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Mortgage Standards Are Plunging – It’s Muppet Fleecing Time All Over Again

Tyler Durden's picture


Submitted by Mike Krieger of Liberty Blitzkrieg blog,

In February, I highlighted the fact that subprime loans were about to make a return in my piece: Subprime Mortgages are Back…This Time Marketed as “Second Chance Purchase Programs.” In that article, I posited that with the “all cash” private equity shops and hedge funds no longer able to make good returns through buying new homes to rent, these investors would need some sucker to sell to in order to realize a return (Blackstone’s purchases have plunged 70% recently). That sucker, as always, will be the retail muppets, and those muppets will be lured in through subprime. This is now starting to happen in earnest.

The following article from the Wall Street Journal is both depressing and disturbing. Rather than allowing home prices to reset at a lower level after the 2008 crash where normal buyers could afford a sane 20% mortgage, our central planners decided to do “whatever it takes” to re-inflate the housing bubble. This was achieved through wealthy investment pools buying properties for all cash. The trouble is, with home prices now inflated by these financial buyers and no real increase in wages, homes are simply unaffordable. So what do you do? You bring back subprime and get the peasants long real estate with essentially zero money down all over again. Truly remarkable.

From the Wall Street Journal:

While standards remain tight by historical measures, lenders have started to accept lower credit scores and to reduce down-payment requirements.


One such lender is TD Bank, Toronto-Dominion Bank’s U.S. unit, which on Friday began accepting down payments as low as 3% through an initiative called “Right Step,” geared toward first-time buyers and low- and moderate-income buyers. TD initially launched the program last year with a 5% down payment. It keeps the product on its books and doesn’t charge for insurance. Borrowers also don’t need to put down any of their own cash if a family, state or nonprofit group provides a down-payment gift.

So a measly 5% downpayment wasn’t good enough. They had to drop it to 3%. Frightening.

The changes also are a recognition by lenders that the business of refinancing old mortgages, which had been a huge profit center for banks, is nearly tapped out. To generate future profits, banks will have to compete for borrowers who may not have perfect credit or large down payments.


Valley National Bank, a community bank based in Wayne, N.J., lowered down-payment requirements to 5% from 25% this month on mortgages for certain buyers in New York, New Jersey and Pennsylvania. Next month, Arlington Community Federal Credit Union, based in Arlington, Va., will begin accepting 3% down payments on mortgages up to $417,000, down from 5%.

Yes, you read that right, 25% to 5%. Holy fuck.

Over the past year, however, more than one in six loans made outside of the FHA included down payments of less than 10%, the highest share since 2008, according to figures from data firm Black Knight Financial Services. That still is lower than the nearly 44% of the market they accounted for at the peak of the housing bubble in early 2007.


While smaller lenders are trying to appeal to first-time buyers, larger lenders are gradually reducing down payments for jumbo loans—those too large for government backing—to woo wealthy customers. EverBank began accepting down payments of 10.1% for jumbo borrowers with strong credit this year, down from 20%, and Wells Fargo reduced to 15% from 20% its minimum down payment for jumbos last year. Bank of America made the same change for mortgages of up to $1 million.


Any easing should give more options to first-time buyers like Nathan Davenport, 26, who purchased a one-bedroom condo for $195,000 in Atlanta this month with a 5% down payment. Mr. Davenport, who works for a phone-and-Internet services provider, says he has a high credit score but was worried that if he waited longer to save up for a larger down payment he would be priced out of the market.


“Twenty percent of this price and only being out of college a handful of years would have been really hard to pull off,” Mr. Davenport said.

I’m sorry, but on what sort of bizarro crackhead planet is putting 3% down toward an asset mean you are “buying it.”

The Truman Show rolls on...

Full article here.


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Tue, 04/22/2014 - 11:08 | 4682624 Squid Viscous
Squid Viscous's picture

Don't forget about muppet taxpayers, cued up for another TARP

Tue, 04/22/2014 - 11:11 | 4682637 just-my-opinion
just-my-opinion's picture

And I thought I would be first.....I own my gonna take it away because of taxes


Tue, 04/22/2014 - 11:21 | 4682661 idea_hamster
idea_hamster's picture

But even 3% of 417,000 is more than 12 grand -- and most Americans have less than $3k in savings and would have a tough time coming up with $2k to cover a surprise medical bill.  


on what sort of bizarro crackhead planet is putting 3% down toward an asset mean you are “buying it.”

