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Fed cuts rate by a half-point

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Posted: Tuesday, September 18, 2007 10:00 pm

WASHINGTON - In a bold strike, the Federal Reserve slashed a key interest rate by a half point on Tuesday - the first cut in over four years - and left the door open to further relief to prevent a painful housing slump and jarring credit crunch from driving the country into recession.

Wall Street responded enthusiastically, propelling stocks up 335.97 points - its biggest one-day point jump in nearly five years. Politicians, shaken by record-high home foreclosures, also welcomed the move.

In a crucial and anxiously awaited decision, Federal Reserve Chairman Ben Bernanke and his central bank colleagues lowered an important interest rate to 4.75 percent. Economic and political pressure has been building on the Fed to act.

As a result, Wells Fargo, Bank of America and other commercial banks dropped their prime lending rate charged to millions of borrowers by a corresponding amount to 7.75 percent.

Whether Bernanke can handle the crisis successfully is the biggest challenge he has faced in his 19 months at the Fed helm.

"Today's action is intended to help forestall some adverse effects on the economy that might otherwise arise from disruptions in financial markets and to promote moderate growth over time," the Fed said in a statement released after its closed-door meeting.

The Fed's action means borrowers who can obtain credit should see rates drop on a variety of loans. It will become less expensive for people to finance certain credit card debt and for homeowners to take out popular home equity lines of credit, which often are used to pay for education, home improvements or medical bills.

And, it will help some homeowners whose adjustable rate mortgages reset in the fall. Those rates will still go up but not by as much as they otherwise could have, analysts said.

Less immediate will be relief for the country's economic health. The rate reduction could take three to nine months to ripple through the economy and bolster overall activity.

The aggressive action underscored the Fed's resolve.

"The Fed has rolled out the heavy artillery here. Bernanke is not being timid," said Brian Bethune, economist at Global Insight. "The Fed has seen the problems. It is not trying to put out a forest fire with a bucket of water," he said.

How will the interest-rate reduction affect Lodi residents?
"
Any borrower with short-term floating interest rate loan could see a drop in their interest cost in the future. It may have no effect, or some effect, on long-term rates like mortgages. It can contribute to a greater level of inflation over time, making foreign imports more expensive.
There is a positive side and a potential negative side. The hope is it will improve consumer confidence and create a more positive atmosphere for future economic activity.
"
Kent Steinwert
President
Farmers and Merchants Bank
"
It may improve our market share a little bit, but it may take a little more than that. Properties are dropping. With sales prices dropping, a lot of people will want to wait. If it goes down another half a percent, that will definitely stir the market because they will want to lock in that interest rate.
"
Rose Marie Mendonca
Realtor
Prudential California Realty
"
People who have biz credit lines will pay less interest per month. It will not create more sales because I think they're a little gun-shy. On msn.com, August had the highest level of foreclosures. Your immediate fix is going to be your commercial customers. The adjustable-rate mortgage changes monthly instead of daily.
"
John Tudor
Business banking officer
Umpqua National Bank
"
It will be good for the average person. It will be cheaper for people to make purchases. There doesn't seem to be too much change in consumer spending over the last six months, but this rate cut is in anticipation of a continued slowdown in the economy. What the Fed is trying to do is head off a recession. Customers may buy because the cost of their loan is cheaper. Any way you look at it, this is a good thing for the economy. It's the first time they've cut rates in four years.
"
Chuck Williams
Dean
Eberhardt Business Forecasting Center
University of the Pacific

Bethune and some other analysts predict the Fed will lower rates again - probably by a more modest one-quarter percentage point - at its next meeting in October. Another rate reduction could come in December, the last meeting of this year, if the economy were to falter.

But economist Richard Yamarone of Argus Research is in the camp that no more help will be needed. "It is one and they are done," he predicted.

The Fed's economic assessment was somber.

"The tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally, " the Fed said.

Fears that the troubled housing market and credit problems could short-circuit the six-year-old economic expansion have shaken Wall Street. Financial turmoil has intensified since the Fed's last scheduled meeting in early August.

The biggest worry is that people and businesses will cut back on their spending and investment, throwing the economy into a tailspin. Tuesday's rate cut is aimed at making sure that doesn't happen.

