No Sign Of A Turnaround In California
Sanluisobispo.com reports from California. “Foreclosure activity is at its highest level in a dozen years in San Luis Obispo County. Lenders sent county homeowners 653 notices of default from January to July, according to All American Foreclosure Service. That’s up from 296 in the same period a year ago, and 99 notices ahead of the 2006 total of 554.”
“‘It’s rough out there. I haven’t seen it this bad since 1995,’ said Don Vaughn, the owner of All American Foreclosure Service. ‘The bottom line is that people have bought homes that they couldn’t afford.’”
“Foreclosure activity is heavily concentrated in Paso Robles and Nipomo, and to a lesser degree Los Osos and Atascadero.”
“The typical home that is foreclosed on in the county is between $450,000 and $600,000, Vaughn and Lynn Cooper, owner of a firm that also tracks foreclosures. But occasionally, higher-priced homes fall into foreclosure.”
“‘Right now, there are quite a few higher-dollar homes in foreclosure’ in the county, mostly spec homes, Cooper said. ‘These properties take a hit when things get tight.’”
“David Gray, a partner in Mid-State Realty in San Luis Obispo, watches the foreclosure market closely. Gray hasn’t bought any homes recently because the debt owed is often higher than the value of the home.”
“‘It’s just not profitable,’ Gray said. ‘I’ve seen novices come in and they think they are getting a deal, but they get burned.’”
The Daily News. “Los Angeles City Councilman Richard Alarcón sought $5 million in foreclosure assistance Wednesday for residents in danger of losing their homes as the housing market continues to unwind. ‘More people are losing their home today than were lost in the (1994 Northridge) Earthquake,’ Alarcón said.”
“During the second quarter, 2,581 properties went into foreclosure, up from 287 a year earlier, Dataquick reported.”
“Jack Kyser, chief economist at the Los Angeles County Economic Development Corp…wondered how far the $5 million would stretch. ‘It makes perfect sense, though. People were trying to buy their first house, and they badly stubbed their toe,’ Kyser said.”
The Union Tribune. “San Diego County’s economic outlook has taken a downward plunge, dragged down by a sharp decline in home building, according to a report released yesterday by the University of San Diego.”
“There were 34 percent fewer home-building permits issued in the first half of 2007 than in the same period of 2006. Condominiums and other multi-family units were down 44 percent, compared with a 21 percent drop for single-family home.”
“A report last month from the Monster.com online employment site said that the biggest drop in San Diego want ads was in white-collar jobs.”
The Voice of San Diego. “‘The dominant factor in the local economy remains the slumping housing market, which is negatively impacting employment and income, hurting consumption, and leading to a surge in the number of foreclosures,’ wrote USD economist Alan Gin. ‘Although a full-fledged recession is not likely for San Diego, the possibility is higher than just a few months ago and cannot be discounted.’”
The North County Times. “‘At this point, there appears to be no sign of a turnaround in the near future, with the local economy expected to be weak through at least the early part of 2008,’ Gin stated in the report.”
“The weakness has spread outside the housing market, Gin said. ‘It’s more of the same, but worse,’ he said.”
The Orange County Register. “First American Corp. in Santa Ana today reported a second-quarter loss of $66 million. The title insurer set aside $387 million for expected losses on title insurance policies and other claims. These claims are coming in higher than expected on policies written from 2004 to 2006, the company said.”
“‘The Title Insurance segment continues to focus on margin improvement by centralizing certain administrative activities, reducing headcount and consolidating selected title branches,’ stated CEO Parker S. Kennedy.”
“Accredited Home Lenders, a San Diego-based subprime lender, today said in a filing it may not remain solvent. Here are some of its statements from the annual report: ‘We face significant challenges due to adverse conditions in the non-prime mortgage industry, and we cannot assure you that we will continue to operate as a going concern.’”
“An investor in a company never wants to see the two words ‘going concern’ in a company filing. That’s a blatant reference to solvency.”
The Marin Independent Journal. “Add Mill Valley-based Redwood Trust Inc. to the growing list of public companies buffeted by shock waves from the bursting of the real estate investment bubble. The stock of the real estate investment trust has lost almost half its value over the past two weeks as concern over the breadth and depth of the real estate correction has grown.”
“The company buys jumbo (over $275,000) mortgage loans from top lenders. The loans, about 50 percent of which originate in California, are then placed in a trust.”
“Jim Fowler, a former mortgage industry analyst who is now a managing director with a hedge fund that invests in Redwood, said, ‘The biggest problem in the capital market right now and amongst both lenders and mortgage investors is liquidity.’”
The Santa Cruz Sentinel. “Local lenders are seeing a ripple effect from the shake-up in the mortgage industry resulting from home loans going sour.”
“American Home Mortgage announced Tuesday that its line of credit had been cut off and it was unable to fund loans promised to borrowers. The once fast-growing company established a branch in Santa Cruz in 2004, as the median home price topped $600,000, and employed 18 people.”
“Santa Cruz Mortgage, which had opened an office in Scotts Valley in 2003, closed that office this summer. A staffer said Wednesday the company has 42 employees at four locations.”
“Washington Mutual closed an office in Dublin in the East Bay that handled subprime loans, eliminating 120 jobs.”
“According to the Santa Cruz Record, 425 homeowners in Santa Cruz County have received notices of default for falling behind in their mortgage payments, double the number a year ago, and 226 properties are in foreclosure, triple the figure from a year ago.”
“Local lenders agree the mortgage industry was due for a correction. ‘It’s a return to normal,’ said Tai Boutell, who’s seen the industry go boom and bust in the past eight years. ‘The guidelines were too loose. Unfortunately, some families are feeling it.’”
