The Eventual Recovery Could Be A Multi-Year Adventure
The Star Tribune reports from Minnesota. “Al Ynigues found out the hard way about the dangers that lurk in exotic high-risk home loans. A broker he trusted exaggerated his income nearly three-fold and steered him into a variable rate mortgage with rapidly escalating payments he can no longer afford, nor escape without hefty penalties.”
“The music teacher knew the rates could ‘go up a little.’ But he never thought his first home in Apple Valley would gobble up his entire monthly income.”
“‘I got burned,’ he said. ‘It’s outright fraud.’”
“He wasn’t told, he said, is that it would cost him prepayment penalties of over $4,000. Another thing Ynigues says he wasn’t told was that his broker had listed his income as $10,000 a month, more than three times what he makes in his music business.”
“On top of that, he would later learn, the broker had cut himself in for a $4,230 fee.”
The Shakopee News from Minnesota. “The Twin Cities regional housing market slowdown continues as home sales remain flat during the peak selling season. Most areas in the region have seen some sort of decline in buyer activity, according to new analysis released by the Southern Twin Cities Association of Realtors (STCAR).”
“So far this year through June, Shakopee home sales have declined by 23.7 percent compared to the same period in 2006.”
“‘The gradual decline in home sales has been continuous since late 2005 and isn’t showing signs of letting up,’ said Wayne Gilbert, president of STCAR. ‘Predicting exactly when that will change is an inexact science, but it’s becoming clear that our eventual recovery could be a multi-year adventure.’”
The Journal Sentinel from Wisconsin. “About 6,900 Wisconsin homebuyers, five times more than originally thought, are entitled to $3.2 million restitution from Ameriquest Mortgage Co. for alleged overcharging, the state attorney general said Tuesday.”
“A year ago, state officials estimated that 1,170 Wisconsin families were hoodwinked by the California-based lender, which has admitted no guilt.”
“‘Never in my wildest dreams would I think that they would be so underhanded,’ said Greenfield homeowner Elizabeth DuPlanty. For DuPlanty and her husband, Rick, the Ameriquest settlement appears too little, too late. ”
“The couple sued Ameriquest in April, and Ameriquest filed a foreclosure action against them in May, court records show. ‘We may still lose our home because we owe more than it’s worth, and no one will write a loan to us,’ Elizabeth DuPlanty said.”
“Another Ameriquest borrower, Racine homeowner Darla Evilsizor, said her family is worried these days, too.”
“‘Our situation involved an over-inflated appraisal,’ Evilsizor said. ‘We have not been able to refinance and are still struggling. One big question that I have regarding (the penalty to Ameriquest) is, will it include the appraiser who appraised our home without even seeing it?’”
The Capital Times from Wisconsin. “While still below a year ago, the local real estate market showed some signs of stabilizing in June, the Realtors Association of South Central Wisconsin reported.”
“The 894 sales of homes and condominiums reported in June in Dane County were 5.9 percent fewer than the 951 last June, but that was not as bad as the 15.8 percent decline in May sales compared to last May.”
“A total of 1,313 homes and condos in Dane County were listed for sale for the first time on the South Central Wisconsin MLS in June, 17.3 percent fewer than a year ago, although well above the range of new listings of 899 to 1,189 from 2003-05.”
“But there remains a glut of homes and condos for sale here: The 5,458 total listings at the end of June are 5.9 percent more than a year ago, 79.6 percent more than two years ago, and well over double three years ago and triple four years ago.”
The Lansing State Journal from Michigan. “It’s been a frustrating few months for Jo Ann Hershey. Hershey listed her 1,900-square-foot East Lansing house in November 2006. She started selling at $291,000 and has dropped the price twice, first to $282,000, now at $274,900. She still has no offers for the three-bedroom, two-bathroom house in the Okemos school district.”
“‘In every house I’ve ever sold, the longest it ever took me to sell a house was three weeks,’ Hershey said. ‘The last house in Haslett I sold, the first person who looked at it bought it.’”
“(Economic) forces have pushed foreclosures up and lengthened the average time on the local market to 120 days, said associate broker Matt Bowler. It’s good news for buyers, who have more selection to choose from at lower prices. ‘There’s never been a better time to buy a house,’ said Matt Bowler, president of the Greater Lansing Association of Realtors. ‘The good news is Lansing is the bright spot in Michigan.’”