"By going with a half-point reduction, Bernanke is eschewing a gradualistic approach. The patient - the economy - has a bad flu and you don't want it to turn into pneumonia. So you don't want to mess around," said Terry Connelly, dean of Golden Gate University's Ageno School of Business.

The situation for the Fed could become tricky.

"Some inflation risks remain," Fed policymakers said. There have been some inflation improvements. Wholesale prices fell 1.4 percent in August, the government reported Tuesday. But threats remain: Oil prices climbed to a new high on Tuesday, above $81 a barrel.

The Fed left the door open to its next rate move, saying it will "act as needed to foster price stability and sustainable economic growth."

Ex Federal Reserve Chairman Alan Greenspan, in an interview Monday with The Associated Press, said the odds of a recession are growing.

"Obviously the odds have moved up to more than a third, but I doubt if we are anywhere near 50 percent yet." Earlier this year, his prediction of a one-in-three chance of a recession caused Wall Street to nosedive.

Analysts expect the economy to slow to a rate of about 2 percent in the current July to-September quarter. That would be just half the rate of the previous three months. Growth in the final three months of this year could turn out even weaker.

The free flow of credit is important to the smooth functioning of the national economy. If credit becomes too difficult to get, it can put a damper on peoples' ability to buy big-ticket items such as homes, cars and appliances. And it can crimp businesses' capital investment and hiring.

Employers cut 4,000 jobs in August, the first time the economy has lost jobs in four years. The unemployment rate, now at 4.6 percent, is expected to climb close to 5 percent by the year's end.

The worst housing slump in 16 years is being painfully felt. Higher interest rates squeezed homeowners, especially "subprime" borrowers with blemished credit or low incomes. Foreclosures set records and late payments spiked. Lenders were forced out of business. Hedge funds and other investors in subprime-related mortgage securities got clobbered.

The credit crisis spread beyond the subprime market to more creditworthy borrowers.

Bernanke and his colleagues were accused of being behind the curve when they held their key interest rate steady at 5.25 percent at their last meeting on Aug. 7. Just days later the Fed was forced to pump billions of dollars into the U.S. financial system to get institutions over the credit hump. Then on Aug. 17 the Fed took even more aggressive action and cut its lending rate for banks. The Fed on Tuesday lowered that lending rate again.

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71 comments:

  • posted at 4:06 pm on Tue, Sep 25, 2007.

    Posts:

    You're the fool if you have property or real estate on paper. I've got a cash portfolio probably much larger than your eastside properties are worth. Just hope you can keep them rented. I'm retired and sold ours in Brooklyn two years ago when RE was at its peak. All cash, no paper. Gob's here in Lodi are in the same positions, no cash, only property and real estate no one will buy.

     
  • posted at 6:45 pm on Mon, Sep 24, 2007.

    Posts:

    Regarding your comment on 9/20: You are wrong, real estate my father invested in has left me quite an inheritance, you're a fool.

     
  • posted at 8:41 am on Mon, Sep 24, 2007.

    Posts:

    I am interested in simple videos that I can show. The most authoritive comprehensive examination of the federal reserve is "Creature from Jekyll Island," by G. Edward Griffin. Not coincidentally, he is a guest speaker with Ron Paul.

     
  • posted at 6:01 pm on Sun, Sep 23, 2007.

    Posts:

    For those of us with cash savings, it was like burning cash in the fireplace....20% of it. Any money from overtime?...burned up. Thanks Mr Bernanke, boat companies have stopped building and selling luxury boats, and other items because people need their money to buy food. Its great for the Realtors, that they keep housing prices high and mortage companies won't go bankrupt as fast. A humongous recession is ahead this winter.

     
  • posted at 6:00 pm on Sun, Sep 23, 2007.

    Posts:

    Canada has been celebrating all weekend, they experienced a 20% increase in value of their Loonie (CAN dollar), at the same time our dollar lost 20% to the Loonie. Canadians are streaming across the border to buy at Walmart with more valuable currency. They can buy a Honda in the US for 20% less then a week ago. Europeans are also celebrating, they can fly to the US to make purchases with Euros which are worth more money. Those of us with pension plans we just lost buying power.