“Chick Donaldson, with Santa Cruz Financial in Capitola, sees spending habits as part of the problem. When people return to refinance, it’s difficult for them to get better terms if they haven’t cut back on spending and paid down their credit card debt.”
“‘With subprime loans, you get subprime buyers,’ said Donaldson, who has been in lending since 1985. ‘People were getting into things they couldn’t afford.’”
“A total of 164 single-family homes sold in June, the fewest since 2001. ‘It’s really slow now,’ said Charles Thomas, owner of Financial Strategies Mortgage Services in Capitola.”
“Meanwhile, some potential buyers sit on the sidelines, fearful of investing at the wrong time, and that is pushing home prices downward. ‘I see homes for as low as $549,000 now,’ said Thomas. ‘People don’t want to pay $700,000 for something that will be worth $650,000 six months from now.’”
FYI, this blogs’ server will be shut down for a few minutes this evening in an effort to fix the problems we’ve had the past two days.
According the Marketwatch, Senator Chris dodd called IndyMac Bank’s CEO Mike Perry and asked how congress could step in to help the mortgage industry.
I think we need to flood that bastard Dodd with more emails and phone calls. He just doesn’t get it. No bailouts for the banks that enabled this mess.
“The typical home that is foreclosed on in the county is between $450,000 and $600,000″
WOW, I’m a little sheltered here in No. Colorado. Our foreclosures are numerous but mostly in the $150k to $250k range. My guess is these are subprimers going belly up.
I would bet that as this plays out, the higher dollar homes will be next (Alt-A defaults). In addition, the better deals will be further down the line (late ‘08 and ‘09) as the less patient investors have already blown their respective wads. The number of bidders for these more expensive foreclosures will dwindle and prices might be realistic.
And with that in mind, how far do you think 5 mil in aid is going to go? Nice, huh? When you’re talkin’ aid, don’t even think about millions, or billions. When you get a trillion, let’s talk.
Exactly, that $5 mil in aid might cover offices and salaries for a newly created beaurocracy (sp?), but won’t do squat for the multitude of FB’s. It’s a freakin’ band-aid!
How much was Ohio allocating to each FB that won a lottery ticket to its bailout program? $100,000? At that rate, $5M would cover exactly 50 people. From bail-out to publicity stunt.
The Ohio bailout program involves banks putting the loans back so that the residents keep paying and the bank doesn’t get stuck with some crappy house. The bubble worked differently there because it was mostly corrupt brokers selling fraudulent loans. Your understanding of the “bailout” in Ohio is totally wrong and that is a problem for your agenda.
What are you talking about mole man? What agenda? You think what Ohio did was good?
“The Ohio bailout program involves banks putting the loans back so that the residents keep paying and the bank doesn’t get stuck with some crappy house.”
The last thing many borrowers will want is to continue with their same loan because their homes have already fallen in resale value, so many of the bubble buyers are now upside down. Once that reality settles in then it’s only a matter of time before the keys are tossed on the kitchen counter before stepping out the front door. Either way, the quality (value) of the bank’s loans has fallen and will continue to do so. Sure, Ohio’s bubble might pale in comparison to FL or CA, but bubbles are bubbles.
“hat is a problem for your agenda”
Oh shoot, you saw right through me…rats.
Mole Man:
Dayton Daily News, March 27, 2007
http://tinyurl.com/29nmkq
“The agency will issue $100 million in taxable municipal bonds to provide approximately 1,000 families with average loans of $100,000 per home.
If demand is sufficient, the agency will issue additional bonds or launch other forms of financing up to $500 million each year, a press release said. The program is to start next Monday”
Cost: $100,000,000, financed by state borrowing money (issuing municipal bonds)
Benefit: 1,000 homeowners.
Money spent per homeowner helped: $100,000
QED
Even in Alarcon’s crappy district, houses were going for 500K, how many FBs will 5 mil. save? Not many. Looks good on a campaign ad though.
Take that $5 million and start the NRT. Its overdue. They won’t even have to charge much per foreclosure transaction; volume will fully fund it.
Got popcorn?
Neil
ex-nnvmtgbrkr;….How bad has the Reno market gotten ??
“When you get a trillion, let’s talk.”
From “too big to fail” to “too big to bail”.
Spend that $5 million on tent camps and soup lines instead. The FBs are going to need them.
Knowing the sleeze councilman, the five million will go to 7 or 8 of his relatives or other suck ups. None for the real idiots.
Yes… $450-600K is - excuse me - was- “entry level” in that neck of the woods.
Yep - in the last 2 years, just about anything under $700K was junk. And the $700K only bought you a 1900 SF Centex stucco POS.
If you follow RealtyTrac there are some pricier properties ($800K+) getting their NOD’s in the mail.
Alt-A is next on the Central Coast.
When the kids start going to Kindergarten (in about a month), I’m going to start digging into the county recorder’s office to see what kinds of loans recent purchasers on the central Cali coast have been using…I want to see if “everyone is paying cash”, and “everyone is a rich baby boomer” rings true…
Be sure to email me what you find - I’ll create a separate post over at my blog.
BTW - there are some interesting comments from people in the Alan Little thread.
http://centralcoasthousingbubble.blogspot.com/
I’ll be sure to email you.
“Alan Little thread”
Yup, been following it.
Just anecdotal, but went shopping at Banana R & GAP several times on Higuera Street for the past 2 weeks. All I can say is “where is everybody?” Usually summer is the time for doctor & dental appts for kids, and to be able to get an appt is difficult, but I am not having probs. I go in to these offices and there is usually just one other patient. All I can think of is that a lot of people either moved out of the area or do not have the $ to spend.
