Federal Retreat on Bigger Loans Rattles Housing

"For the last three years, federal agencies have backed new mortgages as large as $729,750 in desirable neighborhoods in high-cost states like California, New York, New Jersey, Connecticut and Massachusetts. Without the government covering the risk of default, many lenders would have refused to make the loans. With the economy in free fall, Congress broadened its traditionally generous support of housing to a substantial degree."

The government giveth and taketh away. The new limit will be $625k for NYC.

Never saw that coming............ :)

My 5yo son asked 'will the fed keep interest rate at 0% forever and steal from savers to give to spenders?'

I thought, my my my son can see farther than Ericho/jim bones and 99.99% of re borkers. Mission accomplished!

It takes place on Sept. 30. So by summer, all the sellers of one bedrooms will realize that if they don't sell immediately, they will lose more than half the buyer pool. The new buyer pool on a 700K apt will have to put 30% down and their interest rate will go up a full point. Seems to me that sometime in the summer, all the 700K apts will take an automatic 10% haircut. That will put pressure on studio prices-- which is good news for Julia. How long before the trickle down begins to affect the 2 bedrooms?

It should be hitting sellers in the 780-900k range first if you assume they were putting down 20% before. As those sellers get pressured to drop their prices, the studios are the next group to get smacked.

Stinks for Monterey. My family has a house out there (was my grandfather's) that will eventually have to be unloaded I think. Thanks for posting, alan.

I don't see how this is not going to put a big dent in pricing.
1. Kill the fed backing of jumbos
2. Banks take the risk (out comes the microscope)
3. Smaller loans to a smaller pool with higher interest rates.
4. cash is king (and the pool shrinks)
5. going to see another 20-25% off today's pricing (in the ask)
6. it's the 1.5-3M that's going to get it's ass kicked
7. Let's not forget where re taxes are going.....up up and away in my beautiful ballon......

Not to mention that prices in the nearby NY/NJ counties will probably collapse earlier, faster and harder. The burbs might attract some of the three bedroom families that have been attracted to NYC back to hinterlands with more affordable space. And more teachers.

"Not to mention that prices in the nearby NY/NJ counties will probably collapse earlier, faster and harder."

Are you familiar with the suburban market or are you making that claim blindly? I am VERY familir with the northern NJ market and prices have actually stabalized. In a few rare cases, bidding wars are ven breaking out. I know one house that was listed for $899,000 and sold for $910,000. Another house just sold for 50% over its 2002 sale price. If need be, I am more than willing to prvide addresses to back up my claims.

we are predicting the future... you are telling us the past. Lets' try this again. When the artificial fake boobs are deflated, your tits will look prettier/perkier and have no scars or saggy and can't be held together in a shape of a breast with 50 yards of duct tape?

Shouldn't you be talking about some tax issue or political agenda?

Planned cuts in the size of a mortgage that can be backed by the federal government may hurt upscale housing markets in high-cost states like New York and California.

--------------
Perfect Timing. The Private market is ready and willing to lend again for quality Jumbo loans. The caveat though is the LTV'S probably won't be above 70%. This is not unlike the market say 20 years ago.

"The Private market is ready and willing to lend again for quality Jumbo loans."

What makes you so sure?

Where are all of the clowns that predicted 2 years ago that the AIG bonus tax, which never passed, was going to kill Manhattan RE?

http://streeteasy.com/nyc/talk/discussion/9358-house-bill-will-tax-employees-of-tarp-banks-90

http://streeteasy.com/nyc/talk/discussion/9365-no-pay-over-250k-for-all-tarp-recipient-bank-employees?comment_id=132108

hey aplie... go fk yourself

Socialist: What is it that you don't see. Do you understand why the entire RE industry is so alarmed and are furiously lobbying congressmen who refuse to listen? If you own a house worth $700K in NJ --- on Oct 1 it will be worth $625K. Say you bought that house last year and put down 10%. You have lost that 70K. Plus your house will only be worth $625K for the foreseeable future. When rates go up, your house will be worth even less. If the mortgage deduction is voted away in the next couple of years to help pay off the ridiculous US govt debt, your house value goes down more.

