Matrix Blog


Foreign investors pushing up New york apartment prices

Chicago exchange looks to give investors a way to trade on the future price of real estate

Investors Can Rest In Peace Now, On The Bench

May 15, 2006 | 12:01 am |
Source: Bubblemeter

The infamous Bubble Bench in Fairfax County Virginia was presented by Bubblemeter a few months ago and immortalized in a Washington Post front page story on the housing market.

There are now only three lockboxes on the bench. According to Bubblemeter, it doesn’t suggest the market is improving. The developer likely asked them to be removed.

Investor Path: Stock Markets -> Housing -> Commodities -> Gold?

May 15, 2006 | 12:01 am |

With the housing market not seeing the returns of the past few years, investors have been looking at alternatives for a while now. Wall Street is seeing green with the DJIA moving close to a record high. However, some investors are seeing gold in the red-hot commodities market or just plain gold [WaPo], which acts both as a safe-haven asset [] against geopolitical uncertainty and as an inflation hedge against rising energy prices.

Upbeat bulls are clearly in the majority on Wall Street right now [WaPo], and truly negative bears are hard to find. But many stock traders and market analysts can identify reasons to be worried about the current state of affairs, and some are actively predicting at least a short downturn by the end of the year.

Gold futures, often a haven for “gold bugs” — investors concerned about inflation and geopolitical or stock market turmoil — rose above $700 in New York this week for the first time since 1980. Silver is at a 25-year high, and copper and platinum both set records in the week, though copper pulled back a bit by week’s end.

Perhaps we will start seeing Gold Bubble Blogs fairly soon as the price continues to rise rapidly.

Tags: ,

[Getting Graphic] Investors Take A Seat

March 28, 2006 | 1:48 pm |

Getting Graphic is a semi-sort-of-irregular collection of our favorite real estate-related images(s).

This photo was taken this past Sunday in Northern Virginia. Its a collection of lockboxes for investor units being flipped in a condo development. The balloons on specific lockboxes must be part of a well thought out marketing strategy.

Go to Bubble Meter to get the whole story.


Got Game? For Real Estate Investors With Virtually Too Much Time On Their Hands

February 27, 2006 | 12:01 am |

I was reading The Real Estate and got a chuckle over the The Virtual Mogul post about Atari’s new game Tycoon City: New York, where players will get the chance to carve their own empires out of the Big Apple from humble origins. (Well thats not reality since many New York developers are second and third generation).

Donald Trump seems to have the dominated board and video real estate games with his titles Donald Trump’s Real Estate Tycoon and Trump – The Game, both of which get pretty good reviews.

A couple of questions come to mind:

  • Do developers actually play real estate video games? (no way)
  • Has the recent housing boom transcended all age levels that kids would give up Grand Theft Auto: San Andreas and Madden NFL 2006? (no way)
  • Does Atari think that kids or teens will play real estate games or do they expect adults to? (no clue)

Wouldn’t Atari sell more copies if they re-named their new game:

The Real Estate Developer Wars: Assemble The Most Key Parcels Of Land With The Most FAR! ?


To The Passive Investor In Builder Stocks, Not A Stud In Sight

February 1, 2006 | 12:01 am |

The boom in homebuilder stocks has far outpaced the housing market. Over the past 6 years, Standard & Poor’s Homebuilding Index has increased 675%, but has fallen 18% since last summer. At the same time OFHEO’s House Price Index only shows a 57% increase over the same period (not that I am crazy about OFHEO’s stat validity).

Kiplinger Magazine agrees “with Frank Nothaft, chief economist for Freddie Mac, who expects a “soft landing,” meaning that home prices won’t fall, but they’ll grow at a much slower pace. He predicts 5% a year on average, rather than the torrid 15% annual growth that some regions have experienced during the past five years.”

They contend that if prices continue to rise, even modestly, that profits will continue to be realized. Stocks are only trading at about 6x 2006 earnings, well below 15x for the overall market.

There are two strategies presented in the article, depending how you think the housing market is going to move.