Well, you are assuming full down-side price risk -- that's something!


Tue, 04/22/2014 - 11:21 | 4682672 hedgeless_horseman
hedgeless_horseman's picture



Tue, 04/22/2014 - 11:23 | 4682678 centerline
centerline's picture

Nice to see you around HH.  Hope all is well with you and your family.

Tue, 04/22/2014 - 13:18 | 4683182 schoolsout
schoolsout's picture

I'm in the process of getting a mortgage and asked what was the least I could put down...Was told by my mortgage broker buddy I could finance 97%.  Kinda scared me...I'm putting 20% down, but just wondering when the next crash is going to come.  That said, hoping the market here stays near or where it has been for past few years.  Houses going up left/right with plenty of buyers...for now.

Tue, 04/22/2014 - 13:21 | 4683192 schoolsout
schoolsout's picture

Also, for anyone (first time buyers...or, I think those that haven't bought in past couple of years), you may want to check on a Mortgage Credit Certificate.  Little known tax CREDIT instead of deduction that few utilize.  Luckily, local paper ran a story about it as I was in process of lining up loan. 

Tue, 04/22/2014 - 13:47 | 4683336 max2205
max2205's picture

I don't know about the rest of you but i could use a nice big housing bubble so I can officially retire

Tue, 04/22/2014 - 15:07 | 4683729 N2OJoe
N2OJoe's picture

I could use a nice muppet slaughtering credit collapse so i can afford to move out of moms basement.

Tue, 04/22/2014 - 11:25 | 4682685 Cognitive Dissonance
Cognitive Dissonance's picture

Dude. Where have you been?

We thought Goldman Sachs kidnapped you and was gonna trade you to the Russians for unlimited natural gas.  :)

Tue, 04/22/2014 - 11:35 | 4682712 hedgeless_horseman
hedgeless_horseman's picture



All is well, thanks.  It has been insanely busy.  Only rarely have time to read ZH, nonetheless post.  It is all the same "news" from a few years ago anyway...

Any easing should give more options to first-time buyers like Nathan Davenport, 26, who purchased a one-bedroom condo for $195,000 in Atlanta this month with a 5% down payment. Mr. Davenport, who works for a phone-and-Internet services provider, says he has a high credit score but was worried that if he waited longer to save up for a larger down payment he would be priced out of the market.


Tue, 04/22/2014 - 11:36 | 4682728 Almost Solvent
Almost Solvent's picture

No news is good news, usually.

Tue, 04/22/2014 - 11:41 | 4682739 10mm
10mm's picture

Nathan will learn the hard way. They always do. You can put it all out in front of them how they will be suckered and played. "But it's the time to buy".

Tue, 04/22/2014 - 11:49 | 4682748 hedgeless_horseman
hedgeless_horseman's picture



Nathan Davenport, 26, who purchased a one-bedroom condo for $195,000 in Atlanta this month with a 5% down payment.

Hmmm.  Where is Atlanta on this old map from 2009?  Those that do not learn from history are doomed to repeat it.


Tue, 04/22/2014 - 11:46 | 4682755 tarsubil
tarsubil's picture

Ugh... if we weren't all crazy, the problems would be obvious.

Tue, 04/22/2014 - 12:06 | 4682846 Quus Ant
Quus Ant's picture

Indeed.  We're all mad here, so I do not trust anyone from this culture to diagnose the true problems, but there are at least a few who recognize problems exist. 

As with our forefathers and mothers, we'll know the truth when it bloody well kicks us in the teeth.  Then maybe we can be free.  And toothless.

Tue, 04/22/2014 - 14:17 | 4683494 moneybots
moneybots's picture

"Mr. Davenport, who works for a phone-and-Internet services provider, says he has a high credit score but was worried that if he waited longer to save up for a larger down payment he would be priced out of the market."


Wash, rinse, repeat.  I have heard this story a few times before.

