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Santa Maria Penthouse Back on the Market – $14.9M

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Santa Maria PH4901

As you may recall, Penthouse 4901 at Santa Maria was a bank-owned foreclosure that came onto the market this past May at an asking price of $12.9M.  Later that same very day, the status of the listing changed to “closed sale” and showed a purchase price of $11M, or $1100 per square foot.  Earlier today, I noticed that the amazing, 10,000 square foot penthouse at Santa Maria was re-listed last month, on September 10th, at an asking price of $14.9M, or $1490 per square foot.  There’s no question that Penthouse 4901 at Santa Maria is one of Miami’s most coveted luxury penthouses.  It will be interesting to see how long it remains on the market before garnering the interest of another buyer.  I’ll be sure to keep the penthouse on my radar and report the sales price after it closes.

View additional pictures and listing information for Santa Maria PH4901.

105 thoughts on “Santa Maria Penthouse Back on the Market – $14.9M

  1. It is easiest way of marketing without having to pay for it. It also sets a perception that it is worth that much.

  2. It’s amazing how this website has changed.

    Before there used to be a lot of interesting discussions here, now it has become just another brokerage website.

    You deserve it Lucas, but just wishing you hade kept the essence a bit more

  3. Hi Hugo, have you bought an apartment condo in Aventura yet? I remember you on here a long time ago talking about it.Have you heard from Renter Tom?

  4. It’s funny how people keep complaining about the lack of discussions here. It takes two sides to have a discussion, but the bulls made it a point to run off the bears, so here we are. I used to enjoy Renter Tom’s commentary and links, etc., but I don’t blame him for not posting anymore.

  5. Lucas

    Any word of wisdom on the foreclosure mess? Are you seeing anyone trying to move back into their very own apartments like the guy on CNN trying to move back in to his $3.8 million house with his lawyer.

  6. Except for maybe one case in a hundred, this new foreclosure scandal is just nonsense being drummed up by liberals and lawyers (but I repeat myself).

    Anyone who thinks their mortgage is going to disappear because some piece of paper was lost or wasn’t notarized properly needs to get serious. All the foreclosure moratorium will do is delay the day of reckoning and keep the U.S. economy and r.e. market in the dumpster.

  7. Remember, paying your mortgage is an affirmative defense to a foreclosure action. Going into court and saying, “No, your honor, I haven’t paid my mortgage for the last 17 months, but this piece of paper should have been signed by Person B instead of Person A” isn’t much of a defense. At best, it’s a delaying tactic.

  8. Joe, Joe, Joe

    From WSJ “………… Rep. Debbie Wasserman Schultz (D., Fla.) engaged in a heated exchange last weekend on the issue with Rep. Eric Cantor (R., Va.) on “Fox News Sunday.”
    Mr. Cantor said that imposing a moratorium, as Ms. Wasserman Schultz urged, would shut down the housing industry.
    “People have to take responsibility for themselves,” Mr. Cantor said. “We need to get the housing industry going again. We don’t need government intervening in every step.”
    Ms. Wasserman Schultz responded: “Eric, you are not from a state where there are thousands and thousands of people being ejected from their homes through the reckless disregard for regulations….”

    Do you think anyone from this administration want to stop this? No – they want to keep these deadbeats in homes without having to pay for mortgage, taxes, rent …. Not to mention that they have no intention of paying the second mortgages, HELOC, credit cards. What next? Their cars cannot be repossessed if they fail to make payments?
    Now – show me a single media report, which has highlighted the benefits of not paying the mortgage. One single miserable media report. Show me what these people are doing with the money! Average American household spends one third of their income on housing – mortgage, taxes, rent etc)
    They are not paying mortgage, nor are they paying the rent, nor are they paying the mortgage after collecting the rent! We have reached a stage that people are bragging about it. It is the smart money now. On average $1500 free money per month. No income tax either. Wouldn’t you want to make it last as long as possible? There are flyers from the lawyers – $150 – $200 / month retainer and they will keep you in home for as long as 6 years.
    Our legal system has become a joke. Some judges are throwing a book at the guy who is being evicted for nonpayment of rent, while ignoring the fact that the owner has not paid the mortgage or the taxes for years. They call it legality.
    Deadbeats are getting as much as $10,000 to vacate the homes after foreclosure. Thanks to this administration and all those who wanted “CHANGE”. Now you have it.

  9. Yes, it’s a total joke. The amazing thing is that even with millions of people not paying their mortgage, the economy is still in the tank. You can be sure the deadbeats are spending the hell out of their “free” money.

    I miss living in Miami, but I’m happy I’m living outside the U.S. right now. If I was working and paying taxes in the U.S., I’d be going nuts. I can’t believe all we’ve had are a few protests in D.C. The working people might be making a little noise with the Tea Party, but with 45% of American households paying no taxes, it might be too late to take back the U.S. of old.

  10. Poor and Unemployed:

    Although I share your frustration with the pin head borrowers/dead beats/morons/(IDIOTAS!) who took out these mortgages and incurred these debts, you miss the point. The mortgage agreement is a matter of state law, not federal. While the Democratic majority would have you believe that the federal government can solve all of society’s problems and has the power to do so, a closer and more informed look at Article 1, Section 8 of the US Constitution reveals otherwise.

    This is going to be a long, ugly, draw-out process. But, much like the flu or dysentery, it must run its course.

    In the short term, HOWEVER, if you guys are looking to cash in on this crisis – – for those of you who are not connecting the dots and/or missed David Einhorn’s announced short of St. Joe (check out business insider’s website for a copy of the power point presentation)- – here is how you do it.

    Short Bank of America. Short St. Joe (and any Florida company like it) – – if you still can. Short the parent company that now owns GMAC. Short Citibank. If you find a publicly-traded, non-real estate oriented company that was “dabbling” in real estate during the boom (e.g. GMAC) – – short it. Short it 5-days a week and all day on Sunday.


    Because they are going to take huge losses on these properties. I guarantee it. You can bank on it. This ain’t rocket science folks.

    We all know that cost basis (the price at which the properties were acquired/purchased and mortgaged) of 110% of the properties presently in or on the precipus of foreclosure exceed fair market value by, conservatively speaking, at least 45.7%. Because profit is the amount by which the sales price exceeds cost basis, there won’t be a lot of profits.

    This is particularly true in markets such as Florida where the supply of available units clearly exceeds market demand. Thus, to sell/unload these properties at foreclosure, the lender will have to slash the prices to make the properties attractive to buyers. Thus, for example, the lenders will take a loss on the mortgage liability and the another loss when they sell the property at auction.

    Now, if one assumes that Bank of America, for example, has over $1 bn in mortgage-based liabilities, it is not difficult to see that it won’t recover most of that capital; which will adversely affect its earnings and profits (E&P) and thus its earnings per share (EPS). Short the stock and you will earn a profit on the difference between the current stock price and that on the strike date.

    Moreover, the holders of the derivative mortgage-backed securities (JP Morgan, Goldman Sacs,Citibank, hedge funds, etc.) are also going to take a bath on their mortgage back security long positions. Shorting them is riskier because they, logically speaking, covered their long positions with shorts.


  11. scriv, i think you might be targeting the wrong folks with your shorts. many of the financials are only servicing the mortgages. most of the mortgages have been sold off into securities. now there is an outside chance the banks may have to buy back some of those mortgages-but i really don’t think that will happen. pension funds and hedge funds own a large chunk of these securities. also the fed and china have purchased alot of the government backed securities. but not quite sure how you can short those entities.

    fannie and freddie were major contributors to the bubble. both sides of the aisle now want to get rid of those entities and return housing to the private sector. that cannot occur if you force BoA, JPMorgan, etc to buy back those securities. They wont have cash to loan out and the housing problem will crash again. just my 2 cents.

