Mr. Mortgage Warns: We Haven't Learned Anything...

Low Mortgage Rates to Spur New Wave of Defaults

Posted on December 26th, 2008 in Daily Mortgage/Housing News - The Real Story, Mr Mortgage's Personal Opinions/Research

Talk about unintended consequences. The following is significant insight from the street level. This is especially important for those of you thinking that these low mortgage rates will lead housing and the consumer to the Promised Land.

Everyone wants to refinance right now - that’s a fact. Home owners and loan officers around the nation have not been this exited in years over the low rates. Purchases are far and few in between and require solid relationships, so most loan officers love a good refi boom - they are the easy pickens (until now). The media are actually quoting mortgage rates non-stop, which is a complete story in and of itself.

Loan officers and banks are very busy taking loan applications, as reflected in the faulty MBA loan application survey data (Mr Mortgage story out next week). Loan approval times at some banks is at three to four weeks making for a two month start to finish process. Fall-out will be extreme over the near-term as brokers and borrowers switch banks three and four times trying to get the lowest rate available. Trying to hedge this chaotic mess is a mortgage secondary marketing manager’s worst nightmare and can lead to significant losses.

Along side of being one of the biggest consumer ‘bait and switches’ of all time, this drop in rates should set the stage for a significant leg-up in mortgage loan defaults and leg down in house values and consumer / homeowner sentiment.

In my opinion, the government artificially pushing rates down this quickly not only will cost the originators plenty but quickens the pace at which the Alt-A, Jumbo Prime, and ‘Prime’ implosions could begin in earnest.

Click Here for the full article

LA Times: Top 15 California Destinations

For whatever it's worth here is what LA Times writer Christopher Reynolds believes to be the "not-so-obvious but oh-so-essential sites" within "our" "Golden' State". (I add quotation to 'our' and 'Golden State' for comedic effect and parodic inflection)... (maybe even some angry sarcasm).

1. NATIONAL STEINBECK CENTER Salinas, Monterey County
2. THE COLD SPRING TAVERN San Marcos Pass, Santa Barbara County
3. CORONADO BEACH, WITH GRUNION RUNNING Coronado, San Diego County
4. SANDPIPER GOLF CLUB Santa Barbara County
5. HIDDEN VALLEY Joshua Tree National Park, Riverside& San Bernardino counties
6. THOUSAND ISLAND LAKE Ansel Adams Wilderness, Inyo National Forest
7. SEA RANCH Sonoma County
8. TOMALES BAY Marin County
9. MONTANA DE ORO STATE PARK San Luis Obispo County
10. LITTLE PETROGLYPH CANYON Naval Air Station - China Lake, Kern County
11. THE BATHS AT ESALEN Big Sur, Monterey County
12. CALIFORNIA HIGHWAY 46 San Luis Obispo County
13. GENERAL GRANT TREE Kings Canyon National Park, Tulare County
14. THE INN ON MT. ADA Santa Catalina Island, Los Angeles County
15. DRAKESBAD GUEST RANCH Lassen Volcanic National Park, Plumas County

(Take a moment to appreciate the fact that I have collected these links for you so you dont have to click through 15 separate pages on LATIMES.com just to see the friggin list.)

Obama flashes Tits To Curry Favor At Pentagon Meet and Greet

(Some Fun from our friends at the Comedy Hub):

Transition Meeting With Top Military Officials Ends in Truth or Dare Fiasco.
by: Kaylee Strut, Comedy Hub Political Analist. 6:15 PM EST

In what seemed to be standard procedure, President-Elect Barack Obama sat down with transition advisers, State Department Leaders, and numerous 4 Star Generals to discuss the possible surge of troops into Afghanistan rumored to begin just after the Inauguration.

The three hour meeting was all but complete when Obama reportedly challenged Deputy Secretary John Negroponte and his staff to a game of 5 on 5 basketball. Negraponte is said to have promised to make the President Elect regret the offer according to an un-named source.

