Monday, September 22, 2008
Isabella moth-woolly bear caterpillars
Saturday, September 20, 2008
Goatwood
Friday, September 19, 2008
The mortgage crisis
President Bush announced today that the fed wants to buy several hundred billion dollars of bad debt off investment firms to help clear their books and get money moving again.
I have been following this economic crisis trying to learn what the mess is and how we got into it in the first place.
So I am going to write what I know, and try to see how the pieces of the puzzle fit.
According to the government, the heart of the crisis is a collapse of the home mortgage industry.
This is my personal experience with mortgages:
About twenty years ago I had a little bit of cash saved up, and decided I was sick of paying 450 a month rent on an apartment and would rather put the cash down on a home. I was figuring that way, the monthly shelter cost would be applied to something I would end up owning.
I went through FHA-Federal Housing authority, or HUD (housing and Urban Development), a mortgage program for first time homeowners. My income was calculated into a payment, and I was told that I would qualify for about 45,000.
I think there were two homes for that price in a 20 mile radius, and I looked at both. One of them was owned by a couple, the wife of whom was wheelchair bound. The entire house reeked of urine. No getting that odor out -short of a match and a can of kerosene.
The second home was located about twenty feet from a major thoroughfare and was about the size of a crackerbox. A couple years after I passed on it, a car left the road at a high rate of speed and hit the house. Glad I wasn't there.
I was told that if I brought in my boyfriend's income and added him as a joint tenant, we could qualify for a larger loan. Although he already had a large payment, it still added more borrowing power. So we did that and bought a home.
We signed in on a fixed thirty-year mortgage. Our interest rate was about 6 percent. The sellers received 57,000. I put cash up front and the mortgage total was 63,000. What?!?!
Well, I discovered that there are things called "points" and "discount fees'-which is money that the lender just tacks on there for fun. The realtor suggested having the seller pay the points, and raising the selling price of the home so that went into the loan. I think the points and discount fee added up to around 5,000-money that went right to the mortgage company. Then there was mortgage insurance; in case we defaulted on the loan, the lender would get paid. I paid that up front. And title search and home appraisal, and inspection fees-to make sure the deed was good and the house was worth the money. All designed to protect the lender mostly, although us too, but of course that was paid up front by me.
So, right off the bat, the mortage company has made 5,000 and has an ironclad guarantee that they hold the title until the loan is paid. If it isn't paid, what they have is worth the money they lent, and they are insured through mortgage insurance, and also work the home owner's insurance into the monthly payment so the property is insured against lawsuit or damage.
Also included in the monthly payment was an estimated tax payment which went into escrow until property tax was due annually. That ensured the town wouldn't be putting a lien on the property for unpaid taxes.
I was then a proud home owner with a nice little monthly coupon book, and a huge folder of paperwork. Didn't I aggravate the attorney handling the closing, when I read through every line on every paper I signed. I wanted to make sure I understood everything as I signed it.
The biggest suprise was the long print-out of the amortization schedule. Mortgages are amortized. Using my example, a 63,000 mortgage for 30 years at about 6% fixed interest, including taxes and insurance, was 600 a month for thirty years. The suprise? The interest is calculated up front, and paid more or less up front. For the first year, about $3 a month goes on the principle (the 63,000). So out of the 500 going on the loan-about 100 was taxes and insurance-497 went to interest. In the first year on receiving payments, the mortgage made about 6,000 for the company -not counting the 5,000 up front. That is more like 10% interest, but that is how it goes in the mortgage industry. Amortization-grrrr.
So I was pretty suprised when every couple of years or so, we would get a letter saying that we would now send the check somewhere else. Mortgages sold as investments. Meaning, after making a nice little sum, the original company would bundle together a bunch of mortgages and sell them to another company.
After about nine years of 600 a month, 1986-1995, the original loan had been reduced by about two thousand dollars, and I wanted out of the relationship. The housing market had not budged in those 9 years. I estimated that by the time lawyers on both sides were paid to duke it out, and the house sold, and the realtors' commission paid, it would costs us both several thousand dollars and the house. That didn't make much sense, so I signed my share of the house over scot free to the ex so he could re-finance it in his name.