~Misstrial
Accredited Home Lenders, a San Diego-based subprime lender, today said in a filing it may not remain solvent. Here are some of its statements from the annual report: ‘We face significant challenges due to adverse conditions in the non-prime mortgage industry, and we cannot assure you that we will continue to operate as a going concern.
AHM stock was a roller-coaster from hell this week - fortunes made and lost in minutes. Tomorrow the company closes its doors and the stock goes to zero. Unbelievable. Who’s next?
You said it; Lend might be next.
Carnage is King
Gee, let’s hope so, he said, holding tight to his January puts…
I got brown on my neck today and sold my WM jan puts at 6.1 (bought at 2.2).Still watching the glass. It’s half empty now.
I wonder if your question should be, “who isn’t in this line?”.
It appears that the roller-coaster is picking up speed.
Apparently firms offering foreclosure services are not in this line…
we cannot assure you that we will continue to operate as a going concern
Am I the only one who thought, after reading this, of that one prostate commercial? “My doctor said it’s not a going problem, but a growing problem.” Oddly fitting here, don’t you think?
yes - with that little L.A. Law troll heehee
“‘With subprime loans, you get subprime buyers,’ said Donaldson, who has been in lending since 1985.”
Now there is a comment makes me chuckle. I wonder how fixed income investors never made that connection?
With Alt-A, you get people with good credit but not enough income.
doesn’t seem all that much better to me, your still missing one “C” out of the 4 “Cs” of credit worthiness.
kind of my point!
There are five “c”’s - condition, capital, character, collateral and capacity (or cash flow) - that old school corporate lenders learned. The recent LBO’s are probably missing most of them.
“With Alt-A, you get people with good credit but not enough income.”
Like the stretched 80k/yr middle-class in CA?
While J6P thought he was getting ahead of the Chinese, Indians & illegals he was actually falling further behind because of the scam artists who allowed him to buy a bill of goods.
Do you think emerging economies are hurting? or are likely to hurt.
“I wonder how fixed income investors never made that connection? ”
Because they thought they were getting AAA rated loans and not just a method for allocation cashflow in the event of losses.
seems that they were mislead..no?
Funny thing is, I bet they all thought the rating agencies were on top it, just like the all of the auditing firms…
Enron, Tyco, WorldCom,
Got a CPA? (or maybe some popcorn)
With stated income loans, you get buyers who overstate their incomes.
Hmm..
I feel another “McBoned” type thread starting.
“I’m not gonna let no fixed income investment hurt my family, no sirree! (haawwk, spit)”
Every upside down homeowner will get a kaiser roll, says Kyser…
“Jack Kyser, chief economist at the Los Angeles County Economic Development Corp…wondered how far the $5 million would stretch. ‘It makes perfect sense, though. People were trying to buy their first house, and they badly stubbed their toe,’ Kyser said.”
Kyser’s a dummy. Yeah, they “badly stubbed their toe”. Nah, when I stub my toe I might swear loudly but within 3 minutes I’ve forgotten about it and and back doing whatever it is I’m doing.
These people will be swearing loudly for many many yrs after realizing the damage a foreclosure does to their lives.
Game over…
“stubbed toe”
yea, they stubbed it on a buzz saw
Thanks…
I have to remember not to drink anything while reading the comments.
Got popcorn?
Neil
More likely they got gangrene. The result being the leg cut off.
How will government try to prop up large financial instutions should they be caught in the conatagion.
I suspect they will change name to Philip Morris.
In Germany, they just bail out the bank. I read that they just did this in an article linked from prudentbear.com.
Why is First American taking such big losses on its title insurance policies? I thought that those policies only came into play if there was a problem with title or an encumbrance, not just a straightforward foreclosure. Anyone have any ideas on this?
Dear Bretheren,
Longtime Reader, very impressed with Ben, as well as the long list of brilliant economists/humorists on this blog. Excellent stuff.
I have a question.
My wife and I cashed out of a one-bedroom condo in Fort Lauderdale last year (bought in 2002) and now are watching the stock market, where we have only a little cash…
I’ve noticed the majority are bears on this blog, so my question is:
Should I be bearish on stocks?
I want a housing price crash, so for some reason I FEEL that I want a market crash…
But is that wise?
Please help. We’re renting in Lauderdale, both have good jobs and are trying to save… but what about the stock market. Shouldn’t we want a strong stock market now that we’ve cashed out of RE?
Long term, I’m bearish. Short term I just expect lots of bouncing around in place. It will take awhile for the housing bubble to hit consumer spending full force. Also, we’re well ahead of Europe in this collapse thing. I give it 6-9 months before the euro and pound crash, making the dollar stronger in relation. That, combined with slower u.s. consumer spending will take out corp profits. That is when the stock market will tank.
IMO
Thanks Darrrell,
So if our savings are less than 100k, the only smart bet for a conservative working genX couple is a money market, low-risk 401K?
Man it feels whimpish… what about shorting Berkshire before Warren kicks the bucket?
That was a joke, I like Warren and am from O!
My 401 is in a special savings plan and US treasuries. My cash is staggered in CDs. It’s not glamorous investing but sometimes it is best to invest like a grandma.
You sound like a fed, Gwyn. FERS or CSRS?
don’t confuse a money market account with a 401k, they aren’t the same thing.
A money market is a type of fund or account. A bank money market is FDIC insured up to $100K per depositor. A money market mutual fund is not insured/guaranteed.
A 401k is a type of retirement account and may be invested in a handful of different investment vehicles (ex. money market funds, balanced funds, equity funds, company stock, etc.)
“A money market is a type of fund or account.”
To be precise, money market refers to commercial and government paper (t-bills. CDs, banker’s acceptances, repurchase agreements, ABSs, commercial paper- the latter usually under 270 days maturity) with maturities under one year. Any trading in short term debt instruments is engaging in the money market.