  12. Scrivener

    Gables is right on money. Banks are mainly the servicers in this problem. Fannie and Freddie (Or Uncle Sam – or you and me) are the one holding the bag. I am sure there are lot of smart people are out there in Washington. Here is a simple calculation. Two million homes in default. If each were to pay average $1000 monthly rent – that would be $2,000,000,000. In a year that is $24 BILLION. This can be recaptured by throwing these people out just like our courts throw poor people out of homes when they are late in paying the rents.

    There is a old saying – Don’t fight the City Hall! When there are 10 stupid people in the room and you alone. They win! Unless, moral majority goes out and votes against all the politicians who support bailing out the deadbeats – we are doomed. If you think these deadbeats are the problem – wait for their children to grow up……. They will not only defualt on their financial obligations but will steal from the neighbors to buy the fancy cars and go to Starbucks to drink some expensive wine and eat some expensive Cheese (Yes! Starbucks is planning to serve wine and Cheese.)

    This is Chicago tactic. Glass insurance anyone?

  13. And we are debating about ending Bush era taxcuts! Too expensive for this country! Rich people get richer.

    Everybody is EQUAL but some are MORE EQUAL. What a country! What a President!

  14. Gables & Poor and Employed:

    Fair enough. Maybe I am going after the wrong target. But…maybe not; particularly if Fannie and Freddy require the banks to buy back their loans because they were not properly securitized.

    If lenders are required to buy back the loans that were shifted to Fannie and Freddie – – and Gables, you are right, they may not have the capital to do so and maintain profitability – – then the lenders will take major financial hits. The shell game orchestrated by the present administration and Congress – – where by noncollectable mortgage debt was, only seemingly, shifted off lender’s books through federal guarantees – – creates an enormous opportunity for financial gain for investors willing chase profits on the short side.

    One of the myths I saw reported in the newspapers was that once a lender securitized a mortgage, it was a mere “trustee” and, as such, had to no liability in case the borrower defaulted. This myth is just that, a myth.

    Securitization is merely a hedge – – in some cases a straddle – – whereby the lender offsets the risk of the mortgage default with a contractual obligation under which, for example, it agrees, in exchange for a stream of cash payments, to pay an investor a certain amount when the mortgage is paid off and the investor agrees to pay the lender a certain amount if the borrower defaults. The lender is still on the hook for the mortgage. The securitization merely allows the lender to shift the loan off their books for accounting purposes – – and generate a stream of income during the lift of the mortgage. Put in the most simple terms, securitization is the lender’s way of saying “who wants to bet borrower pays me back?”

    Which brings me to the third issue here: if the mortgages are faulty, the securities (mbs, derivatives, etc) built on those mortgages are also faulty. If securities investors can’t foreclose because they were not given proper documentation, they will sue. Law suits are costly and damages could be huge.


  15. poor and unemployed, your vision seems to get too clouded at times with politics to offer clear financial advice. don’t let your political bias influence your financial views. that is not a good path to prosperity long term. the majority of money is not made by ideology.

    scriv, my overall view is all of the money and effort spent over the past couple of years has been to help banks regain a strong financial footing to stabilize our financial markets. if the government were to turn around and force all the banks to take back those loans, that would have been 2 years of wasted money. you may as well have just let the banks tank to begin with. the government will realize this, and develop a new program to make sure the burden is not entirely shifted back to the banks on the foreclosure issues. remember, today the issue is not the quality of the securities (everybody has accepted the fact the issues stink). the question is who has the legal right to foreclose. the mortgages are not being repaid-there is no chance the homeowners will keep their properties-they earned the right to lose them. it will be merely a situation to address what is the cost to legally recover the property for the mortgage owner.

    what this does is delays the flood of REO properties-reducing supply over the near term. it also creates anxiety over the long term for buyers, because of the uncertainty in legality in purchasing a property. may end up being a bit of inadvertant help for the new home builders.

  16. and scriv, completely agree with you on the legal costs if fraud and/or fault is found in the securitization process. but the SEC is in charge of overseeing this, and as of now I have not seen much action on their part. if the SEC does not take action, i think it will be very hard for the buyers of these securities to take any successful action as well. buyer beware?

  17. Joe -“but the bulls made it a point to run off the bears, so here we are. I used to enjoy Renter Tom’s commentary and links, etc., but I don’t blame him for not posting anymore”.

    Gee, I seem to remember it the other way around. The bears ran off the bulls(remember what you guys did to AJ?). RT promised he would run off to Canada because this country was goind down the drain. Let’s just hope he is a man of his word. Now if only the rest of those who promised to leave this country would keep their word.

  18. “Bank Of America Getting Crushed As NY Fed And PIMCO Join Mortgage Putback Parade

    nteresting! Shares of Bank of America (BAC) are getting crushed on headlines that the New York Fed and PIMCO are about to jump on the Bank of America mortgage putback bandwagon.

    It’s particularly surprising to see the NYFED jump in on the action, since that means they’d be actively working to weaken Bank of America.

    PIMCO is private, so their only interest is making more money. It makes sense.

    All told, the parties may be looking for as much as $47 billion in reimbursements for soured mortgages.

    The Dow is off 200 points.”


    Bring on the short-selling!!!!


  19. you can short BAC to about $10, but it probably cannot go down much further from there. I would back up the truck and load up on shares at that point. that bargain would be almost as good as when it was sub $5 a share in the depths of the crisis. remember it has already fallen from $18 earlier in the year. FYI BAC paid nearly $2.50 a share dividend before the crisis. you can bet it will pay at least half of that within the next 2 years. how would you like to own a stock paying you 12.5% a year and up over the next 20 years-even without capital appreciation. remember BAC’s exposure to the bad mortgages is really through countrywide-which the government basically forced it to buy. still don’t think in the long term the feds will try to sink BAC because of this.

  20. Gables, Scrivener – I do not offer financial advice. This is the worst administration this country has ever seen. This whole episode of robo-signers is just to energize the flock and get them to get off their a$$ and vote. They want the banks to stop foreclosures and scare / prevent the buyers from buying the foreclosed homes. They need time to create inflation, which will hold the home values, make the old debt go away. People who have money will lose, people who have debt will win. Perfect solution to wealth distribution.

    They have tried and have succeeded in keeping their flock in the homes for free since they took the reins. They have used every excuse to do that without any regards to the consequences.

    I do not know if you have any experience in Class actions in securities – the legal process goes on for years if not for decades. The litigation in settlement of these securities would go on forever. The sophistication of these parties and the public forum they are using indicates a strong political motive. They are trying the BoA in media not in a courtroom. Idea is to pressure the banks to stop the foreclosures completely in order to allow this administration to play Robin Hood. How do you justify, people breaking and entering the homes which have been purchased by others. Didn’t O.J. Simpson go to jail for trying to retrieve his own property? This is a country of law. We used to worship the constitution.

    I have two neighbors who are not paying taxes, mortgages but are driving Merc. S500 and have boats costing over $100K. Both purchased homes with ZERO down and did not pay a penny from their pockets for the cars or the boats. Financed by HELOC.

    In summary – you cannot play this table. It is rigged. Moment the banks fall in line, the government would step in to bail them out once again. Most likely, these moves may lead to further consolidation with Citi buying BoA. Fannie and Freddie are living in a government run orphanage and need a home.

    Next Presidential election is two years away. That’s right Robin Hood is in WH for past two years.

    Here is food for thought – You house will be twice what you paid in 2006 but the bread will cost you $100 a loaf. Heard about the currency war?

  21. haha! conspiracy theorists of the world, unite!

    P&U, you do realize the fed exists under two mandates-maintain price stability and ensure full employment (or growing economy). that is why they exist. they are doing exactly what they are supposed to do. deflation is a huge negative-more so than inflation. you may not like their actions-if so change the laws regarding the fed’s responsibility.

    last i saw, inflation was near 1%-too low for growth. and your $100 loaf of bread is nothing more than your imagination. my daily costs have actually dropped in the past two years. i bet yours have risen the same amount. i’m sitting on cash so I love deflation. but it will just decrease demand and cause me to lose income in the future-really not a good thing at all.

    the robosigners issue has nothing to do with the administration. it has everything to do with contracts and following the law-exactly what you say we are avoiding. it is simply an emphasis on the banks to make sure they are legally dotting i’s and crossing t’s before evicting somebody from their house. the foreclosures will still go through-just delayed because lenders were very sloppy in following the rules.

    be careful about blaming administrations for everything. last time i checked, all these loans were made under the Bush administration with a Republican controlled congress. so is it their fault we are in this mess to begin with?