Tue, 04/22/2014 - 11:29 | 4682704 SheepDog-One
SheepDog-One's picture

Who cares about downside investment risk when you can sign a piece of paper and move in payment free for years?

Tue, 04/22/2014 - 12:06 | 4682839 Quus Ant
Quus Ant's picture

So why isn't everyone jumping on this golden opportunity? 

Tue, 04/22/2014 - 11:21 | 4682670 ugmug
ugmug's picture

 Subprime Sherpa's on the Mount Everest of Debt - Our US Government

Tue, 04/22/2014 - 11:26 | 4682690 tarsubil
tarsubil's picture

From street level, things look exactly like they did in 2006-2007. The only real difference is that there are more unemployed and homeless. Guess this will repeat until no one has a job or home.

Tue, 04/22/2014 - 11:39 | 4682734 Bunga Bunga
Bunga Bunga's picture

You're dreaming, permanent wall-st-tax will that be.

Tue, 04/22/2014 - 11:10 | 4682631 khakuda
khakuda's picture

It's baaaack!

So glad Ben and Janet learned the right lessons in 2008.  Can't let reality happen ever again.

Tue, 04/22/2014 - 11:59 | 4682813 Harbanger
Harbanger's picture

Reality? There is no reality in centrally planned economies.  This is all being directed by the Fed chief.  Yellen was very bullish about the housing market before the 2008 crash.  It's a one way train, their biggest fear is deflation, they will never allow it even if they have to give away free money.

Tue, 04/22/2014 - 12:29 | 4682944 donsluck
donsluck's picture

Money, at 1%, is already free, as in below inflation. As for loans, no-one in their right mind would loan to someone who ALREADY defaulted on their last mortgage. But since it all gets bought by the Fannie and Fready, the lenders are protected. Yep, here comes TARP 2.

Tue, 04/22/2014 - 12:36 | 4682974 Harbanger
Harbanger's picture

You're right, banks wouldn't lend subprime unless they were backed by the Gov.  This is how they trickle down money to the street and into system because they must have inflation for it to continue.

Tue, 04/22/2014 - 11:11 | 4682638 youngman
youngman's picture

here comes the credit train...get the new generation hooked on the easy money....what crash....this is now...and they want it now..

Tue, 04/22/2014 - 11:12 | 4682639 10mm
10mm's picture

They lowered to 5% in NJ, NY.Shitholes.

Tue, 04/22/2014 - 11:13 | 4682641 Its_the_economy...
Its_the_economy_stupid's picture

I’m sorry, but on what sort of bizarro crackhead planet is putting 3% down toward an asset mean you are “buying it.”?

see Chicago Mercantile Exchange or a freindly futures market near you.

Tue, 04/22/2014 - 11:28 | 4682698 disabledvet
disabledvet's picture

ever try and lever your house 1000 to one? I didn't think so. I've been trying to lever my pick up truck 100 to one and that isn't even working.

I tried to tell the Banker phuck "hey, you're paying 100 million for a fighter jet that can't even fly. This truck runs even better WITHOUT the computer! Certainly it's worth at least a hundred thousand?"

On the good side i picked up one of those piece of shit teledyne mircro rockets...shredded a bunch of "pre 2007 George W. Bush tires" and am pretty sure it's got at least a range of 500 excess of 5,000 miles per hour no less.

Facebook is my guidance system so the error rate should be measure in microns actually.

Tue, 04/22/2014 - 11:14 | 4682643 Squid Viscous
Squid Viscous's picture

if you can come up with 5% surely you're good for the rest... in this booming economy

Tue, 04/22/2014 - 11:15 | 4682645 vote_libertaria...
vote_libertarian_party's picture the Fed will be buying all of these 'AAA' bonds?

Tue, 04/22/2014 - 11:30 | 4682707 waterhorse
waterhorse's picture

Man, that Timberwolf was one shitty deal.

Tue, 04/22/2014 - 11:15 | 4682646 Max Damage
Max Damage's picture

Well they made billions each with no consequences last time so why not fucking rob everyone all over again? Hang the fuckin bastards!!!!!

Tue, 04/22/2014 - 11:17 | 4682647 NoDebt
NoDebt's picture

Not good enough.  I need a loan where I have the option of paying:

1.  P&I, like a normal mortgage

2.  Interest only.

3.  Nothing at all, with that month's payment being added to the principal amount owed.

Oh, and of course it should be an adjustable rate mortgage.