     
  • posted at 4:25 am on Sat, Sep 22, 2007.

    Posts:

    Everything you said is true. If you google "Money as Debt" it comes up number one. Its an online FREE animated video that explains the Federal Reserve system and fiat currency. Every high school and college student (and their teachers) should see this video - FREE- on the internet. It was written by a Canadian economist. Its easy to understand and answers lots of questions. The movie is 47 minutes long. Thanks Daniel for your eloquent post.

     
  • posted at 6:15 pm on Fri, Sep 21, 2007.

    Posts:

    sam: Did you ever get the "world without cancer" book. International bankers are mentioned in there.

     
  • posted at 6:12 pm on Fri, Sep 21, 2007.

    Posts:

    By these arguments, I speculate that the chair person's responsibility is to determine the amount of interest that can be fleeced out of the serfs and peasants. I can only speculate, because there is no way to test this statement by any sort of interview with an international banker.

     
  • posted at 6:10 pm on Fri, Sep 21, 2007.

    Posts:

    The wealth of the federal reserve shareholders is unimaginable. Almost noone realizes that the prime interest rate is a payment to the shareholders, and that every dime of money in circulation is loaned, with interest payments due. If the loan were paid, the last dime of payment would be the last dime that falls out of circulaton. Meanwhile, noone realizes that interest payments reduce the money supply, below the premium due, until the shareholders buy some real estate with their money.

     
  • posted at 6:06 pm on Fri, Sep 21, 2007.

    Posts:

    In fact, I don't even think the federal reserve needs a chair at all. That would make the appointed chair person entirely a public spokesperson, whose job it is to create the appearance that the federal reserve is fulfilling its advertised responsibility.

     
  • posted at 6:04 pm on Fri, Sep 21, 2007.

    Posts:

    Only a few people realize that the federal reserve is not associated with or accountable to the federal government in any way, whatsoever. I am humiliated by the congressional approval hearings for the nominated federal reserve chair. It is literally a dog-and-pony show. It is so much of a show that if, suppose, congress disapproved of the nominated chair, the federal reserve could keep its chairman anyway.

     
  • posted at 6:02 pm on Fri, Sep 21, 2007.

    Posts:

    Few people realize that congress has constitutional authority under Article I, Section 8, to create money, if it so decides. The interest rate would be 0%. The segment of the federal budget that is devoted to interest payments on past overruns, is unnecessary.

     
  • posted at 5:58 pm on Fri, Sep 21, 2007.

    Posts:

    People think inflation is an immutable law of economics. Instead, it is an increase of money supply. The federal does its magic trick, at the snap of a finger, to create money to feed congress's insatiable craving for more money.

     
  • posted at 7:28 pm on Thu, Sep 20, 2007.

    Posts:

    From the 15 minute $300 "independent" appraisal that is 90% based on comps (which are free), to the "smiling Jack" Realtor balthering..."..and this is the closet, and this is the kitchen.." So we are going to pay tens of thousands of dollars for the "Lodi edition" of the "Price is Right"?? No WAAAY! Get a real job, I'll spend MY money when the prices go back to normal AND people stop trying to cheat me.

     
  • posted at 7:27 pm on Thu, Sep 20, 2007.

    Posts:

    You know, you can tell a rat by the feeling in your gut. By the smell test. Is the person you are dealing with "happy happy" everything is good? Its time to understand why they're happy. Its because they want you to owe them money. I would be smiling too, if thats all it took. Every middleman who takes a cookie from your buyers "cookie jar" needs to stand up and explain what they are doing for the money.

     
  • posted at 12:04 pm on Thu, Sep 20, 2007.

    Posts:

    I think that borrowers should receive a list BEFORE they sign the papers, of WHO GETS WHAT cookie and how much. If I see a crook stealing one of my cookies, I won't but the house. WHY? because they are MY COOKIES. Why can't these middle men be honest and tell us they are doing us? Disgusting, but it all makes sense. Now-- I understand why Realtors, Appraisers and Loan officers are such "good buddies". They feed off each other and we have to pay for it. NOT IF WE DON'T BUY!

     
  • posted at 11:59 am on Thu, Sep 20, 2007.

