-be masters, the world will be a better place overnight.
You can find an audio-only version of this video at the SelfAdoration.com podcast on iTunes.6 comments
We just lost our house to foreclosure. Negotiations with the bank fell apart and we spent the last seven days bugging out. This was our third Notice of Trustee’s Sale. We had managed to redeem the note twice before, and we thought for sure we could thread the needle a third time. No joy. We didn’t know until yesterday morning that the bank had actually foreclosed, but we had to operate on the assumption that we could lose our pets and our personal property without notice.
That’s bad, but it’s not the end of the world. We are solvent even if we are not terribly liquid just now. We have business assets, art and artifacts and intellectual property, all of which we were able to conserve by acting quickly. Was I the bank, I would have hung in there for another month or two, taking account that we live on a cash-flow roller coaster and that we had managed to cling to the home twice before.
Over the past three months, we have cut our monthly nut by two-thirds, so we are well-situated to weather the economy we are living in. Had we done this seven years ago, things might be different, but we live with the consequences of our choices. We loved our home and we are sorry to have lost it, and sorry, too, to have defaulted on our promise to the bank, but life is suddenly a lot more joyous without that anchor around our necks.
Our real estate business is secure and solvent. All of the rental properties we manage are leased to solid, performing tenants, and our corporate bank accounts are all in good order. Our personal finances might be chaotic — this for many years, alas — but this has had no impact on the funds we hold in trust for our landlords and tenants.
And our marriage is stronger than it has ever been — literally as the consequence of these events. Cathleen had some teary moments, because we loved the El Caminito house, and because we spent many happy, loving years there, minus a few rough spots. But I’m happy with everything, so far, most especially with our marriage. It is the shared commitment to overcoming adversity that makes families, and we have lived through a lot of commitment in the past week.
All of this is offered up as news: This is what is going on with us. We are living out of boxes in our new abode, but the office is up and running, with me keeping the paperwork flowing while Cathleen stages and lists a home for sale today. We’re running behind, obviously, but we are catching up with alacrity. In a week’s time, all of these events won’t amount to a speed-bump on a sleepy side-street.
We are hale, well and happy — and so should you be. FannieMae is taking another hit, but that seems to be what they’re good at. Meanwhile, we pick ourselves up, dust ourselves off — and press on regardless. We have each other, and everything else is just so much stuff.
September 13, 2012