The Ann Arbor Business Review. “Development of Kingsley Lane was put on hold in mid-July until the housing market rebounds. The 46-condo project celebrated the groundbreaking for its first phase on March 21, and the developers anticipated a summer 2008 completion of 20 lofts.”
“However, the spring sales market didn’t gain traction, leaving sales commitments flat and buyers wary of their ability to sell existing homes in order to fulfill their purchase. ‘There was fantastic momentum … right up until the Pfizer announcement (in January),’ said co-developer Peter Allen.”
“Condo sales are down 18 percent this year over 2006, according to the Ann Arbor Area Board of Realtors. At the same time, the number of listings have climbed nearly 18 percent during the first half of 2007, with 1,772 condos listed for sale year to date. During that timeframe, 318 condos sold and the median sales price dropped $10,000 to $159,945.”
“At issue appears to be ongoing economic uncertainty paired with the pending departure of Pfizer from Ann Arbor, which could add over 1,000 homes to the existing excess housing inventory.”
“‘Demand has slowed down,’ Allen said. ‘It’s hard to track exactly what’s happening right now.’”
The Enquirer from Ohio. “Ohio Attorney General Marc Dann said his office is close to getting its first criminal indictments in its crackdown on predatory lending practices.”
“While Dann is already pursuing about 30 civil cases statewide, he said criminal charges are being pursued against the worst mortgage brokers and property appraisers that he believes helped give the Buckeye State the highest foreclosure rate in the nation.”
“‘Fraud is a crime and deserves to be punished,’ he said Wednesday. ‘We’re going to bring enforcement against those who cheat.’”
“In June, two Cincinnati-area mortgage firms were also among 10 named in civil lawsuits filed by Dann’s office under Ohio’s new predatory lending law. Dann has accused Ace Mortgage Funding of Sycamore Township and Premiere Service Mortgage of West Chester of improperly influencing property appraisers to ‘puff up’ property estimates to create bigger debts for homebuyers.”
“Tracey Brooks, said her purchase of a three-bedroom East Price Hill home was marred by her lender. Though she was told her loan came with a fixed rate, it adjusted after two years, pushing her $678-per-month mortgage payments to about $1,100.”
“‘I’m not in foreclosure, but it’s killing me and ruining my credit,’ she said. ‘I’ve put too much money into it to let it go.’”
The Suburban Journal from Missouri. “St. Charles County in March posted the state’s highest rate of foreclosures. One household out of every 26 in the county faced a foreclosure that month - a number 37 times the state average and almost 30 times the national average.”
“The failure to meet mortgage payments is a problem affecting all segments of the market, from those buying their first home to the luxury-home buyer. ‘It’s primarily people getting into a house that they could have waited a year or so to get into,’ said Don Rogers, president of the St. Charles County Association of Realtors.”
“In the luxury market, some lenders are settling for a less orthodox resolution to unpaid mortgages. ‘We’ve seen more short sales,’ says Cort Schneider of Schneider Real Estate.”
“What makes the upswing of foreclosures so excruciating is its damage across a wide swath of home prices. ‘The upper-end price range homes are the first ones to take a hit,’ Schneider says, though foreclosures hit homeowners ‘across the board.’”
“Rogers says that while area real estate agents work to get buyers pre-approved for loans, for some buyers, patience is the best policy.”
“‘Sometimes I see a pretty flower and I want to buy that pretty flower, and next thing I know I need to pay for the thing,’ he says of some buyers’ anxiety to get into a home fast. ‘Impulse buying is really a monster.’”
anyone want to take a guess what the comission will be on mort deals in the future ?
I’m guessing .1% ordered through a clowns head
Here is a SCARY THOUGHT:
All those mortgage fraud workers will be getting other jobs ……
I wonder how many embezzlement, theft, stealing company secrets, insider trading, cases will be related to prior employment as a Loan officer or RE scammer…. hmmmm picking tomatoes i’ll guess you make what? $70-80K a year ..you deserve a $500K house
“‘I’m not in foreclosure, but it’s killing me and ruining my credit,’ she said. ‘I’ve put too much money into it to let it go.’”