Investors As Wild Card

August 22, 2005 | 7:54 am |


Investors are the wild card of the current housing boom [Note: Subscription]. The NAR released a report last spring that said 23% of all homes purchased in 2004 were for investment and an additional 13% were vacation homes. Presumably, ratio of investors to owner occupancy will be even greater in 2005.

Here lies the problem for investors…

The rental market has taken a large hit over the past 4 years as lower mortgage rates have converted would-be renters into buyers. The free flow of capital stimulated rental development up until the past year, when it switched to condo development as prices rose rapidly. Now the increase in investor activity may drive down rents [Note: Subscription], placing more pressure for investors to sell quickly and not hold out for a higher price.

Tags: ,

Trump,Investors sell property In New York City for 1.8 billion

Wall Street profits go up as investors get down to party

March 26, 2021

Don’t Stand Too Close To The Housing Market Eruption

Watching a volcanic eruption is like watching a waterfall, right?

But I digress…

Tangible Reasons Why The U.S. Housing Market Is Not In A Bubble

Many wonder if we are entering or already in a housing bubble with rapid housing price growth. I’ve maintained we are not because lending conditions remain tighter than historical normals (looking well before the GFC era)

Barry Ritholtz at The Big Picture post Is it a Bubble? GS Edition with this super interesting chart on famous financial bubbles as well as Ray Dalio’s checklist:

Item 5 below is what seems to be missing at the moment.

Common Characteristics
1. Excessive price appreciation and extreme valuations 2. New valuation approaches justified
3. Increased market concentration
4. Frantic speculation and investor flows
5. Easy credit, low rates and rising leverage
6. Booming corporate activity
7. ‘New era’ narrative and technology innovations
8. Late-cycle economic boom
9. The emergence of accounting scandals and irregularities

Felix Salmon over on his Axios Capital newsletter shows us why the Canadian housing is in a bubble, and the U.S. is probably not – U.S. home prices are rising faster than mortgage debt:

The Palm Beach Luxury Real Estate Flip Fest Is A Thing

After me downplaying growing bubble talk, let’s talk about a 113% annualized rate of growth on a luxury flip in Palm Beach.

EXCLUSIVE: Billionaire Steve Wynn’s company sells Palm Beach house for $23.67 million [Shiny Sheet]

The casino magnate paid $18.4 million for the home at 235 Via Vizcaya in late December, property records show.

Palm Beach has been a hot-bed of high sales activity in a market defined by high end activity.

[click image to open article]

New Yorker Cover: Spring Is Almost Here!

Census: Changing Homeownership Rates

There don’t seem to be any big patterns in homeownership growth – southeast coastline, northern Texas, northern California coastline seem to stand out.

Despite Large Declines, Coastal Urban Rents Remain Stratospheric

From – Top 25 Most (and Least) Expensive American Cities to Rent an Apartment

New in the Real Estate Lexicon: COVAX

How the real estate brokers in Palm Beach refer to the COVID housing market.

Getting Graphic

Len Kiefer‘s Chart Handiwork


(For earlier appraisal industry commentary, visit my old clunky REIC site.)

Project Teams: The Appraisal Institute Practices Recycling, But Doesn’t Take Out The Trash

One of the frustrations of AI membership has been how the organization has not kept up with changing times, but instead, focusing its energies on workarounds to keep long-time FOJs in power and circulation. And this lets FOJs keep the money rolling in by overpaying executives and letting them fly business class with their emotional support spouses and other lackeys all over the world without actual benefit to the members. The collective braintrust of the Appraisal Institute is quite impressive so why not bring in new ideas and new leadership? The organization as it is currently run, is unable to see ahead of the curve without an influx of new thinking. The world has changed and the Appraisal Institute has not – this is why the organization continues to drift into irrelevance to the outside world and why people like me are so concerned about the damage their negligence is causing to the profession.

I’ve been covering the Sham Petition Process quite a bit over the past year, chronicling its utilization and the fraud it represents. The organizational pivot to its current sorry state was a measurable moment in time: 2007 when the Sham Petition Process was invented to get Leslie Sellers into the ranks for the eventual presidency by 2010 after failing to win the NNC approval, and actually voted for himself instead of recusing. In 2010, I saw his AI video, which announced the exit of AI from TAF, and was disgusted by his reasoning (paraphrased) “We are so excited about our future, now having the freedom to grow.” I left AI at that point and watched its membership ranks fall by about 30%.