    Posts:

    You seem to be the smartest one of the bunch. The others need to go back to school. Are you also a banker? or a lawyer?

     
  • posted at 11:57 am on Thu, Sep 20, 2007.

    Posts:

    You are close but I thought you raised your kids to be honest. You can have money and be honest, but you can't be a GOB and be honest. ALL of their money is extracted from honest people. You are honest and so are your lkids. You have values. The GOB have values too, like "Do onto others , until you get caught". LOL

     
  • posted at 9:37 am on Thu, Sep 20, 2007.

    Posts:

    Very important facts and figures. It's telling me that since I own my home free and clear, and my vehicles, have no debt whatsoever, that I'll stick with my 8-12% cash portfolio at UBS and be completely happy. No real estate in there and never will be. Real estate investments are for the rookies and get rich quick crowd. I,m in for the long term investment to make my children very comfortable when I die. They'll qualify to be gob's on their inheritance.

     
  • posted at 3:55 am on Thu, Sep 20, 2007.

    Posts:

    What does the GOB think about the drop in rates? Will it hurt Lodi?

     
  • posted at 3:55 am on Thu, Sep 20, 2007.

    Posts:

    What does the LNS think about the new policy by the FED? How will this change things in Lodi?

     
  • posted at 3:53 am on Thu, Sep 20, 2007.

    Posts:

    The city council will be meeting on the new Redevlopment Agency soon. What affect will this have on our RDA plans?

     
  • posted at 3:52 am on Thu, Sep 20, 2007.

    Posts:

    Joanne Mounce what is your opinion about the FED rate changes?

     
  • posted at 3:51 am on Thu, Sep 20, 2007.

    Posts:

    I wonder what our mayor thinks of the change in rates? What is his guidance on this?

     
  • posted at 3:50 am on Thu, Sep 20, 2007.

    Posts:

    What is your take on these comments?

     
  • posted at 3:50 am on Thu, Sep 20, 2007.

    Posts:

    Enjoyed your comments, what will this do for the eastside?

     
  • posted at 3:49 am on Thu, Sep 20, 2007.

    Posts:

    How will this affect business in Lodi?

     
  • posted at 7:03 pm on Wed, Sep 19, 2007.

    Posts:

    How low can the FED go? It bottomed at 1% in 2004. Can it go negative? Just hand out money on the streets? What happens when you approach zero? Its not a frivolous question. Fractional reserve systems with central banking caused this problem along with fiat currency. When does it end? What is your recommendation? There are many solutions without using a fractional reserve system.

     
  • posted at 7:02 pm on Wed, Sep 19, 2007.

    Posts:

    Theoretical question that we will face. Lets say the FED keeps capitulating to Wall Street for the next two years during this mortgate crisis (The 2/28 loans will last that long). And in 2009 we now have to face the exact same problems as today but, unemployment is higher, the dollar is valued even lower to other currencies, and the price of oil and transportation will increase (do to requirements of their investments).

     
  • posted at 6:54 pm on Wed, Sep 19, 2007.

    Posts:

    But also, the borrower pays for these middlemen with a higher risk of mortgage default and bankruptcy because all along the way there was no one telling him, You cannot afford this loan. Instead, everyone told him Yes, yes, yes because anyone in the system who said otherwise would have been less profitable and their business would not have survived the competition.

     
  • posted at 6:54 pm on Wed, Sep 19, 2007.

    Posts:

    The middlemen do not care at all if the loan was ever suitable or affordable; all they care about is the size of the loan and the volume of loans they can sell. In effect, the middlemen are taking a cookie for themselves before passing the jar along and one must realize that whoever held the jar first (the borrower) had to be the one who filled the jar. The borrower pays for this orgy of middlemen through a higher interest rate and through upfront fees known as points.

     
  • posted at 6:53 pm on Wed, Sep 19, 2007.

    Posts:

    Instead, everyone told him Yes, yes, yes because anyone in the system who said otherwise would have been less profitable and their business would not have survived the competition. Notice just how many entities touch a single mortgage before it finds a home for itself. Each of these players takes a cut for themselves and then passes the risk to the next bigger fool willing to buy the debt.

     
  • posted at 6:53 pm on Wed, Sep 19, 2007.