Sick of mortgage companies and their interest scams, I bought my own piece of land outright and started building on it. Ten years later, and it is not finished. LOL. But I refuse to borrow the money to finish it off. I figure I have saved-on paper-quite a nice chunk of change not paying rent, -or interest.
Back to the first house and the ex. After the ex refinanced our original loan, house prices took off. The next ten years saw the value of the house more than double. Ok, sometimes that annoyed me, I admit, but good for him for sticking with it. He has mentioned refinancing a couple of times-I play dumb and don't ask for details so I don't know the rate or the amount, or the monthly payment.
The example is just to point out what happened to the appraisal values on homes in the last ten years-they went through the roof. So, what happened?
A lot of the blame is placed on the mortgage companies. While mine had been scrupulous in matching income to loan repayment amounts, and requiring money up front, the word is that changed. More companies wanted in on that risk free mortgage investment, Anybody that could get a loan was given one. Higher demand meant higher home prices.
Higher risk folks were given variable rate loans. Don't EVER get a variable rate loan. Because the rate can change-and it is almost guaranteed to go up. So, it is no longer based on your income. That 600 a month payment might change to 800. Now, a lot of folks would cut out the extras and come up with that extra amount every month, but there is another something that no one on the news is discussing in relationship to the current economic crisis.
OIL. That's right, I'm back to oil. You see, in the last eight years, the price of a gallon of gas here has gone from 1.25 a gallon to the current 3.76 for regular. That is a three-fold increase. The cost doubled since Hurricane Katrina.
Now, it's not just gas for your car, it's gas that costs to ship the food you eat and the goods you buy. It's gas that's cost to harvest the crops to make your bread and feed your beef.
It's heating oil for your home-oops, add 300 amonth heat onto that 800 a month mortgage and your shelter costs nearly doubled in eight years. So did your food costs, and your transportation to your job, if you didn't happen to get laid off.
So people start defaulting on their mortgages. They can't afford to pay them. And most anyone that could get a mortgage in the last ten years got one, so who's going to buy those homes that the folks with better credit can't afford?
The value of property started to drop like a bullet because there is no one able to afford the payment on the home.
Take a couple steps back. While the economy is crashing around our ears, and the taxpayers are going to have to swallow half a trillion dollars in bad mortgage debt so those companies can start the wheel all over again...where did the money go?
In 2007, the top five oil companies had 123.3 BILLION dollars in PROFIT. That's Exxon Mobil leading the pack with 40.6 billion, Shell 31.3, Chevron 18.7, Conoco Philips 11.9, and BP 20.8.
I know, 123 Billion is not half a trillion, but if you figured in this year and the previous two or three years,and the fact that it is not just the one time sale that is coming out of your pocket. Meaning, not just that tank of gas, but the tank of gas to get your bread from the field to the factory to the shop owner, and the oil to heat the shop...that extra cost of gas becomes an huge gigantic mudslide aimed right at the Global economy.
Yeah, blame it all on the poor credit risk mortgage takers. I'm not buying it.
Brown Daddy-long-legs
Thursday, September 18, 2008
Elaine
Oh, come again to Astolat!
I will not ask you to be kind.
And you may go when you will go,
And I will stay behind.
I will not say how dear you are,
Or ask you if you hold me dear,
Or trouble you with things for you
The way I did last year.
So still the orchard, Lancelot,
So very still the lake shall be,
You could not guess—though you should guess—
What is become of me.
So wide shall be the garden-walk,
The garden-seat so very wide,
You needs must think—if you should think—
The lily maid had died.
Save that, a little way away,
I’d watch you for a little while,
To see you speak, the way you speak,
And smile,—if you should smile.
Edna St. Vincent Millay
Wednesday, September 17, 2008
A Golden Day
We saw the Golden Eagles today! It was a perfect day for flying; great visibility and clear air.
We had just pulled back into the laundrymat, and a fellow laundry washer pulled in right after to see me shading my eyes staring up at the sky.
He looked a bit puzzled and looked up, and I explained that I had just been watching a pair of Goldens. We struck up a conversation and I was suprised to see that the insignia on his shirt said, "Alaska Raptor Center" with a picture of a Bald Eagle on it.
