“On The Cusp Of Foreclosure” In California
The Associated Press reports on California. “A divorce led Daniel Peart to refinance his four-bedroom home with a subprime loan. Like many borrowers with spotty credit, the self-employed handyman said he agreed to a relatively high interest rate in exchange for two years of low, fixed payments.”
“In less than a year, however, the payments jumped beyond his budget, forcing him to seek bankruptcy protection while trying to sell the home he bought 19 years ago, he said.”
“‘I put the majority of the blame on the broker, for not being upfront, telling me what the charges were all going to be, and rapid-signing all the paperwork,’ said Peart, whose home is located in the San Diego suburb of Poway.”
“Antonio and Celina Lopez recently began the bankruptcy process. They fell behind on payments just eight months after buying a home in Escondido in San Diego County.”
“Daisy Ramirez and Jose Mendoza, both 21, said they asked an agent to find their extended family a home but stressed that they couldn’t afford a payment of more than $3,200 a month. The agent found them a three-bedroom house for $570,000. After signing a blank loan application, the couple was approved for a piggyback mortgage, two loans requiring monthly payments of $3,200 and $1,200, Ramirez said.”
“She said they told the agent that was too expensive but closed escrow in January 2006 after being advised they could refinance in a year with enough equity to slash their monthly payment and even take a vacation. The house is now in foreclosure.”
“We were told the opposite of what was going to happen,” Ramirez said.”
The Ventura County Star. “A consumer group urged a state Senate panel investigating problems with subprime mortgages Monday to adopt regulations that will force lenders ‘to return back to the days of fundamental, sound lending practices.’”
“Sen. Bob Margett asked industry representatives what could be done to prevent borrowers from losing their homes. ‘How do we unfry the egg?’ he asked. ‘I think we’ve got to start looking at helping these guys who, starry-eyed, bought their homes.’”
“Sen. Dave Cox cautioned that lawmakers should not go too far in trying to protect consumers who made bad decisions. ‘I hope we don’t move in the direction of calling people who default on their loans ‘victims.’”
“Sen. Mike Machado, chairman of the Senate Banking, Finance and Insurance Committee, is developing a bill that would apply recent federal lending guidelines to state-regulated lenders. He also wants state agencies to more aggressively restrict practices such as low introductory interest rates and variable monthly payment options.”
“‘You’ve seen the market kind of diverge to escape the (federal) guidelines,’ Machado said after Monday’s hearing. ‘There’s probably a role for the state to come in and apply those. And there’s a question, I think, of whether the federal guidelines are in themselves sufficient, or should we go beyond them?’”
“Sen. Dave Cox said potential home buyers also need to take responsibility for their own actions and not assume a mortgage they may not be able to afford. ‘Subprime has given people the opportunity to buy a home,’ he said. ‘There are sometimes, you ask yourself, can we save people from themselves?’”
Inside Bay Area. “Foreclosure filings jumped 79 percent last month in California, with some of the highest rates in local counties, according to RealtyTrac. Solano, San Joaquin and Contra Costa counties were among 10 California counties with the highest levels of foreclosure activity in February.”
“While San Joaquin County is indeed seeing more foreclosures, the real spike has been in short sales, said Dave Konesky, a Realtor in Tracy. Konesky estimated the number of short sales last month were 10 times the number in February 2006.”
“‘That’s what I see happening, way more short sales than foreclosures,’ he said. ‘A lot of owners out there say, ‘Bring us an offer, I’m just on the cusp of foreclosure.’”
“In Alameda County, 591 homes were in foreclosure in February, up from 254 a year ago. San Mateo County had 118 homes in foreclosure, compared with 77 a year ago.”
The Press Enterprise. “With property values no longer rising to bail homeowners out of trouble, last month in Riverside County foreclosure activity was more than double what it was a year earlier.”
“Also, the number of foreclosure-related filings in San Bernardino County last month was almost triple that of February 2006, according to Realty Trac. Riverside County had 2,169 foreclosure-related filings in February, while San Bernardino County had 1,673 filings.”
“John Marcell, immediate past president of the California Association of Mortgage Brokers, said 2007 will be a ’shakeout year’ for failing mortgages. He said he expects lenders will repossess properties in default or to allow distressed borrowers to sell their homes for less than they owe rather than fall into foreclosure. In combination, he said, this will depress surrounding home prices.”
The Union Tribune. “RealtyTrac said yesterday that there were 1,065 default notices, auction sale notices and bank repossessions in San Diego County in February. That number was up 20.9 percent from February 2006.”
“The county figures, which are not seasonally adjusted, generally paralleled trends reported earlier by San Diego-based DataQuick Information Systems, which placed San Diego’s default notice count at 1,268 for both January and February and 480 for February last year.”
The Bakersfield Californian. “While some local real estate professionals voice skepticism at predictions of tough times for the Bakersfield market, many see a reckoning ahead. ‘I think our market is in for a correction,’ said local appraiser Gary Crabtree. ‘It was just a matter of time. We went up so rapidly in such a short period of time that the salaries of homebuyers could not keep up.’”
“Kern County had 634 properties enter some stage of foreclosure in February, up from 185 in February 2006, according to RealtyTrac. Crabtree said that recently about one of every three notices of default have led to foreclosure, up from a historical average of 10 to 15 percent.”
“‘It is a sign of weakening of the market,’ Crabtree said, blaming questionable subprime lending practices for the increase. ‘Foreclosures will increase and supply will increase, which will place downward pressure on prices,’ he said.”
The County Sun. “John Short was looking - but definitely not buying - on Monday at Shea Homes’ 24-Seven at Victoria Gardens development. ‘But…homes are about $50,000 to $60,000 too high,’ he said. ‘A place like this should be more affordable in about six months to a year.’”
“With new-home sales continuing to drop, William Carney says he’s hearing the same thing from people in the building industry. ‘Basically, it’s too costly,’ said Carney, CEO of the Riverside-based Inland Empire Economic Partnership.”
“‘The market went upscale,’ said Redlands-based economist John Husing. ‘I’m thinking in the next year (to) year and a half, you’ll see prices slowly drift downward.’”
The Sun Star. “Home prices continued to slide downward in February, markedly in Merced County, with the median sales price dropping for the eighth consecutive month, according to new data from the California Association of Realtors.”
“Merced County’s median home price was $320,000 in February, a 14.7 percent decline from the February 2006 median figure of $375,000, according to the California Association of Realtors figures.”
“The continued price plunge means Merced’s real estate market is returning to reality after a period of overinflated activity, said Merced County Association of Realtors President Scott Oliver.”
“‘Everyone thinks the sky is falling, but that’s not the case,’ Oliver said. ‘It’s finally coming down to a regular market.’”
“With builders offering discounts and other incentives to clear inventory sitting in new subdivisions, homeowners looking to sell existing houses are now lowering asking prices to stay competitive, Oliver said.”
“‘We’ve seen a drastic decline in how sellers are structuring their prices now,’ Oliver said. ‘They’re not looking for the big numbers anymore, they’re just happy if they make a profit.’”
March 27, 2007. 3 comments. Topic:
Collapse of the “Subprime” Mortgage Market in California
Increased foreclosures will have major impacts on the state, individuals, and businesses
http://www.californiaprogressreport.com/2007/03/collapse_of_the.html
Thats a good read!
CRL wants a loan restructering for those who have EQUITY. LOL!
No mention of the responsibility of individuals to borrow responsibly, none.
The author suggests “We” have to help these borrowers……I suggest those who believe “WE” have to help these people get together and pool THEIR resources, pick out those THEY deem worthy of help and then share with us the specific examples of people worthy of help and allow us to contribute VOLUNTARILY to those families who may have been duped.
I don’t think everyone stuck with a subprime loan is worthy of help just because they fall into this, particular, category. In fact, its probably very reasonable to find far more worthy recipients of financial aid who have nothing to do with subprime borrowing, no? What is sacred about borrowers who get in trouble? What about renters who lose their jobs, get sick or have a spouse abandon them?
Individuals mismanaged their lives in this one regard. Why should we treat them any differently than other individuals who crash and burn for drug, alcohol, gambling or other equally destructive choices?
Want to help people in distress? Fine. But their choice of mortgages and financial risks shouldn’t make them distinctively “needy” should it?
“Daisy Ramirez and Jose Mendoza, both 21, said they asked an agent to find their extended family a home but stressed that they couldn’t afford a payment of more than $3,200 a month. The agent found them a three-bedroom house for $570,000. After signing a blank loan application, the couple was approved for a piggyback mortgage, two loans requiring monthly payments of $3,200 and $1,200, Ramirez said.”
“She said they told the agent that was too expensive but closed escrow in January 2006 after being advised they could refinance in a year with enough equity to slash their monthly payment and even take a vacation. The house is now in foreclosure.”
“We were told the opposite of what was going to happen,” Ramirez said.”
There is so much STUPID in this story…I don’t even know where to start….
I got a new post up that deals with an FB story from 14 months ago that was on the blog. Find out the persons situation and what happened…
SoCalMtgGuy
http://www.housingbubblecasualty.com
I didn’t know issuing a 1099 was optional ? Is this so the bank can hide losses ?
Under the Discharge of Indebtness rules there are a few exceptions where you do not have to report income to the extent that all or a portion of the debt was discharged. Unfortunately, one of those exceptions applies to insolvent taxpayers. It was implemented with the rationale that the IRS shouldn’t kick someone while they are down. So if the person is in bankruptcy proceedings the IRS will waive the 1099 filing requiring the taxpayer to claim the debt waived as income.
This is sickening. All the blame for the subprime mess is on the lenders. Unless you’re a complete retard, you know better than to sign something without reading it first.
Sure, the lenders were probably using high-pressure sales tactics. But the bottom line is this: the buyers had to sign papers. Read before you sign, or don’t complain now.
This “Center for Responsible Lending” (CRL) should be called the “Center for Responsible BORROWING”!!! They are using the race card to try to get the government to step in. If I were a “person of color”, I’d be offended that the CRL is implying that Latinos and Blacks are too stupid to know better and should be bailed out.
TYPO: 2nd sentence should have a question mark: “All the blame for the subprime mess is on the lenders?”
Didn’t congress just visit the issue of irresponsible borrowers in the form of CC debt last year?! And didn’t they side with the credit card companies? And didn’t they make it crystal clear that despite predatory lending, borrowers are to blame for their own debt? I dont like the new BK rule.. but I like it even less that mortgage debt is being treated so differently than CC debt.
I can see now that I totally blew it by not buying a home, running up HUGE credit card debt, taking out a HELOC to pay it off and then waiting for the magic mortgage fairy to bail me out. Sadly,I think the only people who didn’t do this are the posters on this blog.
The irony of the BK legislation “fixing” irresponsible borrowing juxstaposed with mtg. lenders irresponsibility is amazing. It’s the problem of the borrower no matter what? Come on! The lenders’ fate should be to roast on the spit. The out and out fraud I’ve seen from the brokers and lenders is sooooo commonplace now that no king’s army can put humpty Dumpty back together again. Pain must fall on a whole lot of people. Next time you see your real estate agent/broker/lender he’s gonna ask you if you want to super size the meal. They deserve it. . .
II wonder if those people that put their money in pension plans deserve to lose money if the basic loan package was fraudulent .I contend that the loan packages in 2006 were so bad as far as fraud goes that it’s scary .
