More Articles by Bob
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Some accurate predictions by Bob
Surviving debt collection for the next few decades
Housing Panic of 2009
to Survive the Great Stagnation of 2009 - 2015
Depression II, are the signs there?
to rent safely during the depression
to Survive the Great Depression of 2008- 2009
of the coming Real Estate Bubble?
By Bob Hoffman
In this article
- You, your house, bankruptcy
- Predictions for the next 12 months
- April 7th Update
- Links to discussions on this article online
Internet Archive of this article from April 9th, 2008
Wayback Machine link
Political Gateway April 4, 2008 Deerfield Beach Florida – In 2004 and 2005 I suggested to people to sell their homes immediately and to rent. I told them the prices of homes were not true, they were not real. I implored them and even wrote a few articles about the coming land bust.
Bob’s note:Links to the referenced stories
Omens of the coming Real Estate Bubble?
December 2005 - Predictions of real estate bursting after the new bankruptcy laws came true.
Sell your home now, or risk the coming real estate crash
May 2005 - Get out, get out now. Talk of great depression like lending.
It was a bit worse than I thought it would be. No other TV, online writer, or business entity was even in the ballpark back then. My articles were correct and the bust started in 2006, shortly after the last article. At the time I wrote those pieces, people were standing in line for days to buy a condo.
A note: Home values never went up, only the prices. By lowering the interest rate like they did is basically like printing money and giving it to everyone. Throughout our history this has been done and always has the same results. The ability for you to buy a higher loan increased, not the value of the property. No one's income went up, in fact many are going down. 2001 prices here we come.
So, enough of 'I told you so'. Now I want to help those in need. What do you do now that you are screwed? The bankruptcy laws have changed for the worse (thank you congress) and you are in deep financial trouble. I am here to help you see what to do. Based on the fact that I was the only one to foresee what is now happening, I will give you my advice for the next year.
Your house – lose it. Give up on it (assuming you are having problems paying for it.) You can buy the same house in 2 years for 2001 prices and get it for a few hundred thousand dollars less. If you are in duress and having problems with the payment, stop paying it. Stay in the house as long as you can. Fight the foreclosure at every turn. Doing the 'right thing' by paying your bills until you go broke and lose everything anyway is not good economic sense for you and your family. If you continue to try to keep up you will not only lose the house but you will be destitute and heading towards homelessness. Pride destroys finances.
Fight the foreclosure – Answer any papers sent to you by the bank. You will have 20 days to respond, wait til 18 go by and overnight it. Complain about the loan and the company and the mortgage broker. They will have 20 days to respond. And so on and so on. This will give you 3 to 12 months in your house rent and mortgage free.
The bank is overwhelmed with properties. Law forbids them from owning too much property. Due to this, the foreclosure could be pushed off for a long time. You can even try to ‘fake’ sell it with a realtor for some real high price or some 'never going' to happen short sale.
These methods, depending on the lender could give you 2 years or more in your house with no payments. Why go broke? Save your money in a hole in the ground. Help your family survive and forget your 'honor.' The lender could not care if you lived or died. They knew what they were doing. Until someone else owns it, it is your property.
Plan for your bankruptcy- Don’t go nuts on your credit cards, but use them up if you cannot pay them. Do not go bankrupt until the month your house is going to foreclosure sale. This will give you an additional three months. Even more if you can work something out with the attorney to delay the proceedings. That is at least 3 more months of living free. Watch excessive spending on cards or huge items going back 12 months before bankruptcy. Hide your cash.
This is especially important if you lost your job. The bank will not go under if you do not pay them, but your family will starve if you feel honor bound to pay the crooks, I mean lenders and credit card companies, til you are really broke and destitute.
Learn how to send cease and desist orders to creditors you are going to bankrupt so they leave you alone.
Realize you are talking about surviving here. You need your car and a roof over your head. You need money to live and eat for you and your family. Don’t worry about breaking the hearts of the crooks that made this mess or the credit card companies (read: loan sharks.) Worry about you.
Feel bad, like you are using the system? These scumbags have received 100s of billions of dollars of our taxpayers money for being crooks. And the CEOs made millions more. So, F#ck em, burn em back. Worry about you and your family not some billionaire. They borrowed the money to lend to you. They got it at 0.25% interest (that is a quarter point) and sold it to you on some screwed up plan that is going up to 8% or more. They will (and are) being bailed out by our loving congress and the lender still made tons on the interest they earned from you over a few years.
After your bankruptcy move into a nice rental and relax. You should have little or no debt. If you still have your job you may be on a small repayment plan, but you will be fine.
Before you rent, you may want to read this article to protect yourself from making a bad rental choice.
In two years from now the prices will have hit real rock bottom and stay there. 2001 prices. Now you can look into buying a house, maybe even the same one, at less than half of what you had originally bought it for. Yea, you will have a bankruptcy, but so will everyone else. You have some credit, maybe a card or two, a car loan.
Best of all, your family is well fed, safe roof over their head, and you still have a lot of money in that hole somewhere.