Although the two sides never took the court the situation escalated rather quickly into a literal pissing contest with Under Secretary of Global Affairs Paula Dobriansky out-distancing VP elect Joe Biden 13 feet to 11. No comments have been made about rumors of other challenges such as: "oops the closet light went out" and "just the tip to see how it feels".

As promised, (the losing team captain) Obama complied with a truth or dare test of and shaved his chest prior to completing 4 sets x 25 fingertip pushups all while chanting "Praise Alah". Finally he completed the dare by walking topless through the building lobby and out to the street where photographers had been called in to capture the historic/breasty moment .

At no time was Obama to remove his sunglasses or tuck in the drawstring on his shorts; both points of contention for the future Chief of Staff Rahm Emanual .

"I think we made some progress today" Negroponte told reporters after the urine, shaving cream, and KY jelly was cleaned from the 3rd floor meeting room outside of his office. "We found out what kind of nerve this guy has, so far I like how things feel... let's be honest this is mostly a 'feel' game when it's all said and done."

The safest place in the world: The Santa Monica Stairs

So, how do you define the safest place in the world?

I say it would be the mythical combination of a place where no crime exists along with an unnecessary and overwhelming police presence. We all realize that those two things would never occur at the same place for a plethora of reasons; it would be like someone trying to attack the Pentagon with a handful of civilians aboard a passenger jet.

In fact it just so happens that such a place does exist and it's right here in LA. The Plastico reports that there is no place in the world that is better patrolled than the ultra safe block of 4th avenue between San Vicente and Adelaide in Santa Monica, CA. This particular block is very very small. In fact, it has a total length of about 425'.

By now you have lots of questions as to why the police would have any active presence on this particular block made up of multi million dollar estates. Let me take it from the top:

This particular area has two sets of stairs that are treasured by folks who enjoy outdoor exercise. One set is concrete, the other is wood; both are a very difficult climb (if you can do 10 sets you are in good shape). Long story short - hot girls work out there and they work out there often. They can be found wearing sports bras and a light layer of glistening sweat. I have been keeping close tabs on this very fact for some years now. While I admit to working out and catching a nice view at the stairs I also admit to not taking a government paycheck while I do it.

So here is the rub: Just about every male city worker in Santa Monica drives back and forth through this neighborhood all day long so that they can see some tail. The endless parade of taxpayer funded vehicles and personnel frequenting the stairs include but are not limited to:

Animal Control
Santa Monica Parking Enforcement (on days with no posted parking restrictions)
LAPD
Santa Monica Police
Los Angeles County Sheriffs

Santa Monica City Maintenance (just about every kind of truck you can think of)

To top off the list just today I spotted this Santa Monica Police K9 unit (pictured left) as it cruised through; I guess you have to give a dog a bone every now and again.

The reality is that since before Christ folks have been exercising in this area. For just as long, your tax dollars have gone to State and City workers that spend remarkable amounts of time driving by in circles and parking nearby to enjoy the view.

But now it's actually official. The Santa Monica Police now have a full time presence at the stairs. Shift after shift we now pay an armed officer hang out and tell people they cannot stretch or do sit ups on the 4th street median. City code says that the median is for walking and jogging only. If you are handicapped and wheelchair bound you may not wheel yourself across the median that you pay tax dollars to maintain. Suck on that invalids!

If you think I'm kidding, you are wrong. Here are the signs that prohibit you from stopping to adjust your socks, kiss your child or to help someone who has just suffered a heart attack because they could not legally stop to rest during their run:

The sign pictured left is new; four of them were installed this week

So how much are taxpayers spending to patrol this 20' wide x 425' piece of grass median? Hard to say but you can price in a full time officer with patrol car for all daylight hours to start. The officer on duty today said that he figured it would just be a two week stint; after a recent meeting he was told it will be indefinite. I suppose that the other city workers who circle throughout the day probably wouldn't be doing anything else anyway so that cost is moot. Certainly the least they could do is get out of their vehicles and do a set of stairs.