    Posts:

    In effect, the middlemen are taking a cookie for themselves before passing the jar along and one must realize that whoever held the jar first (the borrower) had to be the one who filled the jar. The borrower pays for this orgy of middlemen through a higher interest rate and through upfront fees known as points. But also, the borrower pays for these middlemen with a higher risk of mortgage default and bankruptcy because all along the way there was no one telling him, You cannot afford this loan.

     
  • posted at 6:51 pm on Wed, Sep 19, 2007.

    Posts:

    Look how many entities touch a single mortgage before it finds a home for itself. Each of these players takes a cut for themselves and then passes the risk to the next bigger fool willing to buy the debt. The middlemen do not care at all if the loan was ever suitable or affordable; all they care about is the size of the loan and the volume of loans they can sell.

     
  • posted at 6:46 pm on Wed, Sep 19, 2007.

    Posts:

    Ginnie Mae purchases FHA and VA loans; special loans set up for low income individuals and veterans. Banks, in general, can only sell their safe and low risk loans to the GSEs. The loans that are not eligible for purchase by the GSEs are sold to investment banks.

     
  • posted at 6:46 pm on Wed, Sep 19, 2007.

    Posts:

    Banks can sell loans in two different directions. The first is to a government sponsored entities (GSEs). For mortgages, these are Fannie Mae, Freddie Mac, and Ginnie Mae. Loans sold to Fannie Mae, and Freddie Mac are called Conforming Loans and they currently cannot be larger then $417,000 for single unit residences in the continental US. Also, the borrower must qualify through one of two special underwriting software programs called Desktop Underwriter for Fannie Mae and Loan Prospector for Freddie Mac.

     
  • posted at 6:43 pm on Wed, Sep 19, 2007.

    Posts:

    And since the banks too are selling your mortgage, they must only buy loans from lenders that have high enough interest rates so that they themselves can sell the loans off at a competitive price to their buyers. Notice also that, once again, the banks do not care about the long-term suitability or affordability of the loan because they are selling the loan and giving the risk to someone else.

     
  • posted at 6:43 pm on Wed, Sep 19, 2007.

    Posts:

    While the entity that owns the mortgage note ultimately gets the principle and interest, it is the entity that owns the servicing rights who collects the monthly payments from the borrower and forwards it to the note holder. The bank has an interest in keeping the servicing rights of a mortgage because whoever holds servicing rights gets to keep late fees as well as generate revenue by keeping mortgage payments in interest bearing accounts before forwarding these payments to the mortgage note holder.

     
  • posted at 6:42 pm on Wed, Sep 19, 2007.

    Posts:

    Most people think that the banks are the end of the line for a home loan. The truth is that, while banks do keep a small percentage of loans on their portfolios, most home loans are once again sold to other entities. The reason for the confusion about who actually owns the mortgage note is that few in the general public are aware of what are called mortgage servicing rights.

     
  • posted at 6:41 pm on Wed, Sep 19, 2007.

    Posts:

    The only risk the lender faces is the buyback clause, requiring that the lender must repurchase any loan that they sold to a bank if it goes into default within the 6-12 months of purchase. The only thing the lender and broker need to worry about is whether or not that person can make their payments for 6-12 months. When you get a loan you are also paying a premium to the lender, who must only provide the broker with interest rates high enough so that banks will be willing to buy the loan from them later on.

     
  • posted at 6:37 pm on Wed, Sep 19, 2007.

    Posts:

    Notice that the key to being a profitable lender is high volume; lenders want to originate as many loans as possible so that they can sell as many loans as possible. The lender does not care if the mortgage is suitable or affordable for the borrower because the lender plans on selling the loan within a couple of months anyway. Lenders bear almost no risk in giving out a loan to someone.

     
  • posted at 6:35 pm on Wed, Sep 19, 2007.

    Posts:

    The lenders are not in business to hold your mortgage or to earn revenue from your interest payments. Lenders originate loans in order to sell them off to banks such as Wells Fargo, Bear Stearns, or Countrywide. The money received from the sale of the loans goes toward making new loans and into the lenders pocket. The business can only survive by continuing to sell loans at a high enough volume to cover its costs and to make enough profit to justify their efforts.