“Miss, we’re sinking. We have to abandon ship!”
“I can’t—I’ve put too much into it to let it go!”
Just another puff piece. It never said what her salary was and no one asked her questions on why she bought the property. She bought the RE mantra ‘buy now or be priced out forever’ and was a victim of her own greed. If her property had gone up $100K she would have refi’d and be liv’in the good life until the next refi.
Another “Entitlement Ellie” who’s getting her just desserts. She’ll be in denial to the bitter end.
I’ve put too much money into it to let it go.’
Says the monkey with its hand in the hole…
“‘Sometimes I see a pretty flower and I want to buy that pretty flower, and next thing I know I need to pay for the thing,’ he says of some buyers’ anxiety to get into a home fast. ‘Impulse buying is really a monster.’”
Earth to dipstick… A pretty flower costs about a dollar. An overpriced POS McMansion costs a few hundred thousand times more. Get the difference?
“He saw a pretty blue light and just couldn’t resist flying into it…then there was a bright flash of white, a snapping noise, and the smell of scorched bug.”
Next-of-kin testimony in Bug vs. Bug-zapper wrongful death lawsuit.
LOL!!! No, he doesn’t get the difference. Most of the people I work with are just like this. Whatever extra money they have, poof, right out the door on the latest toy.
I’m talking about the kind of person who paid 499.00 for an IPOD when they could have bought a portable CD player for 49.00. I know some of you probably did this, “Oh, it’s worth it. I couldn’t live without my IPOD”.
That’s what I’m talking about.
Shakopee???
“Mmph!!!” Won’t go there. Must. Be. Grown. Up.
LOL
“What makes the upswing of foreclosures so excruciating is its damage across a wide swath of home prices. ‘The upper-end price range homes are the first ones to take a hit,’ Schneider says, though foreclosures hit homeowners ‘across the board.’”
My new favorite past time is reading the classifieds postings of “notice of trustee sale”…and, damn, there’s a lot of them. I’ve seen them in the $1 million range all the way down to the trailer for $112k. I’d say it’s mainly in the 500K range. Here, as in northcentral AZ. Then I like to flip to the ’stuff for sale’ part of the classifieds…who knew there were so many ATV’s, BMW’s, hot tubs, granite countertops, and wedding rings for sale in our area?
BTW, I see the same phone numbers for some of this stuff for sell as in FSBO’s and contractor’s looking for work.
Hey, girlfriend. Email me if you’ve seen anything interestingly priced up there.
Needing some pots to go with that stove eh?
Do they have to disclose if some flipper stuck his head in that oven?
speaking of stuff for sale, marketwatch had a thing on Harley Davidson today.. sales are down, inventory is up, projection is weak. My guess is lots of them will soon cram the want ads.
In Next Month’s Issue: “Txchick57 on a Hardtail”
I’m scared of motorcycles.
There’s a retailer of ATVs, dirtbikes, etc here off Rt. 217. I’ve never seen more inventory than they’ve got there, all visible from the highway. Must be 300-400 vehicles out there.
The way I hear it, Txchick IS a hardtail….
“Another Ameriquest borrower, Racine homeowner Darla Evilsizor, said her family is worried these days, too.”
“‘Our situation involved an over-inflated appraisal,’ Evilsizor said.”
Almost choked on my granola after reading that transition from one FB to the next. It’s seamless and nonchalant.
Got Granola?
Wah wah wah, cry cry cry…that’s all we hear from these FBs these days, I’m getting really sick of it. They signed the freaking documents, grow up already.
Another Ameriquest borrower, Racine homeowner Darla
Evilsizor…
Evil Sizor??? As in Evilly-sized appraisal?
ta-dump!
(I’m here all week, folks. Try the roast beef, it’s great and don’t forget to tip your waitress)
“an over-inflated appraisal”
As opposed to a normally inflated appraisal?
Appraisal does not have anything with not being able to pay, Simple isnt it?
The foreclosures I see up for sale in Minnesota have the wildest asking prices. It’s ridiculous. They are the biggest of the wishers.
Here in Midtown they are setting up a lot of port-o-potties on 42nd St. It looks like the Con-Ed boys will be here for a while. I just saw some yuppie doorknob make a $400,000 offer on one of them. He loved the view and he had a Wall Street bonus burning a hole in his pocket.