Could the stock market be divorced from the real economy? I think we all want a strong economy and then the rest will take care of itself.
Stock market lead by Big Caps is divorced from US Economy. You micro caps & small caps joint at hip to US economy.
Big caps are now global plays.
I think that stocks are VERY risky because they can drop faster than you can react. If you want to make some money you can short stocks, but there is no limit to how much you could lose if you short the wrong stock. The market isn’t rational so if you attempt to play rationally then you can get burned.
At this point, I think you could probably beat the market by earning 5% in a CD somewhere. The key going forward will probably wealth preservation. If you can keep your relative purchasing power then you will be ahead of most people!
As long as you are in cash just keep an eye on the printing presses and be ready to jump into assets / other currencies if necessary.
I’ve been wondering what’s the most obvious sign to look for when old Ben fires up the presses? Are there any blatant signs its time to move into gold et al.
Tin foil hat and scuba gear necessary. It can be lonely out here. http://www.safehaven.com/article-5295.htm
You can still find the M3 if you look hard enough. If there were blatant signs they would already be priced into the market. So unless you’re on speaking terms with Bernanke it’s probably a good idea to diversify.
Ah, you might also split the CDs into seperate banks/credit unions. I’m in 3 different places all paying over 5%.
Many thanks!
I’ll go back to lurking/learning.
If you want to play the market consider this possibility. Keep your money in safe investments and start studying the stock market. For example you could begin with Peter Lynch’s various books. Mr Lynch apparently had the best yield over a 10 year period for the big guys. My idea would be for you to take a sector you like (say toys) and study the companies in that sector. Also the rich people I know have multiple stock brokers…get to know the ones who specialize in your sector (cars for example). I became a stock broker many years ago in hopes of improving my trading skills. Didn’t work out…I basically had a great time day trading but burned out at about even (minus the thousand of hours I put into the entire project). Have fun and keep your money safe. By the way, I’m also a real estate investor and its still the way to make money (far easier than the market). You just need to study an area like its a stock…don’t try to catch the bottom. You should become an agent or get access to your local mls so you can study the local market. Good luck and have fun, its study and timing. gw
Cramer had an interesting insight on his show today. Glad I saw it for the first time in months.
back in 1990 there was a real financial crisis where Chase and Citibank almost went out of business and were insolvent for a little while. If you check the charts, the SP500 only dropped 20% and that was only after Iraq invaded Kuwait. And it started going back up before Desert Storm, and in October right about the time Bush announced an offensive capability.
1987 was a 30% SP500 crash. then a jump back to pre-August 1987 levels. Year of a flat market. 1990 bear market and then another bull. And housing didn’t bottom out in NYC until 1994.
i wouldn’t plan on a market meltdown like the nasdaq of 2000-2003. people will gladly forclose on their homes, rent for half the cost and keep on buying Ipods and $80 Juicy sweatpants
I totally agree. Expect stock market to get kicked in the balls, but it will eventually come about. I also am thinking China may be a good play. Especially if they float their currency.
You may “want” a strong stock market but what you’ll get is something else and beyond the crystal balls of this blog. Stock market moves also depends on leverage.
Your guess is as good as ours wrt market trends.
If you don’t know what to do, park it in a money market account but as others say, watch who you deposit it with. If appreciable amount of $, you can get ~5% which isn’t too far from “experts” return from the stock market of 7%. Not too shabby for doing “nothing”.
OT…
Does anyone have a link to the ARM Reset Chart/Graph that had been passed around a while back?
Thanks.
Here’s one link:
http://www.bubbleinfo.com/statistics-2007/2007/3/15/arm-reset-schedule.html
Excellent. Thanks so much.
I cannot get enough of that chart. Ivy Zelman rightfully deserves induction to the Housing Bubble Hall of Fame for that bit of work.
Here are a couple of take-home interpretations:
1) Subprime resets taper off by Q4 2008, but a massive weight of other species of ARM resets (Alt-A + Unsecuritized + Option + Agency + Prime) does not hit the second tsunami crest until past mid-2010.
2) The second wave does not taper off to negligible levels until Q4 2011 or so.
3) Since all of these resets were scheduled as of year-end 2006, any efforts by Fannie, Freddie and the FHA to “ride to the rescue” by getting more people to buy homes they cannot afford using subprime will only add to the massive weight of resets already scheduled.
That second wave has probably grown since the graph was first published. Also remember the Option ARMs will move up in time becuase of people making minimum payments.
A note on financials the banks show option arms as making full amoratizing payments even as the balance is getting bigger. Not sure how they get away with that but they do.
“Also remember the Option ARMs will move up in time becuase of people making minimum payments.”
A very important consideration for 2008/2009. Almost all of those “prime” option ARMs due to reset in 2010/2011… won’t last past mid-2009.
Its actually part of my calculation on when to buy.
Got popcorn?
Neil
“‘It’s rough out there. I haven’t seen it this bad since 1995,’ said Don Vaughn, the owner of All American Foreclosure Service. ‘The bottom line is that people have bought homes that they couldn’t afford.’”
I wish I could have seen the saliva flowing inside his hungry mouth as he described the dire situation posed by rising foreclosure levels. The bottom line is that his business is about to take off to levels not seen since 1995 and before.
Good on him. He’s providing a necessary service that meets an overwhelming market demand.
Toast,
Last week I had the opportunity to drive through 85249 on my way down to Florence. Man, they’re still building down there.
Awesome view of the Superstition Mtns from down there.
Lip
“David Gray, a partner in Mid-State Realty in San Luis Obispo, watches the foreclosure market closely. Gray hasn’t bought any homes recently because the debt owed is often higher than the value of the home.”