  22. Gables on U&P

    Thanks for cutting through P&G’s politcal agenda and clarifying the facts. It’s refeshing especially during election season.

  23. gables — The robo-signer issue is a lot more than making banks “dot the i’s and cross the t’s.” Lawyers are going into court and getting judges to agree that anything less than the original mortgage document and/or original title is unsatisfactory for purposes of foreclosure. This is so absurd it’s beyond comprehension. Imagine if you had to keep the original title to your condo in your pocket at all times, and then, if you lose the title, or put it in the washing machine by mistake, or some guy spills coffee on it, your right to your home evaporates forever. This is what’s happening right now in the courts (and media), and it’s absurd. Maybe 1% of foreclosures have legitimate issues, which could have been addressed without a national foreclosure freeze and without raising foreclosure costs by a factor of two or three (or more).

    gables said: “be careful about blaming administrations for everything. last time i checked, all these loans were made under the Bush administration with a Republican controlled congress. so is it their fault we are in this mess to begin with?”

    — Come on, man, I thought you were better than this. Anyone who knows anything about the r.e. mess knows Bush proposed to reign in Fannie and Freddie YEARS before the r.e. meltdown, but he was both rejected by Barney Frank (and his Dem cronies in Congress) and harshly rebuked by the media for being “anti-poor.” At least 95% of the r.e. meltdown was the result of extending huge loans to people who had no business getting loans, which was a 20-year pet project of the Democrats that has come home to roost in a big way. Remember “redlining” and “community reinvestment” and all that nonsense? Those were just codewords for “liberal reasons for forcing banks to give loans to people with horrendous credit.” (BTW, this was something Obama was personally involved with in Chicago in the ’80s and ’90s.)

    Clearly, the Bush administration wasn’t perfect when it comes to banks and financials, but if anyone is going to assign blame for the r.e. meltdown in a fair, neutral manner, Dems get at least 80% of the blame. All the spin in the world can’t change that.

  24. Joe, you need to get the facts straight. Maybe you were stuck in Mexico “working” during the bush years but that is no excuse for posting blatantly false info. You choose to simply ignore Bush advocacy of home ownership in his push for the “ownership society”. You also choose to ignore the fact that Most sub prime loans were issued by unregulated independent mortgage companies and investment banks who were not regulated by CRA. The CRA has been law since 1977 but you and your right wing hacks find it politically expedient to blame this policy for the cause of the housing crash. Once again you are wrong, it is not dems or repubs to blame for the sub prime mess. The bubble lasted from 2001 to 2006, those were years the republican had control of congress and the presidency, how can you say dems are 80% responsible? Market forces saw an opportunity to take advantage of market conditions and it did what comes naturally. This wasn’t the first bubble and it won’t be the last. You really need to educate yourself with the facts before you repeat the fox news talking point.

  25. OK Guys! What is QE2? Is it Queen Elizabeth II they are talking about or about printing money and giving it to WH to give to unions?

    Just because a girl gets raped once, that does not mean the next guy who comes along has the right to rape her.

    What was your opinion of the Miami real estate market in 2005? How many people did you tag as conspiracy theorist back then? Hell everyone was beating drums of Miami real estate and how it could never fall!

    How quickly we forget about the people who lied on the mortgage applications. Shouldn’t they go to jail? So this administration want to put some people who earned $10 / hr, signing papers in jail. What would be the purpose? Scare other employees so the banks will have difficulties in finding people to sign the papers? End result? prevent foreclosures and let people live in the houses for free? What should we call these housing units? No income housing.

    What about deflation? How can you discount the core rate when the energy and food prices have skyrocketed and remained in the stratosphere for past 5 years? If we did not have inflation when people were spending the funny money they did not have – tobe precise $2.3 trillion, why would we have to worry about the deflation when people do not have the funny money to spend. I have seen and lived in the spriraling inflations of Mexico, Brazil, Argentina, hell – all of central and south america starting from 70’s. You do not want to wish that life. That is when wives, sisters, daughters start to walk the streets. Grandfathers, fathers, uncles, brothers, sons become the agents.

  26. “No income housing” is awesome. Well done, P&U.

    It’s amazing to me that we’re years into this r.e. meltdown and economic recession but most people still seem to think it’s cyclical rather than structural. The people and government of the U.S. have spent billions upon billions of dollars yet we’re still at zero inflation (or even deflation). Think about that for a second.

    When the cable news programs show the riots in France and Greece, they should splash a “Coming Soon” graphic on the images, just like a movie preview. Those problems and harsh realities are indeed coming soon.

  27. Joe, have you forgotten about the Bush home “ownership society” and its great good for our country? Now you tell me, if the Republican’s controlled the WH for 8 years, and the Congress for 6 of those years, and did nothing to fix a problem you say they were aware of-what in the heck were they doing all those years?

    you said “At least 95% of the r.e. meltdown was the result of extending huge loans to people who had no business getting loans, which was a 20-year pet project of the Democrats that has come home to roost in a big way. Remember “redlining” and “community reinvestment” and all that nonsense?” Are you serious about this? I guess Brickell and downtown Miami were redlined districts with poor minority buyers. The big money losses in mortgages did not come from these poor neighborhoods-they may be foreclosed on but never really bubbled. The big losses come from middle and upper income city center and suburbs in FL, CA, NV and AZ. The no documentation loans were the result of poor regulation enforcement and the greedy banks/securitizers-not public policy. Quit listening to the talking heads on TV.

    P&U, you said “What was your opinion of the Miami real estate market in 2005? How many people did you tag as conspiracy theorist back then?” I thought it was overplayed back then, which is why i did not buy. Its getting back to reality now.

    P&U you said “What about deflation? How can you discount the core rate when the energy and food prices have skyrocketed and remained in the stratosphere for past 5 years?” Show me the data that indicates all this inflation. It does not exist. And my own pocketbook agrees. P&U, i used to have the same view as you. Then I looked at the real data, and it tells a completely different story. Again do not let ideology confuse you with the facts.

  28. Nice to see the blog picking up again. I visited Miami and this time spent some time in the Brickell area. I actually felt is was a nice contrast to the touristy SOBE scene. Just wondering if anyone can tell me how I can find out how well a building’s HOA is doing? In particular Emerald at Brickell. Will the association give me info directly? Gables I believe you were looking in this area as well. Any thoughts?

  29. Gables, I hope you heard Shaun Donovan’s interview on CNBC this morning. – “All this is about making sure that the some of the banks do everything possible to keep people in their homes”

    Great news! So we have no foreclosures, no REO, no sales and no jobs!

    “Then I looked at the real data, and it tells a completely different story. Again do not let ideology confuse you with the facts.”
    Where is real data? Glass is half full or half empty? According to data, we are not even in recession. Home sales are up and milllions of jobs are being created every month. Actually they did include 450K census jobs to show job creation earlier this year. Wake up! Do your own research, read between the lines. Have you ever paid attention to revised numbers? Did all the REAL data point towards the real estate collapse or it was that one weekend, when aliens caused the financial meltdown around the world?

  30. gables — Yes, I remember the “ownership” society that Bush liked to endorse. But I don’t recall Bush, or anyone in his administration, endorsing the issuance of $650,000, interest-only, no-down-payment mortgages to bus drivers. In fact, I remember quite the opposite, but as with Social Security reform and Medicare reform and Katrina, etc., Congress and our other “leaders” didn’t want to take charge, make tough choices, and risk a public backlash. They just wanted to keep the gravy train running, and now here we are, pretending it’s a big mystery how we arrived at this desolate economic destination.