We saw the Sham Petition Process maneuver’s return that attempted to ram FOJ favorite “Tank” down the membership’s throat (which he willingly threw his name into the hat) to cancel the NNC choice who had already publicly announced, Craig Steinley.

That’s not the only reason FOJs work hard to control every move of the Appraisal Institute. Stacking committees with FOJs and using the formation of project teams to crush dissent has been another way.

Here’s the difference between “committees and “project teams:”

Project Teams Presidential Appointment, No BoD approval, No Money available, Report to the Executive Committee (and usually die after three years, not accountable).

Project teams are used for political purposes, often to kill an insurgency by placating in the short term and then doing nothing about the issue. For example, the residential appraiser project team was formed back in 2017 and had about thirty members. Jim Amorin formed it to appease the membership during the uprising of residential members when AI Headquarters plotted to take control of chapter dues. The project team never meets and has not done a single thing yet to advance the residential profession. Shameful. By 2018-19 the membership was down to about ten members and still has not done anything. Why would someone be a member of a team that does nothing?

And membership on these project teams is not made public like committees are. Why is that? What about transparency?

Committees Appointed by President but must have BoD Approval, Budget with money, Chair reports to BoD at Quarterly meetings (accountable).

Here are some glaring examples of keeping the older FOJ ex-leadership in positions of influence – I have heard there are about 40 positions available each year, and about 400 apply. With 17K members, I would think it would be a snap to fill 100% of these committee openings with new members every year. Instead, AI recycles some of the worst leadership the organization has ever had, allowing Jim Amorin to run the organization like a dictator and not be concerned about its members.

Member name (# of committees) Comment

Steve Roach (6)
Claire Aufrance (3) inspired the term “emotional support spouse”
Terry Dunkin (3) 2007 President and in charge when AI leadership went sour
Jim Murrett (3) 2018 President
Nick Pilz (3)
Mike Tankersley (2) participated in the 2020 sham petition process
Leslie Sellers (1) 2010 President – petition process was created in 2007 to get him in line for the presidency

Why is this happening? This is poor governance 101. How can an organization evolve when the same people are in positions of power for years? To be blunt, dinosaurs representing a failed institutional legacy should not be on these committees if the organization wants to grow and remain relevant.

And why is an executive such Jim Amorin on the Government Relations Committee?

To review how it is supposed to work, here are links to Regulation 7 and the current bylaws.

C’mon AI President and BoD, please get to work to stop this hostile institutional takeover before the authorities do.

Bloomberg’s CITYLAB Incorrectly Blames Appraisers For Redlining

This excellent piece Redlined, Now Flooding made a mistake and it is part of the growing false narrative that Brookings and many real estate journalists are perpetuating.

Unfortunately, the appraisal industry’s two largest organizations have been long mired in their own internal self-dealing that they no longer have the backs of appraisers. Appraisers are exposed with no one taking action to represent us other than pithy press releases.

The problem with this piece is the journalists conflate banks and appraisers – the appraisers appraised houses that were mortgaged by banks, who redlined applicants. The banks redlined, not the appraisers. This presentation makes it sound as though the appraisers determined who was redlined. I’m not excusing systemic racism but this is a mischaracterization of what happened. Redlining is what federal agencies and banks were built on during the Great Depression and afterwards. I have pointed this out to Citylab.

Dave Towne On Unlawful Restrictive Covenants

This is from appraiser Dave Towne (email him to get on his distribution list):

There has been considerable discussion about ‘bias’ applying to appraisals on forums, and elsewhere, since the Congressional hearing in 2018 where appraisers were blamed for racial bias by the rep from the Brookings Institute.

That rep vilified appraisers as being the culprits in the lending process, which is mostly bogus. Unfortunately, now that the charge has been made, appraisers and appraisal organizations are now forced to play on the defensive side of the ball, rather than being proactive and disclosing what actually transpired, on offense. I sense appraisal organizations are afraid to tell the real story. And it’s been real hard to disprove the negative. Appraisers are easy targets.