“‘It’s just not profitable,’ Gray said. ‘I’ve seen novices come in and they think they are getting a deal, but they get burned.’”
I assume he is referring to all the novice investers eager to catch falling knives? The same guys who are helping to reset the comps by snapping up deals at what look to a novice invester like fire sale prices, but which are actually still considerably higher than where the market will eventually settle out, once prices finally realign with fundamentals (incomes and rents)?
“‘I’ve seen novices come in and they think they are getting a deal, but they get burned.”
These are the investards you see paying 2% below retail at an auction for a trashed REO.
“‘It’s just not profitable,’ Gray said. ‘I’ve seen novices come in and they think they are getting a deal, but they get burned.’”
Bernard Baruch (one of the most successful speculators of the early 20th century) was quoted as saying that there’s more money lost buying on the way down, than buying at the top.
“San Luis Obispo County…‘Right now, there are quite a few higher-dollar homes in foreclosure’ in the county, mostly spec homes, Cooper said. ‘These properties take a hit when things get tight.’”
Yup:
The Central Coast Housing Bubble Blog
“Death Watch: Alan Little Custom Homes”
http://tinyurl.com/35nne2
“Jack Kyser, chief economist at the Los Angeles County Economic Development Corp…wondered how far the $5 million would stretch. ‘It makes perfect sense, though. People were trying to buy their first house, and they badly stubbed their toe,’ Kyser said.”
“Stubbed their toe?!” Ahahahahaha! Ahem… sorry. I just found it incredibly funny that this buffoon equated people ruining their credit to subbing their toes. Oh wait, that’s the extent of how J6P sees it too, isn’t it? Screw it, it’s not that funny after all. Sigh.
Opps, misposted there. Sorry, Arroyo…
No Problemo.
ArroyoGrande,
Do you sell those fine pictures on your website?
Lip
Yes. Thanks! Email (see web site).
“wondered how far the $5 million would stretch. ‘It makes perfect sense, though. People were trying to buy their first house, and they badly stubbed their toe,’ Kyser said.”
Yes, it makes perfect sense to be making $50,000 a year and buying a $600,000 house…get the band-aids out.
I keep seeing these 50K buying 600K and similar quotes, but they seem so far out of whack that I cannot believe them! The interest alone would eat up ALL of the after-tax income.
I was making 65K and couldn’t qualify to borrow 280K with good credit. Perhaps I wasn’t going after the right types of loans from the right companies.
Anyone who took out that loan would foreclose almost immediately!
Change your “right”s to “wrong”s and you have the right picture.
Neg-Am or Option-ARM loan with an initial rate of 2% (the rest of the money you *should* be paying in interest gets added to your loan balance). That’s only $1000 a month. See, anyone can “afford” a house in California. Until they can’t.
“‘With subprime loans, you get subprime buyers,’ said Donaldson, who has been in lending since 1985. ‘People were getting into things they couldn’t afford.’”
AG adds: “And with Prime borrowers with I/O ARMs and Option ARMS, not to mention HELOCs, you get over leveraged buyers who happen to have high FICO scores.”, said Arroyogrande, who has been watching real estate since 2003. ‘High-FICO people were getting into things they couldn’t afford.’
i am traumatized from living here and im scared of my LL. he just wrote me again.
Ann-
Please contact me regarding the property as soon as possible. It will be listed on the MLS starting tommorrow or so and I need to coordinate with you your situation and make sure the realtor can show the place.
I have also spoken to my father and we have an exit plan for you that I will discuss when you contact me and timing. If you agree you can leave fairly quickly as you have wanted for so many months now.
I await your call or email.
Rob
im scared to write him back and im shaking. eeek its a monster!
Remind me…do you want to leave? Maybe he’ll offer cash to keep the place looking presentable and leave with no problems.
If you don’t want to leave until the end of the lease, perhaps contact a real estate attorney, or maybe a free service provided by the city that helps renters with legal questions regarding landlords (do an internet search).?
“im scared..”
Do not screw around.. nothing personal but your fear puts you into a position of weakness .. negotiating or communicatiing anything at this point is dumb.
consult an atty asap and, in a friendly, open way, let the LL know you’re searching for legal advice before you answer his requests and/or questions.
and he wrote again and im still scared:
Ann-
If you like, you can pay the rent due on the 17th of this month and vacate whenever you like. We will release you from your lease obligation, once we receive your rent due. From that point you have 60 days to vacate if you agree.
If you vacate earlier, you will receive a proper refund of your last months rent and deposit less damages, but you must make a payment of the 17th of August and thus your last day of occupancy will be the 17th of October at the latest.
Time is essential , hop to hear from you.
Rob
Hey Rob:
What about your Moving expenses too….the landlord is OFFING YOU NOTHING TO BREAK YOUR LEASE.
He is still making you pay for the next two months…what a loser.
I would stay until the last day of the lease…..I would NEVER trust a Landlord who is selling a house to return 2 months rent and deposit…… And even if you sued him, he could be in BK by then or foreclosure….and all you would have in reality is an IOU from the court against him.
We should have a weekend thread on who can write Rob the most offensive (from his point of view) letter possible.
Dear Rob (or should I just call you $hit for Brains from now on?),
I will be glad to make the payment of August 17th. As well as my check, I am including a small picture frame with the payment. I was thinking that you could frame my check, if you don’t have an immense need to immediately cash it. You can memorialize this check since it will be the last money you see from this piece of flaming dog turds for a good long time.
I do not wish to hold you back any longer from joining the summer “listing” season. Feel free to put any price on this palace that you see fit. May I suggest that you start with a price of one gajillion dollars. If you are going to put a ridiculous price on a depreciating asset, you may as well stand out. One gajillion dollars is no more, or less, ridiculous than the number that I’m certain you have in mind. After all, a troglodyte such as yourself deserves such a rich payoff. Signing a mortgage placed you in the same category of “jenius investor” as notable investors such as Casey Serin and the fruit picker making $17,000 per year.