I assume you don’t mean that he made an offer on one of the Con Ed workers.
…But sources say he was then outbid by his own realtor from Prudential Douglas Elliman.
The realtor said, “I could have just taken the $24k commission, but this is a fantastic investment opportunity. I figure I can put in granite countertops and flip it for a profit of $150k.”
Wow ive never seen so much kool aid being drunk! Hes gonna be kicking himself and cursing all the way down! He just lost $24k and will lose another $150k!
“On top of that, he would later learn, the broker had cut himself in for a $4,230 fee.”
Rule Number 1: Never trust anyone who is commision only!
rule #2. “Never get high on your own supply”
So frigging what. The little shark got eaten by a bigger shark. Both a pair of fraudsters.
Let’s correct the reporters mistakes…
Al Ynigues found out the hard way about the dangers that lurk (in exotic high-risk home loans) in committing morgage fraud. A broker he (trusted) colluded with exaggerated his income nearly three-fold and steered him into a variable rate mortgage with rapidly escalating payments he can no longer afford, nor escape without hefty penalties.”
“The music teacher knew the rates could ‘go up a little.’ But he never thought his first home in Apple Valley would gobble up his entire monthly income.”
Since he stated that his income was 10k a month, even a 4k a month reset, while high, is still doable.
So shaddup Montoya, if you do the crime, it’s gonna cost ya.
rule #3: “Never underestimate the other guys GREED!.”
Wayne Gilbert, president of STCAR. ‘Predicting exactly when that will change is an inexact science, but it’s becoming clear that our eventual recovery could be a multi-year adventure.’”
Uhm…”could be?”
Hey Wayno, if you’d been tuning into this blog, you’d have known this a couple years ago.
Glad the finally light came on for ya.
In light of this post’s title - What if TPTB (The Fed, or whatever shadowy entity you prefer) let the lending shenanigans go so long, encouraged the bubble to build — as cover for an inevitable, protracted RE bust, based on a confluence of events: the beginning of the end of US hegemony, declining wages, rising energy costs, economic dislocations in the wake of boomer retirement/cash-outs, etc.?
By staging the bust as a lending/corruption crisis, concerns about the intrinsic long term (30 - 40 year) values of RE are assuaged. It will appear to be a reasonable assumption that we’ll recover and return to historical norms once the ‘07 - ‘08 crop of defaults and foreclosures shake out.
Maybe I’ll just change my login name to MORE_TINFOIL. Is that taken?
“‘There’s never been a better time to buy a house,’ said Matt Bowler, president of the Greater Lansing Association of Realtors. ‘The good news is Lansing is the bright spot in Michigan.’”
They never stop. Can’t help themselves.
Lansing is nice compared to Detriot, no doubt, but Lansing is not the best of Michigan for anything. Aside from MSU and the state government Lansing is as automotive dependent as Detroit. Ann Arbor has a better technology base and a better university. Aside from Detroit and Flint most of Michigan is really quite nice. Lansing is part of the nice part, but not outstanding in any particular manner.
Buggy whips and radios are cheaper than they were 50 years ago, doesn’t mean one should go load up on $500,000 dollars on inventory and hope to resell them for more next year.
I just wish some of these real estate agents would do something more in life than be the KY Jelly in a transaction where some party is always getting screwed.
They’re more like the sand in the vaseline of that transaction.
Good point.
LOL! This is the funniest thread yet!
I can guarantee you, the day after Hiroshima was nuked, some realtor was oozing through the flattened, radioactive neighborhoods, claiming “There’s never been a better time to buy!”
How many heads did that realwhore have? Did he use all 4 arms to gesture what a good deal it is? LOL
One big question that I have regarding (the penalty to Ameriquest) is, will it include the appraiser who appraised our home without even seeing it?”
If the appraiser had seen our home and appraised it for a lesser value, would you have still signed the loan papers?
“…had seen your home…”
If the appraiser came in at a lower value, how much would you have whined to the loan officer that your home was worth more money? I guaran-da#n-T that this poor “victim” would have been pitching a fit saying the appraiser didn’t know what he/she was doing because she wouldn’t have received as much cash-out.
One big question that I have regarding (the penalty to Ameriquest) is, will it include the appraiser who appraised our home without even seeing it?’”