     
  • posted at 6:35 pm on Wed, Sep 19, 2007.

    Posts:

    So what happens after youve borrowed too much to pay for a home which is probably worth less than you thought? The actual money for the loan did not come from the broker; it came from the lender for whom the broker works. However, lenders typically have very little money themselves. It is not unusual for a lender to only have enough money to fund a handful of loans.

     
  • posted at 6:33 pm on Wed, Sep 19, 2007.

    Posts:

    The agents and brokers put pressure on the appraisers to return an inflated house valuation, and if the numbers come in too low, that appraiser will never get a job from that agent or broker again. So now youve essentially paid a premium to the agent, the appraiser, and the broker. The fraud that exists due to the three headed beast goes much, much deeper.

     
  • posted at 6:33 pm on Wed, Sep 19, 2007.

    Posts:

    Since few people have sums of money that are comparable to the cost of a house, the size of the average loan usually goes up when house prices go up, so the interests of the agent/broker are in line with each other. How does the appraiser fit in? The appraiser is supposed to be a neutral party that provides a fair market value for a house. Increasingly, what has been happening is that appraisers, agents, and brokers have been working together, illegally, and manipulating house prices in order to fatten their commission-based paychecks.

     
  • posted at 6:32 pm on Wed, Sep 19, 2007.

    Posts:

    However, both the agent and the broker are paid on commission, which creates a conflict of interest in the buyer-agent and buyer-broker relationships. It is actually in the best interest of the agent for the home to sell for as high of a price as possible, and in the best interest of the broker for the loan to be as large as possible.

     
  • posted at 6:31 pm on Wed, Sep 19, 2007.

    Posts:

    It all starts with the three headed beast: real estate agents, mortgage brokers, and appraisers. The real estate agent and the mortgage broker are both supposed to work in the best interest of the borrower. The real estate agent is supposed to find the best home for the buyers needs at a fair price, while the mortgage brokers job is to find the buyer an affordable and suitable mortgage product at a fair interest rate.

     
  • posted at 6:23 pm on Wed, Sep 19, 2007.

    Posts:

    Its too bad that this income represents less than 8% of the population, but isn't enough money to support retirement savings, medical insurance copays, house repairs, car problems, and living expenses such as EATING, clothing and paying utility bills.


    The Census records for Lodi and vicinity demonstrate that very few people earn the $125,000 annual income required to qualify to pay these large loans. When you factor in loans with less than 20% down, all the "starter" houses are immediately overpriced (less than 1700 sqft).

     
  • posted at 6:20 pm on Wed, Sep 19, 2007.

    Posts:

    One quick solution, is for SFR houses to drop in price until they are affordable under the standard economic models that has been used for years. Of course the first waves of foreclosures has already begun, nothing can be done about that. Affordability is closely linked to income and debt of prospective buyers. If the buyer does not have at least 20% down, they are in a risky loan BY DEFINITION requiring Mortgage insurance.

     
  • posted at 6:17 pm on Wed, Sep 19, 2007.

    Posts:

    Their monthly payments are guaranteed by the Federal Housing Administration, which covers defaults from the pool of insurance payments, using no taxpayer money.

    In addition to NOT MISSING ANY PAYMENTS BEFORE their mortgages reset AND having at least 3 PERCENT EQUITY in their homes, eligible borrowers MUST HAVE A JOB AND THE HIGH INCOME to cover the payments. Add to this fire insurance premiums, and county property tax impounds, few eligible borrowers will be able to meet the LTV ratio required.

     
  • posted at 6:16 pm on Wed, Sep 19, 2007.

    Posts:

    These people were coached into buying houses at inflated prices with minimal or no down and flaky underwriting with No-Doc loans. President Bush wants to add a new FHA SECURE program. FHASecure expands the number of borrowers eligible for FHA- guaranteed loans to include homeowners in default. FHA borrowers take out loans from about 8,500 qualified lenders, paying an added insurance premium.

     
  • posted at 6:15 pm on Wed, Sep 19, 2007.