I wish you all the best in the future. Lacking both integrity and brains you will need all the best wishes that can be offered. When you are still holding this place in two years, I will gladly rent for one half the price I am currently paying, as long as you install new carpets and agree to a 1,000 mile restraining order that will allow me to castrate you if you violate the designated order.
Best of Wishes,
Ann
I’m sure I could do better but on short notice it will have to do.
You have legal rights as a renter. I have been and am still going through this same problem right now.
You have the right to STAY UNTIL The LAST DAY OF YOUR LEASE. As long as the rent is paid. And your lease goes with the new owner.
If you know the LL is in foreclosure you can try and deposit the rent money with the court and force the landlord to sue you, and here in NYC, a judge will take into account your last months rent and security. At least this way You might have 2or3 months deposited with the court and you get it all back.
A lease WORKS BOTH WAYS, a LL will charge you for every dime he lost if you broke the lease…well….
One last bit of advice, if a LL wants to move back in, or sells it, then most deductions for damages are not allowed by the courts. (some will be adjusted at the closing)
The logic is this: there is a term called “rental standard” which in essence means if there is a stain or scratches on the counter top is perfectly fine for a rental. But if the LL moves in he cannot replace it and bill it to you since an “LL or Owners standard” is much higher then a rental standard. same with a stained carpet, fine for a rental, but not fine for the LL, so he pays for it not you.
That’s why you try and make sure you get the deposit back in full (cash) when you hand over the keys if the LL moves in or sells it.
Excuse me but weren’t you trying to “weasel” out of this lease? If so, what is your problem with the offer - sounds like he is trying to be accomodating. Or do you want to stay? If so just pay your rent and inform him you would like to keep your lease after all.
You signed a lease, you want out, he’s letting you out with your full deposit, how much more can you ask for?
I may have misread something in the earlier threads and if so please let me know. But if you’ve been trying to get out of the lease and are not paying rent and have this kind of offer coming your way stop being a drama queen. This blog is about responsibility and indicating terror from those messages is annoying. Actually I just reread your last two messages from “Rob” and you’ve been trying to get out for months. Sounds like you have a problem with legal agreements you make and are extremely childish about dealing with a business situation. I am not usually a bitch on this site, but Ann - grow the f%$# up.
im frozen and jittery. tell me what to write his creepness.
Why do you have to reply right now? Just tell him you were out for the night watching “The Simpsons Movie”, and didn’t get a chance to reply until Friday (or later). Or be honest and tell him (not now, tomorrow) that you are thinking about your options.
Do what I always do: “Opps sorry, I was out celebrating with a dear college friend, she just made partner at her lawfirm”.
Small time landlords hate that >; )
“she just made partner at her lawfirm”
I like the way your mind works, gwynster!
It’s kind of a crappy passive aggressive way of saying “don’t even think of f@cking with me”.
He could get snotty but then I really do have a friend who made partner….. 3 yrs ago. Still, my uncle is just a phone call away and he’s meaner then Cheryl >; )
What is your lease agreement? How much time is left? Even if you really want out, you can still make him buy you out if he realy wants to sell. I’d send him back an email something like… I’ve decided to stay until the end of the lease. Letting me live her rent free for the next month, and returning my security deposit in full may convince me to be out within 30 days. Oh, and you can’t show the property without 120 day advance notice…
Something like that… He wants you out. PLay back at him now.
Talk to a lawyer or a free legal aid society.
I Am Not A Lawyer, but, here is what I found on the internet (but check with a real lawyer to be sure)…note the part about the landlord breaking the lease at the end of it:
Union-Tribune
SignOnSanDiego.com
Tenant can’t legally break lease for job change
April 23, 2006
http://tinyurl.com/2ueq3r
“QUESTION: I may have to leave the area due to a job change. Is there a provision in the law where the renter would not be liable for the balance of his lease if he gave suitable notice?
ANSWER: Tenants’ attorney Kellman: The law that governs leases does not automatically give you the right to cancel that lease based on your personal change of circumstances. If this were true, leases would be pretty worthless. The landlord could not rely on your responsibility to that contract if it can be broken so easily.
The contract also binds the landlord, who cannot evict you based on their change of circumstances either. The contract is an acceptance of responsibility for a set time regardless of changed circumstances.
The notable exception under federal law (which applies to all states) is for military personnel under the guidelines of the Servicemembers Civil Relief Act of 2003. Another exception would be if your lease specifically allowed for a cancellation based on a job change. There are several ways a lease can be terminated. See an attorney before trying to break any”
Maybe call these guys for an opinion?
Tenants Legal Center of San Diego
http://www.tenantslegalcenter.com/
Take a look at your lease to see what, if any, rights he has to show the place while you’re living there. Typically, he has no right to do so; so unless the lease gives him that right, then he cannot show the place. He also cannot force you to leave early, and neither can any buyer (the buyer will take the property subject to your lease, which makes the property unattractive to potential buyers unless they are looking for investment properties).
Think about what you want out of the situation. Do you want to leave early? If so, how much longer do you want to stay (I assume you’ll need some time to find a new place)? Need any extra money for moving expenses? Since he can’t force you out, and likely cannot show the place without your permission, you are now in a position to negotiate whatever terms you want. Also, consider whether you think your LL will actually have the money to pay back your deposit, and if you doubt that he will, then keep this in mind in determining what course of action to pursue (e.g., applying security deposit towards rent in lieu of moving expenses). As others have said, there is no reason that you have to respond to him right away. Take your time and think about what you want.
write nothing..
say nothing except “i or my atty will get back to you on that..