While we were chatting away discovering mutual aquaintences, the Goldens returned a bit higher up, and my new friend started ransacking his Land Rover for his binocs, at which point the Goldens soared off again.
We exchanged phone numbers with plans to share some favorite hiking trails in the future. He chastised me for using the dryers (hey, I had six dryers full-way too much to hang up at home) and then I told him we took advantage of the drying time to go for a hike. We said goodbye, and the saplings and I took the upper power line trail across the highway, which was a new one for us.
One of the Goldens flew over us to cross the road, and after a bit uphill hike, we saw the other Golden come out of the treeline and head away from us. Apparently they decided to split up and hunt solo.
We saw moosetrack as large as my hand, and some feline track that might have been Lynx, although it looked rather small.
Once we crested the hill, the view to the West was amazing-we could see Mountains that must be part of the White Mountain range in New Hampshire.
The wildflowers were still blooming;wild morning glory, hawkweed, New England Asters. And the local butterfly population was enjoying them more than we were.
We are actually starting to enjoy laundry day now with our educational hikes. Peko saw me loading the laundry up this morning, and jumped in the back seat, waiting expectently.
NO way was he missing his nature hike! ;)
Monday, September 15, 2008
Blood on My Hands
Early this morning I was awakened by gnawing over my head. The flying squirrel was at it again. I reached over and grabbed the stick I use to prop open the small hatch, and abruptly rapped hard on the ceiling three or four times.
I saw Ruby look out the window, and I smugly figured I scared the crap out of that squirrel and it had fled its place in the roof.
I contemplated getting up, but was still tired enough to roll over and grab another hour or so of sleep. Then I got up, fed the dog, and then took him out for his morning business.
Jingle, our indoor/outdoor cat, greeted us just outside the door, and I called Peko away. He stopped and started sniffing under my car and I saw a little body in a heap. Uh-oh. I called him away, and after he finished his business, I recovered the body.
I thought, here was my chance to get a picture of a flying squirrel, but to see the large glazed eyes covered in dirt, and the body still warm but quite dead, did not strike me as a nice photo opportunity.
She, for it was a female with long rows of nipples, did not have a mark on her, but to see her beautiful coat covered in dirt gave my imagination of her torturous death much fuel. I felt much grieved, like I had lost a small friend.
I wrapped her body in some newspaper and interred her without ceremony in the compost heap. Do I feel guilty? Yeah. :(
Sunday, September 14, 2008
Saturday, September 13, 2008
And the NIght Comes Day
I love it when I happen to be at the computer as the dusk draws around. First the bats leave their daytime roosts under the eaves. Tonight a large one did a very close fly by of my window. Most likely a Large Brown Bat.
Then Jupiter makes it nightly appearance, usually followed by the flying squirrels. Earlier this afternoon I could hear gnawing in the roof over my bedroom, and I eyeballed the maple branch that is providing them entry. I fiercely contemplated getting the ladder out and taking the branch out-the flying squirrels would have no trouble leaving, but would not be able to return.
The branch is just too high for me to tackle on an extension ladder though. I really don't care for ladders. The tree is straight trunked for about twenty feet, so no climbing it freestyle, either-at least not to saw a branch. Not for me, anyhow.
As it is getting late in the season, I guess I will have to allow the squirrels to stay another winter. Too much later and they would be hard pressed to find a new home before winter.
I heard one cussing the other night, and it was perked in the maple tree fussing at Ruby staring from the window. I shined a flashlight out the window to verify it was a flying squirrel, and it did not care for that and scurried around and down the trunk.
Peko needed his evening stroll, and we headed out about 7:30, which is getting on well dark here this time of year. I have found that I enjoy walking down the pitch black drive led by the dog. The fireflies lie in the weeds glowing brightly, and the only sound is that of the waterfall and crickets. Tonight I could see the shine of the moon on the road, and we walked over to the pond guided only by moonlight.
We had a few more inches of rain since my last trip, and the pond is quite full. I could see fish rising toplit by the moon.
I am hoping to start posting photos again soon, as the pieces have come together for some computer surgery. Hopefully I will be able to put this trusty senior computer into back up mode once again.