If anybody is pissed about money drying up than blame it on the loan fraud . Money is also going to get tighter and tighter as lenders will be concerned about additional drops in prices in the future in this declining market .
If you were a person of color you’d be paying a higher interest rate.
I know a white dumba$$ paying 15.9%
I’d love to be a “person of color” who, with good credit, gets offered only a crappy, subprime, loan. Imagine the law suit you’d win? Gee, I wonder why that hasn’t happened?
And I wonder, with so much business done over the phone and electronically, how a racist loan officer identifies, specifically, people of color they want to screw? Sure, there may be “signs” that might tip one off but how reliable, really, is that method? The last mortgage I made, I didn’t meet anyone in person untill the closing. How DO they tell?
And it must be hard to find a near totally racist institution to work for. After all, not everyone is racist and the signs of someone aggressively targeting and slanting their worst business against minorities couldn’t be that easy to hide. Doesn’t any non-racist ever turn these people in?
The odd thing is, in Boston, blacks making over $100k, mostly took subprime loans. Its hard to believe anyone making that kind of money is a poor risk, much less relatively incapable of researching the alternatives as well as being aware of the (apparent) historic racism in mortgage lending. If anything, around here, one would imagine a qualified black getting great treatment from a traditional banker if only to enhance their statistics appeasing the local (vastly liberal and NOT racist) political powers.
Maybe there’s more to this process than just race, no?
The CRL is not implying anything. You should see some of their mystery shopper results where they send 3-4 people who have equal credit (but are different races) to a mortgage banking company for a loan. The black and brown races almost always came out with the disadvantage.
There seems to be a serious misprint in the article. It says that the subprime meltdown will have an effect on “individuals”. I believe it meant to say “borrowers”. Because if anyone thinks non-fb’s are going to “share the burden” the state has another thing coming.
All we need is Arnold to come in here and yell:
“Get Down! Dere’s a bomb in dere! Take my hand!”
“Sen. Dave Cox cautioned that lawmakers should not go too far in trying to protect consumers who made bad decisions. ‘I hope we don’t move in the direction of calling people who default on their loans ‘victims.’”
Great to hear that at least one California lawmaker has more than an ounce of common sense.
How did Senator Cox manage to get elected in California? His comments are a breath of fresh air, after days of hearing the leading Democratic presidential candidates pandering for subprime bailouts on the national stage.
“Sen. Dave Cox said potential home buyers also need to take responsibility for their own actions and not assume a mortgage they may not be able to afford. ‘Subprime has given people the opportunity to buy a home,’ he said. ‘There are sometimes, you ask yourself, can we save people from themselves?’”
That is fine, no bailouts. But let us put some executives and brokers in jail if there was outright fraud.
There are doubtless many who should see some jailtime before all this settles. Borrowers who lied on applications, and brokers who lied to borrowers or outright falsified loan documents.
And there are many in jail that should never be there.
The number one growth industry in the US - Prisons.
look up prison industries on google. You are correct in that our government makes billions on prison labor. Why do you think the huge pressure for ever greater sentences? We are at the empire stage which asks a question…. What happens when the “people” become the enemy of the government. And yes, there are untold vast quantities of innocent people locked away in US prisons - far more than in Iran, Iraq and North Korea combined. But in the case of those who really are guilty, not a bad place all things considered.
I remember when it was a big deal to drive past Soledad, because that was the location of a prison. Nowadays there are prisons in small towns up and down the state. Apparently we have a penal system in California that is larger than most other countries’.
My own personal Rosetta Stone moment came, driving down the 99, coming back from Burning Man, a few years ago, when we came upon Chowchilla, a featureless Central California town, like most of them.
The city burghers looked to have spent around $100k on a flashy sign that proclaimed…
“Chowchilla, A Unique Way Of Life!”
Just a few hundred feet down the ‘99, was a much smaller sign and that one said:
“California Correctional Facility For Woman”
Irony happens when you least expect it.
Anyone who commits a voilent crime should be imprisoned for a long time or moved next door to those who oppose long prison sentences.
This is obviously off topic, but I am always amazed how fraud is not really thought of as a crime, even though in many cases the victims are devastated.
The majority of persons in prison are in for non violent crime, such as drugs, failure to pay child support, unpaid fines etc. Some 25% of prison inmates are also reported to be mentally ill.
It would be great if we could really sort out the vicious bangers and villans, but our criminal justice system does not seem adept at this, and many innocent victims are swept up in the mess that we call justice. I remember a juror justifying locking up some poor kid who was later determined to be innocent by dna evidence. Her response was great. “well some one had to pay”
But if you put everyone who committed fraud or lied on an application in jail, there wouldn’t be enough people left to buy all the foreclosed houses from the bust…
How about for fraud - no statute of limitations and no bankruptcy like school loans. The money collected could go to restitution. That would acutally be more just as it would force those who thought they could gamble away someone elses money and then skate.
i agree. if there was fraud on the lenders part or the borrower’s part, put both in jail
Look. As long as house prices continued to go up, people getting in over there head was no problem. That was the justification for paying ANYTHING for ANY piece of house junk.
Now that prices are flat and falling, it’s all going down the toilet. At the time, there was no malice. Just too much optimism.
Now, where is a McMansion I can buy for pennies on the dollar and where I can evict the squatters (former owners). I feel lucky today!
Can we clone him?
Yes ! Every 2 to 4 years there comes a chance.
Too bad many of them have negative common sense that will overwhelm much of what is currently considered “common sense”.
Most lawmakers’ common sense can be measured in atomic weights. Welcome to the Republic of California, leave your responsibility at the door. All ne’er-do-wells welcome.
Chuck Ponzi
http://www.socalbubble.com
Republican of course!
Cox also referred to buyers as “starry eyed”. What, were these 15 year-old girls buying a house from Elvis?
I feel sorry for these stupid buyers getting conned into buying overpriced houses, but they will never learn a lesson if they don’t feel pain.
They’re going to have to eat a big crap sandwich, and they better like it, because I don’t see much sympathy for their plight on this blogsite.
Why do you feel sorry for these people ? These were the people at the parties bragging about how much money they were going to make, because housing only goes up ! I just had this same conversation with my FIL this last weekend ! Its incredible that people that understand NOTHING about money and finance jump into these things with both feet and then claim to be victims when it doesn’t work out !
Let them burn !
I know, I know. When I saw the movie “Saving Private Ryan” I was the only person who felt sorry for the Germans who were cooked by the flamethrower.
“Don’t shoot ‘em! Let ‘em Burn!”.
Hey, that’s my line! Actually, that’s exactly where I got my blogname. That scene from Saving Private Ryan. I grew up in SoCal, moved away for three years and returned in Sept 04′ to finf out I was priced out of the Antelope Valley (Lancaster/Palmdale). What a mistake that was, the place is now Compton North. I fixed that situation a took a job in the Southeast. Boy, was that a good move. I did however find out the hard way just how bad California public schools were when my daughter really had to struggle to get caught up. The school said I wasn’t the first transplants form Calif to find out their old school sucked! These people need to pay for bad choices. Buy was an investment and if you buy a POS stucco crap box in Lancaster for $400,000, you deserve what is coming. LET’EM BURN!!
Priced out of Antelope Valley!? Now thems the blues…
I hear ya brutha! Most of this was plain old greed coupled with stupidity. Their bragging party is about to turn into a cornhole extravaganza.
I’m sorry, that was Bob Margett who called stupid buyers “starry-eyed”.
That’s good. I used to find Bob Margett a little boring when I did some volunteer work for the Arcadia Republicans. But I applaud him for the remark you report.
Someone has to pay their bill–it should be them, their lender, and their realtor. Not the rest of us.
And everyone who has a pension fund or money market investing in MBS? Perhaps.
My wife was quick to pick up (with no prompting from moi) on the disconnect between the SD Union Tribune story’s byline (based on a 1-month change) compared to the 20.9 percent YOY increase in default notices, auction sale notices and bank repossessions reported in the article.
———————————————————————————-
Foreclosure filings drop in county, but increase is seen in rest of state
By Roger Showley
UNION-TRIBUNE STAFF WRITER
…
RealtyTrac said yesterday that there were 1,065 default notices, auction sale notices and bank repossessions in San Diego County in February. That number was up 20.9 percent from February 2006.
What I don’t get is, if a March 13 entry in the Bubble Markets Inventory Tracking blog shows 2468 foreclosures in SD county, how does RealtyTrac get away with saying there are only 1065? (Actually I guess BMIT blog showed “only” 1879 foreclosures for 2/27/07.)
The worst thing is that there is no way this can be the correct numbers.
Foreclosures in San Diego have gone through the roof. I have tracked them on foreclosure.com since 7/3/06.
7/3/06 was 415, they have gone up exponentially since then, they are now at 2856.
http://www.foreclosure.com/search.html?st=CA&cno=073&z=&tab=f
Number of trustee deeds were 73 in Feb. ‘06 they were 408 in Feb. ‘07 (down from 457 in Jan. ‘07).
http://www.sddt.com/Finance/EconomicIndicators.cfm
Well February is a short month with a holiday. Beware the Ides of March, lenders and overleveraged homedebtors.
‘A lot of owners out there say, ‘Bring us an offer, I’m just on the cusp of foreclosure.’
Ummm, think I’ll wait till the price is 50% less than what you and your bank think it is now. Then I will low-ball it!
You see, I am not a desperate buyer. You on the other hand….
Blah Ha ha Ha Ha!
Needed an evil laugh for that!
I starting to see listing with 3rd party approval. I am just wondering how low can I go on a offer. Where the seller is trying to sell their house for $540K.
BTW I would only offer them $200k for it.
Mr Vincent,
“You see, I am not a desperate buyer. You on the other hand….”
Who was it that said: …wait until you see…the whites of their eyes!
Never has it paid so much
For so few
to wait
for so many.
Got popcorn?
Neil
Nice.
Let the desparate seller throw in his desparate housewife and maybe we’ll talk
F*ck that’s awesome! can’t type, can’t breathe…on the floor!
Amor for amortization. Seems a fair trade.
NIcely put. Any buyer who buys now is most likely bailing out some greedy flipper.
I have much admiration for immigrants, being the son of one…
But let’s look at your standard hard working Hispanic Immigrant… (hate to shock some of you, throwing “work ethic” in there)
He or she is just as upside down in their mortgage, as the next guy that doesn’t speak Spanish.
Everybody is in the same leaky boat.
We don’t have the option of hightailin’ it back to Michoacan, or Durango or from wherever it is, from whence they came.
They do.
They don’t have much skin in the game, we do.
We “can’t” go back to our country.
Once we start blaming the immigrants for all of our problems, that’ll turn up the heat, even more.
Hispanics that have done well in this country (there are many, you just concentrated on the bad apples) will be just as desirious to leave, as well.
Nobody wants to feel like they don’t belong.
Time to get along with one another.
When I was a kid, my dad was always yelling at us to work and save and not to trust those who seemed too eager to part you from your money. Good advice. Having been through the Depression, he’d seen some hard times.
He liked to talk about the Irish immigrant families that went “shirtsleeves to shirtsleeves in three generations”. He’d be shocked, I tell you, shocked to see many of the current crop of immigrants, legal and illegal, going shirtsleeves to shirtsleeves in ONE generation.
There’s the modern Arab parable as well…
My grandfather rode a camel.
My father rode a Cadillac.
I flew a Lear Jet.
My son became a wastrel.
Then the oil ran out.