In other words, survive and let the multi billionaires who have ripped everyone off for so long get some heat. You and your family come before any crooks like the lenders. Your family first, lenders last.
Wisdom – you did not get out when you could have. The experts, who have a vested interest in making you spend your money, told you it would be fine. They lied. Take care of yourself, the next year is going to be a bitch.
Predictions for the next 12 months –
-Home prices will flip around but continue down. Drastic drop when the Dem president takes over in January (you will almost think it was timed).
- After the Dems take the whitehouse the supports trying to hold up the economy will finally buckle. It's not personal, its politics. Perfect planning to ensure a Republican ticket win in 2012. Look for 2009 to be a bad year financially. Gotta love top level political strategy.
-Prices on condos will drop and be close to 2002/3 levels on their way down to 2001 levels. Many small condo complexes will be bought as apartments or most likely timeshares.
-Home prices will fall and keep falling, then stagnate for at least 4 years. Bargain hunting time (in about 2 years). Loans will suck as 7% will be the new ‘good fixed rate.’ But your total debt will be a few hundred thousand less if you buy during the stagnate period.
-A whole bunch of fake baloney will happen on capitol hill regarding the lending industry but nothing will happen, other than your taxpayer money making sure the lenders did not lose a penny.
-All those bankrupt sub prime lenders? Wow, hey, they all started new companies. Wow, amazing how that worked out. Look for that beginning next year.
-Wall street and major news outlets will continue to talk about ‘downturns’ and other things to make you feel rosey. That is mostly to suck the money out of those people who can still be gullible enough to fall for it. Remember who they work for. It ain't you.
- Gold, silver, and Oil will bankrupt many as it drops to the floor, bringing dumb investors to their knees. Oh yea, oil is gonna go to two hundred you say. Hey, it is your money, go ahead and gamble it like a moron. It will start dropping back down on its way to 34 bucks a barrel by year's end (it will eventually get to 34, not at years end, but heading towards it on its way down.) As for gold and silver, if you buy it now you are really stupid.
- Iraq - Now that the 'nuclear peace' is over, things are going back to the way they were (and have always been) pre- 1945. Big countries make puppets of little countries. Iraq no longer exists. Many dictators want it for different reasons. Saudis want a buffer state, or part of one, to make sure Iran is not their next door neighbor. Syria and the other little countries want a spot at the table and part of the spoils. Iran wants a piece of the action and will be part of the political process (read: puppet) in Iraq. America will not leave Iraq, America will have a small 'American Iraq' in there somewhere. Iraq as a country on the world stage is over. And it will be a long time before it will really be one again, if ever. The question is, which country will it be a part of in 2020? Or will it be split into other countries? No matter which it is, the war in Iraq is over Iraq and nothing else. Greedy dictators are wringing their hands with excitement over owning something new.
Some Understanding - RIght now it is hard to get an adjustable rate mortgage, the lenders are not pushing them. During the boom, when interest rates were lower than ever, they pushed adjustable rate loans. The reasons are simple. They make money charging you more for loans. Selling you fixed rates when interest is low is not good for their pockets. Selling fixed when rates are high is great for their pockets. You see how this works?
If you bought an interest only or adjustable rate mortgage in the last 6 years you made a mistake. The bank is happy though and that is all that matters, at least in congress.
April 7th 2008
Okay, so much mail and comments have come in over this. Let me try to clarify things for you.
1- I am not Jewish, so all you racist/religionist types can just stop the hate mail. Just beat your wife and leave me alone. I hope she calls the cops on you.
2- Yes, other people talked about the ‘bubble.’ If you read the original stories you would see I talked about the great depression, credit crisis, and much more than a bubble. NO ONE wrote about that back then. If you can find an article, I would love to see it.
3- You are not committing fraud by staying in a house you legally own. Foreclosure is a legal action and until it is finished it is your home. Everything in that home is yours, you can take it with you. Lenders do not want empty houses and cannot go to foreclosure sale very easy right now, so stay in it as long as you can.
4- Paying your bills while knowing that you will be unable to keep up with them means you spend all your money every month and still fall behind. Lenders do not care how honorable you are. You are late, you are screwed. If you do not see a way out, stop paying now.
5- Until the day of the foreclosure sale or bankruptcy discharge it is your house. You can paint it, modify it, even sell it. You own it.
6- Realizing you are in financial trouble, it is better to start clean with a bankruptcy. You will get credit and can buy cars and homes within a very short time, even a day. Depends on your situation.
7- Renting is cheaper. You pay a monthly rent and nothing else. No insurance, principal, interest, inflated taxes, major repairs, etc. You will probably save 100 to 1500 a month depending on your situation.
Why housing prices will drop to 2001 levels.
House prices go along with the income level of the neighborhood and the price a rental can get. In 2001 prices it all made sense. Now your neighborhood is unaffordable by that same income class and no investor can make money renting a property for less than they pay per month on a mortgage. This is a long and involved are of discussion and it could take pages to explain. Suffice to say until the homes in your neighborhood are affordable to the people who would be happy living there or renting there, it is over priced.
