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Monday, February 08, 1982

02.08.2007 - Thursday Open Thread

This is your open thread for Thursday, February 8, 2007. Please post random links and off-topic discussions here.

I'm traveling back from Atlanta today, so although I realize that the local papers' stories about January will be posted today, I probably won't have time to post about them until tonight. Just an FYI.

23 comments:

The Klondike said...

From London..."Europe's biggest bank, HSBC Holdings, said its charge for bad debts would be more than $10.5 billion for 2006, some 20 percent above analysts' average forecasts, due to problems in its U.S. mortgage book."

That is 10.5 BILLION with a B dollars. Holy sh...!!!!!!

Maybe being the worlds 3rd largest bank, 10.5 billion ain't much, .... bull sh... it's still a lot. just think of the impact on smaller banks. Now I know why the UN said a month or so ago that they were worried about the US housing markets impact on the worlds financial institutions.

The defication is coming in contact with the rotary oscilator....in other words, The sh.. is hitting the fan!

Matthew said...

And to think TV and B, this is just the beginning of the ARM resets, imagine what the situation is going to be like in a few years.

tacoland said...

AP
Senate Banking Committee to Hold Hearing
Wednesday February 7, 6:35 am ET
Senate Banking Committee Scheduled to Hold Hearing on Mortgage Lender Practices


NEW YORK (AP) -- The Senate Banking Committee will conduct a hearing Wednesday on lender practices within the subprime mortgage space.
Representatives have been invited to testify from Mortgage Bankers Association, National Association of Mortgage Brokers, The National Association for the Advancement of Colored People, American Association of Retired Persons, and the Center for Responsible Lending.
Lehman Brothers analyst Charles Marr said predatory lending legislation is expected to be a top priority for House Financial Services Chairman Barney Frank, D-Mass, and Christopher Dodd, D-Conn.

The Klondike said...

Man, I am no doomsdayer,(some simple minded optomists might disagree) but holy Bat-turds! this doesn't look good.

Anonymous said...

The water finally broke on my New Century short position (NEW), down 29% today to $21.50/share.

Burn baby, burn.

Anonymous said...

Maybe this HSBC will be the catalyst for the "Next Time Down" in the markets.

*fingers crossed*

If that turns out to be the case, all I have to say is "It's about freakin' time!"

Kim said...

"Senate Banking Committee to Hold Hearing
Wednesday February 7, 6:35 am ET
Senate Banking Committee Scheduled to Hold Hearing on Mortgage Lender Practices "

If they had done it 3 years ago it might have done some good.

The Klondike said...

"If they had done it 3 years ago it might have done some good"

Done some good in what way I guess is the question. prevented such a run up in home prices? Or prevented the impending fall of home prices?

maybe without the loose lending practices, the speculative buyers might not have run the prices up. but if it would have prevented the fall of prices that is happening now, then I don't think that is necessarily a good thing.

Rolandovich said...

richard:

The reason people quitclaim their house to an LLC is they are holding the house for investment purposes and want to avoid personal liability in case a tenant injures himself on the property. However, they can secure better financing if they buy it in their own name as residence. Then after they get the house, they quitclaim it to an LLC. The funny thing is their lender will always have a due on sale clause, which allows them to call the loan in if the house is transferred to another party (including an LLC). Further, their insurance policies will almost always be voided by such a transfer so it actually does them no good.

So who puts this thought in the minds of these investors? I'll let all of you venture a guess.

Anonymous said...

The KC breakouts are very very interesting this month for Seattle.

breakouts link

Seattle combined down 9.53% MOM and only up 0.79% YOY. The lowest YOY gain for Seattle in the history of available KC breakouts going back to Feb 02.

Yeah it's only one month.. but very very interesting. Seems to fly in the face of the theories that the suburbs are more vulnerable to price erosion than the short commute city homes.

Shadowed said...

A new house is up for sale on my route to work in residential Redmond. It was bought less than a year ago, lived in ever since, and is now FSBO. The gentleman I've seen in the yard didn't seem the flipper type, so I'm wondering if his mortgage is biting him. Other houses on that street were up for way too much last year.

Anonymous said...

Quit Claiming people on and off like a light switch may trigger excise tax and has surprised many people who do this cavalierly. Particularly when refinancing. And this in turn may cause legal ramifications for those who have suggested this technique to their customers: ie, lawsuits recovering excise tax, not to mention potential lost equity depending upon the situation.

I'm not an attorney and this is not legal advise, nor should be construed as legal advise. Anyone reading this should consult legal counsel for their specific situation.