    Also, I didn’t say poor people caused the r.e. meltdown. My point was that once lax underwriting standards took hold in poor/bad-credit neighborhoods — which basically happened under government duress, as the Al Sharpton/Jesse Jackson crowd was threatening boycotts against banks that didn’t comply — the same lax underwriting trickled up to middle-class borrowers, which then collectively leveraged itself to the hilt (actually, beyond the hilt). Obviously, the numbers are bigger in Brickell and Las Vegas than they are in Little Haiti, but it all traces back to the same misdeed: lax underwriting.

  31. Poor and Unemployed:

    QE2 stands for “qualitative easing,” round 2. Alternatively, think of it as “qualitative easing 2.0”


  32. Joe, banks did not put themselves and investors into bad financial positions because of duress from the government. that is a huge copout where you try to make the dems scapegoats. banks got us into this mess because they are greedy and did not follow the rules. government oversight was negligent, i fully agree, but they did not put a gun to the banks head and say make this loan. there was a big scam going on by the banks, people buying homes and regulators. you need to remember to spread the blame around. and again, i point out this mostly occured under a Republican controlled WH and Congress. I am not a Democrat, but i do make a point of emphasis when this bias of blame exists on Democrats to remember who was in charge when the bad things were occuring. And since 2006 the Dems didnt help matters-but the problems were already in existence at that point as well.

    i just find it funny how when businesses make bad decisions for the country, they were forced to by Dems. but when they make good profitable decisions, it was because Reps provide freedom to do so. it has become very scapegoat PR in the media, but it is just not true. businesses do good and bad regardless of the political powers in influence at the time.

  33. P&U, can’t really follow your rant. the data i refer to is related to inflation-it is not occuring. and yes, the real data did point to a RE collapse-which is why i did not buy-even when i had a 50% mortgage match from my employer in 2006. home prices (in MIA) far exceeded income-hence the bubble. it was rather obvious to me at the time.

  34. gables — You are revising history in a truly troubling way. It’s simply ludicrous to flatly blame “the banks” for the r.e. meltdown given that they couldn’t have extended the damn loans in the first place but for massive GOVERNMENT complicity. Do you really believe the banks would have been extending these putrid loans if Fannie and Freddie weren’t buying all the garbage paper the banks were writing? Again, I’m not some big pro-Bush, pro-Republican apologist, but the facts are the facts. Just like Bush tried to reform Social Security and got obliterated in the media, he tried to reform Fannie and Freddie and got rebuffed by Congress. You can search high and low, and you won’t find right-wingers who supported giving LIAR loans to anyone with a pulse, FICO be damned. As Kevin Bacon’s character said in “A Few Good Men,” these are the facts, and they are indisputable.

  35. the banks, and mostly mortgage brokers, were not properly underwriting these mortgages according to the rules fannie and freddie defined. now F&F failed in their part to check that the underwriting was correct to be sure. but the initial parties knowingly conducted sustantandard due diligence because they knew they would not have to hold onto the mortgage. they committed the improper action first, and F&F did nothing but enable it. but don’t blame the bar for the alcoholic walking out drunk. or do you want to live in a nanny state where the government tells you what you should and shouldn’t do?

    remember, many of these really bad loans did not go through F&F-they came on board really late because subprime was not in their mandate initially. many of these subprime loans were securitized through the private sector because of the supposed money that could be made-without government backing. government had a hand, no doubt, in enabling this stuff to happen. but much of the bad behavior occurred strictly within the private sector, trying to pass risk on from one entity to the next like a hot potato.

  36. Joe…you are funny. Banks own the government in this country. If you have a dog you probably have no clue which side is the head and which is the tail. “Banks were made to do it” is the most hillarious thing I’ve ever read.

  37. and there are many banks who moved through the RE and financial crisis with very few problems-because they stayed out of the broker and securitization game being played. yes they had to live off of smaller profits-but they chose to be not greedy and the result was not being bitten. banks could make money outside of this RE game-but many chose to participate in the game because it appeared to be a one-sided risk-reward scenario. in the financial world its called chasing yield-and typically does not end well for the last man holding the bag.

  38. gables — So Fannie and Freddie shouldn’t have bought the paper, but somehow it’s still all the banks’ fault. That’s rich. We have a president of the United States who actively pressured banks to give loans to high-risk borrowers throughout the ’80s and ’90s, but somehow the whole r.e. implosion was entirely the banks’ fault.


    Papercut — Nice try, but I didn’t say the banks “were made to do it.” I simply pointed out the FACT that bank underwriting standards were under assault from the government and liberal interest groups dating back to the ’80s, and things snowballed in the 2000s. Banks have always been greedy, but before around 2002, they weren’t stupid. During the r.e. boom, banks simply reacted to market pressures — the government (and then, later, the private sector) created a market for garbage loans and the banks were happy to supply them. It’s as simple as that.

  39. joe, you said “So Fannie and Freddie shouldn’t have bought the paper, but somehow it’s still all the banks’ fault. That’s rich.” Yes. It takes two people to complete a deal. Either side can say, nope this is not correct. contrary to the media portrayal, the banks were not forced into making any type of loans at all. integrity and ethics should play a role in business. And i fault the banks far more than F&F in this case. And for full disclosure, I own alot of banking stocks so i have a vested interest in protecting them. but they are not really defendable. at the same time, i don’t think the banks owe any of these investors “put backs” on the securities they purchased. they knew what they were buying just like the banks new what they were selling. the innocence argument carries no weight with me.

    just as a side note, joe said “During the r.e. boom, banks simply reacted to market pressures — the government (and then, later, the private sector) created a market for garbage loans and the banks were happy to supply them. It’s as simple as that.” so market pressures are justification for not doing the right thing? i guess there exists personal responsibility, but that is abdicated in the world of business?

  40. Miami2009, i have not had much success obtaining HOA information. although i will admit i have not looked that hard since serious purchase opportunities never really materialized. i really liked emerald-almost rented in the place a few years ago. the HOA costs seem excessively high-and rumor has it mortgage fraud was rampant. but the view from the pool deck atop the building is amazing-although rather windy. my preference is coral gables over brickel-but to each their own.

  41. Some of you guys have a very selective reading! Too much noise and very little substance.

    Those big fat cat bank shareholders enjoyed losing their life savings, 401K’s and now they blame the poor deadbeats for not letting them lose more. With all their fancy 401k and their savings they think they own the world.

    They call me deadbeat but I have the boat, and a expensive cars not to mention the mansion I live in without paying my mortgage! What do these bank shareholder have to show? Good Credit1 Ha! Ha! Ha! Show it to Obama and he may give you a job at the soup kitchen waiting on me.

  42. Joe, seriously you really need to get you head checked. Are you saying the government made the banks give 729K loans to lettuce pickers with a 14K annual salary. The government made banks accept vastly over valued appraisal on run down shacks not suitable for an out house? Dude you are really out there. The truth is that sub-prime mess started with wall street bankers and their packaging of the junk and selling it to their clients all around the world. They sold it as AAA securities and clients couldn’t get enough of it. Independent Mtg Companies would give anyone who could fog a mirror a mtg and made lots of money doing so. Wall st would buy the junk and re-package it to clients all around the world. Conventional banks saw how lucrative the business was and decided they wanted some of the action. Freddie and Fannie decided to get into the game and as the last ones in they got stuck with a bunch of shit on their books. As gables said if the Govt. forced banks to write those garbage why is it that some banks and savings institution had very little of that garbage on their books. Did they get some kind of exemption? Get real.

  43. gables — You seem to be drawing lines wherever you feel like it. You say it “takes two” to complete a deal, but you assign all the blame to the banks and not much to Fannie and Freddie (despite the fact Fannie and Freddie, if they had done their jobs, could have prevented most of the crap loans from being made in the first place). Then you switch gears and say the banks don’t owe put-backs to investors, despite what you call unethical activity by the banks. This makes no sense. Are you seriously saying that the banks’ unethical activity exempted Frannie and Freddie from blame, but not the investors? If the investors should have known, then the much bigger Fannie and Freddie should have known.