However, if you do a strategic default on Oct 1, you get to live there 10 -12 months rent free. Then you can go rent a comparable house for less than your house payment. If you are honorable and choose not to play unethical hardball just like all the banks and businesses have done since 2008, then you can stay in your house for decades and still not recoup your original cost. But if even 1 or 2 neighbors are not so ethical and default, then your house is worth even less as it will now be surrounded by foreclosed property.

hey, apt23 with the "backdoor" on west 67th street is back.

Here's when apt23 was in heat for w67thstreet
http://streeteasy.com/nyc/talk/discussion/25684-w-67s-prediction-come-to-pass-thru-the-backdoor

and she seems to know a lot about people who lack ethics. Perhaps she and damier212 should go into business with each other.

So apt23, all of a sudden, all real estate is going to be suddenly worth the new loan limit of $625,000? Well, if that is the case, then how are houses still selling for ABOVE the current loan limit??? Why did the value of high end real estate not fall to $729,000?

Socialist, there are all sorts of people on streeteasy with illogical and misdirected points of view (you as case in point on about 80% of topics). But when it comes to hysterics, uncurable hormonal imbalances, and voices that none of the rest of us can hear, well, you found her.

That is ridiculous socialist. My example was in the 600-700K range. If you can't do the math, then I can't help you. Do you think you could do some reading to understand why the entire RE industry is in a panic over this? Do you think they are spending millions in lobbying efforts because they are giddy that an 899K house went for 910k? No, they are worried about a cycle of more strategic defaults and lower prices.

Everyone knows that huntersburg is the troll, right? When is SE going to ban the troll altogether?

>If you own a house worth $700K in NJ --- on Oct 1 it will be worth $625K. Say you bought that house last year and put down 10%. You have lost that 70K. Plus your house will only be worth $625K for the foreseeable future. When rates go up, your house will be worth even less. If the mortgage deduction is voted away in the next couple of years to help pay off the ridiculous US govt debt, your house value goes down more.<

Yup, agree.

I have taken a stab at quantifying the impact (huge!) in Manhattan: http://malcolmcarter.wordpress.com/2011/05/12/mack-truck-is-headed-into-the-manhattan-market/

"Stinks for Monterey. My family has a house out there (was my grandfather's) that will eventually have to be unloaded I think. Thanks for posting, alan."

How long have they been hanging onto it and why?

On this $625K thing, you gotta imagine they're going to keep ratcheting it down back to pre-crisis levels over the next few years.

apt23, how is your backdoor? http://streeteasy.com/nyc/talk/discussion/25684-w-67s-prediction-come-to-pass-thru-the-backdoor

"How long have they been hanging onto it and why?"

nada, my grandfather only passed away recently. I'm pretty sure it's being rented at the moment. Unfortunately, no one lives in CA anymore, so it may be tough to hang on to for too long. He bought it in the 40s.

"On this $625K thing, you gotta imagine they're going to keep ratcheting it down back to pre-crisis levels over the next few years."

I was thinking the same. Maybe not all the way down, but lower for sure. I think it'll be managed carefully though.

Sorry to hear that he recently passed. Keep us posted on the status of the house.

"no one lives in CA" ... it's too crowded.

"He bought it in the 40s" ... good RE market timer! It must have been a spectacularly beautiful area back then. And as the RE crash goes, I'm pretty sure Monterey hasn't been hit all that hard ... ?

Alternate scenario 1: Buyer borrows $625K on a conforming first, and another $100K or so on a non-conforming second. The terms on the last $100K will be relatively onerous, but 85% of the total debt still gets Fannie/Freddie terms.

Alternate scenario 2: Buyer borrows is able to borrow nearly as much as he would have before October 1, because jumbo spreads continue to narrow as competition among lenders in a reviving MBS market renders the $625K mark less of a bright red line.

Alternate scenario 3: Buyer has the cash to make up the difference, and is bidding against another buyer who can do the same (or is willing to pursue scenario 1 or 2).

The reality will be much more complex than, "The conforming cap drops 15%, so prices must drop proportionally."

To be clear, though, I think the impact will be substantial. I just don't think it can be predicted with simple arithmetic.

forgive my ignorance, but don't FHA loan limits follow conforming? if so, this could have very large implications for harlem and some areas in the boroughs.

the us hasn't shown itself to be exactly good at "managing" the housing market.

West81: Your overall point is a good one. I don't think anyone can predict the exact relationship, but do you think those scenarios are likely? 1 and 2 would require banks to actually increase their risk into what they will recognize will be a falling housing market at the same time that many of them are still writing down old losses.