Bring back the camel.
And so it goes.
A great book that opened my eyes…
http://www.rollingstone.com/news/story/7203633/the_long_emergency
A bite sized excerpt for you.
Jim hits on many important cylinders (ha)
Which is similar to what Napoleon said: (Apologies for the paraphrase)
“I must study war, so that my son may study business, so that his son may study poetry.”
The problem of course, comes when your country’s got nothing but a bunch of poets and competing nations have all the businessmen.
“In less than a year, however, the payments jumped beyond his budget, forcing him to seek bankruptcy protection while trying to sell the home he bought 19 years ago, he said.”
See what happens when a “handyman” upgrades his career by opening a “scrap-booking business”
What happened to the equity of 19 years in San Die-go dude? ;-O
It all went into home “upgrades”: new glass in every room (60″ plasmas), new steel appliances (his & hers Hummers), new landscaping (implants for ex-wife) and new roof (hair transplant for Dan).
LOL!
~Misstrial
This reminds me of a pathetic story I just heard. The brother and SIL of a coworker had a house in Minnesota and both had good jobs, but then they started divorcing, and it was vicious. So they both started spending the equity (HELOC) just to piss the other one off. One bought a huge new car and the other bought tons of furniture, just out of spite (and the expectation that they would have to split the equity). Pa-friggin-thetic.
See, I would have tapped into the HELOC and converted the “equity” into 1 oz gold coins or $20 bills….
People are so stupid. You don’t have to be a genius to know the difference between what you can and can’t afford. All they had to do was walk away when they saw the numbers. I don’t feel sorry for people who bit off more than they could chew. And don’t ask me to foot the bill for their poor decisions…………..I know what I can’t afford and I want a home as badly as these poor schmoes.
It became very confusing for San Diegans between 1998 and 2005. Many homeowners thought that they had suddenly become financial geniuses, and that the doubling of prices every seven years would go on forever.
I swear many were convinced that the end was near and if they did not in fact buy now they certainly would have been priced out forever. I can’t tell you how many people I know that truly believed that, while I would just shake my head and say “yeah righhhht”
I second what you just said. All those FB’s in 2005-2006 will have own scalp handed to them. Life & persuit of hapiness will make a sucking sound.
They had already been priced out, and should have stayed out. We got the pitches from family and friends and ignored it, because we knew what we could afford and that was that.
Reminds me of playing poker. Don’t push those chips unless your willing to wave goodbye to them…
There was a lot of bait and switch going on too. We read right here that many times people were told they had a fixed rate loan, only to be screwed the day the loan closes. It is easy to say just walk away, but people had given notice to their landlord, paid deposits for the moving van, disconnected the phones, etc. It isn’t easy walking away under these circumstances.
And that was exactly what the mortgage brokers were banking on.
You are “told” you have a fixed rate loan? You don’t have anything in writing prior to the closing?
Are you suggesting that a lot of these borrowers didn’t bother to get any documentation to support a case of FRAUD against a lender when hundreds of thousands of dollars were involved?
I’m sorry. When society accepts such infantile behavior from individuals when such substantial sums are involved we’re doomed. When I was 30, buying my second home, I threatened to walk over a $10,000 title search issue. If you can’t be bothered to understand your rights in a major financial transaction in today’s world (with tons of free, easily, accessable, information) then why should anyone else be “bothered” when your transaction doesn’t work out?
I’ll be damned if I’ll insure (via taxation) people for abject, reckless, behavior.
In my second closing the title company threw in a $250 doc fee that had not been in the earlier docs reviewed by my attorney, who was present at the closing (why don’t people do this more)? He said to me, “let’s go” and started packing up. The realtors almost wet themselves and offered to pay it out of their commissions. My lawyer said “No. We will only sign the documents that you provided us for review”. They scrambled and revered to the old docs and we signed.
I was impressed and learned a very important lesson. NEVER sign something you (or your representative) haven’t reviewed and understood. Period.
Signing the loan docs for our first place back in 2000, almost on the last page, I noticed that they had added points onto what was, up until that point, a no point loan - about 2.2K….
Yup - I got up to walk out, they scrambled around, profusely apologising for their ‘mistake’ and had it fixed and we signed.
I too, learned a valuable lesson.
We have read stories of buyers having to walk out because for the second or third time a ARM was presented to them, despite their instance they wanted a fixed or nothing.
The “Good faith estimate” ALWAYS is different at the closing of a subprime loan. Even the lawyers fees were jacked up for a kickback to the mortgage co.
This way you can make a little extra than the max amount on the loan.
A question. I have never taken out a morgage, so I don’t know. How do you make sure that the terms in the document you sign are the one you agreed to? It looks as if these brokers have been behaving like hungry wolves.
Cass, At the closing there are a lot of documents. one of the documents is called “NOTE” - this document spells out the terms of payback, interest rate, etc - all the terms and conditions - there may be an additional document called “NOTE RIDER” this document would detail additional items such as prepay penalties, changes to loan terms etc.
Hoz, thanks for your response. If I ever get to buy a house, I will make sure to read the NOTE and the NOTE RIDER. If I find something fishy, I’ll stop the proceedings and say I have to consult with my advisors on this blog.
Um… you read it, before you sign it.
I know, it seemed like a very novel approach, to the other people in the room, when I actually did so at closings for the last few properties I’ve bought.
Above all else take a day or two ( prefer the whole weekend) to read and research the contract before signing. Dont fall into need to sign today from realtor or broker.
“…There was a lot of bait and switch going on too…
“It is easy to say just walk away, but people had given notice to their landlord, paid deposits for the moving van, disconnected the phones, etc. It isn’t easy walking away under these circumstances.”
I get so sick of reading this crap… Crap like this is why a bailout is even being entertained. For chrissake if the deal isn’t what you thought grow some nads and kick it back. Why in the world would you sign up for something that you knew you were dead on.
Now mind you I know there are some crooked guys in the industry have seen plenty of perp walks long before this bubble.
But this:
“Daisy Ramirez and Jose Mendoza, both 21, said they asked an agent to find their extended family a home but stressed that they couldn’t afford a payment of more than $3,200 a month. The agent found them a three-bedroom house for $570,000. After signing a blank loan application, the couple was approved for a piggyback mortgage, two loans requiring monthly payments of $3,200 and $1,200, Ramirez said.”
These a$$hats deserve all the a$$ pounding they got coming. Signing a blank loan app, know your max is $3,200 but you sign for $4,400.
Where did you think the money was going to come from?? Geez.
Newsflash that wasn’t only the broker playing fast and loose their folks. Gimme a break.
“Why in the world would you sign up for something that you knew you were dead on”.
Greed–all they have is dollar signs in their eyes. would they have bought if they new for sure that the price would not go up or (god forbid) might go down. no, they wouldn’t have bought.
I’m not saying everyone falls into this category, but there are many that do. Your argument takes a couple examples and tars everyone with it.
Instead of blaming every buyer out there for being stupid, and deserving to get crushed, think about this a little more.
What about elderly people? They would be very challenged to read all the fine print. And even real estate experts have chimed in saying you cannot understand the contracts.
Instead of being a simpleton, spend a little more time researching AND thinking about the topic. You may just find that many people were totally ripped off.
That’s fair, right?
LOL
“Instead of blaming every buyer out there for being stupid, and deserving to get crushed, think about this a little more.”
Where in incomestream’s post did he say that?
“instead of being a simpleton, spend a little more time researching AND thinking about the topic.”
I’ve read many of incomestream’s posts and have read your as well and IMHO…..
If he qualifies as a simpleton , then you Joe Momma, qualify as an ignoramus.
Joe Momma,
If a buyer cannot understand the contract, then the buyer should not SIGN the contract. If someone put a contract in front of you that was written in Chinese (let’s assume you can’t read Chinese), would you sign it???
Yes, there are scummy people out there who try to take advantage of people who don’t read the contracts that they sign. But that’s been going on for hundreds of years. That’s why there is NO excuse for signing a contract that you don’t understand.
“That’s fair, right?
“LOL ”
Dude you’re spewing the logic of someone 3 months back with a mattress on the roof and the car idling in the driveway. Here’s a hint next time someone rings the doorbell answer the door. It might just be a Carlton Sheets flunkie with a fat check for your keys.
Here’s a hint for you I don’t need to research or think about my answer. When I was typing my last response to your drivel. I had some numbnuts on the phone looking for a neg-am “he could squeeze into before it all dried up”.
Don’t be naive like I said there are plenty crooks in the mortgage business. Hell there are crooks in every industry. But when you start talking about blank apps and signing up for $1200 more than your “max” that’s not the broker.
And as far as your comments about the elderly not being able to read the fine print. Well they should have an attorney or a trusted family member read the docs. As far as your real estate expert comment. If a real estate expert can’t understand the contracts chances are he’s no expert and again why would anyone sign anything they did not understand. Could it be they were greedy thought they were beating the system and wanted in at any cost. No that never crossed your mind you’re too busy worrying about your car jumping out of gear in the driveway. Maybe you should go handle that and leave blogging to the big boys.
One law that would be worthwhile would be to have a required coversheet on all real estate documents that says, in 72 point type:
Real estate is a written-contract business. Anything anyone says counts for s**t. What is written here is what is agreed to, nothing more or nothing less. Real estate law is like virginity- oral doesn’t count.
Sure seems like this blog has a lot of people suffering from sour grapes. It is not possible to express an opposing view without being attacked for it.
Sorry, I cannot share your joy of watching others lose everything over a mistake. Sure I want to capitalize on lower real estate prices. Who doesn’t? But I also know many good people and their families are going to be devastated by this. Were many dumb and greedy? Sure. But many more were duped.
So pardon me if I do not share your enthusiasm for their suffering.
Divorce the action from their social class, race, gender, and income bracket. I don’t care who or why they did it but signing a blank loan doc is suicide. These people bought into the lottery and when they didn’t win, they want a refund for their “faulty” ticket. Pwlease….
It is not possible to express an opposing view without being attacked for it.”
Hey… you call people names…. Now you wanna whine about the responses you got?
I know people say read the fine print before signing, but sometimes the paperwork can be mystifying. The brokers then went on aheard to mislead many borrowers. All cheating and lying brokers should be lined up and … hanged.
Final comment - as a paralegal of 20 years - let the buyer beware of what they sign… any *sshat who suggests that millions of people were “duped” are just that… *sshats. Every idiot who signed these things thought they were gonna get some free $$$. That is the bottom line. Any *sshat shoulda been taught by their MOMMA that there is no free money in this world. If it looks like it’s free.. IT AINT! And all the dumb*asses can and should pay the piper for their GREED.
Look. This is the best thing that could happen to these people. What they needed was a short, sharp shock to wake them from their financial stupor.
Hello!!!! McFly!!! Don’t live beyond your means.
“She said they told the agent that was too expensive but closed escrow in January 2006 after being advised they could refinance in a year with enough equity to slash their monthly payment and even take a vacation. The house is now in foreclosure.”
Why walk when you can refinance, extract equity and “take a vacation.”
Another set of stupid greedy bastards.
“The house is now in foreclosure.”
This is what Broker meant by “Vacation”. OK everybody pack your bags….
“and don’t ask me to foot the bill for their poor decisions”
don’t worry, you won’t be asked. You won’t have a choice.