Now THAT is a loan that could help MILLIONS of potential first-time home buyers     (become debt slaves, like their parents before them)

Tue, 04/22/2014 - 11:28 | 4682696 waterhorse
waterhorse's picture

Countrywide Pick-A-Pay?  Countrywide's former execs have started up PennyMac.  Will that be the next Countrywide?

Tue, 04/22/2014 - 11:48 | 4682758 813kml
813kml's picture

It's good to be a white collar criminal.  When a blue collar makes off with $1500, they do a few years hard time and are branded a felon for life.  When a white collar makes of with a few million (or billion), they get to go on vacation for a few years before rinse and repeat.

Tue, 04/22/2014 - 11:17 | 4682650 Rainman
Rainman's picture

Hooray ! .....Next up they go ballz out NINJA !!

Tue, 04/22/2014 - 11:29 | 4682703 centerline
centerline's picture

Hell yeah, mortgages, college loans and auto loans.  Trifecta of pain right there.  Epic debt cram down (spice must flow of course).

Grab the popcorn (and rifle).  It's gonna get real sometime soon.

Tue, 04/22/2014 - 12:05 | 4682837 Deathrips
Deathrips's picture

AKA Liar Loans, Must keep up with joneses.


RIPS Markets

Tue, 04/22/2014 - 11:16 | 4682652 fonzannoon
fonzannoon's picture

Last time around people were putting down 3% to keep liquid and leverage themselves by buying 5 homes. This time around they actually just have 3%.

Also fyi it's ho lee fuk, the way he wrote it was extremely vulgar.

Tue, 04/22/2014 - 12:11 | 4682868 813kml
813kml's picture

I recently spoke to a friend that just signed for a house in Austin.  The Austin market is beyond hot, and she had to buy in one of the shittiest parts of town.  I didn't ask the purchase price but I'm guessing in the $250,000 range.  She makes decent money (around six figures), so I guess should be applauded for not overextending.  But she would have been far better off renting, besides overpaying in a bad neighborhood she now gets the privilege of a long commute in horrendous Austin traffic.

She didn't learn from her previous bad experience in RE and let emotion cloud her judgement.  She is Irish and bought a home in Ireland back in early 2000s.  It was "worth" 4x what she paid at one point, but she held all the way to the bottom and is now underwater on it.  It's not as easy to discharge RE debt in Ireland, and that combined with Catholic guilt still has her paying on that albatross.  It's a very sore subject with her, I don't ask about it anymore.

House purchases are still largely emotion driven, there will always be buyers willing to scrape up whatever % it takes to mortgage their future for the American Dream.

Tue, 04/22/2014 - 11:19 | 4682663 Dr. Engali
Dr. Engali's picture

I'm looking forward to the return of Wachovia's pick a payment loan. Once they reappear I know it's time to GTFO.  

Tue, 04/22/2014 - 11:22 | 4682677 fonzannoon
fonzannoon's picture

honestly I don't know who even has 3% anymore. It's like you said yesterday on the personal savings thread...who the hell has any savings? I don't see how we can get a speculative bubble when 95% of the people are sucking wind this time around. 

Tue, 04/22/2014 - 11:31 | 4682710 br0ken
br0ken's picture

True story. Where's the 20, 5 or even 3% cash coming from? Most Americans are neck high in consumer debt, incomes are shit for the average American and savings retruns are in the gutter. 


Tue, 04/22/2014 - 11:39 | 4682736 Almost Solvent
Almost Solvent's picture

It comes from parents, or line of credit or cash advance off a card.



Tue, 04/22/2014 - 14:11 | 4683462 Blankenstein
Blankenstein's picture

This.  Examples of the above that I have observed:

The "star" of that HGTV flipping show was an "all cash" buyer at the foreclosure auction.  He said that his money came from equity lines on his rentals and credit cards.  

While doing indepth research on the market in my area, I found a house where a couple in their early 30's had paid $670,000 and put down $150,0000.  On the same day, one of their parents took out a loan of $150,000 on their home.  Coincidence?