Lawyer-up now.
“Meanwhile, some potential buyers sit on the sidelines, fearful of investing at the wrong time…”
It’s not fear, it’s logic.
“buyers…fearful of investing”
I believe that the most eloquent quote to summarize how I feel about this whole concept is neatly encapsulated by a phrase used by American high school males:
“Bite me”
–
Remember when people would line up and stay all night to buy a home? Well, the process now is in the reverse gear. Bubbles and busts are all about mass psychology.
Jas
Yes! Once you’ve realized that, it’s not hard to see where all this is going.
my friend did this and she is also an independent mortgage broker with 5 mortgages on 4 investment properties with ARMS! She is so screwed.
It seems as if quite a few “real estate professionals” did this as well.
–
“No Sign Of A Turnaround In California”
Isn’t it a bit early to start looking for a “Sign Of A Turnaround?”
How about in 2010s?
Jas
This is a complete aside…..for those who thing the MSM might not be influenced by the Realty business…..i offer from the AP newswire Exhibit A:
——————————————————
WASHINGTON - Mortgage rates around the country edged down this week, with rates on 30-year home loans sinking to their lowest point in a month, good news for prospective buyers.
Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.68 percent. That was down slightly from 6.69 percent last week and was the lowest since early July, when rates stood at 6.63 percent.
————————————
So yes, with rates “sinking” you could save $100/year in interest on a million dollar loan, or $8 per month, $4.8 after tax rebates.
Secondly…..if rates were %6.63 in early July, how is the current %6.68 “the lowest in a month”….ahh yes, that’s right, probably because it is a GREAT time to buy……..
–
“with rates on 30-year home loans sinking to their lowest point in a month, good news for prospective buyers.”
Low rates have been “good news for prospective buyers” for years. And rates are heading much much lower during the 2008-10 depression (this period should be similar to 1930-32). So, lot more good news for the buyers is in the offing.
Jas
“David Gray, a partner in Mid-State Realty in San Luis Obispo, watches the foreclosure market closely. Gray hasn’t bought any homes recently because the debt owed is often higher than the value of the home.”
“‘It’s just not profitable,’ Gray said. ‘I’ve seen novices come in and they think they are getting a deal, but they get burned.’”
The Daily News. “Los Angeles City Councilman Richard Alarcón sought $5 million in foreclosure assistance Wednesday for residents in danger of losing their homes as the housing market continues to unwind. ‘More people are losing their home today than were lost in the (1994 Northridge) Earthquake,’ Alarcón said.”
Let see - one guy who gets it (Mr. Gray). And some a$$hat politician that wants to give a bailout at taxpayer expense. Hey, Mr. Alarcon, I am afraid $5 million won’t even bail out the FBers on one street, yet alone do much help for all of the soon to be FBers that will be wandering about LALA land.
i dunno.. A genuine asshat woulda come right out and asked for $50 billion.
To the reneter — it sounds to me that your landlord may be in trouble (e.g. behind) on his mortgage and taxes and may be facing a looming foreclosure or reset. I would quickly check with the taxing authorities to see if he has paid taxes on the property — if they are not paid it is a good bet that he is behind. If they are paid and if you have not had a NOD nailed to your front door, then I would negotiate and demand more than a month’s rent. At a minium I would demand moving costs, return of my full deposit (up front) and full release from the lease.
If your Landlord is in trouble, you have a problem but likely an opportunity. The problem — once a bank takes the home they do not have to honor your lease and they will force evict you and if you give the bank your info, likely report an eviction to the credit agencies on your credit report. Not good. The opportunity if this is the case will require a lawyer. If I had this situation, I would immediately hire an attorney and demand immediate proof that he is able to carry out his obligations under the lease. If no response (or if he is behind) I would then ask counsel if I can legally escrow my rent to have the ability to recover damages in the event the landlord defaults and let the landlord know that you will release the escrow only when he shows written proof that mortgage / taxes and HOA are paid and current. What is he going to do — sue you? Evict you? Unlikely and if he starts you likely have a case against him for breaching a contract. But again I am not an attoreny and I would strongly reccomend spending $500 (maybe $250 if you can find a friend who is a lawyer) and get some legal advice. Good luck.
isn’t the person in Hippie Dippie State (San Diego)?
I thought Cali was slow on thier foreclosure process and also big on Tennants rights.
“Jack Kyser, chief economist at the Los Angeles County Economic Development Corp…wondered how far the $5 million would stretch. ‘It makes perfect sense, though. People were trying to buy their first house, and they badly stubbed their toe,’ Kyser said.”
AND why MR. Kyser are tax payers suppose to pay for dumb decissions? I hate political decissions like yours. Education is the answer not bail outs!!!!!
“Most are planning for 2008 to be an up year or at least a level year,” he said.”
http://www.signonsandiego.com/news/business/20070801-9999-1b1boat.html
doesn’t it seem like when people say a market is going to level(aka lereah’s plateau, that’s when the bottom falls out? he can’t fathom falling boat sales. he actually really doesn’t know, so when he draws the boat sales chart in his mind, in just goes
/\__________________
/
/
looks like lereah’s charts for home sales and prices.
Need to give Auger-inn credit for his sick, but brilliant idea from yesterday. Good thing I wasn’t eating or drinking anything. I was laughing so hard for at least 15 minutes. Worth a repeat. ENJOY.
Comment by augur-inn
2007-08-01 15:19:11
Hey, that’s the perfect segue into a business idea I want to run past the gang!
I figure with all the inventory building up and “price reduced” signage all around, there will be demand building for a way to quickly identify motivated sellers amongst the wishers (since everyone has a “price reduced” sign which is becoming increasingly irrelevant).