And 3 is possible, but potentially being in that situation, I just can't imagine bidding up any property unless it was pretty underpriced, which I haven't seen in a quite a while. Cash will be king and cash buyers will use their increased leverage.

malthus: I think MBS revival is less a matter of banks taking on risk than investors chasing yield.

I don't know how long that might take. Memories are short. Junk (sorry, high-yield) bonds came back. MBS probably will too.

""He bought it in the 40s" ... good RE market timer! It must have been a spectacularly beautiful area back then. And as the RE crash goes, I'm pretty sure Monterey hasn't been hit all that hard ... ?"

Makes me wonder how many people considered RE investment in the same light many have in the past decade or so. I have no idea how hard the Monterey area was hit in terms of RE. It's a beautiful area but tends to attract an older crowd.

And nada, thanks.

malthus, cash already is king, no? And as interest rates go up, even more so. I think West81st is spot on - there's a tendency to do the arithmetic like it's a chemical formula that has to balance. In my experience, it rarely works out that way. But as he said, this will have a significant impact.

I don't think the guys in Dusseldorf will be lining up to buy MBSs for a while either. But here's some input from more experienced heads:

"Given the severe problems that continue in the housing and mortgage sectors, Wachter and Guttentag think it could be several years before a private securitization market begins to take over from Fannie and Freddie. Although lending standards are strict today, lenders, securitizers and investors have to be concerned about what would happen if too many lenders loosen standards too much in the future, Wachter notes. That could shake confidence in all mortgage securities, even those based on loans with sound underwriting standards.

Home prices are also key to rebuilding the private securitization market, she adds. Homeowners are less likely to default when prices are rising, because they don't want to lose their equity in foreclosure. If prices continue to fall, defaults will be a persistent worry, discouraging private securitizations by scaring off investors.

"The only thing that is going to rekindle the ... market is the passage of time," according to Guttentag, who adds that the overhang of foreclosures will depress prices for several years. "So long as there is the possibility of a further decline in real estate markets, you're not going to have a [private securitization] market."

http://knowledge.wharton.upenn.edu/article.cfm?articleid=2775

Yes. Bc as we all know simple math and chemical formulas are not built on the same foundations.

W81, would you lend to a ninny buying with 20% down in a $3mm market wo supportable w2, now remember there won't be a govt guarantee. Now let's spread that risk by pooling 1000 of these loans in the SAME bubble markets that are trading upside down to renting. Now I'll give you fixed 200bps over us treasuries locked for 30yrs with all indications market rates will be going up 25bps a quarter for several years. Stick to picking out layouts.

I think we can't say exactly how the details will play out, but I think we can assume that this will cause values & prices to decline.

67th, I'll write this so you can understand: fka me, howz can u know deflating one stripper's fake boob will cauz the same deflation in her coworker's tataz? There will be some correlation, but we all knowz they gotz a mind of dey own. Duct tape or no duct tape, sh!tz gonna sag tho. FLMAOzzzzzzz.

Exactly my sentiment.

Correlation VS causation.

Easy credit -> bubble
Hard credit -> ?????

Fill in the tatas

SE west coast party at bj's dead grandpa's place. Thatz how we kick it. Get some colt 45.

Look at this pile of 30's porn I found in bjw's grnadpa's attic.....

No one puke in the pool!!! Goddddddaaaammmit Falco. Hold you liquor.

Nada. The girl wants to sleep with you. Open your eyes! Stop explaining convection to her..... You had her at 'I save $30k a month renting versus buying!'.

W81/NWT\nyc10023 stop tidying up the place and Fking take your jello shots like a man!

lmfao

67th, that was actually pretty funny. I would like to see my uncles debate who gets to keep the vintage porn. Also, who keeps feeding falco shots? What an animal.

Jim-homes, put down the collar on your pink polo shirt and stop playing with your Oliver ppl glasses, you Fking wanna be from coal country west virginia.

Stop bitching about how ph41 beat your azz in arm wrestling. Look to her credit she beats her husband daily. Who the fk can put up with a pretensions wife like that? Some men like to get beat by their wives, weird shit but true.

Apt23. Can we borrow $50. We need more beer. Thxs. You are awesome!

poor apt23, he is getting so excited thinking that prices will decline enough so that he can one day move out of his 5th floor walk up. Poor soul.

