Much thanks to Karl D. over at one of the best blogs on the net, Market Ticker (which is a daily must read for me and should be for you as well) for bringing to my attention the following news that can only be classified under the file Preposterous.
The news (via the WSJ) is that the IRS is investigating over 100,000 suspicious claims for the first time home buyers tax credit. As if that was not enough, (yes dear reader it gets worse) and in what can only be termed as the inmates are running the asylum, we get this further story, (again thx to Market Ticker) of a 20 yr old buying a home with 3.5% down FHA loan.
Without question, Tejada's loan is toxic--to her and to the taxpayers who are backing the loan. Her house cost $155,000. Tejada's loan was apparently made on a micro-down payment of just 3.5%, the minimum down payment to qualify for an FHA loan. On top of this, however, she got an additional government backed loan to make improvements. Her total loans amount to $183,0000. In short, she was immediately underwater on her new house.
The monthly payments on her debt amount to $1328. Her income is $2470, leaving her with just $285 a week to live on. She's paying 54% of her income to make the mortgage payments. She earns that income by holding down one full time and two part time jobs. Obviously, this woman has a strong work ethic. But it also means her income is precarious. With unemployment still rising, she obviously should be worried about losing one of her three jobs. A loss of one of them would likely leave her unable to make the debt payments.
Tejada appears to be using imaginary numbers about the value of her house. She says that when she bought it, the house was just a “box” with no kitchen or bathroom. Now it is "gorgeous". She claims the renovation has increased the value of her home from $155,000 to $255,000.
"I bought my house for $155,000. And now, after all the fixing, after all the remodeling, my house is worth $255,000. So just within a month period, I made a $100,000," she tells Market Place's Scott Jagow.
and finally in an pseudo tribute to former make-believe real estate magnate Casey Serin we get this doozy:
Tejada sees her house as an investment rather than a home. And she is planning on buying more homes, despite the fact that her income is already strained by her debt. This three bedroom house is just her "first house" and is "a little too big for me." This is the opposite direction house buying traditionally moved in, with young people buying a small fixer-upper or renting and moving into larger homes as their incomes and family size increased. Tejada has started big.
I had to re-read the article twice to get it to sink in. Nothing, and I mean nothing has changed. I agree with Karl that it's laudable that she is willing to work 3 jobs but this does not take away from the fact that we are on the hook via FHA for a loan that only an absolute imbecile would make. So what are we left with, complete imbeciles in charge or pervasive criminal fraud that has infected all arenas of public finance. Now don't even get me started on the likes of Chris Dodd, VIP mortgage customer at Countrywide, and Barney 'Fife' Frank as they sit idly by cashing banking lobbyist and donor cheques.
Ya think the boobs and boobs over at CNBC are gonna cover this story? Ha ha ha that is tooo funny! Of course I jest as covering a story like that would take real journalists who dig up clues and fact check leads, which coincidentally seems to be only be done with SNL skits anymore but yet again I digress.
All kidding aside the boobs at CNBC are far too busy fawning over Paulson's thug of an attache named Khaskari, for those interested phonetically it is pronounced cash and carry, which coincidently I think is the Goldman Sachs mission statement, no?
The irony of the name of the individual, Cash'carry, co-ordinating the heist of the century by the bankers, of the U.S. public treasury is, not lost on this writer. You just cannot make this shit up dear reader, you really can't! To listen to Sir Khaskari, believe me if we had a monarchy he would have been knighted by now, is to know all that is wrong with us and why we as a nation find ourselves in the pickle we're in. To listen to Cash'carry is to know what a true boot licking yes man looks like, walks like, acts like and talks like. After listening to him you can see the mold from which grovelling, trough suckling, leeches move up the food chain in the hierarchy of government. Mark my words he will be a senior government official, mark my words.
Back to our new homeowner with her new taxpayer funded loan, excuse me, I meant FHA loan. I recall the new FHA chief recently as saying the FHA is solvent and doesn't need any bailout money. I also recall a recent Ken Langone interview in which he stated that if heads of public traded companies made the same comments government officials are making they would be in jail.
And yet in the face of all this, people continue to ask and wonder why I am so bearish on stocks and the economy.
Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".
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