    Most oddly of all, you said absolutely nothing about the ethics of borrowing money and not repaying it. You seem to score this 100% banks’ fault; 0% investors’ fault; 0% Fannie and Freddie’s fault; and (amazingly) 0% borrowers’ fault. With all due respect, you’re exhibiting some strange logic here. From reading your comments, one gets the impression bankers dragged millions of people into their offices and forced them to borrow way more money than they could afford to repay. I was in or near plenty of banks from 2002-08; how did I not see this happening? I guess I should thank my lucky stars none of these nefarious bankers forced me to borrow way beyond my means. (Sorry to be so snarky, but I can’t believe what I’m reading here today.)

  44. Makes Me Think — No, you get real. You and gables need to check your facts. As I’ve said repeatedly today and as just about every analyst now agrees, Fannie and Freddie could have preempted 90% of the r.e. mess by simply refusing to buy the first waves of crap paper issued by the banks. The MBS craze didn’t take off like wildfire among private investors until **AFTER** Fannie and Freddie had fanned the flames by encouraging and buying bad paper. Had Fannie and Freddie not bought the first waves of the crap — which gave it the appearance of a performing asset — then the secondary MBS wave never would have happened (or would have been far, far smaller). The MBS craze didn’t pop up out of the blue in 2002; it came later in the boom/bubble. This is a simple fact.

  45. Makes Me Think said: “As gables said if the Govt. forced banks to write those garbage why is it that some banks and savings institution had very little of that garbage on their books. Did they get some kind of exemption?”

    — You’re dreaming. Please name some major banks that weren’t heavily involved in the r.e. boom/bust. A few smart ones might have jumped off the train right before it crashed (i.e., dumped the bad paper), but for you and gables to claim that a large number of major banks/financials totally sat out the r.e. boom is utter nonsense. It’s fiction.

  46. Joe, you are being silly.
    everyone is affected by this mortgage mess by this point. The bad loans have brought down the good loans. You can’t find anyone not affected by this mess. JPMorgan and Wells Fargo had much better loan portfolio than Citibank, countrywide and Wachovia. I was more specifically talking about small conservative regional banks that did relatively well during the crisis. Wachovia bank had a loan product that allowed you to pay whatever you wanted towards your mtg. Tell me did the govt. force them to offer that product?

    – “The MBS craze didn’t take off like wildfire among private investors until **AFTER** Fannie and Freddie had fanned the flames by encouraging and buying bad paper. Had Fannie and Freddie not bought the first waves of the crap ”

    No Wall st. bought the shit Mtgs from independent Mtg companies (many seconds and HELOC). They then turned around and sold it to clients as AAA, clients ate that shit up and couldn’t get enough. The cycle continued and then Freddie and Fannie wanted some of that money and got involved later in the game. How do you thing this shit spread all over the world?

  47. Joe, Fannie and Freddie got into the crappy loan securitization very late in the game, just as MMT stated. they did not lead us into this mess-they were just the last man holding the bag. there business was conforming loans-not subprime, alt-A, etc. don’t revise history.

    and quit putting words in my mouth to accentuate your arguments. in no way shape or form did i mention anything about banks bringing people into this mess. a relatively small number of people (actually a rather small percentage of the overall buyers market) were involved in the demise of the RE market. MOST mortgages are performing perfectly fine. those bad guys are going to get foreclosed on and credit ruined for a number of years-plus the loss of any capital put into the loan. if banks were stupid enough to lend with no money down, knowing there is a risk of default on a loan, that is very poor business practice. but they never considered the downside risks-only volume for profit. we have laws in place for banks who foreclose to go after assets if the foreclosure is strategic rather than financial-have at them. but a bank (or investor) who does a no down loan on an overinflated property with a buyer having little/no equity or assets as collateral does not get any sympathy from me whatsoever.

  48. MMK, Gables

    Half knowledge is more dangerous than no knowledge. I hope you guys are not investing on that basis. Hardrock may have better odds for you.

    I feel like in a room full of children, trying to explain P/E ratio and market multiple.

    To understand this mess, first you need to have a open mind. Next you have to understand the relationship between banks, Federal Reserve, regional reserve banks, treasury, and various finance committees in Washington.
    Do you know that Federal Reserve is owned by the banks but 7 of it’s governors are appointed by the President.
    Let me know if you get it so far

  49. P&U, again your post is meaningless. at least make a statement relevant to the discussion. if i make an incorrect statement-please point it out. but if you just disagree with my sentiment, based on your ideology, not sure where that will get us.

  50. Joe,You are letting your politics get in the way of the facts. I have first hand experience in the business. Let me assure you that I was left scratching my head on many deals during the early boom. I know when there was a piece of shit, over priced property selling for above market value in a very shitty neighborhood the buyer almost never had a mortgage with one of the big federally regulated banks. In many cases it was some independent mortgage company in Florida, California or Texas that most American had never heard of. Later during the boom you saw some of the bigger banks relaxing their lending policy. When there was a buyer with very, very poor credit those clients weren’t told to go to BOA or Wells Fargo or Chase. They were told to go see a mortgage broker who could put them with a independent mortgage company who would be willing to underwrite them because the big banks wouldn’t touch them. Many times the Broker would charge them with ridiculously high closing fees but they didn’t care. I can’t tell you how many times I saw people get mortgages who I thought would never get one.

  51. Look, we’re talking in circles here. If you guys think the banks collectively woke up one day in 2002 and decided it was a good idea to give $650,000 liar loans to bus drivers, you’re nuts. The banks’ underwriting standards got looser and looser over a 20-year period, which then combined with a sustained period of cheap money from the Fed to fuel an out-of-control credit and r.e. orgy. Personally, I’d probably score the blame as 33% Congress/Fannie/Freddie, 33% banks, and 33% borrowers. You might convince me to add or subtract 5 points here or there, but I’m sure as hell not going to assess 100% of the blame to the banks and none to borrowers and government “leaders” and agencies. That’s ridiculous.

  52. Joe, you are certainly entitled to your opinion. as am i. i don’t blame the banks for all of the misdeeds, but I blame them for most of the misdeeds. they did not have to get lax in their underwriting-but they did. problem would have barely existed if that had not occurred. and if we had any regulators doing diligence regarding outright mortgage fraud-of which miami had way more than its share-most ordinary buyers would never have been caught up in this mess because property values would not have risen fraudulently. but mortgage fraud was enabled by lax underwriting standards-and contributed to the huge bubble in miami RE in particular. the banks were in the best position to cut this off-but chose to be greedy instead.

  53. See, we differ because I can’t blame the borrowers.
    If you give a bus driver or a lettuce picker living in a gang infested neighborhood a $600,000 loan to buy the home of his dream with no money out of his pocket and if you tell that guy the home will allow him to gain a $100,000 profit in about a year if he sell it. I can’t blame that man for taking such a deal even if he has to lie to get that loan especially when there are no down side risk for him except loosing the home if things go bad.

    sorry can’t blame the guy for trying to get ahead of the game when there is nothing for him to loose. He might loose more if he doesn’t take that deal.

  54. gables — But you keep talking about “the banks” as if they’re a monolithic entity, but they’re not. As long as one sleazy bank or mortgage lender was giving loans out like crazy, that put pressure on all of the others to do so. Since there was little or no governmental intervention, banks were forced to either unilaterally disarm (i.e., no subprime loans) or go with the flow. Again, as I said above, there were people screaming about the credit and r.e. mess by 2003 or 2004, but just like with Social Security, Medicare, and every other big problem in America, few people listened. Instead, people buried their heads in the sand (“All r.e. is local!” “Bubble? What bubble?!”) while our “leaders” punted the problem down the road for another day.


    Makes Me Think — Your last post above is classic liberal crap. “They made me do it!” “I was a victim!!” What a joke. It’s not even worth writing a reply.

  55. Joe:

    Brilliant! I could not agree with you more.