Socialist, apt23 lives in a large rental building in Lincoln Center area. But while her apartment doesn't have a back door, she seems to talk a lot about the back door (anyone have any ideas) and w67thstreet in the same breath. And apparently w67thstreet has learned it only takes some beer to get apt23 to loosen up

I think you guys are overstating the impact of a loan limit drop of 15%. Lending has been tight for awhile, but banks are lending (Perhaps in anticipation of this, BofA has been very aggressive about trumpeting their activity in the jumbo market). In NYC, the $1.5 mm space is crowded with cash bidders, so a $100K difference may eliminate some competition, but far from all of it.

Most vulnerable IMHO are the $900K apartments which may take a haircut to $850K.

ali r.
DG Neary Realty

This comIng from the same fktard professionals who never saw the bubble, can't admit to it and can't even quantify the extent of the bubble. R u Lawrence yun's Harvard educated mama?

"Building Wealth Through Renting
By DAVID LEONHARDT

I replied:

Yes, building equity is a good thing. But the advantages of it are exaggerated.

For one thing, how do you know you’ll be building equity, as opposed to making an investment that will lose money? People who bought in Florida, Las Vegas, Phoenix and much of inland California in 2006 thought they would be building equity. I interviewed some of them. But they did not. In many cases, they lost all of their equity. There is definitely some downside risk in the New York market today.

Second, by buying a house, you’re making a decision to tie up your capital in a specific sector — real estate. It’s entirely possible that the money you spent on a down payment would have earned more money in the stock market, for instance.

Finally, buying also involves throwing thousands of dollars down a hole: in mortgage fees and interest, in property taxes, in repairs and renovations, in tens of thousands of dollars of closing costs. Renting doesn’t involve the huge up-front costs that buying does. Owning also involves some continuing costs (e.g. repairs) that renting does not.

Living somewhere is always going to involve costs, just as education, health care and food involve costs. Financially, the decision to buy is basically a decision that your investment will increase in value by an amount sufficient to make up for all the additional costs of buying. (Put it this way: you’d never buy an apartment if you were staying in a city for just a week, in an effort to build equity. You’d rent — a hotel room.)

Sometimes — often — the decision to buy works out. But it does not work out far more often than is commonly understood."

So your contention is that buyers and sellers are going to split the difference on what the lenders won't lend? Even knowing that the limits will proably come down farther in the short term a buyer is going to somehow come up with 50k more for a downpayment? While knowing that it might be wiped out if the limits drop another 100k in 2012 (at which point they will still be higher than they were in 2007)?

M, the banks will lend it: it will just cost the borrower another $5K a year for that old $729K loan. My prediction is that right around that margin, buyers will try to get price concessions to balance that cost.

But I don't think they'll be that severe in NYC, because I think there are too many buyers who can take the extra equity out of the stock market, which appears to be zooming along just fine.

ali r.
DG Neary Realty

That's why the small-unit market is holding up so well. all those stock market millionaires rushing to cash in to take part in the under-million market.

Let me translate in french. Aboutready called Ali a Fking retard.

w81. Those are interesting scenarios if the bank will go for it. Perhaps banks have become looser since I re-fi'd last year but I could not find a bank that would do a jumbo for under 30% down. Though it was easy to get a 5 yr arm, I could not get a 30 yr if there were any other encumbrances. And I have great credit. The question is whether a bank will give you a non conforming second loan if you have no skin in the game (or less than 30%). Judging from my experience, I would say no, particularly as strategic defaults are on the upswing.

But my point, and the simple arithmetic is this: Unless you are paying cash, If you are in the market for a 700-900K apt, it is significantly more expensive on Oct1 than Sept 30. That will have an impact. Even if you finance with a 5 yr arm, you have to think long and hard about whether prices will be down and whether you will be able to refi in 5 years without putting up a lot more cash.

I think Malcolm detailed the likely scenario well in his post above.

Socialist: I will continue to rent as long until it is cheaper to buy a comp apt. My downpayment is doing quite well in the financial markets so I am not really concerned about RE prices right now. I am on the sidelines vis a vis Manhattan RE.

w67: Buy as much beer as you want, I will sell some calls on my Budweiser stock.