Whoweee!!!!!!!!
The quotes just get better every day!
No my dear…your appraiser will not be hung from the gallows.
In all likelyhood your appraiser was a former auto body shop parts remover who got a job as a number hitter with a high volume appraisal bucket shop. Since their contract with Ameriquest stated that all the appraisals were done in a 24 hour time span, guess what?
The hacks never even go to inspect the property!
They comuter can the report, download some comp pics from the MLS and throw in some look-alike pics of your place…and voila!
A real life FNMA 1004-not worth the paper it’s printed on.
But WTF…when you’re only making a fee split of $75.00 for valuation of a half million dollar house, you got to expect corners to be cut.
Anyway, your appraiser is long gone back to some auto body shop in some anonomous slum. He’ll never be found.
When my old boss got divorced and she refinanced her house to get it in just her name, the appraiser had to go out to a 1 MILE radius to get the comps to the number she needed. Where she lives that ain’t even in the same city.
So much for “automated valuation models”. There used to be saying that went something like, “don’t lend money on property that you can’t see from your office window”.
HD74, when I saw slab ranches in West Peabody selling for $350k (five years ago), I knew things were getting bad. Then it was the split levels for $500k.
Did I read here yesterday that our friend Bantering Bear bought a house? Where?
this goes back about a week and it’s fuzzy.
as i recall 3 acres or so.. with a house. near 400K? Ohio or MI sticks in my brain but is likely incorrect.
Reason was business.. some kinda landscaping or nursery supply.
“Some kinda landscaping or nursery supply.”
Hmmm. A lot of house these days have plants growing inside them. But I don’t think that’s the kind of “grow house” Bear bought into.
– Judge Smales
“You’ll get nothing and like it!”
In a Washington suburb 3 acres 1600 sqft and if I’m not mistaken it was 220k or 165k don’t remember which one but it was in that range.
Did I read here yesterday that our friend Bantering Bear bought a house? Where?
Here
I can’t believe he got ragged on like he did there! I would have done that deal too.
I can’t believe he got ragged on like he did there!
I was a bit surprised by the vehemence myself. I found it interesting. I mean, someday, somewhere housing might be sensible again and the things we’re seeing/saying now won’t apply.
If you ever want to own a home, you can’t blind yourself to that possibility. You can’t just chant “down with home-ownership!” forever.
I thought the same thing. It was surprising because it seems like most people on this blog are very independent-minded. Trading one type of groupthink for another is no good. Sounds like BanteringBear found exactly the sort of place I’d like to buy. If I were to find it for 140k, I’d be all over it. I just think we have a ways to go before that happens in the area I’m looking.
Did I read here yesterday that our friend Bantering Bear bought a house? Where?
Bantering Bear - Say it isn’t so!
Rich Dad Poor Dad is spewing his “wisdom” on Fox News - He’s saying there is a housing crash but he is still investing in Las Vegas & I think he said Phoenix and also Oklahoma (because of an oil patch). ugh
his armegedon on US stocks didn’t work out- how can he dis RE he hawked it till 06?
I checked Clark County public records, no Robert Kiyosaki. I did see Maricopa, he did own two homes there. I will give him some credit, he does have equity in both of them. He does like ARM’s though.
just go read John T. Reed synopsis of Kiyosaki. Make the deal with trump make sense. They are both scam artists.
just go read John T. Reed synopsis of Kiyosaki. Make the deal with trump make sense. They are both scam artists.
““‘I got burned,’ he said. ‘It’s outright fraud.’…Ynigues says he wasn’t told was that his broker had listed his income as $10,000 a month,”
Why did Ynigues sign the paper that said he made $10,000 a month. Isn’t that fraud? I don’t understand what “his broker had listed his income” means. Does that mean that the broker wrote the amount and then held his hands over Ynigues as he signed the loan documents? Does it mean that Ynigues signed the docs thinking “well, i know I don’t make that much, but it’s out of my hands, since the mortgage guy seems to know what he’s doing”?
If what you are about to sign has false information, DON’T SIGN IT.
“My name is [Ynigues] Montoya. You have overvalued my income. Prepare to die.”
LOL.
Great, man…just great.