I'll post about this soon.

Rolandovich said...

(1) Quitclaiming, in and of itself does not have any impact on Excise Tax. The WAC's (Washington Administrative Code) is very clear on when excise tax is due and it relates purely to consideration paid and debt assumed.
(2) Land Trusts don't do anything, in fact they are not even legally recognized in WA State aside from being a grantor controlled trust that has no liability protection at all. Don't buy into what those seminar people teach - they are using legal concepts that don't work/don't do anything in WA.

The best advice all day - Don't listen to anyone on a blog (including Rolandovich!). Ask your real estate attorney who is paid by the hour and disinterested from the transaction. Don't take legal advice from Real Estate Agents or others whose income depends on a deal closing.

Rolandovich said...

Joe - Apology accepted. I think this is a fascinating topic for discussion and further learning.

I'm not aware of the IRS ruling you are referencing and the Due On Sale caselaw I have read seems very broad. But, lets say one can place an investment property in a landtrust as described by yourself without violating the Due On Sale. Here is what I don't understand;

(1) You could obtain a commercial loan in the name of an LLC. Close the property in the name of an LLC and thereby obtain fairly good liability protection so long as you keep your finances separate from that of the LLC.

(2) You could go forward with the process you described: That requies (a) Land Trust; (b) LLC to hold property; (c) LLP to manage land trust; (d) Corporation to act as GP of LLP. That all sounds awefully complicated to me. Sure, it may be harder to find out where your assets are, but are you receiving enough liability protection on the margin to off-set the far easier LLC purchase of property? Also sounds like a lot of fees to your attorney... is it possible that he is the true "ambulance chaser" in this case?

Lastly, If your investment property is held by this land-trust/LLC intertwining but the loan on the property is still in your personal name, I believe that in any lawsuit you would open yourself to liability under the "breach of the corporate veil" doctrine because you have failed to keep business and personal assets separate.

Again, just my thoughts. You want legal advice, hire a Real Estate Attorney. I'm just engaging in friendly banter.

Trickshot said...

The Bay Area has the flu...

Shadowed said...

Haven't seen this posted yet: Median home price plummets by $40,000

MisterBubble said...

Those comments in the PI story are hilarious. You have to love the people who are blaming the MSM for the crash ("it's just the media being sensationalist!") -- talk about selective memory!

Anonymous said...

The P.I. story made the lead paragraph in the latest Ben Jones post.

link

great to see a Seattle post.. it's been forever.

The Klondike said...

"That's odd," Bob Melvey, assistant manager at Windermere Real Estate's Ballard office, said of the Seattle numbers. "My personal experience doesn't jibe with the stats."

Hmmm.. I woulda never figured prices would drop.. How odd. Excuse me while I pull me head outta my a..

Rolandovich said...

Joe- I look forward to reviewing your IRS citations. Fee free to click on my profile and email the information to me directly. Thanks.

Anonymous said...

>does the 30% drop in that stock correllate to a 30% gain for you since you had it shorted?

Yes. I shorted it about 5 months ago and it had dropped about 15-20% since then as well.

Rolandovich said...

Joe -
I have found John T. Reed to be quite persuasive when it comes to "due on sale clauses".
Take a look at: www.johntreed.com/dueonsale.html

In that article he discusses the very citation given to you by your attorney. Mr. Reed's conclusion seems to be the exact opposite from your attorney.
Unfortunately in the Law there frequently are no clear answers. Perhaps this is one of those situations. Regardless, I believe that Mr. Reed's article on Due on Sale clauses is quite educational.

Rolandovich said...

Joe -

Unfortunately I disagree with your attorney. I don't want to belabor the topic of "due on sale" clauses and land trusts. Lets let our respective arguments rest for that topic.

However, I am very curious about the 2nd paragraph of your post where you state that the Lender can't foreclose on a property if the property is deeded to another entity.
You said: "Once title is deeded, the mortgagee loses all right to the property (though they can still go after the original borrower, but with no underlying property as security, collection is much less likely)."

This is false. The DoT is an interest in real property. So long as the debt is not paid in full when the transfer occurs, the DoT will remain against the property and the lender can foreclose.

I know this from a lot of personal litigation involving hard-money loans. In short, the DoT remains with the property unless paid.

I'm sorry I don't have any citations for you - but if you email me directly I may be able to email you some scanned articles.

I would love to know who your attorney is and talk to the guy. If your guy is right then maybe I should fire my attorney ;-)