Also have friends that are buying a home with 0% down using a USDA loan - and this is after a foreclosure.  

The market is a house of cards. 


Tue, 04/22/2014 - 11:35 | 4682722 Dr. Engali
Dr. Engali's picture

Based on this area here all I see are more businesses shuttering their doors, the infrastructure going to shit, and a bunch of druggies walking from dumpster to dumpster digging for aluminum cans. Houses are moving, but the majority are to 'investors'. 

Tue, 04/22/2014 - 11:39 | 4682737 Grande Tetons
Grande Tetons's picture

My borther in law sells real estate in Mexico. There is a buying frenzy apparently and almost all of the deals are cash from foreign buyers.  This is global mal investment at its finest. 

Tue, 04/22/2014 - 13:33 | 4683250's picture

And they are changing the laws soon so that foreigners are allowed to outright own land near the coast (not through a trust).

Tue, 04/22/2014 - 11:48 | 4682760 NotApplicable
NotApplicable's picture

I'm noticing the prime stoplights are filling up with homeless beggars.

Tue, 04/22/2014 - 11:50 | 4682762 Al Huxley
Al Huxley's picture

Free money from the FED to the FIs, that's how.  Don't even need a bubble per se, just perpetually rising equity prices.  No need for retail muppets in this environment.

Tue, 04/22/2014 - 12:06 | 4682844 Deathrips
Deathrips's picture

Can I put a downpayment on a credit card?



Tue, 04/22/2014 - 12:31 | 4682931 Squid Viscous
Squid Viscous's picture

Nathan Davenport's mom Myra (nee Birnbaum) was kind enough to give him max allowable tax year gift of $13K ... so he can buy his dream condo in semi-ghetto part of Atlanta and scurry to work for Verizon 6 days a week , yayz

Tue, 04/22/2014 - 11:26 | 4682689 centerline
centerline's picture

Last time it was one of my neighbors (regular Joe sort of guy) who told me he was going to buy a house and flip it.

Guess I need to start to keeping an eye on him.  lol.

Tue, 04/22/2014 - 12:11 | 4682871 Chump
Chump's picture

I see history repeating as well.  Call after call from people with no real estate development experience whatsoever wanting to subdivide their quarter acre and build duplexes.  "Easy money, great cash flow, etc. etc."  Last time this went on for about 10 months before the bottom fell out.

Tue, 04/22/2014 - 12:29 | 4682946 Harbanger
Harbanger's picture

This may be an opportunity for me to unload a shitty RE investment I made in FL. and buy silver on the cheap.  No one can distort reality like the Fed.

Tue, 04/22/2014 - 11:25 | 4682673 SheepDog-One
SheepDog-One's picture

SURE we learned our lesson from the sub-prime NINJA debacle which left banks and the eonomy in ruins and caused the printing of trillions in new debt under threats of 'tanks the sreets'....but we're gonna do it just ONE more time m'kay? It's for the retail connedsumers own good, really it is.

Tue, 04/22/2014 - 11:22 | 4682675 Seasmoke
Seasmoke's picture

If we just ignore 2008-2009, prices of housing never goes down  ......

Tue, 04/22/2014 - 12:03 | 4682830 Canoe Driver
Canoe Driver's picture

General US real estate price levels declined from 2006 thru 2011.

Tue, 04/22/2014 - 12:37 | 4682979 ParkAveFlasher
ParkAveFlasher's picture

Yes, and on a hundred-year timeline, I mean, look at those marble countertops!

Tue, 04/22/2014 - 11:26 | 4682691 Azannoth
Azannoth's picture

There is a reason T.A.R.P was called exactly that and not F.I.X

Tue, 04/22/2014 - 11:26 | 4682692 br0ken
br0ken's picture

If home prices would come down from the level of absurdity they are at now, people could afford to put 20% down on a home. 120k for a fucking one bedroom condo? In Atlanta

Yeah that's not absurd at all. 

