I spent many months of this last year or so defending title insurance as a product.I need to refine that argument and defend title insurance as a product only when it is issued in combination with a full traditional title abstract and examination.The need for this refinement would have seemed ludicrous just a few short […]
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Lewis’ comments came as a new expression - “jingle mail” - referring to the growing trend where Americans mail the keys to their homes to the lenders before vacating, entered the US lexicon. Figures for November revealed more than 200,000 US homes were foreclosed, a 68% increase on November 2006. … Lewis was no doubt speaking for all the banking and mortgage monoliths when he said he was “astonished” at the change of attitude Americans were showing to their homes in a country that, with Australia, has the highest home ownership rates in the world. This piece is a few days old, but that last comment, from Bank of America’s Kenneth Lewis, caught my eye and spurred me to post this. There is serious delusion here, or perhaps denial. The fact is, the attitude of Americans towards home “ownership” has not just now changed. It changed a few years ago when people became willing to occupy homes with no (or nearly no) money down, often times with the hopes of easy flipping gains; and when bankers became willing to underwrite such loans (again, often with a similar flipping intent, except in the secondary MBS market). So this should be no surprise. This is “lending 101″. When the borrower has no skin in the game, they have little to no interest in sticking around to see what happens as a result of their going delinquent. A banking czar like Lewis should be ashamed for feigning surprise. This is why I put “ownership” in quotes above; it is nonsense to speak of “ownership” when the “owner” doesn’t have a dime on the line. Beware of the term “home ownership” being used in demagoguery. Whether victimized or themselves the abusers, borrowers with no equity or no money down are not the same as “homeowners” in the traditional sense. In reality, they probably shouldn’t be true homeowners until prices correct and they are better prepared financially. We worry about panicky policy being set in the amidst this crisis that ignores this underlying reality. Indeed, it is silly to point to America’s “high” home ownership rate when so much of that rate is due to a rapid increase in recent years precisely because of all the unsound lending. This was “fictitious” homeownership at best, and it says the exact opposite of what a naive read of the statistics would suggest. That is, it says the opposite of what politicians, bankers, and mega-lenders like Mozilo want people to believe: that America has some sort of manifest destiny to have unusually high levels of home ownership, fundamentals be damned. America is less of an “ownership society” than it has been at perhaps any time—unless you count debt as an “asset” (amazingly, that is what politicians and mainstream economists have been doing). Hopefully one day we will be that ownership society—when we’ve actually earned it.
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“We need realistic solutions, not more fairytales of a goldilocks economy!” — Great video from our friend Michael Blomquist.
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‘While the bubble was inflating, self-serving explanations were offered for why traditional formulas of home valuation no longer applied. As it turns out, the laws are still in effect.' -ust a dot bomb replay
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This fall I wrote a multipart series on how I would build Zillow Mortgage. Today, I see Joel is asking for 2008 Zillow predictions. Limiting my self to just the mortgage side, how I would build Zillow Mortgage and what I think Zillow will do are not the same thing.What Zillow Mortgage will not be.It […]
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‘Berkshire Hathaway Inc. will buy a reinsurance unit from ING Groep NV, the biggest Dutch financial- services company, gaining access to assets that Chairman Warren Buffett can invest.’
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The American Tower Corporation sued a former Goldman Sachs executive who heads a rival wireless tower operator on Friday, claiming he had impersonated its chief by sending a negative article about it via e-mail … via New York Times
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‘Sales of new homes in the U.S. fell to a 12-year low in November, pointing to bigger declines in construction that will hinder economic growth in 2008.'
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‘I think it’s quite amusing that a homeowner from Cuyahoga County, Ohio gave this powerful, 2,300 lawyer and 30 office law firm a 11 year fight.’
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“People are starting to feel like we are not going to be out of the woods with regard to financials quite yet”
Stock indexes dropped more than 1 percent each on Thursday, pressured by financial stocks after an analyst warned of larger write-offs in the sector and an assassination in Pakistan. via Earth Times
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