The fact is, appraisers as an independent entity, had almost NO involvement in the restrictions that governments and lenders instituted beginning in the early years of this country. I recently read a tidbit of history disclosing how a former mayor of Las Vegas, NV forced a certain ethnic group to relocate their businesses and homes to a different part of the city, out of downtown. This was not the only place in this country where it happened. Other ethnic groups have been forced to live underground (really) in certain cities because they were not respected ‘topside.’ Yet, it was those ‘below ground’ people who enabled the ‘topside’ folks to prosper greatly.

Lenders early on, and into the 1950’s, were probably the worst of the bunch in the way they established ‘approved’ neighborhoods and ‘disapproved’ other neighborhoods for lending purposes. I don’t need to repeat the common term that was used verbally and on maps during those times.

Race and ethnicity divisions has been a global issue since humans first walked upright and began functioning. This is not a uniquely US problem, or one associated directly with appraisers. Humans have a propensity to segregate themselves as a natural course of existence. There is no magic wand that will cure this despite what some think and are trying to force on society.

Meanwhile, appraisers have had to figure out which properties were the most appropriate when doing an appraisal….and those were most likely from the specific neighborhood(s) where the ethnic or racial borrower was located so that the report would ‘pass muster’ and be usable for the requested loan. When the property was “here” the lenders didn’t want comparables used from “over there”, otherwise the lender probably would not approve the loan.

So it’s not really the appraiser at fault for not ‘helping’ certain people rise economically, as often is the charge. Appraisers have been stifled, discouraged, even threatened from doing so, since appraising became a US profession in the mid-1930’s.

Tonight, when I was doing research for something totally different, I found this info (below and in the attached PDF) on a Washington State county auditor web site…..which I’ve never seen before.

I would encourage all appraisers to research their own property deed, and contact the appropriate ‘recording official’ in your state to see if this is being done, or can be done, where you are. More info is in the PDF.

ATTACHMENT (Washington State county auditor)

What are racially restrictive covenants?

In the first half of the twentieth century, restrictive covenants were recorded on some properties in Washington which included racially restrictive provisions. These racially restrictive covenants sometimes singled out specific races that were excluded from owning or occupying the property. Other versions would limit ownership or use to one particular race. Sometimes the restrictive covenants limited ownership or use by members of certain religions.

Are racially restrictive covenants valid and enforceable?

No. In 1948 the United States Supreme Court ruled that racially restrictive covenants could not be enforced. In 1968 the federal Fair Housing Act banned covenants discriminating on the basis of race, color, religion, or national origin.

OFT (One Final Thought)

Old time NYC videos can’t be beat.

“It’s a long way to the street, boys.”

And one on street level…

Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

  • They’ll be more volcanic;
  • You’ll erupt;
  • And I’ll hang out next to waterfalls.

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.

See you next week.

Jonathan J. Miller, CRP, CRE, Member of RAC
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Recently Published Elliman Market Reports

Appraisal Related Reads

Extra Curricular Reads

Friday March 19, 2021

Watching Housing Market Jargon As Housing Notes Hits The 6 Year Mark

On March 6, 2015, I began writing these weekly Housing Notes and had not missed a week since then. Today’s edition is the 315th installment of Housing Notes. The weekly format took about a year to evolve before it became a routine, and I became more comfortable in my voice. The notes have become a cathartic exercise. I exhale (now, with a mask on) much of the housing information that accumulates in my brain during a week tempered by available time. I will continue to do this whether I have seven rabid readers or 7,000 – I simply need to do it.

While I occasionally (lol) drift into the weeds, it is always a good idea to keep in mind who the audience is when presenting information. Please watch this clip from a decade ago to understand what consumers hear when many housing professionals, including me, speak. Listen to the whole thing, please.

But I digress…

The General Phrase ‘The Market Is Down’ Varies Greatly By Property Type

In the current environment, there appear to be haves and have nots with wildly different takes on market conditions before the COVID lockdown in New York and after the COVID lockdown in New York. Different property types are often conflated into one incorrect narrative. Incidentally, many of us tend to see conditions in a linear way:

When prices are falling, they will fall forever.
When prices are rising, they will rise forever.