Tue, 04/22/2014 - 12:04 | 4682831 marathonman
marathonman's picture

That was 190K for a one BR condo in Atlanta!  Nothing absurd bout dat.  /sarc

Tue, 04/22/2014 - 11:28 | 4682699 corporatewhore
corporatewhore's picture

if i had any money or a job that actually paid maybe....just maybe..... i might consider buying.

but i don't and i can't afford these prices.


bring on the crash

Tue, 04/22/2014 - 12:31 | 4682956 djsmps
djsmps's picture

I sold my house in LA during the last bubble, moved to the midwest and paid cash for my house here. It has helped during uncertain times.

Tue, 04/22/2014 - 11:31 | 4682709 BullionTweet
BullionTweet's picture

Goin down, Goin down now, Goin down ......... Led Zepplin

Tue, 04/22/2014 - 22:15 | 4685190 StychoKiller
StychoKiller's picture

"When the levee breaks, Momma you got to move..."

Tue, 04/22/2014 - 11:31 | 4682711 Ribeye
Ribeye's picture

"no no, don't worry, this time its different..............coz, em, we learned from our mistakes...........and., em, tougher regulation........can't happen again..........something something........"


"sign here, here.....aaaaannnnnndddd here"


There a new ad currenltly running on Irish tv for Ulster Bank (RBS), which shows a young couple jumping up and down and cheering with happiness upon hearing that they had been approved for a mortgage, like they'd won the flippin lotto or something, 

meanwhile, most of the country is buried under mortgages that they can never repay, 


you couldn't write it, 

Tue, 04/22/2014 - 22:43 | 4685258 Flagit
Flagit's picture

Irish Lotto.....small potatoes.

Tue, 04/22/2014 - 11:32 | 4682714 MasterB
MasterB's picture

Pffff - try 0.9% (in Canada) - Laughable Apr 21

Tue, 04/22/2014 - 11:33 | 4682717 Al Huxley
Al Huxley's picture

Wait, if I get a subprime loan, I get a nice place to live, drag out the default for a few years and live rent free in a way nicer place than I'd be able to actually RENT, then I eventually default and get punted, and the government/FED makes the lender whole, and all that happens is the deficit and debt continue their vertical ascent, which as the past 5 years have proven, is of no consequence - seems to me this is wins all around, no? Not even the muppets get fleeced.

Tue, 04/22/2014 - 13:41 | 4683304 Squid Viscous
Squid Viscous's picture

rent is for suckers, buy a ford pickup 0 down 0%, cap it off  and live in the bed,

Tue, 04/22/2014 - 12:14 | 4682718 Quus Ant
Quus Ant's picture

"I'll tell you what is.  big city. live.  work.  but, not city open. only peoples.  peoples is peoples.  no is buldings.  is tomatoes, huh?  is peoples!  is dancing!  is music!  is potatoes!"      Pete - Muppets Take Manhattan

Tue, 04/22/2014 - 11:37 | 4682720 Duude
Duude's picture

The census provides some eye opening data that I believe puts the American housing market in perspective. For the just completed year 2013, we saw 764,400 completed builds of both single family and multi-family dwellings nationwide. The census has been tracking this data since 1968 which is also the year that the US population broke 200 million. 1968-2013 is 46 complete years. In those 46 years, the year 2013 ranks 43rd out of the 46 years on the completed build list. That data includes completed builds during all recessions over that period of time and in the caae of the year 1968, while our population was more than  50% less than it was at the end of 2013. The years with a lower total than in 2013 were 2010, 2011, and 2012. We didn't even beat 2009 which itself was less than every year 1968-2008. Now add to these alarming numbers the fact that over the last 4 years mortgage rates were lower than for any period between 1968-2008. Now I ask, is the double digit rise in home prices in the last year even warranted?  What are the prospects for home values going forward with mortgage rates slowly rising? Clearly, we have plenty of home supply for the prices we're looking at now. How many people that bought new homes in the last 4 years actually believed they were buying their home at a great time?

Tue, 04/22/2014 - 11:37 | 4682727 NoIdea
NoIdea's picture

That's still nowhere near what they managed to offer in the UK during the last bubble - 120% mortgage with no money down. Hmm, they seem to have returned in 2014:


I'm sure it'll be fine because house prices never go down do they?