I don’t understand the paperwork of buying a house. I remember back in 1990 there was a “9 part” deal I had to go through. I had to sign 9 different pages. I did not know WTF I was doing. On the good side, it was a first time buyer 30 year fixed loan. It was not adjustable but was 8.25%, which was good back in 1990. I was 31 years old and did not know better. That’s all behind me and I lost $20,000 on that house.
When I buy a place in five years, regardless of whether the prices are 30% cheaper from today or 50%, I will go through a real estate attorney before I sign.
You refi after a year AND get a “vacation”! The bad news is: the sheriff does the packing for you and you never come “home”.
Wow, If I had just read one more post, you already said it!
Yes, but your delivery was better. : )
Tighter subprime lending rules sought
STATE SENATE LOOKS AT DAMAGE OF FORECLOSURES
By Steven Harmon
MediaNews Sacramento Bureau
Article Launched: 03/27/2007 01:55:55 AM PDT
SACRAMENTO - A key Democratic lawmaker said he wants to tighten regulations on mortgage lenders in the wake of a spike in foreclosures on high-risk borrowers who have been saddled with adjustable-rate mortgages and exploding house payments.
…
Stronger response urged
Machado criticized the Department of Corporations’ tepid approach to regulating mortgage brokers, responding incredulously when Commissioner Preston DuFauchard said he sent out letters to brokers asking them to consider stopping so-called stated-income loans (aka liar loans), where there is no verification of a borrower’s employment or income.(*#@%$!!)
“My question is, could he issue a regulation or order to put that in place?” Machado said after the hearing. “I say, yes he can. He has the power. I think he should have been very proactive.”
A web of mortgage brokers, many of whom are real estate agents, write the original loans before selling them to larger financial institutions, said Nancy Wallace, a professor at the University of California-Berkeley Haas School of Business. What’s needed, she said, is more oversight to ensure the original lenders follow truth in lending laws and let borrowers know up front about fees and rising payments they’ll be facing - or whether they should take a loan at all.
“(Lenders) will get ahead of themselves in terms of how contracts are priced, in how they manage risk,” she said. “And there are people who get ahead of themselves by pushing the envelope and exposing themselves or deceiving borrowers. … So, California has an important, if not regulatory, responsibility in oversight of origination practices.”
http://www.mercurynews.com/localnewsheadlines/ci_5529505
“Machado criticized the Department of Corporations’ tepid approach to regulating mortgage brokers, responding incredulously when Commissioner Preston DuFauchard said he sent out letters to brokers asking them to consider stopping so-called stated-income loans (aka liar loans), where there is no verification of a borrower’s employment or income.(*#@%$!!)”
Commissioner Preston DuFauchard ……..bwhahahaha
is there really any point to breaking out the fire extinguisher after the barn has burned to the ground?
There is only one way to stop the low down stated income sub-prime loans and that is for the secondary market to cut them off . Knowing that those loans from that group are bad news fraudulent and the front line loan agents/borrowers/appraisers and realtors will abuse them the loan investors have to accept that fact .Nobody in their right mind would even design a no-down stated income sub-prime loan to begin with . These loans were just betting on real estate going up and not pricing in the true risk .
There has always been low down loans around but the borrower had to have even better credit and the loans were insured in prior lending cycles .
The sub-prime lenders went a long way toward raising the property values to the point of obscene in the last 5 years as the fraud increased each year .I don’t even think alot of these borrowers could qualify for the teaser rate let alone the adjusted up rate .
The way the industry sold these loans was by promising a refinance down the road with instance riches with a cash cow home . Borrowers even signed blank loan applications and that’s a mania . Anybody who signs a blank loan application doesn’t care how it is filled out and is giving permission to the agent to do whatever it takes to get the loan . No bail-outs .
“Anybody who signs a blank loan application doesn’t care how it is filled out and is giving permission to the agent to do whatever it takes to get the loan . No bail-outs . ”
Finally some reality
Yes, if you are being paid to put out the fire.
Glad to see the fringe areas of the Bay Area have some foreclosure issues. When the Goose is cooked good Santa Clara will be front and center of the mess.
I believe subprime is worst in Contra Costa & Alameda. Based on household incomes but I could be wrong.
If you subsribe to RealtyTrac you will find homes valued at $800K-$1M going into FC… what the frig! Its true… Palo Alto, Mt view, Saratoga, etc etc low numbers… but still there.
Too many overleaveraged homeowners.com waiting for Salary increase or IPO that never happened. Most likely it was M&A deal that wiped out the any future salary and IPO payoff. There is lots of M&A and job loss going on.
louie louie did you ever work for a SAN company?
SAN company ?
lol, what the duck is that?
SANitation company?
LOL! Nope I work for a
Mountain View High Tech Company…
FPA
But at times we have done M&A and dump
lots of people … give them a couple coupons
at Chucky Cheese on their last day…
“Glad to see the fringe areas of the Bay Area have some foreclosure issues”
Here are some Fringe areas of LA that also have issues with Defaults/forclosures. Data from foreclosure.com as of March 24, 2007.
SCENTRAL LA ZIPS:
ZIP FCLOSURES NODS
90044 13 137
90011 10 100
90003 16 116
90002 18 98
90037 6 63
COMPTON- 3 ZIPS CODES COMBINED:
90220 - -
90221 - -
90222 36 259
SOUTHGATE
90280- 19 98
LONGBEACH-SLUM AREAS
90805 34 151
90813 12 68
For comparison purposes:
SELECTED WESTSIDE LA ZIPS
AREA ZIP FCLOSURES nod’S
Venice 90291 0 11
WLA 90064 0 11
SMonica 90405 0 16
NOTE:There are differences, even sizable ones, among zip districts so i attempted to evenly match the CCentral and Westside zips at least by geographical area/size match. It is easily seen that the westside LA distrct has virtually no foreclosures(0-1 per zip)and only average 11 NOD’s per zip, at least at this stage of the bubble cycle.
IMOH we are just seeing the beginning/early stages of a massive wave of LA SCentral defaults/foreclosures which will devastate the inner-LA crapburgs like those repeated WWII allied bombing raids into Germany.
The usual suspects
“…LA SCentral defaults/foreclosures which will devastate the inner-LA crapburgs like those repeated WWII allied bombing raids into Germany.”
Gee, and it was so nice to begin with….
“Gee, and it was so nice to begin with….”
Agree! 10,000 foreclosed properties in Scentral would not change these already deteriorated hoods by much.
Mucho oportunities for criminal rackets to set up drug resale operations/illegal immigrant clown houses/gangsta lairs as banks look to dump their hemorraging REO’s in Scentral at firesale prices.
“‘Everyone thinks the sky is falling, but that’s not the case,’ Oliver said. ‘It’s finally coming down to a regular
market.’”
Then he says….
“‘We’ve seen a drastic decline in how sellers are structuring their prices now,’ Oliver said. ‘They’re not looking for the big numbers anymore, they’re just happy if they make a profit.’”
When a Realtor guy uses words like “drastic decline”, I think its time to call it a “sky is falling” scenario.
“they’re just happy if they make a profit” - that’s fine for those who can. Those who must take a loss are very slow to accept it.
What makes them think they deserve a profit ? They invested in a poor quality, over priced asset and they think they should make money ?
I think the real issue here is rather “they’re just happy if they can sell it without having to put money down to cover the shortfall”. I think that is the real story.
Tweedle, in regard to your statement: “I think the real issue here is rather “they’re just happy if they can sell it without having to put money down to cover the shortfall””. No, I think they trully do believe that they are ENTITLED to a profit. Most of these numnuts don’t have a clue about basic economics or risk vs reward fundamentals and actually think it is a riskless sure money venture to buy a house. Most disturbing is that education has no relevance on how clueless most of these folks are. The worst shister realtor I worked with was a female in South Florida who would tout her PhD in Economics as making her highly qualified. She was the biggest idiot and greedy bit@h that I have ever worked with. We parted ways when she tried to shake us down for extra kickback on top of her commission. We were flabbergasted, … her rationale was “I’m from New York, and that’s how they do it there”.
‘We’ve seen a drastic decline in how sellers are structuring their prices now,’
How many fancy-stupid ways can you say sellers are lowering their prices?
“How many fancy-stupid ways can you say sellers are lowering their prices? ”
I was thinking the same thing when I read that. They just cant do it. Its not in their “Up Up With People, The Sky Is Always Blue” lexicon.
I was gonna say, it’s not a freaking collateralized debt obligation. You need to run a Monte Carlo simulation on the offer or something?
“Daisy Ramirez and Jose Mendoza, both 21, said they asked an agent to find their extended family a home but stressed that they couldn’t afford a payment of more than $3,200 a month.
err..so when they say “extended family” they certainly mean mom and dad, grandma and grandpa, brother’s and sister’s aunt’s…..
come on 21 years old and can afford up to $3200!!?! So Meth selling is really that profitable?
When I was 21, I couldn’t have afforded one tenth of that amount. In rent. (Forget about owning, that was out of the question.)
When I was 21 I was paying ONE ONE-HUNDREDTH of that amount in rent. Admittedly in a place w/ three other roommates.
WTF is a 21-year old couple doing buying a $570,000 house??? Unless they just sold their Google options or got a phat bonus from Goldman Sachs, it just doesn’t add up. They’re gonna get the spanking they deserve.
“when I was 21 I ….”
Was on a motorcycle for 4 months roundtrip to Alaska…KOA for a shower every 2-3 days $5.00 1979
In Canada, the campgrounds had a huge pile of FREE firewood
$60.00 Ferry fee to Haines Alaska for the motorcycle
$60.00 Ferry fee to sleep on a lounge chair on the rear deck
3 days of great memories!
Buy a house?
See, I’m not like my brother…He’s a genius…he went to work for the CA state Board of Equalization, while I was swatting at a million force of mosquitoes the size of small apricots.
WTF?!?
3200/mo? That means take home of ~10K/mo? 120K/yr after taxes? Or ~185K a year salary?
WTF???
Me thinks he must be using the product (meth) if he thinks he can afford 3,200/mo!
“120K/yr after taxes”
Your mistake…figure no taxes.
me thinks extended family is about 12-15 people
im sure the locals will just love that
their extended family may also include those tenants they lined up to rent the living room couch for a couple hundred per month, living room floor space, etc. etc.
happens way too often in Santa Ana, CA (orange county, ca)
Oh Oh…………
trouble in home builder land.
http://biz.yahoo.com/ap/070327/beazer_homes_investigation.html?.v=5
Beaser down 15% after hours…..
http://www.marketwatch.com/quotes/bzh
but nyx up almost 2 bucks in ah
and almost 13 pts in like 6 days
thanks cramer lol
Alert! Alert! From BusinesWeek.com:
Atlanta-based Beazer, the nation’s sixth-largest residential homebuilder, rode high during the heyday of the housing boom—profiting from selling the homes it constructed and often financing the buyers as well through a wholly owned mortgage arm. It’s common in the industry, but Beazer may have pushed the bounds: The North Carolina field offices of the Federal Bureau of Investigation, the Internal Revenue Service, and the Justice Dept. have recently opened a joint investigation into the company over such matters.
The Inspector General of Housing & Urban Development is also part of the group since a large percentage of Beazer’s loans were made to low-income borrowers and insured by the federal government through the Government National Mortgage Assn., according to people familiar with the investigation.
“Actively Pursuing Fraud”
Investigators, however, are not limiting their probe to possible mortgage fraud. “There’s all sorts of potential fraud issues here,” FBI spokesman Ken Lucas told BusinessWeek. “We’re looking at all types of [potential] fraud associated with Beazer—corporate, mortgage, investments.”