Interest rates, after the presidential election will finally start rising without being artificially held down over and over by the Fed. This is more political than logical. Powerful people do their own things their own way.
The amount of loans written at a time the lenders were able to borrow money from the government at the lowest rate in history is a not a coincidence. By allowing prices to artificially rise like they did, it started speculation. Lenders were able to borrow untold billions and immediately put that cash into play. They pay a quarter of a percent, per year, to borrow it and then made half of it back over two years of interest and principal payments on those crazy loans, along with a third year of raised interest payments before someone sells or loses the house. This is how it is done. None of them lost anything on any loans as they can sell a house at half the mortgage cost, get the write off, get the bail out, get the mortgage insurance, and then get the higher fixed rate (6% to 9%) for the next 30 years….all this on money they are paying a quarter percentage point per year on.
Condo prices will drop, and they already are. In a bubble, the first type of homes to rise will come down the slowest (they are the most desirable.) The last to go up will fall the fastest (least desirable.) This is common knowledge. The last time this happened was in the late 80s early 90s. People walked away from condos because they could not even give them away. Look for massive investor interest in taking over small complexes in duress for commercial entities like apartments and time shares.
Home prices will fall to a level that accommodates the buyers of that economic class. But, due to the end of a bubble bursting they will fall a bit lower before adjusting to the real level of 2001 + 1% to 3% per year prices.
Gold and silver. These things are not stocks. They do not get high and split. They go up when inflation is here. They go up, way up. Commercials will tell you to buy gold. Then it is over and they drop down to the normal 100 or 200 for gold and 3 to 7 dollars for silver. It is your money, piss it away if you wish, but my advice is to stay away from gold or silver.
Oil- Oil has always kept pretty steady prices over the years (adjusted for inflation). The only times it has spiked post world war II was due to war (sound familiar?). The 70s, bad time. Oh, the wars in the middle east at that time did a lot of that. Then it dropped again.
Whenever you see a commodity climb in value uncharacteristically, it is artificial. It is driven by the people who really make a lot of money off it, and that ain’t you. Eventually it falls, and quite drastically, shortly after it hits it’s high spike. Research it if you need to, but putting money into anything that is on the top of the hill and about to drop is stupid.
Stay away from investing in anything to do with oil.
Your news and ‘expert’ advice are all from people, or represent others, that have a vested interest in making you feel good about spending your money. When the stock market was crashing in the 20’s big business was pushing in the papers how it was just a ‘bump’ and many big companies did everything they could to make it look good. Some of the ‘high profile’ rich men would walk into the market and loudly proclaim how it was to rebound and would buy 100,000 shares of some stock. It was all BS.
Iraq- This will be known as the war that ended ‘nuclear peace’. When China takes over Taiwan, that war will be known as the beginning of the new era. I can only tell you to read history and see how things were before 1945 and then it may make sense to you.
Partitioning of Iraq- This war was about control and still is. It was never about the supposed ‘War on Terror’ against the 100 people that may have been part of the 2001 attack. America will finally have a ‘colony’ in part of Iraq. Other countries like Syria will get richer by being a middleman..well..I could go on. Suggest you read history to understand why wars happen and where those countries are afterwards. (pre 1945 rules apply here). It was never about ‘freeing people from dictatorship’ as every country that is our ally over there is a dictatorship (cept Israel.) So that argument is BS too.
Final comment – No lender will lose a penny on any loan. The reason for 2 year ARMs is not coincidental. Add up your P & I for the two years. Assume a worst case scenario where you can only pay for the third year at the new interest rate before not being able to pay. Now add up all this cash and see that 30 to 50% of the money they put out is paid back already in some form. This allows them to sell the house at 20 to 50% loss and still break even. Coupled with write offs and bail outs they still make money. Now they also get to loan this money back out at an even higher interest rate for 30 years (remember they borrowed from the government at 0.25% interest.) They are going to make so much money in the next ten years.
Comments from around the net. Be prepared for coarse language, witty comments, racial jabs, and a whole lot of anger. I warned ya.
Some of these threads started in April of 2008, some are still active and being discussed moany months later. Wow.
I add new ones as I find them. There have been a few since Oct 2008, but many are behind logins so I cannot link to them here, but all the rest are here.
Perry O's Newsvine's comments
Perry O's Comments part Deux
From the City-Data.com forums
Gold is Money
Hal Turner's website comments (extreme racism site, warning)
From Crownvic website
The Daily Reckoning
One of the few guys that got it right....
Family First, Lenders Last... From strudel and shotguns
Give up already...I am dangerous?
And a late add, from the people at twoplustwo.com
Added in July, 2008
DC Junkies Forum
Scrapper Talk Forums
Florida Shooters Network Forums
This from November 2008, Free Republic
An XBOX forum called Teamxbox has a user in trouble.
Asks if my article is something of worth to him.
Found some more today
really late add
More gold/silver hate...I am nutso
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