    Those namby-pamby individuals out there who cry “predatory lender!” need to man-up and face the facts: 70% of the mortgages written over the past ten years are going to fail because they were given to people who voluntarily undertook a course of action they could not economically or financially support. There was no coercion. Just poor judgment – – which, in all fairness, one must logically and reasonably attribute to both the borrower and the lender.

    For those that are interested, Deutsche Bank issued a report (with charts and graphs) detailing its housing market forecast for 2011. It ain’t pretty. Here is the link:

    (Click the “Here’s why” hyperlink to see the charts)


  56. Joe said “since there was little or no governmental intervention, banks were forced to either unilaterally disarm (i.e., no subprime loans) or go with the flow.” Joe, so let’s be clear about what you are saying. We are in this mess because the government did not regulate the business world of banking. the capital free market system failed in the case of mortgages because we did not have proper government regulation. poor business decisions are just an excuse for the resulting action, not the reason?

    scriv, i agree with you on the issue of “predatory lending”. but out of the two, borrowers and lenders, it is the lender who is taking on a significant amount of risk by loaning money to the borrower. it is only natural that entity should be more cautious than the borrower. don’t bitch when the borrower is not as careful with the money as the lender. problem is the lenders were not careful at all-they wanted somebody else to worry about the risk while they counted their dollars.

    remember, during this bubble a borrower could take out a conforming loan and process through F&F, or a submprime or alt-A loan and process through private securitization. which do you think made more money for the banks up front? you got it-the banks pushed for the cash of the subprime mortgage. they just got sloppy with the risk and collateral requirements of such a loan.

  57. Joe and Scriv,
    that is exactly what I’m saying. The lettuce picker and bus driver are not victims in this transaction they came out unscathed they had nothing to loose. The banks had everything to loose, why would they give a lettuce picker with nothing to loose a 700K mtg? If I give someone a loan that I know can’t pay me back then I’m the fool not the guy borrowing the money from me. Am I to blame him when I knew from the start he didn’t have a job to repay the loan. How is that liberal crap? Sounds like you guys are trying to make excuses for banks that made dumb business decisions.

  58. Scriv -“There was no coercion. Just poor judgment – – which, in all fairness, one must logically and reasonably attribute to both the borrower and the lender.”

    Scriv, that is just bullshit. When people send 5k of their hard earned money to some Nigerian oil prince promising them part $3Mill lottery in return. We say they deserved what they got because they were greedy and stupid, well this is exactly what happened to the banks they got scammed by lettuce pickers,bus drivers, Realtor,etc.. out of billions of dollars because they were greedy and stupid. We don’t feel sorry for the greed folks so why should we feel sorry for the greedy banks? We don’t blame the Nigerian scammers so why should we blame the lettuce picker?

  59. Makes Me Think:

    “Sympathy” is just a word in the dictionary: conveniently located between “shit” and “syphilis.”


  60. Does that mean if someone commits a crime, it is fault of police for not being present to stop it? Some of you guys do not understand business at all. How do you think the Obama administration managed to delay foreclosures? “We must do everything possible to keep people in their homes” & YES We Can! – Barack Hussein Obama

    Looks like we have lot of deadbeats on this site. Adios amigos!

  61. A fool and his money are soon parted. I have no sympthy for the greedy fool who sent his money to nigeria and I have no sympthy for the greedy fools that run the banks. You can go about blaming others but the responsibility rest soley with the banks. No one else is to be blamed.

  62. gables said: “Joe, so let’s be clear about what you are saying. We are in this mess because the government did not regulate the business world of banking.”

    — That was my point at the beginning of the thread, but you basically said, “No, no, no — It was all the banks’ fault.”

    To be clear, the problem wasn’t a lack of regulation; the problem was *de*-regulation in terms of the types of loans Congress wanted made, the types of loans Fannie and Freddie would buy, and the types of loans that would pass muster as “performing” assets on exchanges and in private markets.

    Government now chews up something like 25% of our country’s GDP. I just don’t buy the idea that the government “didn’t know” or was “defrauded” by the big, bad banks. Frankly, most of the mortgage mess didn’t start at legacy banks; it started with fly-by-night mortgage lenders that flooded the airwaves with promises of easy money. The government should have been all over them like stink on poop, but instead, the politicians loved that the “little guy” was able to own a house and/or buy and flip houses.

    Everyone around here likes to revise history and pretend we all saw it coming. The truth is, there were people on this board approx. 2 years ago who still refused to believe there was a housing bubble in Miami. When the good times roll, it’s easy for people — from the man on the street to the heads of Fannie and Freddie — to stick their heads in the sand. And that’s exactly what happened.

  63. Makes Me Think — I’m not trying to make excuses for anyone. I’m about 10% more sympathetic to the banks than the average person seems to be, but the banks obviously share a lot of blame for the r.e. meltdown. (As I said above, if the government had cracked down on the fly-by-night mortgage lenders, then the legacy banks wouldn’t have ever gotten involved in the worst of the subprime mess.)

    My problem is when people describe the bus drivers and “lettuce pickers” who are living (for free) in $650,000 houses as “victims” now that the banks are trying to undo their mistakes via (long overdue) foreclosures. Deadbeats who didn’t pay $1 toward their mortgage for 2-3 years and were foreclosed are now breaking back into “their” houses and squatting, and not only are the police doing nothing (see Chicago sheriff, et al.), but the media and “consumer advocates” are all cheering them on. It’s just absurd that a person who put $0 down on a $650,000 house and then defaulted should get to keep the house, mortgage-free, because Person B signed a foreclosure document instead of Person A. But that’s the story line/mentality developing across America right now (and it’s not being driven by right-wingers).

  64. Joe, you missed the point. by no means was i agreeing with you above. just trying to clarify your view that our mess was because the government did not regulate a segment of our economy. you imply the business world cannot function properly without the police action of our government. i find that amusing. it amazes me how people have this ideology government can do no right and business can do no wrong-and how they can spin any situation along those lines of reasoning. perhaps you should consider the case where, independent of government being good or bad, our business leaders are as pathetic as our government leaders?

    and to be clear, i agree with you on the supposed “victims” who were in over their heads. foreclose on the SOB’s-although follow the law while doing so.

    and for full disclosure, i think in the long term both bank stocks and real estate will increase in price. but let the banks take a hit and the foreclosures proceed in the near term, so that all of the folks who followed the rules, saved money and didn’t drown in debt over the past decade can buy up these cheap assets and get our just reward!

  65. gables — I’ve lost track of what you’re even arguing. Are you back to your absurd “banks were 100% at fault; government was 0% at fault” position? If so, there’s no sense even debating with you anymore.

  66. joe, i just find it amusing how people automatically take the view its the governments fault. government regulates too much-or government did not regulate enough. just seems to be a copout for very poor business decisions.

  67. gables — So your reply is to simply exempt the government from blame while assessing 100% to the banks? That seems like an absurd way to go about things.

    The r.e. meltdown brought the U.S. economy to its knees in a way not seen since the 1930s, yet you assign none of the blame to the government, which could — and SHOULD — have stopped 90% of the mess from happening in the first place. Millions of people got no-money-down loans for homes they could never afford, but somehow the government didn’t know it was happening (or couldn’t stop it). That’s a hell of a position, gables.

  68. “To be clear, the problem wasn’t a lack of regulation; the problem was *de*-regulation in terms of the types of loans Congress wanted made, the types of loans Fannie and Freddie would buy, and the types of loans that would pass muster as “performing” assets on exchanges and in private markets.” – – Joe

    Exactly! Brilliant.

    I would add to this that the present administration’s policy, that of using Fannie and Freddy to seemingly buttress the mortgage and banking industry with federally insured loan guarantees is only compounding the problem. These loan guarantees merely shifted the risk to the American taxpayer. They did not eliminate the risk or the cost. It was a shell game. Now the risk of loss – – and duty to pay up on default for roughly $2 billion in mortgage and mortgage-back securities lies with the taxpayer, rather than the private sector. One could argue that the private sector was in a better position to handle this debt because they could minimize or mitigate their losses through the derivatives and future markets (hedges and straddles).