Thank you very much . It’s about time they look into the fraud of builders .
“Daisy Ramirez and Jose Mendoza, both 21, said they asked an agent to find their extended family a home but stressed that they couldn’t afford a payment of more than $3,200 a month. The agent found them a three-bedroom house for $570,000. After signing a blank loan application, the couple was approved for a piggyback mortgage, two loans requiring monthly payments of $3,200 and $1,200, Ramirez said.”
Classic FB’s. These dufuses had no business even buying a home. My guess is they hold menial jobs at best, yet they are “buying” a $570k home. What a joke! Welcome to your new home, the refrigerator box. NEXT!
Sick thing is, if the lender had flat out told them that, they would probably be accused of “racism” and slapped with a class-action lawsuit.
Oh, are you playing my song, HARM. We see a LOT of this sort of thing here in Arizona.
Heck, I was accused of discrimination for trying to get Hispanic neighbors to quiet their yapping DOGS. (I’m not prejudiced against their dogs. But I am prejudiced in favor of peace and quiet. And I didn’t consent to have their dogs’ barking noise force-fed inside my house.)
You can thank the political party of hand-wringers and victims (gee, I wonder which political party that is) for this “race card” raising for every conflict.
their extended family
So Daisy is planning on running what, a boarding house? If she and her boyfriend are the ones signing the mortgage, isn’t their income alone what counts…not how much they can collect from however many strays they can round up?
This is exactly where the lenders put themselves when advertising “stated income loans”, etc…
Once they advertised this shit they had to provide it, and then all the other lenders had to do the same. Hence the race to the bottom we all predicted.
It was not a question of when or how it would all end, jut how fast it would be traveling when it hit the wall. I would say they made a bout mach2 when they hit, now the debris from this crash will stiffle the entire US economy for years.
Don’t blame the lenders or mortgage brokers. You will upset those on this blog that hate regulation, and that blame the buyers for everything.
Not enough blame to go around.
Screw some of the lenders. Cheating A__holes.
Actually, no. Their mortgage broker is likely of the same race as them.
saw an article today on yahoo i believe that said 1 out 3 people do not know the terms of their mortgage…. this will end well
i think….. i hope …. lmao
ot-i just wanted to thank the people who gave me advice on buying a new computer. i went with the 120gb sony vaio laptop and i love it and it’s paid in full. im old fashioned like that
“Welcome to your new home, the refrigerator box.”
Classic!
“Yes, but I have installed granite countertops and stainless steel fixtures in my refrigerator box.”
Yes, they were presented with the Asshat Package and signed up immediately.
“Merced County’s median home price was $320,000 in February, a 14.7 percent decline from the February 2006 median figure of $375,000, according to the California Association of Realtors figures.”
“The continued price plunge means Merced’s real estate market is returning to reality after a period of overinflated activity, said Merced County Association of Realtors President Scott Oliver.”
“‘Everyone thinks the sky is falling, but that’s not the case,’ Oliver said. ‘It’s finally coming down to a regular market.’”
Mer-Dead will be a nornal market after med prices hit half of the current around $150K. Dumbo Realtors …Where are there jobs to support anythink like 300K homes? What normal market?
When the Goose is cooked good Santa Clara will be front and center of the mess.
I sure hope so. As an almost life-long resident of this valley, I want to see the jerks that helped run up the price of housing into the stratosphere all take it in their rectum$.
a real good old fashion @$$ pounding !
Ha! San Fernando Valley, Orange County and Los Angeles will be the grand finale! After everyone is dying in the streets saying, “No more! No more we can’t take it!” The Los Angeles crash will arrive. The last and biggest wave in the Tsunami, bigger than all the others combined. It will cleanse the country. It will purge the financial system. It will wipe the landscape down to bedrock.
Granted that’s a worse case scenario.
“She said they told the agent that was too expensive but closed escrow in January 2006 after being advised they could refinance in a year with enough equity to slash their monthly payment and even take a vacation. The house is now in foreclosure.”
WTF? I mean, how the hell is that supposed to happen, anyways?? Refinance into what? You have a house that is too expensive, but in a few years, by extracting your equity (and making your house even more expensive in the first place), you could ‘lower’ your payment and take a vacation.
Who was the idiot(s) that came up with that slogan to justify the prices?
Assuming prices go up by 25 % per year, the appreciation has now given them 20% equity in the home, so they now qualify for a lower rate when they refi becoz they are no longer in the 100% LTV camp. If prices are up 30%, they can use the extra 5% to pay for a vacation. The only problem is when the assumption turns out to be invalid. D’oh
I’m beginning to think most of these people don’t have a clue what a refi is. They think it’s a magical way to reduce the amount you owe on your home by using the supposed appreciation of the home’s value.
refi for most of the fb’s=band aid on a gunshot wound
Yes. It would be equivalent to buying a stock for $50 on credit. Then it is valued later at $100. So now I take another $50 in credit in the form of HELOC. How dumb, and risky, is that?
Instead, sell the stock, and pocket the $50 and consider it very, very, little risk. Nope. Not going to use any logic. Go for broke, literally.
Re-fi question: I have heard California allows lenders recourse if the original mortgage loan was re-fied. Is that true even if there was no additional cash out in the re-fi?
“‘Everyone thinks the sky is falling, but that’s not the case,’ Oliver said. ‘It’s finally coming down to a regular market.’”
What makes this different is that there has been such a spike in RE and mortgage activity last years that a lot of people are dependent on prices staying high. For example, I am hard pressed to think of anyone who has not bought or refinanced a home in the last few years. These mortgages and HELOC’s are based on prices that are now trending downward. What happens if these people need to move? Around Boise (and a lot of the country), anyone who bought a place last year at the height of the bubble is going to lose money once you account for the drop in prices and RE commissions.
Yep, I think the sky is falling and I think any reasonable person thinks the sky is falling. And I think that it is better to be prepared for the worst than to stick my head in the sand with my fat ass hanging out in full view.
I posted this earlier, but David Seiders Chief economist was on CNBC ,and was stating that his prediction on Feb was 2% decline in new home sales, 2 weeks ago 4% decline, today he now says 8% ! What will he say next week, month? This from the head cheerleading section…
“Also, the number of foreclosure-related filings in San Bernardino County last month was almost triple that of February 2006, according to Realty Trac. Riverside County had 2,169 foreclosure-related filings in February, while San Bernardino County had 1,673 filings.”
Riverslime 2,169
San Barndodo 1,673
= 3,842
x 5.2 people per foreclosed property
= 19,978.4 affected people looking for a shelter
one month’s data? munch, munch, munch…Gotta get more of Neil’s buttered popcorn.
Can’t resist… my guess is that none of these folks will be buying $320.00 Oakley sunglasses for their kids…more likely… knock-offs at the “Dollar Store”
I bought my sunglasses at Tucson Safety and Medical. For seven bucks and change, I have suns that have side shields to protect my eyes from blowing debris when I’m out on my bike. And I can also wear them as safety glasses when I’m working on outdoor projects.
they’ve already bought the Oakleys, most likely on credit at a store that offers no payments no interest terms till 2010.
My god…
The numbers are already staggering. There is absolutely nothing that’s going to stop this tsunami. Its slow… painfully slow. But I can think of nothing, even a rate drop, that will stop the tide.
I’m going to have to admit its only through reading blogs like this that allowed me to understand how quick a credit tightening can be. But now that it is here… Its amazing how quick the carnage is.
This isn’t S&L part II. Not at all. Back then people had months to years of savings. This… is uncharted territory. Gulp!
Cest la vie.
You can cry or you can spectate.
I choose…
Got popcorn?
Neil
“Its slow… painfully slow.”
Hard to say. Back during the S&L crisis information was very slow and limited. And only if you persued the information agressively.
Today information is far eaiser and may ( i stress may ) impact the general population much faster. Dont rule a fast correction out yet. The elements of the bubble like sub-prime recently came rather quickly… One domino down next one may fall quickly. Like I said, the speed of information may change this market rapidly. Time will tell…
“Dont rule a fast correction out yet.”
Geez, Louie, from your lips to God’s ears, seriously. Because as I posted above, if this is a slow motion agonizing downward drift like Japan’s, yech! I want to buy back in, but as close to bottom as possible. Because I want to go all cash.
That said, I was reading something this evening on another site about a massive hedge fund implosion about to take place. Now, THAT would provide some amusement, for sure. I’d provide a link, but I’m not sure of the veracity of the source. So it is just a rumor, really, from one of those “White House Insider” blogs.
Also, as I post almost daily, the rate of ARM resets will double in a few months. (JFAM pretty steady at $25B/mo, then it rises.)
“Merced County’s median home price was $320,000 in February, a 14.7 percent decline from the February 2006 median figure of $375,000, according to the California Association of Realtors figures.”
“‘Everyone thinks the sky is falling, but that’s not the case,’ Oliver said. ‘It’s finally coming down to a regular market.’”
Tell that to the guy who bought Feb of 06. We all agree that it’s returning to a “regular market”, or shall we say a reversion to mean. It’s what we bubbleheads have been preaching for the last three years. But for the koolaid drinkers who bought in the last couple of years, the sky is falling big-time. Go sell your stupidity somewhere else.
OT: louie louie did you work for a SAN company in Bay Area?
whats a SAN Company!
Storage Area Network - I guess not.
Nope …
A couple of things come to mind, esp. since I live here in bubble central, south OC.
First, after almost a year and a half and depsite the love I have for most everyone here and the blog, thanks Ben, I have finally reached foreclosure fatigue. Sure, I feel sorry for the people who are truly down on their luck, karma, etc. due to health problems or job loss, etc. However, I have no sympathy anymore, whatsoever, for these fools who can’t or won’t take any time to figure out that a fully amortized loan of 100K for 30 years @ 6% is $600 a month. Now, take the amount you want divide by a hundred and multiply the result by 600 and you have your monthly payment on the interest and prin. How freggin hard is this, people?
Second, I find it amusing how all these buyers, almost to a tee, blame the broker. Sure, you trust these commission eaters with the single largest item you will ever buy, er, I mean, go into debt for and then complain when the bank wants to foreclose. Would you like cheese with the w(h)ine?
Third, just for amusement, GS, that is way too many posts early in the thread. You now have to wait 5 mins. in the penalty box until you can post again. Just kiddin.
OCDan,
You forgot something…in the OC anyway…
$600,000 + for the starting price…
But everyone in the OC has job security for the length of the loan right?