    Posts:

    I hope you haven't been financing mortgages the past 5 years. resetting ARMS have NOT been the driver of payment delinquencies, but the fact is if the borrower can't afford the teaser rate payments, then they can't afford to ever pay back the loan. Its intersting that starting in about 2004 when the FED dropped interest to the lowest point in years, people who never saved anything and could not afford to pay first and last + security and cleaning deposits for rent.

     
  • posted at 1:18 pm on Wed, Sep 19, 2007.

    Posts:

    You're so right to T & C, but we haven't even come close to seeing the end yet. When the good old boys have to resort to "blight" and "redevelopment" to make a quick buck you know the economy is really bad here in the Lodi area. By the way, I really like that "Tortilla Flats" designation. ROFLMAO

     
  • posted at 12:05 pm on Wed, Sep 19, 2007.

    Posts:

    I just looked at a house on Armstrong. There are 2 houses (one was called a "mother-in-law" house) on a 1/2 acre lot. The old one is an old piece of whatever with new siding and a new yard. They are asking $650,000 for this piece of work. I hear the vineyard owners are putting a block wall behind the "compound" and building another house. Whoever is conned into buying this piece are losers. So sad.

     
  • posted at 10:28 am on Wed, Sep 19, 2007.

    Posts:

    I wonder who they think will want to live in KNOWN GANG territory for $3500/month on a teensy lot? You can't even put up tents to rent. It will cost you another $4,000 a month for private security guards (this is in the so-called -by Realtors "Tortilla Flats" area).
    LOL ROFL

     
  • posted at 10:26 am on Wed, Sep 19, 2007.

    Posts:

    I saw a new listing on the east side and visited it. A major pity party. Everyone was crying about selling "their mansion". They want $50k above Zillow! AND THEY HAVE THE NERVE TO CALL IT A REDUCTION IN PRICE! That should be illegal. This is the first listing on the MLS! I collect ALL OF THEM. Crazy, Zillow usually runs $ 50-100K high in the mid sized houses and gets its values from CLOSED SALES.

     
  • posted at 10:24 am on Wed, Sep 19, 2007.

    Posts:

    The high end houses are in worse shape because of the new limits on Jumbo mortgages. Now you really have to earn the $200,000 a year you need to pay for the mortgages on these over priced houses. Flip that house now! You don't see Realtors buying up all this bad housing that they created. Its because they know its a bad deal.

     
  • posted at 10:23 am on Wed, Sep 19, 2007.

    Posts:

    It has nothing to do with the little guy. Right now the forecast is that because of the actions of the FED, oil must got to at least $100/barrel. We have has 7 consecutive days of increases. The sub prime buyers especially the 2/28's are still required to ante up their house payments on Oct 1 as in their contracts, regardless how much their house dropped in value.

     
  • posted at 10:12 am on Wed, Sep 19, 2007.

    Posts:

    Gas prices went up because the price of oil went up a couple of weeks ago. Gas prices are always a couple of weeks behind. Interest rates don't necessarily impact oil prices. Oil companies are so flush with money they don't need to borrow and therefor interest rates have no impact.

     
  • posted at 9:40 am on Wed, Sep 19, 2007.

    Posts:

    Hey, you hotshot economists, if this 1/2% interest rate cut is going to do such great things for us common taxpayers, why'd gas go up 8 cents a gallon just today alone with more price increases expected each day?

     
  • posted at 9:30 am on Wed, Sep 19, 2007.

    Posts:

    The market and rates are cyclical people! Like nothing like this has ever happened before! Please, there are few guarantees in life. You make money, you lose money, get used to it. Welcome to the real world!

     
  • posted at 5:18 am on Wed, Sep 19, 2007.

    Posts:

    I agree, the old game is over. It happened with the S&L crisis and it is happening again. If we have inflation again, it may be worse than last time. Remember "prime" mortgages of 13.8% on conventional loans? The irony is that when inflation hits us, house prices will plummet. No one will be able to afford them unless they are paying cash with inflated dollars. Money wont be worth anything again. Yesterday the US dollar dropped to the Euro and Gold is now at a high. Oil passed $82 a barrel.

     
  • posted at 5:07 am on Wed, Sep 19, 2007.