Tue, 04/22/2014 - 11:45 | 4682749 Ribeye
Ribeye's picture

in fairness, all those high LTV loans are switchers for current customers, its just the banks trying to tidy up their own balance sheets, 


not even HBOS are dumb enough to offer 120% mortgages to first time buyers.........yet, 

Tue, 04/22/2014 - 11:37 | 4682730 q99x2
q99x2's picture

Yes but once you are in you'll have two years before you get evicted.

No monthly payments and the electrical and plumbing are yours to boot.

Tue, 04/22/2014 - 11:38 | 4682731 Oh regional Indian
Oh regional Indian's picture

The Rhyme with 1914-1933 is staggering. On so many levels, it's staggering-er....

Move for move....only on a grander scale. These banksters have balls believing they will come out unscathed.



Tue, 04/22/2014 - 11:42 | 4682744 yellowsub
yellowsub's picture

You mean just verifying they have jobs now is a new standard?

Tue, 04/22/2014 - 11:47 | 4682754 novictim
novictim's picture


Bubble 2.0 is a launch!  To the Moon!  Line up the Muppets and shake them down!

Do any of you remember when people bought homes just for the purpose of living in the home?  Now the Housing Market has been turned into an extension of the commodities market.  It is a gambler's game and every US family living in these more desirable areas of the country are now forced to play or move out.

But none of those who "play" get to know that the game is rigged and that the function of the Housing Market is to separate said families from their savings accounts.  It is a game even --less-- fair and transparent than the Stock Market with it's insider trading rules and regulations.

Real Estate is now all about the inside scoop.  Government is in collusion with the gamblers and you are their next meal.  Real Estate is in the control of banks/lenders and the Wall Street investment groups who are ALWAYS on the inside and will be in a position to sell on the will not see it coming.

No! The sell-off will not be televised.  Kramer will not warn you.  One day you will attempt to move and sell your home and find that you not only lost your 20% down but that you -owe- an additional 20% of the original mortgage price.  YOU WILL UNEXPECTEDLY FIND THAT YOU ARE DEEP UNDERWATER! And the rules will have been rewritten by then such that in 2015 or sooner you can't just "walk away" from the underwater mortgage.  You will be a debt slave.  A serf.

Tue, 04/22/2014 - 11:57 | 4682798 swmnguy
swmnguy's picture

In a financialized society run by abstract "wealth," buying a thing for the sake of owning and using it is subversive.

Tue, 04/22/2014 - 14:40 | 4683601 Blankenstein
Blankenstein's picture


 "But none of those who "play" get to know that the game is rigged"

If you weren't living in a bubble (pun intended) 2007 -2009 there is no excuse for not seeing what is going on now.  

Tue, 04/22/2014 - 15:07 | 4683751 nixy
nixy's picture

Yes it is an extension of the commodities 'market'. House prices are manipulated up and some commodities down. They need to keep housing marked to fantasy..... for some reason.

Tue, 04/22/2014 - 11:57 | 4682795 kchrisc
kchrisc's picture

What do the banksters care?! They can fleece the mortgagee for a time and then take possession of the underlying asset when the sucker defaults--all from counterfeit money, Not a bad deal for the banksters.


"When the time comes, the guillotines will be busy."

Tue, 04/22/2014 - 12:16 | 4682890 Canoe Driver
Canoe Driver's picture

The bank is the mortgagee. The muppet is the mortgagor.

Tue, 04/22/2014 - 12:00 | 4682814 markar
markar's picture

So who are suckers going to be this time to buy all these (securitized) subprime mortgages? Or will they just offload them all to the Fed? The GSEs?

Tue, 04/22/2014 - 12:41 | 4682993 novictim
novictim's picture

The flies will always find the rotting carcass.  

Where are the biggest "pots-of-gold" still left untapped?  I think the target will be the Baby-Boomers via their feckless children.  Boomers are the "low hanging fruit" today.

The Gen-Xers are broke and crushed already under student loans and forever-low pay.  

The "Living with the Boomers" crowd want a home, lust for a home, will do anything for a home!  And the doddering Boomer parents will take out that second mortgage, use their "Granite Top Sarcophagus" as their only source of collateral to enable the "dream of home ownership" to be realized for their kids.  This is the weakness that the banks are counting on.

But the Bommers' kids will not maintain an income that will support the outrageous mortgage payments.  There will be no economic "turn-around" that will lavish financial success on these folks.  