For the record (and we always hate the record), it seems that all 'median planting strips are for walking and jogging only' in Santa Monica according to a 1970 code. But can't we all agree that we would rather have every officer spending his or her time targeting serious crimes like not having a front license plate or for using a hand-held cell phone? Also for the record - the Santa Monica Police will not return calls to comment on this story; other city workers have been quoted as saying "(insert chauvinistic whistle sounds; repeat as needed)".

So What if We Had Just Listened To Mark Hanson (Mr. Mortgage)

It seems as if the news cycle is running about a year behind on just how deep and wide the credit crisis is. When the final story is written (if any of us survive to write it) we will take a look back at the folks that got it all dead wrong and run after them in angry crowd format with sticks and torches. So be it. But we will also eventually identify the people that had it dead right from the get go. One man that identified and warned about the sub-prime crisis early on in plain language was Mark Hanson, or "Mr. Mortgage" as he is oft referred to within inner circles.

Mark Hanson's discussions are so valuable for West Coast Real Estate that we felt it necessary to track him here at The Plastico full time with an RSS Feed on the right side of the page. You can stay literate on the housing market just by following his articles.

If you are a buyer or seller of real estate in California you need to hold your nose and read Mark's latest article where he takes a moment to rip the CA. Association of Realtors a new a**hole.

CA Association of Realtors Needs a Math Class…Perhaps Ethics as Well

Posted on September 29th, 2008 in Daily Mortgage/Housing News - The Real Story, Mr Mortgage's Personal Opinions/Research

In their latest attempt to paint a picture of the glass totally full of Cristal Champagne, CAR released a August home sales report on Thursday that made it seem as though the state had no housing-related issues whatsoever. This is exactly why I always scream ‘YOU CAN’T BELIEVE THE HEADLINES!

“Sales are now 85 percent above the monthly trough for this cycle, which occurred in October 2007, and for the first time this year are ahead of 2007 in year-to-date terms,” said C.A.R. President William E. Brown”.

I think CAR either needs a math class or should not be allowed to ever put out another press release. I have no idea what they are even saying here…

“The statewide sales figure represents what the total number of homes sold during 2008 would be if sales maintained the August pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales”

“Closed escrow sales of existing, single-family detached homes in California totaled 490,850 in August at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity increased 56.7 percent from the revised 313,310 sales pace recorded in August 2007. Sales in August 2008 increased 1.8 percent compared with the previous month.”

This would not bother me so much if three days before I didn’t put out a very well-researched August CA Home Sales Report saying:

“August was not good for the CA real estate market. Just one month after pom-pom’s were flying over how well the market did in July and bottoms were again being called across the board yet again, August, a peak sales month, delivered another blow. Total sales were off, organic sales were off, foreclosure-related sales rose, defaults rose and prices tumbled.”

The facts are that in August 2008 37,988 new and resale properties sold according to DataQuick. Last August, there were 33,429. There was an increase but nowhere near the 85% quoted above or the 56.7% quoted below. The sad part is in August 2005, 73,285 homes sold. Yes, there was an increase year over year from August 2007 to 2008, which could be viewed as encouraging. However, the number of ‘organic’ sales in August 2008 were only 21,172, as foreclosure-related sales made up 46.9% of the total sales. In August 2007, foreclosure-related sales were negligible. Therefore, in my book real home sales fell sharply from August 2007 to August 2008, less inventory was absorbed, prices tumbled, which is the most destructive and the foreclosure market remains the real estate market at least for now. Nice try guys.

A Whole Bunch of Reasons to Avoid the Santa Monica Pier

A Guide For Santa Monica Pier Virgins

Santa Monica, CA - Living in and around West LA all of us sort of get into a groove of places that we go and places that we go...not.  I wasn't sure why I had avoided the Santa Monica Pier for so long, but I had. In fact, I had not set foot on it for at least 10 years. So last Monday afternoon I took a walk. A good ole-fashioned walk on the Pier... and I sure wish I hadn't.