    Posts:

    The Realtor scam of High-balling "asking prices" just to get a listing is an old trick. If Realtors want to only sell to naiive first timers, then go ahead rip THEM off, thats your market. Most of them are not qualified anymore thanks to your housing bubble. If the house is priced right, WE WILL BUY. No more of these hysterical rants "They aren't making property anymore", I think YOU know who made these outrageous claims!

     
  • posted at 5:01 am on Wed, Sep 19, 2007.

    Posts:

    To those potential sellers who bought before 1999, and didn't refinance to buy a toy or pay off plastic, lower your asking price, no matter what the Realtors tell you, and your property will sell FAST AND you'll make a good tax free profit! As always, if your listing is over 30 days on the MLS, ITS PRICED TOO HIGH. Most Realtors hide this fact because they want the listing even if it doesn't sell.

     
  • posted at 5:00 am on Wed, Sep 19, 2007.

    Posts:

    GIVE ME SOME VALUE ON YOUR WORK!! If you start billing flat fee or hourly thats the honest way to go. Thats what all other workers do! We work, we get paid. Where is the added value of $24,000 (6%)on one of these old fixers? If you want serious buyers; LO's, Realtors and appraisers have to start acting like adults. That means support lower asking prices and get ready to negotiate your commission! EVERY property has an intrinsic value since it is a potential investment.

     
  • posted at 4:59 am on Wed, Sep 19, 2007.

    Posts:

    Even with a 50% equity position, we won't buy until the asking prices come back to planet earth. How can you be serious asking $400,00 for a DUMP built in the 1930's? Not with my hard earned cash! Drop the prices and you will see activity again. The "Flip That House" frenzy is over. Also, since we are sensitive to value and not working with OPM, I am not interested in throwing away 6% for ME DOING ALL THE WORK.

     
  • posted at 4:57 am on Wed, Sep 19, 2007.

    Posts:

    My goal: WE WANT VALUE. We don't want to join the rest of the "mortgage slaves" and pay high PITI on a junk house. We can NOT get value when the asking prices are still in orbit. We have heard all the lame excuses. Bottom line, as long as building costs are LESS, NO ONE can afford these prices for 1930's era boxes filled with termites! Many of these houses are over 70 years old- They are "old and tired" and the CC and RDA wants them to be defined as "blight".

     
  • posted at 4:50 am on Wed, Sep 19, 2007.

    Posts:

    From the perspective of a VALUE buyer your statement is NOT correct! I am a motivated over-ualified buyer for an SFR and have high FICO, high income (over 170K )and I want an LTV of about 50%. I have tried, but NO bank or mortgage company will "lock in" any interest rate unless I tell them WHICH house I want to buy, even if I agree to an LTV of 50% or less. They have VERY LOW RISK on any deal with me. We will be 50-50 partners.

     
  • posted at 3:22 am on Wed, Sep 19, 2007.

    Posts:

    Hey DGP and FCB, they're going to be beating down your doors wanting to buy your homes again! Now you can recall all your former employees back to work from McD's and Burgerking. When's Reynolds Ranch and that new Blue Cross/shield building going to be ready? I thought September? Have they started transferring employees to the Sacramento area yet? That was such a high priority project without the proper paperwork not being finished, now you need to fulfill your end DGP.t&c

     
  • posted at 2:57 am on Wed, Sep 19, 2007.

    Posts:

    Kent's comments are contradictory and shallow, wish he would just sell F&M and move on.
    The realtor is just wishing things get better.
    John is getting closer, but not sure commercial is going to get a bounce.
    Bring back Snaith, he never feared pulling some optimistic forecast out of his nether regions.

     
  • posted at 2:53 am on Wed, Sep 19, 2007.

    Posts:

    This rate cut is meaningless. Unless you are a big bank or someone with stellar credit, more than likely your rates are going to stay the same. Adjustable Mortgages are mostly tied to LIBOR so no change there. The reaping is just beginning from all of the sowing done in the last 6 years. Bring it....

     

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Should graduations return to the Grape Bowl?

Lodi Unified leaders are moving Lodi and Tokay high school graduations from the Grape Bowl to the Spanos Center at UOP in Stockton. They cite limited seating, costs and unpredictable weather at the Grape Bowl. But others say graduations at the Grape Bowl are an important Lodi tradition, and one reason many supported renovating the stadium. What do you think?

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