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Mortgage Market Reopens to Risky Borrowers

wsj.com

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Re: Mortgage Market Reopens to Risky Borrowers

#51

Post by aznpwnzor »

rayiner wrote: post #6
apo wrote: post #2

> Some $2.5 billion worth of subprime loans, those with FICO credit scores below 690, ended up in mortgage bonds in the first quarter of 2019. That is more than double a year earlier and the highest level since the end of 2007, according to Inside Mortgage Finance. There was $1.9 billion worth of subprime mortgage bonds in the second quarter. Statements like this are hard to evaluate without knowing the denominator:…

The problem is that most journalists are innumerate. As Matt Yglesias notes, "many reporters and editors don't really understand what they're doing. Reputable colleges hand out degrees to people who have almost no understanding of quantitative methods." [1] These journalists see the numbers as garnishes on a narrative point. They're not trying to put the numbers in some sort of mathematical context to draw sound conc…

imo part of the problem is our liberal arts influenced college education system.

because college has moved away from being a luxury of broadly educating landed gentry to being a signaling of "i can be employed and responsible" the train a generalist approach doesn't really work.

To be specific, there are two types of journalists/writers

1. domain experts that are good writers/communicators 2. good writers/communicators with an ability to pick up domains quickly

at some point the 2nd type of person will be out of their depth. but the 1st type of person is expensive.

Why are Matt Levine and Adam Minter (even Krugman sometimes) such great journalists? All were domain experts first.

Great journalists that were not domain experts still exist, but they are more of the investigative variety. the ones that win Pulitzers.

Re: Mortgage Market Reopens to Risky Borrowers

#52

Post by Goronmon »

apo wrote: post #2

> Some $2.5 billion worth of subprime loans, those with FICO credit scores below 690, ended up in mortgage bonds in the first quarter of 2019. That is more than double a year earlier and the highest level since the end of 2007, according to Inside Mortgage Finance. There was $1.9 billion worth of subprime mortgage bonds in the second quarter. Statements like this are hard to evaluate without knowing the denominator:…

I see this all the time and wonder to what extent it has contributed to mistrust of the traditional media.

I'd say it's more likely that people are mistrustful of the media because the media will say things they either don't like or don't agree with personally, rather than a specific concern about articles lacking certain context on complicated topics.

Re: Mortgage Market Reopens to Risky Borrowers

#53

Post by beat »

nostromo wrote: post #42
rayiner wrote: post #6

Earlier quoted context omitted.

The problem is that most journalists are innumerate. As Matt Yglesias notes, "many reporters and editors don't really understand what they're doing. Reputable colleges hand out degrees to people who have almost no understanding of quantitative methods." [1] These journalists see the numbers as garnishes on a narrative point. They're not trying to put the numbers in some sort of mathematical context to draw sound conc…

Matt Yglesias himself fits that mold perfectly -- studying philosophy at a prestigious university -- and going on to write about economics, politics, and foreign policy, not philosophy. Best I can tell he's never had any kind of role other than blogger/journalist.

He's probably been a full-time journalist much longer than he was a college student.

My spouse works in e-commerce as an expert in international payments systems. Her undergrad degree was an Art/Asian Civilizations double major (with honors work in historic Chinese painting), and her master's degree is in Chinese pedagogy.

By your standards, she's not qualified for the field she has worked in for the past 15 years. Then again, you can't exactly get a college degree in international payments.

Re: Mortgage Market Reopens to Risky Borrowers

#54

Post by driverdan »

SilasX wrote: post #19

Negative yielding bonds that people only buy in hopes of unloading onto a bigger sucker?[1] Pre-crisis level of subprime lending? Time for the financial equivalent of going to the Winchester to wait for this to blow over. [1] https://news.ycombinator.com/item?id=20760222

> Pre-crisis level of subprime lending?

Nope, not there yet.

Re: Mortgage Market Reopens to Risky Borrowers

#55

Post by kurtisc »

rayiner wrote: post #6
apo wrote: post #2

> Some $2.5 billion worth of subprime loans, those with FICO credit scores below 690, ended up in mortgage bonds in the first quarter of 2019. That is more than double a year earlier and the highest level since the end of 2007, according to Inside Mortgage Finance. There was $1.9 billion worth of subprime mortgage bonds in the second quarter. Statements like this are hard to evaluate without knowing the denominator:…

The problem is that most journalists are innumerate. As Matt Yglesias notes, "many reporters and editors don't really understand what they're doing. Reputable colleges hand out degrees to people who have almost no understanding of quantitative methods." [1] These journalists see the numbers as garnishes on a narrative point. They're not trying to put the numbers in some sort of mathematical context to draw sound conc…

I've noticed a trend on BBC news.

'[X market/stock] slumps as [thing related to X] [does something]'

Yet when you go and look at the long-term graph, it's well within normal variance. There's no evidence they're connected at all. I'm sure it happens with other media providers too.

Why? Because they didn't have the numbers right, or just didn't check at all. Well, if I'd written a statement like that in an essay during my schooling, I'd be marked down for unsubstantiated claims at best or admonished for plagiarism at worst.