The most recognizable sight in Santa Monica is the famous and oft pictured sign at the entrance to the pier. Commonly thought to be the official end of historic Route 66... It isn't. 

Route 66 actually actually ends a block away at Santa Monica Blvd. and Ocean Ave. You can view the Will Rogers Highway Dedication Plaque at Palisades Park if you are so inclined. But lets stay on track: So I took a walk on the pier...

Reader Safety Alert: The pier itself (the Planks and the nails/spikes that hold them) are old, warped, and often in shocking disrepair. Wearing sandals should net you at least one stubbed tow before you are able to escape. As I tripped along the aging and un-maintained surface I could not help but to think about all of those brand new parking enforcement vehicles that are absolutely everywhere in Santa Monica... or the cost of the full time police patrol at 4th and San Vicente where an armed officer is paid to tell you not to stretch in the grass median (it's for walking and jogging only; duh).

Back to the pier. After opening a small wound on my left foot I kept a close eye out for those little 18" x 18" plywood patch boards that seem to be meant to close gaps between broken planks but actually result in a far greater tripping hazard than anything they might cover. Maybe they would serve a reasonable purpose if the installation technique had included using enough screws to hold them securely in place. 

The first thing you might see on the pier itself is the Bubba Gump Shrimp Restaurant which I believe is legally required to be on every pier in America. Try not to think of the last time you ate at one, just think happy thoughts about Forest Gump and the late Bubba.

Once you get passed the fine dining at Bubba Gump you will be happy to find lots of fast food that is simply impossible to find anywhere else: Pizza Hut, Taco Bell, and The Coffee Bean are appetizers until you find the overpriced fried seafood joints that change their cooking grease at least once per leap year. About midway across the pier you may find yourself in need of a pit stop. You are in luck because not a dime was spared on some temporary bathrooms (pictured below).
.

The picture also provides a good example of the type of folks that have time to hang out on the pier. Please note the latest style; are they shorts that are too long or pants that are too short? They shall henceforth be called: "shants".

The main attraction is just ahead on your left. No, it's not the gimmick roller coaster or the trapeze lessons; it's the remote controlled boats! This is your chance to pay $2.00 for the opportunity to control a boat that moves very very slowly inside of a smallish bathtub/jacuzzi. The best among us are able to navigate their boat into well identified docking station that happens to be an exact replica of a normal sized miniature remote control boat dock.


As you approach the end of the pier you will see a Police/first aide station and the final eatery. After you dress your foot wounds you just might be hungry enough to view the overpriced menu at Mariasol Cocina Mexicana. 

It seems you have reached the end, but if you're lucky, you will go about 10 steps too far and find yourself having a look at the local anglers and the days 'take'. This is where another Pier rule sets in: If you walk to the end of any pier in America you will see a skate fish that has been caught and is slowly suffocating and bleeding out through its chopped off tail. Here is a photo of the one that graced the pier for me and the fine 'shant' wearing gentleman who caught it...


When you catch your skate here is a youtube video showing you how to clean and prepare the fish for cooking. 

So why would anyone ever set foot on the Santa Monica Pier?

Well it wasn't clear at all, not until I saw one final thing that reminded me what all piers are meant to be. The pier is, in all her glory, just a place to sit with the one you love - it just might be the one you chose to grow old with and to watch one more sunset.


If you still insist on going, I wont stop you (I just don't have the time). So here is some info that may help you navigate through the fray:

Official web site — directory with links to the arcade, the aquarium, and history
Pacific Park — information about the rides, attractions, and food court on the pier
Twilight Dance Series — free concerts that run on the pier from June - September
Santa Monica "Drive-In" at the pier — free films at the pier in Aug. - September
Taste of Santa Monica — September 14th (THIS SUNDAY) event featuring Santa Monica restaurants. This year: $40.00 - to stuff your face for 4 hours. Take a look and take your own first aid kit.  Cheers.