    But the current anti-business administration and the Democratic majority opted for a poorly structured government guarantee scheme that will only require another bailout. The problem with bailing out Fannie and Freddy, however, is that, unlike the TARP program, the government, and thus the American taxpayer, probably won’t profit from an equity investment in Fannie and Freddy. Case in point, the US Government dumped $X billion (I forget the exact number) into Citibank in exchange for Citibank stock. The government presently owns some 1.1 billion shares of Citi at, I have read, a cost basis of $3.20/per share. (More or less). The stock is presently trading at $4+. You do the math.

    The government, and thus the American taxpayer, received an 8.5% yield from TARP program – – – and if you do the research, the TARP program is not finished because the US government still has equity positions in several banks that will take time to sell; you can’t dump billions of shares in a single transaction without killing the company.


  69. Joe, you are the one saying i lay 100% blame on banks and 0% on government. i did not say that. my position is most of the blame is with the banks-enough that i hold them accountable for the actions. you are trying to create a straw man argument. i simply am unwilling to give the banks an excuse for their poor decisions. i do not defend the governments policies, but i am very unsympathetic to those who acted on that poor policy.

    scriv, many of the financial leaders (private enterprise) have said even though they hate the current situation with F&F, it is necessary to exist right now because banks will not move into the private mortgage arena. you may not have liked the TARP programs, but where do you honestly think the country and the world economy would be right now without it?

    scriv, you said “One could argue that the private sector was in a better position to handle this debt because they could minimize or mitigate their losses through the derivatives and future markets (hedges and straddles). ” Their inability to do this is what led to much of the TARP type funding-think of AIG. Many of the investment banks were headed under because the world did not believe they would pay off their fiancial insurance (derivatives)-and demanded payment of cash that was not in existence.

  70. Gabels:

    I don’t like TARP. I don’t dislike TARP. It is what it is: and profitable it was. And, an added bonus, it worked; permitting the private firms to absorb the huge losses they incurred all the while generating more than an 8.3% return for the Treasury. Win, win.

    I note that TARP and the mortgage bailout are two distinctly different programs. The Fannie and Freddy mortgage guarantees did not prop up the banks. The TARP funds did that.

    Joe is correct, de-regulation was a huge problem in getting us to where we were; I point to repeal of Glass-Stegall as a starting point as well as a Barny Frank-led campaign designed to expand home ownership regardless of the cost or consequences. Repealing the federal law that prohibited commercial banks from collaborating with full-service brokerage firms or participating in investment banking activities permitted creation of these mortgage-backed financial products which fueled this toxic bubble. I also note, Blue Horseshoe loves a fourth quarter naked short of BAC. 😉


  71. Gables – “find that amusing. it amazes me how people have this ideology government can do no right and business can do no wrong-and how they can spin any situation along those lines of reasoning. perhaps you should consider the case where, independent of government being good or bad, our business leaders are as pathetic as our government leaders?”

    Right On point!

    Government fucks up and businesses fucks up equally. Somehow these people want us to forget all the colossal failures in the business world.
    And when businesses fucks up somehow it’s the government fault. It was the government’s fault for the gulf oil spill too.

  72. joe -“but the media and “consumer advocates” are all cheering them on. It’s just absurd that a person who put $0 down on a $650,000 house and then defaulted should get to keep the house, mortgage-free, because Person B signed a foreclosure document instead of Person A. ”

    Hey you are always going to get people that is way out there in their views. I don’t feel sorry for anyone who doesn’t pay their mtg for 6 months. It is the bank responsibility to kick them out on their ass provided the follow the letter of the law. I’m not going to cry for the banks though when they didn’t follow the letter of the law and there is someone sitting in their house 2 years without paying a nickle in mtg. Banks ware taking advantage of those same people when playing games with the way they processed credit card payments or check payments in order to charge them excessive overdraft fees, now people are taking advantage of them. I don’t feel sorry for them.

  73. scriv, we agree more than we disagree-and i think we always have. but don’t think the Fannie and Feddie backstop did not prop up the banks. they did exactly that through the back door. but since money is fungible that discussion would be neverending.

    completely agree with you on Glass-Stegall. but again, why does business have to rely on government to force it to operate fairly and safely? just like your naked short of BAC (which is not a bad near term bet). isn’t naked short selling illegal? (and disgusting when done by a fat naked broker :) but it is conducted anyway through the brokers and exchanges.

  74. I think we all agree glass-stegall repeal was a bad idea but at the time many conservatives argued the law itself was a bad idea. The banks fought and got it repealed and then almost choked on it.

    Naked shorts are always a bad idea it this irrational market. too much down side risk, a well placed rumor to the right media source can wipe you out.

  75. naked shorts do not follow the rules of supply and demand. one can theoritcally have an unlimited supply of naked shorts, but only a finite number of longs. shear lunacy!

    interesting tweet from lucas’ site on starwood properties. Lucas, any idea on what, if any discounts, they will sell their units at? are they looking at reasonable price points for the current environment? that is alot of extra inventory to bring onto the market.

  76. gables said: “but again, why does business have to rely on government to force it to operate fairly and safely?”

    — Come on gables, this is getting more Pollyannish by the minute. Everyone knows that killing people is wrong, but we still have laws against murder, and those laws are violated tens of thousands of times per year. If what you said above is even remotely true out in the real world, then why are we spending 20-25% of GDP on government every year? If we’re going to have a gov’t, it’s not too much to ask that it pay attention when a segment of the economy is threatening to bring the ENTIRE economy down (which is exactly what happened thanks to the “no money down” crowd).

  77. joe, not sure what you are trying to prove, other than to display your anitgovernment-pro business stance. just punish the guy who started the fight. in football, i throw the flag on the guy who threw the first punch. i don’t cop out and penalize both with offsetting penalties-nobody learns a lesson from that line of action.

    and much of what the government spends is on items which are valuable to the public as a whole but are not in a position for private enterprise to pursue in a profitable way. education, infrastructure, and defense all come to mind. if you don’t like the way government is operating-run for office and change it!

  78. gables — I used to think you were one of the more level-headed people around here, but your latest comments are a little wacky. I never said anything about eliminating education or national defense. You’re trying to paint me as some anarchist who wants no gov’t, when I haven’t said anything of the sort. I simply said that if dozens of gov’t agencies and Congressional committees are going to claim oversight of banks, mortgage lenders, Fannie and Freddie, etc., then maybe they should have actually DONE THEIR JOBS before a small number of bad actors were able to bring the entire U.S. economy to its knees. You, on the other hand, seem to prefer some Pollyannish world in which we have laws but don’t actually enforce them, because people and businesses “should know better” on their own. That would be an odd mentality in Mayberry, but for someone who lives in fraud-filled *Miami* to make such a naive claim is beyond bizarre.

  79. Joe, YOU said “why are we spending 20-25% of GDP on government every year?”. i simply answered the question. nowhere did i paint you into the corner you seemed threatened by. i don’t believe you are an anarchist in any way, shape or form. just think you may be more biased in your views than you realize. i have only backed you into corners on issues of government when you lose balance and immediately blame the government for the failures in the business world.

    “then maybe they should have actually DONE THEIR JOBS before a small number of bad actors were able to bring the entire U.S. economy to its knees.” i agree with enforcing the laws-i have never said we should not. but throw the bastards in jail who were cheating-even if its after the fact. but don’t blame their actions on the regulators who also failed. just quit trying to blame others for the actions of these banks. they pulled the trigger themselves.

  80. gables — The r.e. meltdown didn’t happen because of a few rogue $100 billion transactions. It happened because millions, if not tens of millions, of bad loans were written over a 5- to 7-year period without much, if any, gov’t intervention, despite a long list of gov’t agencies and Congressional committees charged with oversight and regulatory responsibilities.