Even though market conditions ebb and flow…

Manhattan Residential Sales The plunge in mortgage rates brought on a “late to the party” boom for Manhattan at the end of the year, even with the optics of boarded up street retail and 85% empty office buildings in the Midtown central business district. But discounts from aspirational asking prices do not represent the decline in market conditions. The Market Is Down: lower initial sales, surge in initial inventory, slip in pricing.

Manhattan Residential Leasing The rental market fueled the suburban home sale boom, poaching a huge segment of demand, resulting in a massive drop in rental prices and heavy inventory. The Market Is Down: plunge in new leasing initially pivoting to record activity in the fall and faint signs emerging of price stabilization after initial plunge but with high vacancy and inventory.

Manhattan Condo Development The condo development space is perhaps the most polarized given its multi-year oversupply challenge of the prior five years. We are seeing some developers having financial problems, but it is important not to brush-stroke all developments into the same bucket. The Market Is Down: Based on closing data for co-ops and condos, Q4-2020 new development sales fell 5.8% YOY while resales fell 22.8%. New signed contracts for February for all property types jumped 73% YOY.

Manhattan Commercial Buildings new leases being signed are seeing significant price cuts. The Market Is Down: declining office rents and rising vacancy will crush property values which has ramifications for lenders who used the property as collateral.

Manhattan Bidding Wars Remain Near Record Lows But Saw A Slight YOY Uptick In Q4-2020

The 41.6% market share of first time buyers, a seven year record, reflects the power of the mortgage rate drop in pulling renters into the purchase market.

On Our Matrix Blog: I Discuss The Florida-New York Housing SMACKDOWN On Bloomberg TV’s Surveillance March 12, 2021

Last Friday I had a fun discussion with Lisa Abramowicz on Bloomberg Surveillance. It’s been bedlam in Appraiserville so I’ve been slow to post it. The New York to Florida housing migration story has been a bit one sided with optics that suggest 9 people will be left in Manhattan by the summer time despite that Manhattan contract activity beginning to surge. On the other hand Florida sales activity continues to be frenzied.

I don’t have the short clip so you have to go to the end of the full show at the 2:10:50 minute mark to pick up my interview with Lisa (but I think its worth it):

Affordability by State Only Shows Half The Typical Owner Vs. Renter Relationship has a pretty cool state by state chart showing affordability to purchase a new home. While clearly median new home prices are typically higher than resales, a new contruction since the financial crisis has skewed to higher-end housing due to high land, labor and materials cost, the fact that only one/third of residents can afford one is eye opening, especially when the U.S. homeownership rate is double that. The moral of the story, record low mortgage rates DO NOT improve affordability. Low rates make asset price higher.


(For earlier appraisal industry commentary, visit my old clunky REIC site.)

AI National’s Travel Policies Are A Sham Paid Vacation Entitlement Exercise

At the last board meeting on February 25-26, 2021, it became clear to me that the odds are much higher that Jim Amorin’s contract was renewed for another three years since the BOD did not discuss its expiration. I hope I am wrong about that. If true, it is very unfortunate for the organization, but I am encouraged to see growing pushback from the BOD against both his and his FOJs (friend of Jim Amorin) sham policies to load their pockets, as has been discussed many times here before.

Spousal Travel Lap Dog / Emotional Support Spouse

One of the board members, Matt Myers, who works abroad and would be the most impacted, proposed that the travel policy excludes spousal travel because it is not in the best interest of its members. You can bet the FOJs will fight to keep him from serving on the board another term so the good guys need to work hard to protect the backbone he is showing. Very impressive.

One of the most idiotic comments in favor of this policy was made by Trevor Hubbard, who said the board needed to consider all officers’ emotional care. Translation I: My spouse is my emotional support animal, and I need to have them by my side at all times since I am too afraid to travel alone.
Translation II: How can I enjoy my all expense paid trip to Europe blindly covered by the membership without my spouse? It just won’t be as fun and it’s just not fair (to me).

Corporate America DOES NOT PAY SPOUSAL EXPENSES. Good grief.

