bostonbubble.com

[john p]

http://www.plumbingsupply.com/waterhammerarresters.html

I'm going to repost this link. Imagine a bunch of pipes in a plumbing system distribution. Imagine water flowing through it and then someone turns a valve off and all the water has to hit the brakes. What tends to happen is that the water slams like a bunch of cars when someone on the highway gets rear ended. To aleviate this pressure they put these water hammers in. What they do are like allow the excess pressure to escape into like a dead end with a piston which absorbs the shock.

The housing bubble was the water hammer that recieved the pressure from the brakes being hit or valve being shut with the stock market crash.

Take a look at the diagram, it's not too hard to figure out. I think that the economy needs to have a system which has these shock absorbers and have sensors which can indicate the pressures in the plumbing. The financial plumbing is slamming within its infrastructure. I don't know exactly why, but I see deflation of the dollar as a way to alleviate this pressure.

http://www.x-rates.com/d/USD/EUR/hist2007.html

What stinks is that we let other countries pipe into our system....

[john p]

http://www.fxcmtr.com/ ...truncated...

Editor's Note: This post was edited to abbreviate a URL which was widening the page due to the way that the forum software lays out posts. No other changes have been made, and the URL still points to the original destination - only its display has been shortened.

[john p]

http://www.grubb-ellis.com/PRItems/2007_Global_RE_Market_Forecast.pdf

http://www.realestatejournal.com/columnists_com/buildingvalue/20050315-buildingvalue.html

http://www.realestatejournal.com/reits/20060726-dunham.html

[tt]

Story from today's globe:

http://www.boston.com/business/globe/articles/2007/09/29/thousands_brace_for_mortgage_rate_jump/

""I don’t know how I’m going to survive," said Sana Masoud, a single mother facing a $600 a month increase in one of two mortgages she obtained to buy a two-family house in Brighton for $712,000 in 2004."

House sold for 199k in '99 and she pays 513k more 5 years later...idiot

[JCK]

No doubt she's an idiot. But so is the bank. How on earth can a single mother with two kids making $60k/year afford a $700k home, even if it's a two family?

Never should have been approved for the loan.

[BK- former Owner]

Banks are not idiots - they make their Money on Transaction fees and Mortgage Brokers make their Money on Transaction fees. The Mortgage was ultimately rolled up into a Bond and purchased by a fund or a pension plan or lots of individuals.
Every one involved in this transaction (including the home Buyer were sucked in by greed). Lets not forget the Federal Government that likes to perpetuate the myth that the only way to become Wealthy is to Buy a home.

[john p]

Unfortunately you're right; the whole point of "underwriting" a loan is to have someone be responsible for aligning it with some reasonability.

Street gambling, which is illegal, requires you to have someone to vouge for you before you enter a network. So the mortgage business is less sound, signficantly less sound, than street gambling. The difference is that for one, they are working with their own money, the others are looking for a transaction fee.

[john p]

Vouch not vouge, sorry....

Basically, I'm told that if you vouch for someone and they don't pay their gambling debt, you have to pay it for them. People don't want to have to collect, it is very costly and a pain so filtering out the bad folks is worth its weight in gold for those folks. Because you are responsible for someone you vouch for, you end up choosing carefully and are the first to step in and report that someone is in trouble and not to take their action.

Again, this is fundamental business: borrower, lender, underwriter and risk agent who is on the hook.

[Dorchester grandma]

This mother could have been reasonably approved for maybe $300,000? She should have attended the excellent first time home buyers class at the Allston Brighton CDC. They would have suggested a good mortgage broker who has worked with the 101 program. She would have read the chapter on predatory lending and exotic loans in the Homebuyer 101 handbook and not become a victim.

She would certainly have had to rent for a while longer but she could have saved for a larger downpayment. Brighton, which used to be largely a working class Irish community is extremely gentrified and overpriced. However there some decent single families out there now for 300K though she might have to move away from Boston. The Allston Brighton CDC where the classes are held has now moved from Allston to Washington Street in Brighton. When I attended the class sveral years ago my hopes were dashed as I realized that I could not buy at that time but better than getting myself into a mess.

[admin]

There is a bit more to this lady's story than what The Globe reported. See:

http://bostonreb.com/blog/2007/09/29/higher-interest-rates-cause-rioting-in-the-streets/

http://squaringtheglobe.blogspot.com/2007/09/things-globe-reporters-cant-seem-to.html

- admin

[Dorchester grandma]

As a first time homebuyer, you get the lowest interest rate if you take the class. In 2005 my interest rate would have been 5.25%. By attending the $35 class this woman might have had a lower interest rate as well.

I have paid about 2/3 of my net income for rent. Saving for me takes tremendous sacrifice and thrift store shopping much of the time. I am also paying student loans which I co-signed (for my kids) as I must maintain my credit. Besides having taken out an adjustable rate mortgage, she might be spending more than she needs to. I remember my mother making lentil soup with hot dog slices floating on top to afford a mortgage which of course by today's standards was small. I know that it is difficult with teenage kids though. Mine would not step foot inside Urban Renewals (best thrift store, in Allston) when they were teens.

[john p]

Here is one thing I've been thinking about and blogged about earlier, but never knew the full impact of: variable rates for student loan consolidation agreements. I just read an article on this recently and this will have a huge impact on first time buyer affordability for homes.

[Dorchester grandma]

Regarding my co-signed student loans, unless my kids can prove themselves credit worthy over several months, I am regarded as responsible for those loans. The loans have lessened the amount that I can be approved for when buying a property.

I would advise parents to really think hard about co-signing loans and of course anyone who co-signs any kind of loan for a relative or friend. It might become yours to keep.

[john p]

Do you know what is not getting ugly is Dorothy Hamil. She still has a Dorothy Hamil hairdew.

[hyperbad]