I got asked by my employer to send a scan of my signature to marketing. When asked to see the document they were going to add my signature to, it said, “I certify the above is true and correct to the best of my knowledge”. This in persuit of a job for the Federal government.
When I raised a huge fuss, both the marketing and HR folks thought it was no big deal. These are the type of people that think a $3000 a month income can afford a $5000 home.
“These are the type of people that think a $3000 a month income can afford a $5000 home. ”
And they’d be right. In two months, you’d have that sucker paid off and ice cream money.
There used to be an old saying, “Tell it to the judge”.
“As a first-time home buyer in 2004, Ynigues sought a conventional fixed-rate mortgage but was told he didn’t qualify. He was steered into an adjustable-rate mortgage on a $270,000 loan starting at 6.9 percent, costing him $1,660 a month. That came on top of a second fixed-rate mortgage to cover the down payment and closing costs. It has a 9.3 percent interest rate, for a monthly payment of $430.”
He didnt qualify and he knew it… So then went begging for someone to shoehorn him into a flakey 1st and 2nd cause he had nothing to put down.. and in the end, he got his little dream house.
Is this predatory lending or preditory borrowing? I get them mixed up.
“Is this predatory lending or preditory borrowing? I get them mixed up.”
Bingo, it’s both.You’ve got a slimey broker and a weasel of a borrower and they met in an office and colluded to commit fraud.
Both of these jerks ought to be in jail.
Is this predatory lending or preditory borrowing? I get them mixed up.
It was an IQ test. He failed.
Well played, Neil.
– Judge Smales
“You’ll get nothing and like it!”
This is just me, and I’ve had a somewhat tougher day than usual, but can we stop with the coverage of the crying FB’s already? Jeez, call the whaaaambulance and clear them out. Either that, or turn them over to SNL to resurrect the Compulsive Liar skit. “Yeah, I earn two… hundred… er… thousand dollars a year. Yeah, that’s the ticket. Two hundred thousand dollars a year, doing art… istic… musical… I’m a rock star. Yep, that’s me. And there the bank is, foreclosing on me because they never told me about anything on those pages full of printed whaddyacallems - words. Yeah. That’s the ticket. Didn’t tell me about the words.”
Now I’ll have to move back in with my wife, Liv Tayl, no, Angelina Jol, no, MORGAN FAIRCHILD. Whom I’ve slept with!
Testing
A broker he trusted exaggerated his income nearly three-fold…
Does anyone else find that statement blindingly contradictory? What trustworthy broker would knowingly exaggerate your income by a factor of three? This clown is no victim - he was in on the scam, only he thought rising home prices would cover all his sins. Justice would be him and his broker being forced to sleep under the same bridge, while some smug renter buys his foreclosed house for pennies on the dollar.
“..contradictory?”
not at all.. a guy does for you and it’s taken for granted that you are supposed to screw him at the first opportunity..
see.. Your problem is you think like an honest person.. gotta get over that.
Dann has accused Ace Mortgage Funding of Sycamore Township and Premiere Service Mortgage of West Chester of improperly influencing property appraisers to ‘puff up’ property estimates to create bigger debts for homebuyers.”
With names like those, did anyone actually expect them to be reputable? How’s next on Dann’s prosecution list - The Aristocrat Escort Service & Mortgage Broker?
It’s almost certain that this Ynigues clown thought he’d be taking the fast ride to riches. He’s a 65 year old music teacher on a modest income who’s never owned before… what kind of 65 year old without money enters into a 30 year mortgage as a first time homebuyer?
One trying to ride on the “flip and get rich quick scam fraud train” to wealth
Too bad no one told him the peak was in late 2005 and he caught the knife on the way down as it slit his wrists.
Every sat in the Providence Journal you’ll find a special 10 page section of foreclosure listings, yet through it all most realtors are still living the delusion that we’re just going back to a “normal market”, and most sellers are still in denial that their tiny raised ranch on a 5,000 sq foot lot in the ghetto is no longer worth 350k. Some very big surprises are brewing in this perfect storm - a minimum 30% haircut is underway in the northeast! I wouldn’t be surprised if it all goes back to pre-boom pricing now that the local store clerk making 17k a year is not capable of flipping a house with no down payment or income verification - it was just all so totally insane! So much fraud, so many participants.