Previous AI President Jeff Sherman said this was a huge “firecracker” because of the severe business sacrifice he has made. The thing is, as Joe Magz said during the meeting, serving the membership is a “privilege.” Plus, as I’ve shared before in the 990 analysis, Jeff got a chunk of money for his time as president. That should factor in whether a candidate aspires to serve the membership.

And remind me again why AI officers fly to Europe and Asia all the time? What is the proof of benefit to the organization and members? How is this benefit relayed to the members? Answer: There is no tangible benefit that matters, given membership has fallen by about 30% in a little over a decade.

And if the flight is five hours or more, they can fly Business Class! With their spouse!

AI spends $250K per year on travel!!!

The problem with the FOJs is they forgot long ago that they were serving the organization and were not there to serve themselves. Once they got a taste of the insider track, it became addictive in the form of feeling entitled.

Nine people voted against this motion, but 14 people were in favor of it. The “against” largely represents FOJs: Sherman, Hubbard, Konikoff, Molinari, Schulze, AuFrance, Placer, Powers, Ramirez.

Amorin Control-Freaking Discussed

Jody Bishop brought up that the board wanted Jim Amorin to stop interfering with the information that BOD asks of staffers. There needs to be an established process. Jim Amorin freaked out at this, stating he has never (except once) denied BOD information. Amorin essentially expressed that “members might think” he was doing something he wasn’t. LOL.


Also, I appreciate Rodman’s shoutout to “our blogger” – it certainly beats being called ‘that Joe Miller’ – AI’s new president is on the right side of history and board members that are showing backbone against the FOJ mob is appreciated by myself and the membership.

Ichthyologist Alert: The Cosmic Cobra Guy Explains The Subprime Crisis


Here’s Jeremy Bagott’s latest effort (Ichthyology): The Ichthyologist’s Guide to the Subprime Meltdown. Giving his easy to understand writing style provided in his Dispatches from the Cosmic Cobra Breeding Farm tome I read in early January 2020, I bought his latest effort. I am recommending the book before I read it based on the prior book and his press release which sounds really interesting:

(LOS ANGELES, MARCH 12, 2021) – From Seattle’s CHOP zone to the Rajneesh compound in rural Oregon to the so-called Republic of West Florida, self-styled autonomous zones have never prospered in America. Too often, they’ve descended into lawlessness, orgiastic behavior and chaos, requiring costly taxpayer-funded clean-ups. Such was the case in 2008 with the ungovernable mash-ups Fannie Mae and Freddie Mac.

A first of its kind, “The Ichthyologist’s Guide to the Subprime Meltdown” is a concise almanac that distills the cataclysmic financial crisis of 2007-2008 to its essence. This pithy guide to the upheaval includes essays, chronologies, roundups and key lists, weaving together the stories of the politics-infused Freddie and Fannie; the doomed Wall Street investment banks Lehman and Bear Stearns; the dereliction of duty by the Big Three credit-rating services; the mayhem caused by the shadowy nonbank lenders; and the massive government bailouts. It provides a rapid-fire succession of “ah-hah” moments as it lays out the meltdown, convulsion by convulsion.

But back to Freddie and Fannie: The trajectory of the two can be best understood through their almost comically incoherent timeline during the crisis – It reads like a rap sheet. They assured investors in early 2007 they had little exposure to toxic subprime loans. Reports would later surface that by 2008 the two had backed or purchased as many as 70 percent of the nation’s junk mortgages. In September of that year, the undercapitalized mortgage guarantors – amped up on sugar water and with no real accountability – simply collapsed. Their lack of an adequate capital cushion all but preordained it.


February 27, 2007 – Fannie Mae and Freddie Mac tell investors they have little exposure to the subprime mortgage market.

March 6, 2007 – Fed Chairman Ben Bernanke, quoting Alan Greenspan, warns that Fannie and Freddie are a continual source of “systemic risk.” He suggests legislation to rein them in.

April 18, 2007 – Freddie Mac is fined $3.8 million by the Federal Election Commission for making illegal campaign contributions to members of the U.S. House Committee on Financial Services, which is tasked with monitoring the mortgage giant.