"Perhaps banks have become looser since I re-fi'd last year but I could not find a bank that would do a jumbo for under 30% down. Though it was easy to get a 5 yr arm, I could not get a 30 yr if there were any other encumbrances. And I have great credit."

I refied earlier this year - they make you jump through a lot more hoops, that's for sure, but otherwise it wasn't that hard. Just lots of paperwork. I imagine we'll see a stream of refis before October.

" I will continue to rent as long until it is cheaper to buy a comp apt."

How did you re-fi last year if you rent?

I sold my NYC RE in 2005. I bought an ocean front condo in Miami Beach in 2008. Re-fi'd last year. I refi'd through my NY bank. I asked if the 30% down was only because it was in Miami and he said no, they require it in Manhattan now also. Of course, can you ever believe a banker -- even though he is a helluva nice guy. Very happy to get a 30 yr jumbo at 4.7% Doubt I'll ever see that rate again. I now rent in NYC.

So you did not buy in NYC because you think prices are going to fall further, yet you bought in Miamai where prices have plummeted more than anywhere else on the east coast. How much have you lost on your Miami condo?

Sold NY early. Bought Miami too early.

It's all about timing.

The bubble burst earliest, fastest and hardest in Miami, Phoenix and Vegas. It made sense to buy there in 2008 (even if prices have floated down some more since then). NY's price adjustment was (and continues to be) deferred by govt. bailouts, etc., so it still doesn't make sense to buy.

"It made sense to buy there in 2008 (even if prices have floated down some more since then)."

Huh??????

"Including distressed sales, states with the highest appreciation in home prices included New York, which was up 3.5 percent in March. Florida is named as one of the hardest hit states with a 10.6 percent price depreciation, according to the data. In Miami, Miami Beach-Kendall home prices declined by 12.79 percent from March 2010."

http://therealdeal.com/newyork/articles/distressed-sales-account-for-large-portion-of-home-price-drop

I don't see how trading in a NYC condo for a Miami condo is not financially disasterous decision.

w67: Before I was a part-time tranny borker, I priced whole-loan pools and repackaged them for the GSEs and for private-label MBS. Not that it makes me an expert, but I've seen investors buy stuff that would make even YOU blush. And that was way back in the 90s, when alt-A was considered the shady side of the business.

Miami now has a higher unemployment rate than Detroit. That will only drive down prices even further.

Ocean front property in Miami is going up. Even though I bought a distressed property, it was, at one point, down 15% (due to a distressed comp in the building). But that has changed. Just as Manhattan RE has been held up thru the strength of the Euro buyers, Miami is being bought by Brazillionaires and others from South America and Europe ---and lots of Russians and Canadians.

Sale prices in my building have been going up and selling quickly. I believe I am at about par now and expect it will be a good investment if I ever sell which is unlikely. In the meantime I can rent it out for the season and cover my monthly costs for the year. I just never want to do that. I love going there.

It is all about location in Florida -- you know like Queens was more distressed than Manhattan.

Socialist: Can we refrain from hijacking this very good thread . As much as you want to cast aspersions on my investments, I am quite content. But you are right, RE in Florida will continue to go down. Let's get back to the important subject of govt loan minimums.

Good to have you back, w67th.

It's a w67th-palooza. Excellent.

Where did all of the foreclosures go then? Did they magically disappear? Even if they are not in your immediate area, they still have an impact. I don't beleive prices in Miamai are going up. The number of foriegn buyers, whether in Manhattan or Miami, is over-estimated.

Socialist, apparently apt23 can criticize buyers (remember she equated buying with promoting smoking) but you can't criticize her purchases.

How do foreign buyers get counted anyway? Does anyone with a foreign sounding name get classified as a foreign buyer?

I have been away from the site for a while. Can anyone explain why Socialist is so consumed by a non-story? Am I speaking with a version of the troll I do not know about? Am I just a troll magnet?

it's just alpie. since he lost his overpriced NJ home in foreclosure he's been living in his PT Cruiser. it's making him testy.

Shouldn't a socialist live in public housing?

Thanks AR. That would explain it.

apt23: "Socialist: What is it that you don't see. Do you understand why the entire RE industry is so alarmed and are furiously lobbying congressmen who refuse to listen? If you own a house worth $700K in NJ --- on Oct 1 it will be worth $625K. Say you bought that house last year and put down 10%. You have lost that 70K. Plus your house will only be worth $625K for the foreseeable future. When rates go up, your house will be worth even less. If the mortgage deduction is voted away in the next couple of years to help pay off the ridiculous US govt debt, your house value goes down more."

show some b*alls and BRING IT ON! till lending standards don't come back to where they were before the bubble and rates don't come back up to normal levels we are not buying anyway. why delaying the inevitable?