Yeah, get those 50-year loans cranking up babeeeee
Yeah right highway, using the example I gave, you would be out $3,600/month before HOAs, taxes, maintenance. Let’s add them in HOA ($250), taxes ($650), and maintenance ($250). That’s right $4,750/month and add in another $150 for mortgage insurance because no one put down $60 grand for that baby, so you are at 4,900/month plus another 500 for utilities. Therefore, that 600 grand monster just cost $5,400/month just to live in. Hope you have something leftover for food, gas, auto insurance and car payments, as well as the possible HELOC, which, if you have, could be anywhere from $300-$750, or even more. WOW! $6 grand to be a home debtor/serf. I am glad I rent. The only question now is how long can these people who really really really have to sell can hang on?
but oc-dan have some compassion for these “victims”
screw them and let em rot is my motto
they were not vicitms when mr.broker was handing them that heloc check were they? they never include that little nugget of information in those msm stories of these poor souls
is it me or is every newscast i watch lately there is a story about people losing their home? i thought real estate ony went up?
oh this feels like vindication
Well MGNYC, I will admit to having used a HELOC and we still made the payments on both the house and the HELOC. However, we didn’t have more than 175K outstanding on both the mortgage and the HELOC. These people are in over 3-5X that amount. They will be punished for their greed and spending habits.
and rightfully so
i can see the late night infomercials now
from a mcmansion and a hummer to a cardboard box and a shopping cart in three easy steps
1)buy an unaffordable house
2)heloc unaffordable house to buy unaffordable consumer crap
3)fall behind on payments and wallah you are in a cardboard box pushing a shopping cart after you lose that job pushing subprime mortages on the greater fools
I guess we should be long on shopping carts then. There may just be a shortage in the next 2-4 years.
Thanks a lot OCDan. Now all my colleagues in cubicle land are wondering why I’m laughing uncontrollably.
“screw them and let em rot is my motto
they were not vicitms when mr.broker was handing them that heloc check were they? they never include that little nugget of information in those msm stories of these poor souls”
Agreed. As Ricky Roma might say, this place has stunk for the past three years with their farts.
Ah yes, Glen Garry Glenn Ross. My favorite is Blake. “…third prize is, you’re fired.” Classic.
Stupid political chucks…
They ain’t seen shite yet.
Slightly OT but have to share, sometimes a simple example clearly spells out the rediculousness of a situration…
Subprime is the new Prime. The government bailout of subprime will mean that subprime enjoys explicit backing of the government while prime loans do not. Black is the new white, up is down, dogs and cats living together, etc, etc…
TxChick: “Broke is the new black.”
It will only get blacker if the Dems push their subprime bailout proposals through.
How else will you motivate illegals to go north.
Free Healthcare - Check
Job - Check
No taxes - Check
Guaranteed housing - Check
My Uncle Bill he my hero.
You forgot free education for children of illegals, and social security.
I went to Senator Cox’s website and emailed him kudos on his stance on personal responsibility: http://republican.sen.ca.gov/web/1/
Sent hate mail (actually, logical well thought-out mail that was a bit bitter) to Sen. Dodd this morning.
http://dodd.senate.gov/index.php?q=node/3128&cat=Opinion
I just sent this:
Sen Dodd-
If you have any desire/hope/dreams of becoming the President of this country, I suggest you drop your quest for a “sub-prime borrower bail-out”. Honest, hard working, and disciplined AMERICAN citizens will not sponsor any politician who tries to force us, the taxpayer, to bail out the greedy, stupid fools in financial trouble.
Keep in mind most of us taxpayers vote. You might want to seriously re-consider your position. The word is out on many very popular blogs that you are sponsoring a bail-out. Word is also out that many of the large wall street firms (GS, DB, MS, etc.) donated lots of money to your campaign. Considering these firms were the invisible hand behind the sub-prime disaster, do not think for a minute people will not put 2 and 2 together. And in fact, many already have.
Just some input from a tax paying American citizen.
Awesome. Can I copy that and have it handy to any Senators in my ‘hood who get any stupid ideas?
Sure. Copy & Paste is ok by me.
Well LostAngels… I would have replaced some negative parts with “why not investigate mortgage agents role in liar loans, and realtors role in forcing fake appraisals..” or other fraud discussed on Bens blog.
Simple saying “no bail” out is not enough! Now that you have Congress ear…use it !
Here’s what I wrote….
No homedebtor bailout!
Do not reward irresponsible financial decisions at the taxpayers expense!
The housing market will adjust without government interference!
If a crime has been committed then enforce the existing law!
Reward prudent savers!
No mortgage and forclosure bailout!
Financially savvy people don’t apply for mortgages that they cannot repay! Those that are being foreclosed upon need to feel the pain so they learn the lesson….don’t buy things you cannot afford!!!
No homedebtor bailout!
After I emailed Dodd several days ago, what I got back was a bunch of solicitations to help his pres. campaign. Not even an acknowledgement of what my email was about.
Thanks for the link. I just sent him kudos as well.
Second the thanks for the link, and also sent the good Senator Cox a letter thanking him for the reality-check on a subprime bailout. It only takes a few minutes to compose a letter, and it might help keep some of these guys honest.
I also wrote a thankyou to Cox. Thank God for people who have sense. We need to let them know their good sense is appreciated.
Especially now with evry other politician jumping on the bailout bandwagon.
“‘The market went upscale,’ said Redlands-based economist John Husing. ‘I’m thinking in the next year (to) year and a half, you’ll see prices slowly drift downward.’”
Another case of selected amnesia. This is the guy who kept on saying the IE would emerged unscathed because it is such an economic juggernaut.
I agree, another perma-bull does a stealth flip-flop.
They’ve been drifting downward for a year already, numbnut.
Is this the “IE is the center of the universe” dude? If so, I can’t believe he’s still being quoted.
“IE is the center of the universe”
well, if the world needed an enema kind of center….
There is no cure for dumb…
Maybe a “dumb” tax could get us out of this mess.
They’ve already got this covered with the Lotteries.
As the comedian Ron White stated, “You can’t fix stupid.”
My Dad always said . “If you’re gonna be dumb, you better be tough”
“Sen. Mike Machado, chairman of the Senate Banking, Finance and Insurance Committee, is developing a bill that would apply recent federal lending guidelines to state-regulated lenders. He also wants state agencies to more aggressively restrict practices such as low introductory interest rates and variable monthly payment options.”
I’m not convinced that we need to take a regulatory measure on this. Fact of the matter is that these types of loans do serve a purpose, but people just misused them. We’ll hear in the next couple of years plenty about the pitfalls of these loans, people and lenders will get fried, and then we will go back to the times when these loans will be used as an exception rather than the rule. I don’t see anything wrong with that. Isn’t that how the market is supposed to work?
probably his argument would be , Guns do serve a purpose, but we regulate them any way. NO attack from NRA please ! I’m going into hiding
Bailout won’t work—how in the hell can you “restructure” the mortgages of present FBs while keeping the industry solvent to lend money under reasonable guideline to future buyers?
The bailout isn’t really for the FB’s. It’s to save the lenders. It is a stealth transfer of wealth from the middle class to Wall Street. They managed to enslave nearly every buyer from 2003-2006. Now they want to ensnare the rest of us in their trap.
http://www.youtube.com/watch?v=KlkOPAa4Mao
Compare the construction quality of the 1930s vs. what we have now. I also thought that the 1930s construction workers were a lot more attentive.
I really liked the interior of the house. Even the fold-out ironing board can be used as a mixed drink table.
Reminds me of my old Silverlake apartment - down to the “spacious” closets!
Did you see our own Lou Minatti has one in there too! And this one is a keeper, http://video.google.com/videoplay?docid=6897935140271687860
The Bakersfield Californian. “While some local real estate professionals voice skepticism at predictions of tough times for the Bakersfield market,”
When a motto becomes a mantra:
I’m not a skeptic, I’m a Bakersfried prophet:
Bakersfield,
Oil, carrots, pesticide dust and foreclosed houses…& free blanket & free one way bus ticket to WeedPatch
“Last year, the Mortgage Asset Research Institute sampled 100 such loan applications and reported that 90 percent listed significantly higher incomes for borrowers than they had reported on their tax returns.”
Can anyone spell IRS and balanced federal budget?
I see RED!!!
=
http://tinyurl.com/2ffkc4
Finally time to set up the homebuilders’ implode-o-meter?
Man, this is a great site.
What NOBODY mentions these days is that interest rates are at historic lows. Never have we had such a narrow spread between the Fed rate and mortgages. And never before have we had such a low rate for so long.
So… is it going to stay like this for another 20 years ? With the price of oil, copper, silver, uranium, corn and gasoline all rising ?
What would these houses be worth if everyone was required to get a 20% down, full doc mortgage with an interest rate of 12% ? I swear you would have trouble selling houses for 100K !
To paraphrase Warren Buffet: A rising tide lifts all boats except for the sunken ones under tons of sand.
“To paraphrase Warren Buffet: A rising tide lifts all boats except for the sunken ones under tons of sand.”
Yeah, well what Warren forgets to mention is that the “Capitan’s” of the sunken boats filled with skeleton’s and diary’s to loved one’s have… abandoned ship…only to re-surface as a genius CEO to yet another IPO boat slack-towed astern to the NYSE / NasDAQ / Private Equity firm.
Maybe he just does not hire them in his group of holdings?
“”It’s only when the tide goes out that you learn who’s been swimming naked.” and “a rising tide lifts all boats, yet even a king tide won’t lift a leaking ship.”
I have no idea of how Mr. Buffet hires/fires, but I suspect that after the CEO’s get the ceremonial slap on the wrist - they’re good buddies will find them suitable employment to maintain the standard of life they became accustomed to.
Tweedle-dee, the avg. home costs what, $210K? Your comment about 100K is not far off. If you had to have 20K or 40K or 60K, dep. on the value of the home, I have no doubt the market would lose 50% in most areas overnight. Some yahoo right around the corner from where I work still wants 835K for his tract PoS! Ouch. How the he77 is left pay that kind of funny money and who would part with even 10% down on that monster mortgage? If I had 1 cool mil in the bank, I would buy closer to the ocean in about another 3-5 years. Why buy now at that price 15 miles inland here in South OC? These sellers are nuts!
Median home price is around $210K but the average price is closer to $300K.
“Never have we had such a narrow spread between the Fed rate and mortgages.”
Japan had a similar situation w.r.t. their mortgage rates and BOJ-controlled rates from 1990-2006. And their home prices steadily deflated over the entire period. What many fail to grasp is that the very high home values in 2005 were a direct consequence of ultra-low Fed funds rates in 2002. Monetary policy’s impact occurs with a long and variable lag.
I met an ex-California mortgage broker the other day. She relocated from Sacramento to Raleigh, NC in 2005. She sold her house in Sacto and walked away with about $350,000. She bought a small house in NC for about $200,000 and paid cash for some retirement property in Calif. foothills. We were talking about how crazy things have become out there. She said almost everyone who refied with her in 2005 took out $75,000-100,000 cash for cars, furniture, etc. She told me she made ( before taxes) $490,000 in personal income in 2005. She predicted a depression like fall in the California economy due to the whole RE refinance scheme. She is glad she is out and is waiting for the “dust to settle” when she plans to return to build her retirement home, ie ” The builders will be desperate by then”. She is not in the real estate business now and states ” I only owe about $85,000 on my house and everything else is paid for, but I know a lot of other people in the business who are drowning in debt”. She seemed like one of the smart ones who got out at the right time. Interesting times ahead. I suggest those who are so inclined head out to the target range to practice self defense skills, you may need them if the masses become desperate.
In the next 2-3 years this anecdote will sum up about 50%, if not more, of this sorry smoke and mirrors economy. I applaud her planning. She has one house paid for, no debt, and an 85K mortgage. Very good and I bet she still has some bank. She will need it when the foreclosed masses start looking for blood. Will be a good time to hide out in the foothills of Ca or in the woods of Carolina.
If she made 490k in 2005 she put a hell of alot of people into sub-prime crap loans so screw her I hope she gets sued .
Housing Wizard, I agree
but as the saying goes… It takes two to tango. I’m sure a lot of those FB’s couldn’t live without the new lexus, Hummer, boob job for the flat chested wife, etc. and were just glad someone could help them “liberate their equity” I vaguely remember a saying something like ” Let the buyer beware”.
