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April 17, 2008

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Now if only the asinine traders running up financials the last couple of days would read your blog... As always, thanks for keeping your ear to the ground.

Mr. Mortage, since you are in CA how many of these subprime/Alt-A/option ARMS/HELOCS were made the the Latino recqonquista crowd or folks with dubious criminal backgrounds. I think the banks want to just stuff the CA foreclosure crisis in a shoebox and forget about it for now because everyone knows the social consequences. When push comes to shove they would have to send SWAT teams to repossess entire neighborhoods in some areas. Think Rodney King riots x 10! Mr Mortage if I were you I would get to a safe place!


The fools at motley fool have a bullish piece on Wells Fargo:
http://www.fool.com/investing/general/2008/04/17/wells-fargo-dodges-the-housing-bullet.aspx

I think Wells in denying the bullet rather than dodging it . . .

I just read the FBI is investigating loan fraud in the housing mess. Complete nonsense, everyone knew what was going on... it's not like you have to be a rocket scientist to see where interest only loans are going to get you. The whole thing is so silly... Congress was crying last year that there was no affordable housing... now you are getting it and you don't like that either.

The government is just one huge circus where they all play as clowns. If there was one word that would describe what the US is... it would be Rome. A tragic-comedy in the making.

Nice work Mr. M.

Mr. M:
Love the blog.

A question about one of your statements:
This means that if the average household income in San Francisco Bay Area is $85k, that borrower can qualify for about a $350k loan. Currently, the average home price is closer to $550k meaning we could have alot further to drop.

Have you seen any historical data comparing the median home price in a region to the amount of Fannie/Freddie mortgage available to a median-income family? My sense has been that most of California has long had median prices well above the "median mortgage available", but I have no data for that view.

What I would expect to see is lower rates of home ownership in areas where there is a larger gap between median values and "median mortgage available".

Absolutely...you nailed it. You can get income/home price data down to the zip code level. Now that all the exotics are gone, prices will gravitate toward the most avail financing, which is $417k and prices will go back to historic norms of 2-4x average annual household income for the zip/msa/region.

Everybody needs to remember that there is not a floor on prices. What is forgotten is a foreclosure is not just a house going for a cheaper price it is also a owner who won't be able to borrow for another house. This on top of the tightening of lending standards will cause an over-shoot in price deflation. So expect to see a house that sold for $200,000 in 1998 to be priced around $160,000 when this is all done.
You have to remember that some of the prices are up 200 percent in some areas. That means they will likely drop 200 percent.

I have been trying to understand this subject for a while, there is so much information out there, but your post helped me understand the concept.
So thank you.

Your blog is very much good. I am very much impressed by your blog content.

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