> NY's price adjustment was (and continues to be) deferred by govt. bailouts, etc., so it still doesn't make sense to buy.

exactly, from 2012/3 timing was pushed to at least 2014/5. and i'm taking for granted that more $ is going to be wasted on keeping prices inflated, delaying it further. the gov is basically asking potential 1st time home buyers to be permanent renters if they don't want to be the bag-holders.

Interesting point, notadmin. You gotta wonder how much current policies are working against the govt-stated goal of homeownership. Unintended consequences & all.

> Interesting point, notadmin. You gotta wonder how much current policies are working against the govt-stated goal of homeownership. Unintended consequences & all.

as the % of renters goes close to 40%, the gov might end up switching to a policy of providing cheaper & more stable rentals instead of being landlord-friendly (a tiny population of voters).

I believe what the government have been intending to do so far was not to re inflate the bubble but spreading the damage. The continuous drop in House pricing is inevitable but if it happened or deflated at once, our worldwide economy would simply meltdown. Mortgage rates will rise, no question about it but i believe they will do so only after banks have cleared most of its foreclosure portfolio so they can handle on the second wave of default that will happen when mortgage rates will slowly rise and deflate housing prices another round.

Gov't policy right now is in support of the bank balance sheet. The hope is that monetary policy increases asset prices(aka REO loans held by banks). A second target is the stock market in the hopes consumers feel wealthier and start spending more). The gov't is not trying to help people buy homes right now.

I agree with your assessment of the govt's intentions, sledge. I was talking about the longer-standing goals (decades old) of promoting homeownership.

I can't really disagree with the govt's policy of spreading the damage over time. Clearly, it gives the best shot at keeping the losses in the hands of those where it belongs: homeowners who purchased at stupid prices. The losses will be paid slowly over time, with those doing the paying never really figuring it out.

I also find the socioeconomic distribution effects fascinating. The lower-income folks who did 110% option ARM at 1% teaser rates, followed by strategic default and 1-3 years of living rent-free while the wheels of foreclosure slowly grinded, made out pretty well. Arguably, they made out with 10% on the equity withdrawal, 5-10% on a few years of under-market interest, and 5-10% on free rent. Let's call that a 25% return for zero money down. If you are making $40K, purchased a $400K home with nothing other than your credit at risk, then exchanging your credit score for $100K is arguably a decent outcome. So seller made out well, buyer made out well, but bank and taxpayer made out poorly. The bank has the loss, and the taxpayer has a loss or is left holding risk for little reward.

Higher-income folks, on the other hand, will likely keep the bulk of their losses as prices are holding the line enough to not be worth a strategic default. First-time buyers will be holding the bag, sure, but I have limited sympathy for relatively well-off people making poor financial choices. They'll be $250K-income folks living in $150K-income homes, so what?

W81, so did you create the black box pricing models which comPletely missed the bubble? Or r you bragging about being a data entry guy in front of an excel sheet?

Btw, the people that I know that went to mbs when I went into I banking either pissed away all their bonuses and live in Texas or banked it and we all meet up in maui for the summer.

So you brokering to $$$$ or for open houses? FLMAOzzzzz

Inonada, it still Fking suks no matter what the policy. My wife just hired a doctor who defaulted on a mortgage in detroit 5 yrs ago. No ding to credit. My LL just strategically defaulted. He met me in a 2008 mb s550 to hand me my security chk. FLMAOzzzzz. Fk why even have a credit score? Why even have a bankruptcy court? Fk why even have mortgage recordings? We should all be borkers and well play another round of musical chairs. In 10 yrs some of us will be rich and some will be poor based on which chair we snag! I should teach my kids to sit down quicker. It'll be on the SAT, MCAT and LSAT.

Like it or not, as long as the masses refuse to acknowledge the greed of the masses as a key component, all you are left with is musical chairs with intelligent investing playing a small role.

> In 10 yrs some of us will be rich and some will be poor based on which chair we snag!

Is this the way it works in the ape jungle?