    You keep saying I’m “biased” and “unbalanced,” but if you actually read my comments, I’ve said I assign 33% of the blame to the banks, 33% to the gov’t, and 33% to the borrowers. That seems quite balanced to me. You’re the one who seems hellbent on assigning 90% of the blame to the banks and anywhere from 0% to 10% to the gov’t. If you’re looking for imbalance in this discussion, it’s right there.

  81. and who wrote those millions of bad loans? the tooth fairy? spreading the blame out evenly is a copout, a way to minimize blame on the banks. you basically are saying the banks hold only partial responsibility-a third. you may think that is balanced, but it just is not so. and just to be clear, when i note the banks, it’s really a reference to the larger financial field involved in the RE market-not just the corner bank.

    today you argue for government intervention to make the boys play fair. but tomorrow, when it suits you, you will claim government needs to quit regulating the financial industry and let the free market rule. i find it all rather amusing. gives me a chuckle.

  82. Gables,

    Nobody idea what Starwood will price their inventory at. They have an interest free loan though so don’t expect them to dump anything at big discounts. I’m expecting them to sell their inventory little by little at levels where sales are taking place. They’re in no hurry to sell it.

  83. gables — Going in circles is tiresome. I’ve quoted a percentage for how I blame the banks and gov’t while you just keep talking in Pollyannish platitudes and generalities. The first wave of bad loans was clearly 100% on the banks. But after the gov’t did nothing for years, while the nation’s airwaves were flooded with absurd ads promising “no money down!” and “103% financing!” and “credit for everyone!,” the gov’t clearly became a co-conspirator. If you can’t see this, there’s no sense in continuing for another 90 comments.

  84. Joe, i can run in circles all night-i’m a youthful and energetic person. but i won’t let you take the easy way out and blame the government for failures of the business leaders. you do realize, by your distribution of fault, that government and borrowers combined take the majority of blame? i completely disagree.

  85. gables — I’m young and energetic, too, but wasting energy running in circles is generally unproductive if not downright foolish.

    Yes, I’m aware that under my calculations, “gov’t and borrowers combined to take the majority of the blame,” and I stand by it. I’ve discussed the gov’t for days without getting anywhere with you, so I’ll simply refer you back to my prior comments. As for borrowers, people who borrow money they have no ability and/or intention of repaying are not victims* and, indeed, probably should be treated as criminals. If you go order a $20 pizza and then skip out on the bill, you’ll get chased and arrested. Meanwhile, millions of people are defaulting on liar loans and then, when evicted, are stripping “their” houses down to the drywall, and yet we’re supposed to consider them “victims.” Sorry, no sale. As Jack Nicholson’s character said in “As Good as It Gets,” “Go sell crazy somewhere else. We’re all stocked up here.”

    (* Yes, I know there was some predatory lending, but there weren’t 5 million such predatory loans.)

  86. Joe, still can’t drink your kool-aid. a mortgage is different than a pizza bill. it has an out clause if you cannot pay back the mortgage-that is why down payments and collateral exist. and also why proper assessment of the property is required. so that if the buyer defaults, then the mortgage holder is in a position to recoup his money due to collateral of asset value and down payment. but banks did not care to be careful about these issues, because housing prices never fall, and they planned on moving the mortgage off the books asap.

    you said “people who borrow money they have no ability and/or intention of repaying are not victims* and, indeed, probably should be treated as criminals.” maybe banks should not have been so eager to loan out that money. they could have passed on the mortgage commission-but they didn’t. extremely poor business decisions. loaning money out for underperforming assets purchases by people without the means to repay is a rather poor business model. and we got the expected outcome.

  87. gables — Again, this is getting tedious. For hundreds of years, banks were smart and greedy. Now you want us to believe they all woke up circa 2002 and became STUPID and greedy. Even if that were somehow true, it couldn’t have happened without millions of co-conspirators in the private sector (borrowers) and gov’t (agencies and committees looking the other way, often because they were getting huge contributions from the greedy bankers).

    You always seemed like a reasonable guy, but your insistence on demonizing only half of these transactions (on the bank side) is downright farcical. As they say, it takes two to tango, and in the r.e. meltdown, it took millions.

  88. gables — Oh, and as for this new foreclosure “crisis,” it’s clearly a crisis because the lenders never expected millions of people to default simultaneously, and millions of people WOULDN’T have defaulted had the gov’t stepped in around 2004 or ’05 and put an end to the worst of the lending. Instead, the gov’t stepped in and started buying up more and more of the crap paper. But hey, it was just the little old federal gov’t. According to you, they didn’t have the time, resources, or responsibility to actually know what was going on.

  89. joe, again you are doing nothing but making excuses for the poor behavior of the banks by blaming the government. banks had a fiduciary responsibility in the deals which went down-to the borrowers and investors. they abdicated their responsibility.

    as you said, there were millions of transactions. do you really believe the conspiracy that millions of people, beginning in 2002, all of a sudden decided to take out bad loans, independently? this after decades of following a conservative approach to mortgages which worked? there was a very common denominator there-the banking industry. not sure why you insist on compicating a rather simple situation.

  90. gables — First of all, I haven’t made “excuses” for the banks. I said quite clearly the banks were greedy and stupid. Second, yes, the banks violated their fiduciary responsibility, but since the banks are guaranteed by TAXPAYER MONEY as a matter of both law and custom, the government ALSO had a fiduciary responsibility to *ITS* investors (i.e., taxpayers). Why you choose to ignore this is absolutely beyond me. You don’t seem to understand the government’s full role in U.S. banking or, for that matter, the role of moral hazard in the r.e. meltdown.

    As for your second paragraph above, it’s a non sequitur. What is an “independent” “conspiracy”? And are you claiming it was BORROWERS who preferred a “conservative approach to mortgages” prior to 2002? If so, that’s nuts. Borrowers have always shown a quick willingness to max out the proverbial credit line.

  91. joe, i understand the government’s role in banking fairly well. and i absolutely understand the role the borrowers and government played in the crisis. but it does not change the fact that the banks were the point of greatest failure. they failed on both sides-with the borrowers and the investors. and they did it out of greed and stupidity-just as you say. irregardless of the failure of the regulators, it does not change the poor behavior of the financial industry. bankers are big boys and do not need to be told they are behaving poorly by a regulator-they know when that is happening.

    case in point is the current foreclosure issues. banks knew they were not following proper legal processes. why did it take threats of a lawsuit and investigation to change their practices? just follow the rules to begin with instead of looking for shortcuts.

  92. gables — The so-called foreclosure crisis has been massively overblown. In 99.99% of the cases, a borrower has defaulted and is looking for any technicality to delay the inevitable and continue living for free in homes for which they aren’t paying. Further, as for “proper legal processes,” the so-called foreclosure crisis has been largely a failure of common-sense planning by the legislatures and courts. Aside from a small number of egregious cases/abuses, banks aren’t foreclosing any differently now than they ever did in the past. The simple fact is, most courts only provide two options: 1. Bring original mortgage documents to court, or 2. File a lost-document affidavit. A lot of jurisdictions don’t offer a common-sense option No. 3, which would be to legally file an exact copy of the mortgage *without* having to claim the original document had been “lost.” We live in an electronic world. It’s beyond silly to expect banks to hire people to fly around the country with mortgages handcuffed to their wrists so lawyers can look at an original instead of an exact electronic or paper copy.

  93. joe, i agree with you to a large degree on the current “crisis”. that is why i called it a foreclosure issue rather than crisis. borrowers who default should, and will, be foreclosed on. but the rules to proceed in a foreclosure are quite clear. just follow them-it’s the law. you look like a guilty fool when you fabricate documents (like robo signed afadavits ensuring due dilligence was conducted) in this process. option 3 may be satisfactory, but unfortunately it does not exist. follow the rules until they are changed-we have plenty of lobbyists for this task. and the ensuing fabrication of legal documents just gives ammunition against the digital world, where creation of digital documents is nothing but a couple of keystrokes. these guys just keep digging their own grave-it’s amazing!

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