December 4, 2007 – Fannie Mae issues a cash call, seeking $7 billion to cover losses linked to the housing market. Investors get a haircut when the dividend is trimmed by 30 percent.

January 1, 2008 – More than 70 percent of the nation’s 27 million weak mortgages are on the books of a government-related entity, primarily Fannie and Freddie, it is later reported. These include radioactive products such as so-called option ARMs, 2/28 ARMs, negatively amortizing mortgages and “no doc” mortgages.

April 2008 – Former Fannie Mae CEO Frank Raines, who left office in the midst of an accounting scandal, settles with the U.S. government. His total compensation from 1998 through 2004 is reported at $91.1 million, including some $52.6 million in bonuses. He ushered in an era in which Fannie was making big bets on subprime mortgage securities. A federal lawsuit accused him and two other Fannie Mae executives of manipulating earnings over 6 years.

July 14, 2008 – U.S. Representative Barney Frank of Massachusetts characterizes Fannie Mae and Freddie Mac as financially sound. Later, the Boston Globe will report that Frank received tens of thousands of dollars in donations from Fannie and Freddie between 2000 and 2008.

September 7, 2008 – Regulators seize Fannie Mae and Freddie Mac, pumping about $200 billion of U.S. taxpayer money into the two. Riddled with bad mortgages, they are placed into conservatorship. At the time, Fannie and Freddie were the most highly leveraged financial institutions on the planet, wrote Jason Thomas in National Affairs in a fall 2013 retrospective.

September 23, 2008 – The FBI reveals it has been investigating Fannie and Freddie, along with their executives, as part of a far-reaching probe into potential mortgage fraud.

November 25, 2008 – Fannie and Freddie offload as much as $500 billion in toxic mortgage-backed securities and $100 billion in bad housing agency debt to the U.S. Federal Reserve.

July 21, 2010 – A former Countrywide Financial loan officer tells the Wall Street Journal that Senator Chris Dodd knowingly saved tens of thousands of dollars on the refinancing of his two personal properties in 2003 as part of a special VIP program Countrywide Financial had for anyone with the ability to influence Fannie and Freddie.

When the two amalgams were finally seized by federal regulators and placed into conservatorship, they were neither government agencies nor private enterprises. They defy description to this day. Their business model is simple: Collectivize the risks and privatize the profits. But even this plum arrangement was not enough. The two have always been about boundary-pushing and excess, with the implicit – now demonstrated – guarantee that the U.S. taxpayer would be there to clean up any mess.

Like sasquatches, they lurk in the thickets, unreformed, unrepentant. They remain a source of future taxpayer liability, ready to one day unleash a new crisis on a new generation.

The book’s author, a real property appraiser and former newspaper editor, guides the reader through the smoldering wreckage of a crisis that took the global financial system to the edge of the abyss in the first decade of a new millennium.



Exec At The Appraisal Foundation ‘Likes’ The Appraisal Institute

Even after the excellent and solid thrashing AI National gave TAF in their comments discussed last week in Appraiserville regarding USPAP, causing TAF to extend USPAP for another year without notifying or doing any research for the stakeholders, yet lamely and falsely blaming COVID, TAF exec still “likes’ them. What a leadership void we are seeing in The Appraisal Foundation at this critical moment in history.

OFT (One Final Thought)

Appraiser Dave Towne shares this Big Bear Bald Eagle Cam and we never knew we needed to see it.

Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

  • They’ll have more jargon;
  • You’ll be more jargon wary;
  • And I’ll just keep talking.

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.

See you next week.

Jonathan J. Miller, CRP, CRE, Member of RAC
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Recently Published Elliman Market Reports

Appraisal Related Reads

Extra Curricular Reads

Get Weekly Insights and Research

Housing Notes by Jonathan Miller

Receive Jonathan Miller's 'Housing Notes' and get regular market insights, the market report series for Douglas Elliman Real Estate as well as interviews, columns, blog posts and other content.

Follow Jonathan on Twitter

#Housing analyst, #realestate, #appraiser, podcaster/blogger, non-economist, Miller Samuel CEO, family man, maker of snow and lobster fisherman (order varies)
NYC CT Hamptons DC Miami LA Aspen
Joined October 2007