Whoa now, a boob job for a flat-chested wife is money well spent…..for her next husband…..
I resemble that comment….
two words-skank realtor.
That’s redundant.
WIz, I hear ya. However, no one held a gun to these greedy buyers’ heads. I know, I know, too many papers to read before signing. Well, just go to the one that tells the interest rate and resets. I mean, come on, how hard is that. Whenever I have had a mortgage that is in fact the first pages I look at. Rates and amortization schedules. No, they were too busy eating at Hometown Buffet to be bothered to even look at those important pieces of paper.
“too many papers to read.” That is what I thought. But I did know my rate was fixed and 8.25% (in 1990). What I did not know is that I bought just over the peak and the prices fell in 6 years. Rather than walk away, I stuck through and saved as much $ as I could in a money market fund to take with me to the table for the sale when I was going to sell. I did. Stil, I learned to read EVERYTHING before I buy real estate again. I recovered my losses actually by becoming very mobile and able to take high paying jobs anywhere in the U.S. within one week notice. I shed a lot of material possessions, going the opposite way of those who loaded up on SUVs and Plasma TVs. For the money I saved on mortgage payments (by renting instead the last 6 years), I bought government securities like crazy. Are these the next bubble? Ha!
Exactly. I hope the lawyers take her to the cleaners.
Story sounds a little like B.S. She walked from her Sacto home with $350K and made almost $500K earnings in 2005, yet had to take out a 80K mortgage on a 200K house? There wouldn’t even be a tax incentive to do that. Just sounds like B.S. to me.
very, very few mortgage brokers made $400K or $500K per year, even 2 or 3 years ago. wonder what types of loans she pushed or how accurate her loan apps were?? wonder how honest her borrowers were??
It’s just hard for me to believe that she made that kind of bread without doing “what it takes “so to speak . I agree that she most likely had willng borrowers . I would love to see her foreclosure rate . Sometimes blood money is bad money and of course it was a real estate mania, but I am pissed at her for leaving behind a bunch of FB’s for the rest of us to bail out in a bail out that might come .
Further , hasn’t anyone heard of a win/win situation in business ? I just don’t like it when it’s a me win/you loose situation in business .In a real estate mania there becomes the extreme winners and the extreme losers . It sucks .
21 year old Mexicans in a 600K house.
I give up. Truly.
mi casa su casa
im speechless as well tx
the american dream alive and well in california
Neil,
Pass the Nachos!
Que Pasa Taco Bell!
I’m floored too…
Got Nachos?
Neil
maybe they were supplying this guy
http://www.msnbc.msn.com/id/17808933/wid/11915773/?GT1=9145
Man, that is one scary picture of his face. Lights on, but no one home. In fact, long gone for a while.
Guy looks like he bought a house in 2006.
ROTFL
You just scared me away from looking at the picture!
Got popcorn?
Neil
Looks like a typical pedestrian you would encounter in this fine town at mid-day somewhere on Thomas between 12th street and 40th street. Meth Central.
And people even wonder why they cannot afford the mortgage. 21. Heck I was still in college and a work study student. Obviously, the bank and the rest of that hoard only saw commission, fees, and points. The 21 year old, a bright shiny faux chateau. If we are lending this kind of money out to 21 yr. olds with no hope of repaying, we are truly toast in this country and the economy is a joke.
Why do we even bother playing this charade anymore? Bring on the depression. We need a good financial cleansing right now. Like, I mean right now. Yes, RIGHT NOW!
haven’t you heard about the new loans calif. loan brokers are gearing up to push:
no interest, no payments till March 2010.
Don’t even go there with that. I am so sick of hearing those types of terms to buy crap I am sick. If housing gets to that point, I think we will all realize the value of a home is no more than a used car or plasma flat screen HDTV.
Who will fund these loans?
Funny you should mention March 2010. Go to implode-o-meter’s 2007-03-19 graph of ARM resets. After a high peak from mid-2007 through fall 2008, they drop off some … until MARCH 2010 when they spike up again.
Now this guy makes sense!
http://www.marketwatch.com/tvradio/player.asp?guid=%7BCD303452-3CC6-4CE0-8BF7-E36689A6F803%7D
Good catch. I like the title “1st inning”
I just think that two years is to short.
thanks / danke
ohio getting money for a bailout in their state
very upsting
And what lender will loan ANY money to Ohio now? Property will fall 50% in a few years there.
Come on who wouldn’t loan moneys to Ohio RE. The government is guaranteeing!
One thing that has been repeated over and over and over is that government manipulations of markets never work. If Ohio guarentees loans, what will the result be? Basically they would be removing the need for FB’s to pay their loans. What you’ll get is a wave of people who’ll decide (rightfully so) to stop paying their mortgages. You’ll also get a new wave of speculation and mortgage fraud. The Ohio program will become a major scandal and will bleed the state dry. A few months after it’s started, the embarrassed pols will have to rescind it.
“Daisy Ramirez and Jose Mendoza, both 21, said they asked an agent to find their extended family a home but stressed that they couldn’t afford a payment of more than $3,200 a month. The agent found them a three-bedroom house for $570,000. After signing a blank loan application, the couple was approved for a piggyback mortgage, two loans requiring monthly payments of $3,200 and $1,200, Ramirez said.”
Why don’t people friggin move to a cheaper place to live? These people obviously don’t have any money and are living in one of the most expensive places on earth. I am guessing that they are not tied to the local economy. . .why not pack up and move to San Antonio (lowest cost of living for a large city), Dallas, or pretty much any other place and HAVE A LIFE and not be tied to a crazy mortgage?
The could buy a stunning house (comparatively speaking) in a great neighborhood in San Antonio for less than $300K.
I don’t get the fascination with California by poor people. . .
AC, I don’t either and I’ve been here 21 years, more than half my life. 20 Years ago this was a nice place, but not now. I hear the argument about the beaches, but it isn’t Hawaii so I can’t seem to make since of that one. The weather? Well, you can go to many other soutehrn states and have our weather. You might have to put up with some humidity, but then again we do have rainy and damp winters even in So. Cal. I think the reason people come here and fight to stay is that there is a sense of comfort. By that I mean they are comforted that there will always be a job, even at the local In-n-Out burger place. The fear is that if I move to somewhere cheaper, can I get a job? I know that Dallas and San Antonio have jobs, but I think people who live here don’t think so. Also, you may have other factors, like family or other ties to this place. Lastly, there is the old saying, “Once you leave California you can’t afford to come back.” While that may or may not be true, I think people are genuinely afraid that if they leave and don’t like where they move to, they won’t be able to get back into Ca.
OCDan,
As a native from SoCal, and someone who has lived much of my adult life here, I agree with your observations. Another big fear Californians have (aside from being afraid they can never move back), is the fear of Bible Belt & extreme conservatism –especially as portrayed/hyped by the media. There are a lot of Libs here who fear moving to the deep South will be like stepping onto the set of Deliverance, minus the scenic beauty. I think this fear is grossly exaggerated (I have family all over the South and have lived there), but it sure works nicely to convince people to keep feedin’ that CA alligator, no?
Harm,
No doubt about that Bible Belt comment. I also think there is a California snobbery about the rest of the country with the exception of the Northeast. I also forgot to add, many Californians have an NYC mentality, but about the state. We tend to think the universe ends at the CA/Nevada or Arizona borders. We all know how geographically challenged clownifornians can be/are!
From the Onion:
‘Midwest’ Discovered Between East, West Coasts
October 21, 1997 | Issue 32•12
NEW YORK—A U.S. Geological Survey expeditionary force announced Tuesday that it has discovered a previously unknown and unexplored land mass between the New York and California coasts known as the “Midwest.”
The Geological Survey team discovered the vast region while searching for the fabled Midwest Passage, the mythical overland route passing through the uncharted area between Ithaca, NY, and Bakersfield, CA.
“I long suspected something was there,” said Franklin Eldred, a Manhattan native and leader of the 200-man exploratory force. “I’d flown between New York and L.A. on business many times, and the unusually long duration of my flights seemed to indicate that some sort of large area was being traversed, an area of unknown composition.”
A few comments - I live in the DFW area (from Washington DC) so take my comments from someone who left. . .
Re the Bible Belt, I don’t think that the “poor immigrants” that are being highlighted in many articles even know what that is. . .
Also, most people I know in DFW could care less about what you are or do. . .Texas used to be an independent country remember so there does appear to be some respect for “do your own thing and don’t bother me and I don’t care”. Also, some places like Austin could give Berkley a run for their money . . .!
“Once you leave California you can’t afford to come back.”
Thats what they told me, I left anyway.
Rubish! So how do you explain those people that moved to central valley from the coast. Have you even been up north I mean really up north near Eureka….
The flip side is if you made yourself a multimillionair… can you indeed continue to live in California… 9% of any earnings would get taxed. For every 100K of income you would pay the State 10K…
Not worth it …Your better off living in FL or NV… No State Income tax…
These are ideal people for RE CEO’s. You can count on them to raise prices when least expected causing bubble.
“i hear that in Kalifornia, first month’s rent is free. so they figure they will just move around month to month. also, you don’t gotta ever by any fruit, on account that it grows on all the trees”.
‘I think we’ve got to start looking at helping these guys who, starry-eyed, bought their homes.’”
I think that’s a great idea! In fact, we should make it a whole new entitlement. From now on, anyone who gets starry eyed about something they want but can’t afford, but purchases it anyway, should be entitled to Federal relief. Did you get starry eyed and buy that boat, or that plasma TV? No problem. The taxpayers have got your back!
“If she made 490k in 2005 she put a hell of alot of people into sub-prime crap loans so screw her I hope she gets sued .”
Comment by ExNorCalNative
2007-03-27 17:26:17
Housing Wizard, I agree with your sentiment
but as the saying goes… It takes two to tango. I’m sure a lot of those FB’s couldn’t live without the new lexus, Hummer, boob job for the flat chested wife, etc. and were just glad someone could help them “liberate their equity”. I vaguely remember a saying something like ” Let the buyer beware”.
I agree with you . It does take two to tango . It was a real estate mania and everyone was in the speculation mood ,(even the lenders ).IMO borrowers usually know it if the loan application is not accurate . People were sold on low teaser payment ,ability to get in on a no-down loan ,and ability to refinance down the road after real estate went up .Borrowers have to be honest with themselves in what they thought was going to save them . If 1/3 of the borrowers do not even know how their loan works than it’s clear that the loan did not matter to borrowers in alot of cases and that means appreciation is what mattered, or buying toys ,or flipping that house, or a fear based motive of not being priced out .Greed and fear makes people close their eyes .Why people believed that real estate would continue to go up is the question and why they thought greater fools would be coming non-stop is the question .
In prior lending cycles terms of a loan and interest rate did matter to borrowers as well as being able to afford the payments .
I didn’t see very many newspapers attack the myths that were believed during the mania about real estate always going up and we are the running out of land cr-p . Was the real estate myths and advertising so pervasive that people were brainwashed ?No excuse for fraud on their loan application .
Thousands of people really believed that they could not afford not to buy because of the hype and spin that was going on .
The greatest evil is that sub-prime loans caused real estate to go up based on the sub-prime loan demand with all the speculators that were willing to pay any higher price that sellers put on the selling block .