I find it irresponsible that the news rarely cites its sources beyond admitting they bought it from AP/Reuters. I believe it should be enough to prevent them being cited as a trustworthy secondary source until they at least have their justifications to a level that would be considered adequate by a high school history class. It's the only reason citogenesis happens on Wikipedia.

Re: Mortgage Market Reopens to Risky Borrowers

#56

Post by rconti »

opportune wrote: post #22

Is anybody else making the supposedly foolish decision to time the housing market? I am financially ready to purchase my first home, currently living in the bay area, but I think right now just looks like a bad time. - A lot of housing price growth is seemingly "priced in" since rents for condos/apartments significantly lower than total monthly ownerships costs (mortgage+hoa+insurance+taxes+etc.), even with 20% down.…

My opinion is that you're right to wait, with the caveat that I think you've done more research than I have, AND when I bought in fall 2014, I was ALSO convinced it was a horrible time to buy. That suspicion has not been borne out.

That said, the bay area market has been slowing the past year or so

I'm not sure your first point is particularly valid; I think that's basically always true here. Rent is cheaper in areas where assets are expected to appreciate quickly; rent is relatively expensive in slow/stagnant markets (where, for example, maintenance could be a significant deterrent to ownership, versus price appreciation).

I'm not sure at all about your second point, that sounds highly speculative.

But it sounds like you've done your homework on the last two.

Re: Mortgage Market Reopens to Risky Borrowers

#57

Post by jedberg »

opportune wrote: post #22

Is anybody else making the supposedly foolish decision to time the housing market? I am financially ready to purchase my first home, currently living in the bay area, but I think right now just looks like a bad time. - A lot of housing price growth is seemingly "priced in" since rents for condos/apartments significantly lower than total monthly ownerships costs (mortgage+hoa+insurance+taxes+etc.), even with 20% down.…

In the Bay Area prices have already started to level off. Sites like Zillow are predicting a 10% downturn in the next year in the highest priced areas.

If you want to buy in the Bay Area, I'd wait a year and see what happens. I don't think the price increased will outpace your savings by very much if you hold out and continue to add to your down payment fund.

But I'm just a guy on the internet, so don't blame me if I'm wrong. :)

Re: Mortgage Market Reopens to Risky Borrowers

#58

Post by lotsofpulp »

kurtisc wrote: post #55
rayiner wrote: post #6

Earlier quoted context omitted.

The problem is that most journalists are innumerate. As Matt Yglesias notes, "many reporters and editors don't really understand what they're doing. Reputable colleges hand out degrees to people who have almost no understanding of quantitative methods." [1] These journalists see the numbers as garnishes on a narrative point. They're not trying to put the numbers in some sort of mathematical context to draw sound conc…

I've noticed a trend on BBC news. '[X market/stock] slumps as [thing related to X] [does something]' Yet when you go and look at the long-term graph, it's well within normal variance. There's no evidence they're connected at all. I'm sure it happens with other media providers too. Why? Because they didn't have the numbers right, or just didn't check at all. Well, if I'd written a statement like that in an essay durin…

That’s how financial news has always been reported. They need to sell papers, and technically they’re just mentioning two things that happened to happen at the same time.

Re: Mortgage Market Reopens to Risky Borrowers

#59

Post by rconti »

opportune wrote: post #44
frustrated_90 wrote: post #36

Earlier quoted context omitted.

Do you mind shredding some light on where big tech companies are expanding to? I can't seem to find where they're going through Google search.

You might be able to find lists of offices for major tech companies via google maps. Off the top of my head: Google, Facebook, Apple are all expanding to Seattle, some in multiple locations Amazon is building an office in NoVa Apple is building in Austin. Looks like Amazon, Apple, and Google are too Google, Amazon, and Netflix are building in LA I'm sure there are many more expansions occurring too, anyone may feel f…

Aren't these all regions that were destinations for SV "flight" 15 years ago as well?" I'm not saying the scale isn't different, but these statements could have been uttered awhile ago.

Re: Mortgage Market Reopens to Risky Borrowers

#60

Post by TomMckenny »

Goronmon wrote: post #52
apo wrote: post #2

> Some $2.5 billion worth of subprime loans, those with FICO credit scores below 690, ended up in mortgage bonds in the first quarter of 2019. That is more than double a year earlier and the highest level since the end of 2007, according to Inside Mortgage Finance. There was $1.9 billion worth of subprime mortgage bonds in the second quarter. Statements like this are hard to evaluate without knowing the denominator:…

I see this all the time and wonder to what extent it has contributed to mistrust of the traditional media. I'd say it's more likely that people are mistrustful of the media because the media will say things they either don't like or don't agree with personally, rather than a specific concern about articles lacking certain context on complicated topics.

Exactly so. That and continuous denunciation of the free press by a certain category of new politicians.

Actually, this article differs in no way from similar articles written since printed news was invented. Which of course means that all the other criticisms, including imprecision, are still valid. It just means that it is not the source of the recent spike in media dislike.

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