As planned, both the Boomers and their "chitlins" will be foreclosed on.  The bank and the Fed will benefit from the former wealth of the Boomers in this way.  The boomers will cushion the banks from the coming financial collapse.

Tue, 04/22/2014 - 13:30 | 4683232 Peak Finance
Peak Finance's picture

Well, also don't forget the "reverse mortgage" scam is doing a great job of seperating boomer wealth from the Gen X kids.  These reverse mortgage guys really are the worst fucking evil of all these crooked pricks. 

Tue, 04/22/2014 - 20:57 | 4684969 novictim
novictim's picture

But they make such great commercials...and all the has been TV stars need a job, don't they? /end-sarc

Tue, 04/22/2014 - 12:10 | 4682866 caShOnlY
caShOnlY's picture

just another leg in the race to the end. 

I wondered how they would get the big money their ROI on these cash purchases - now we know.  Fabian Calvo was the first to call this a while back, that I know of.   If you believe the collapse is coming then this news really isn't surprising, it buys more time and increases the wealth for the elites, again. 

Tue, 04/22/2014 - 12:26 | 4682928 Nadine of Tyrol
Nadine of Tyrol's picture

In the failed state of California, you can qualify for an "affordable" housing unit of $350,000 with zero down and an income of $60K.  The mexican transplants have solved the obvious cash flow problem by inviting their extended illegal family into the state.  Risk off because deportations are essentially illegal.  The under the table economy thrives and everyone gets their "free" barrycare and foodstamps.  In the meantime, the producers and taxpayers are leaving the state in droves........

Tue, 04/22/2014 - 12:30 | 4682952 FreeNewEnergy
FreeNewEnergy's picture

Bring on da granite counter tops so's I's can eats my pizzas on 'em. Totino's, of course.

Tue, 04/22/2014 - 12:38 | 4682960 yogibear
yogibear's picture

Rinse and repeat until the US dollar and the economy crashes and burns.

No end to the $5,000 Wall Street suit fleecing until every muppet dollar is taken. 

Tue, 04/22/2014 - 12:48 | 4683037 syntaxterror
syntaxterror's picture

Team Short Sale is emerging from their 7-year bankruptcy blacklistings too. All in!

Tue, 04/22/2014 - 13:03 | 4683101 medium giraffe
medium giraffe's picture

In a debt based society, everything is a bubble.  Perhaps it might be better to suggest that this area of the overall foam is looking particularly frothy at present. 


p.s - Anyone have the number for Scion Capital?

Tue, 04/22/2014 - 14:03 | 4683411 scam_MERS
scam_MERS's picture

Sold my overpriced shitbox here in So Cal during the last runup - bought for 225K in 2003 (brand new home, paid cash) and sold it to some suckers in the Fall of 2006 for 480K, walking away with more than double my money tax-free. Sat on the sidelines (rented from friends) until 2010, bought an REO fixer that was just over $1M at the peak for a cash price of 350K. Just checked Zillow yesterday (yeah, I know) and it shows it's up to $825K (and an increase of 87K in the last 30 days - WTF???) I'm starting to get the itch to sell again, could walk away with a cool half a mil tax-free and do the same thing again in just a few years. California is crazy, but if you're on the ride you may as well enjoy it (I am).

Tue, 04/22/2014 - 16:49 | 4684133 Spungo
Spungo's picture

I don't see the problem with having nothing-down loans in Canada. Up in Canada, you can't just mail your house keys or car keys to the bank and tell them it's their problem. The debt is your problem. The only way out is to declare bankruptcy, assuming the court allows it. If you simply chose to stop paying, the court will have the money automatically taken out of your pay, and you'll probably get fired because employers hate dealing with the government. The eviction process in Canada is very fast. You don't get a free house for 2 years. You'll be kicked out within 1 month.

Demanding that people act like ADULTS is why Canadians kept paying their mortgages after their homes lost 30% of their value.

Tue, 04/22/2014 - 18:38 | 4684455 SmittyinLA
SmittyinLA's picture

No problemo, the entities supply the assets that back the cash that back the bonds that buy the bad loans have lots of Ukrainian farmland and mineral deposits to offer as collateral, whether they own them or not.



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