Senator Dave Cox is my hero.
test
Housing prices in CA and FL are just like America Online stock in 2000. Back then every single human in the country was buying its stock and seeing 20% monthly price increases. Same with every other dot.com.
If all those dot.com investors (which were basically everyone) had managed to cash out their winnings then we would have had hyperinflation. But almost nobody got out alive- the profit just vanished.
Same thing with housing- if every california resident (35 million people) were to somehow cash out their average 600k house, and take that money into the rest of the country, then you would quickly find that a loaf of bread costs 50 bucks.
The only solution is to have home prices crash. Everyone in society can’t get rich placing bets against each other. The math simply doesn’t work.
Hey if everyone flushed their toilet at once we’d be out of water. If everyone sold their gold at once…
If everyone in sold their home at once we’d see a crash but the fact is this market is inflated and home owners are known to hold on to their homes and not sell in a crash or depressed market unless they are forced to sell.
This home market is NOT like owning speculative IT stock.
People will stay in their home. As long as we don’t have a recession we’ll see prices drop but no state wide or nation wide crash.
What do you mean “stay in *their* home”?
These homes aren’t “theirs”. People don’t “own” their homes.
They borrow them from banks.
test2
(2007, a Space Housing Odyssey)
Open the Bad Loan Day Doors, Hal
Guys you are all expert. Help me understand what my BIL did. He lives with wife ( both working ) in Santa Clara. They purchased a new home for $750,000 in april 2006 on ARM. I dont know the details as its awkward to ask someone who is close. But he said his interest rates wont rise for the next 5 yrs till 2011 ! How true is that? He said he made a 10% downpayment. Their annual income is around $175K. I am particularly concerned with him saying “rates wont change till 2011″. Is this even possible on ARM? They are both highly educated and wont fall into traps easily…They both have masters in comp engr and biomedics..
The are some IO ARMs (not sub-prime) in the Alt-A category that are IO for 5 years and then are reset to IO and principal at that time (25-years left on the contract).
If you look at a recent Credit Suisse chart that is all over the net, which contains a chart of the ARM reset per month beginning in January 2007, you will see that there are a lot of Prime ARMs, IO ARMs all resetting starting in 2009 and going through 2011.
Yes - a five yr arm is standard for A paper. Better rates that 7 yr or 10 yr arms. So if planning on leaving in 5 yrs no problem as long as house price is the same or higher.
This is quite possible. There are products that are 3, 5 and 7 years fixed, with the rate adjusting after that period. Very similiar to a X year baloon loan, except that it rolls into the adjustable.
I had one from ING Direct on my old house, 5 year fixed at 3.99, then turned into a ARm with a max cap of 6 points. Pretty sweet loan since I new I would only be in the house for a few yearsmore (refinance).
I’ve been having a lot of trouble posting this week. I posted this in an unrelated post, but want to repeat it here, because I think it’s amazing.
I don’t know you guys/gals ,I guess you would have to be in the business to know how bad it is for lenders to conspire with borrowers to f-uck the bagholder final lender .I’m sure at the time everyone was caught up in the mania and nobody thought anybody was going to go down …but look at the mess .
With the exception of borrowers who have proof of foul play ,I don’t think the borrowers can scream victim unless you call a National Mania the grounds for victimhood . Only under conditions like this perfect storm mania would borrowers sign their life away with dumb loans along with overpaying for real estate . Can people sue because they believed “myths” and “sales puff” . I don’t know, but I’m interested in how the Courts are going to rule on these cases .Usually the Courts like the parties to be acting in good faith ,but also the Courts tend to honor contract law if it isn’t a voidable contract .
I’m not going to get my LA bubble article, am I.
Personal moral dilemma here. I already mentioned my loser brother-in-law the banker who heloc’d his house till he was BK, had to do a short sale, and my mother in law bailed him out by giving him a down payment for a new house. Now I find out the idiot is up to his old tricks, he’s 700K in debt on the house my MIL bought him for 225K. His wife is apparently out buying new designer purses, jewelry, etc. Should I warn my MIL that she will soon be called upon to bail the loser out, and tell her I’m cutting off relations if she does, or should I shut up and stay out of it?
To add insult to injury, my sister-in-law is the same b!tch who got my MIL to outfit her newly bought bail-out house with newly installed HW floors, granite counter tops, etc.
Your MIL seems like a bigger loser than your BIL and SIL
shut up and stay out - they’re her loser kids, she’s reaping what she sowed when she raised them.
I think that you should state your case once. Warn her with concrete examples, then shut up. You also might mention that when he burns up her money, you won’t be available to help any of them out.
Cutting off relations is non-productive.
Also, depending on age and capacity, this might be elder abuse.
Paul
I decided to just tell her they’re pulling money out again, not disclose detais unless she asks, that way maybe she can (if she develops a backbone) give them a don’t-borrow-any-more-cause-I’m-not-gonna-bail-you-out-again speech.
“Sen. Bob Margett asked industry representatives what could be done to prevent borrowers from losing their homes. ‘How do we unfry the egg?’ he asked. ‘I think we’ve got to start looking at helping these guys who, starry-eyed, bought their homes.’”
So if I go out and buy 100K worth of cool stuff on my credit cards (all starry eyed) will some Senator bail me out?
It really makes me mad that my wife and I have been patiently and responsibly sitting out on the sidelines renting a fairly small apartment in San Diego, and you have a bunch of idiots talking about bailaing out those who either through stupidity or through fraud bought recently. I guess someone will ALSO need me to pay some more tax to fund this endeavour?
Would these same Senators and Congressional reps be demanding these same “victims” give back their profit had everything gone according to plan and prices kept going up? I think not.
Ok, I relent - Oh and Scotty now would be a good time to beam me up
What is going to happen in Iran and with housing? The MSM has been showing us!!!! Anna Nicole: Everything is beautifual and great then it all goes to shizzle and ppffffttt
If I was a lender and I knew the market was in decline mode ,I would think twice about making any loan that didn’t have a big down payment . You can’t say the market is stable with the sub-prime meltdown . Don’t be surprised if the lending gets even tighter . The fraud was getting so bad that the whole system is haywire . The cheerleaders keep trying to call a bottom because they know that if the lenders back off forget about sales or refinances being a easy piece of cake . I bet the sales pitch now in real estate is “get in now before you have to really qualify and put a big down payment “. Some people will go for that faulty logic because they don’t have a down payment . Better to just save up the money and get the real estate at a cheaper price down the road .
We keep hearing about areas in central CA and what not but anyone venture to guess why prices in LA are not coming down much? It’s still very unaffordable…
It is all about capital. More people with more money in LA.
So what are you saying? That the majority of people in LA earn well over $200K per year? Because frankly, that’s about what it takes today here to buy a home comfortably.
Just guessing here, but LA’s economy looks pretty solid compared to the central valley. When you add in the shadow economy to the large numbers of highly paid professionals, plus the low unemployment rate, there is just a lot of cash flowing through the economy.
For example, in the areas I watch, you can still see a lot of major remodels and complete rebuilds under way. The contractors and construction workers must still be getting paid, because work continues. The downturn simply hasn’t kicked in here yet.
However, I expect to see construction slowing down soon as construction loans dry up. I read in the WSJ the other day that banks are tightening up on constructions loans now.
I think we Angelinos will need a lot of patience. See various posts by lainvestorgirl.
sm_landlord - i’m seeing so much of this going on. The Other Half and I like to tour neighbourhoods in Westside/south SFV on the weekend, and the amount of new construction going on is just amazing.
Seems that many people are now tearing down the modest mid-century houses and building 5000 sq ft mansions in their place - in fact 90% of the new lisings for these areas in ZipRealty show houses over 4000 sq ft for sale.
I really wish construction would slow down - I don’t want to buy a McMansion - leave the modest houses alone and stop building huge piles of $rap that are priced at 200% above what they’re worth. No one’s going to buy them - but you might have a chance of unloading a modest house at a modest price.
Here is a good article:
Looks like New Century’s employees are selling their Porche’s ..OC is hosed:
http://www.bloomberg.com/apps/news?pid=20601170&sid=alOjASNOLKcQ&refer=home
Hmmm….I thought Orange County was different.
Oh, I get it. The politicians are worried about the value of their own homes if all these borrowers default.
Makes perfect sense now.
I personally don’t buy this BS about “oh, the broker forced us to sign a blank document and then proceeded to fill it with lies about our assets and income” and yadda yadda. I really REALLY don’t buy it. NOT ONE BIT.
I think one sentence sums up this whole situation. “You can’t fix stupid”
Housing Wizard asks, “Why people believed that real estate would continue to go up is the question and why they thought greater fools would be coming non-stop is the question.”
I would say that every mania in the history of mankind is the same. People are mesmerized by the increasing price of the bubble asset, and every single time almost every single person believes, “it’s different this time.” Kindleberger’s Manias, Panics and Crashes lays it all out. I find that people are just mesmerized by housing prices here in California, and STILL cannot believe that prices could possibly fall more than maybe five percent, after going up 100, 200, 300 percent in a few years. My main concern now is making money off the crash. Thanks txchick.
Nozferatu,
I was wondering about the same thing. It is evident that appraisal prices and banks views on homes fair market value is way down.
Seeing appraisals coming in 20% lower than the borrower states and then the bank is saying it is worth even less. Seeing in all across the US but the press keeps stating that home prices are not decreasing. I can tell you they are. They have been for a while. But the numbers in the news have me scratching my head.
Yes I agree….I have seen a drop lately.
There was a very interesting listing on Zip Realty..I should report it to the proper authorities because I think it’s a crook who owns the place and this is what happened:
Late 2006, he increased the price of his listing from $549K to $599K. Then in Jan/Feb he reduced the price down from $599K to $539K….
THEN the realtor gave the description that the owner is giving HUGE discount of $60K! What a scam.
Anyway, people say there is wealth here. I do agree to a certain extent. I don’t expect places like La Canada, San Marino, etc to lose property values. BUT come on, I can see the types of people who live in Glendale, Burbank, etc….they are not “weathly”. They are stuck in their homes because they can’t buy anything else even if they sold…that’s the majority of people IMO.
A good example would be my wife’s friend. She has a house in the Valley. She works for LAUSD. Recently, LAUSD scrfewed up their payroll and underpaid people bigtime..i.e. $4000 paycheck went down to $600 by mistake. Well..it takes time to correct fine. But JUST ONE PAYCHECK HICCUP and my wife’s friend couldn’t pay the mortgage.
While I’m frustrated that the prices in LA are not really coming down at a rate I’d like to see, I think most people are on the edge here. Overstretched, overburdened, overcooked, overworked…
We’ll see what happens. My wife and I are already considering leaving for good as I think the benefits (which are few for me anyway) of living here are pretty much finished.
Clearly, we don’t have enough lawyers. If we had more lawyers, those folks would have hired someone to look at those contracts BEFORE they signed them. There’s no excuse for signing a blank contract. I realize that people have this idea that signing a contract doesn’t mean that they are legally bound by it. If you are sick, you need a doctor. If you are dealing with legal stuff, you need a lawyer. And don’t talk to me about those idiots that would sign a mortgage with someone who knocked on their door.
When interest rates were at their lowest, the papers were full of info about the “historically low rates”. If someone does not understand that low rates should be locked in with a fixed rate, they shouldn’t be buying a house. Instead, they told those getting fixed rate mortgages that they were idiots. High time for them to have a little pain and suffering.