Introducing the …..”PLEASE STICK EM” sticker! A 6″ high unisex caricature from a side view, bent over, pants down and spreading cheeks. Perhaps with a “seller” t-shirt on and a sad face announcing “I’ll submit to any offer!” in the caption.
I figure the realtors can buy them in rolls of 100 to be applied in the upper left corner of the property’s front yard “for sale” sign. Or, alternatively, they could use the symbol in print ads. That way only a drive-by or a glance at the ad is required in order to ascertain whether the seller is realistically setting the price or not. Perhaps the neighbors can have some fun with it as well by occasionally yelling out an absurdly lowball price and quickly bending over mimicking the sticker when they see the sellers out and about?
What do you think, does the idea fly? Any other marketing ideas?
classic!
Maybe Congress, in it’s wisdom, instead of allocating money for flippers and dolts stuck in crazy loans put that money into Bridge repair.
Peter Schiff interview on Bloomberg:
http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vJck9ysOID2E.asf
But if low interest rates ignighted a bubble here, didn’t they ignight one in Euope as well? Everything I hear about Europe home prices says they are way overvalued also. When their prices fall they’ll also be unable to refi, and unable to keep their economies afloat.
And, Japan has shown that it isn’t that easy to flip a switch and turn a producing and exporting country into a consuming one.
Isn’t this recession going to be global?
And, if we’re heading into recession why would interest rates go up? Inflation? Stagflation, recession?
Doesn’t the real problem come down to when we started lieing about inflation. Or has the problem gone back further? When we set up pensions based upon small funding with promises of huge, unrealistic investment returns?
I understand the U.S. is bankrupt, but I just don’t see how, even if we’re the cabose, how we don’t take the world down with us.
Crud, looks like I need to diversify out of just Treasuries….
All thats left is gold coins, ammo, bags or rice… considering you are in Arizona you might want to fill up the pool for drinking water… buy yourself a good filter and you can outlast everyone else when the water stops pumping.
Solar and wind are good options for electricity out there.
If you have enough space a horse doesn’t need gasoline.
Stock up on staple good folks. This could get a little messy…
Darrell,
Based on your concerns, you should read Peter’s book for an answer to your questions.
In regards to James pool idea.
Fill it with fresh large rock ballast from an aggregate plant (no dust). Run 3 pvc tubes slotted at the bottom. On top lay visqueen and 4×4 wire. Pour a slab of concrete.
Run more PVC to your rain gutters to one of the vents sticking up.
This will improve the water quality, keep it cool, replenish stock, and require less filtering.
If you want more capacity build a column to support the roof. But leave a couple of feet of rock at the bottom.
This is how great grandpa did it.
Mike,
I want to thank you for posting this. Normally my A-D-D won’t allow me to hang in there
but I couldn’t look away from this. Schiff was echoing every sentiment on this board, one by one.
The interviewer kept poking at him but Schiff just hung in there. Granted, he’s a bear with something to sell, but I think this is a great, mostly understandable piece that I can forward to friends/family that gives a compelling idea of what’s to come and things to consider to weather it. Thanks again.
OT, but I thought it would amuse the HBB to see what the low end rentals here in Alaska are like…
15′ x 20′ dry cabin
Tranquil, pretty setting on Goldstream Creek
No electricity
Wood heat
Phone
5 miles from UAF
Dogs welcome
$275/month
Call xxx-xxxx (BTW, dry cabin means no indoor plumbing. My first place, which we built, was like that for a few years…)
Okay, okay I’ve just had a little wine and seen The Simpsons movie.
I have been in the RE biz in the Antelope Valley for 15 years(I want out and am looking for a real job) started as a loan officer when people had to REALLY qualify. It was rare that I dealt with someone that could qualify for 300k.
Anyway I found this blog a couple of months ago, you guys are right on the money. I have been saying this since early 2006. This is going to be biblical. I say 50% percent drop in price, anyone buying now is a fool.Which reminds me of a listing I sold in June.
Sellers listed in March 2007. Did my best to convince them to be aggressive with the price. They held to their posistion. House is in Mission Hills CA (SFV). 1500 sqft, 4/2 built in 1959, no garage, dump. Listed at 525k, my suggested price 485k. After a couple of price reductions no offers. In May I told them to lower price enough for some stupid wannabe flipper left out there to think they could flip it. New price 439,900.
GOT 3 offers. Unbelieveable! Ended up selling for 450k and seller giving up 17,500 in repair concessions to a flipper. Who is rehabbing the place.Thank You God for idiots…and a pay day.
good post, thank you, and welcome
‘Ended up selling for 450k and seller giving up 17,500 in repair concessions to a flipper. Who is rehabbing the place.Thank You God for idiots…and a pay day. ‘
I would love to know approx. when the last of the current flippers is shaken out of the system. If there is a site where flippers post now, the time when they are ALL recommending anything BUT real estate might be the time to consider moving into real estate. What a bunch of idiots!
Here’s a failed flip that zillows for $333K (LOL). It sold on 04/19/2007: $279,407 and is now listed on redfin for over 40 days for… you guessed it… $279K: http://www.redfin.com/stingray/do/printable-listing?listing-id=779848
Here’s another in my area that
has a “zesstimate” $615.7K but it has been foreclosed and is in Countrywide’s REO database priced at $489K and doesn’t seem to be selling…
http://www.zillow.com/HomeDetails.htm?zprop=16476487
There are LOTS of other examples in So Cal of houses on the market for 20% below the zesstimate and not zelling anytime zoon…
definately not contained.
Axa IM defends funds with own money
By Kate Burgess Thu Aug 2, 5:20 PM ET
Axa Investment Managers, the Paris-based asset manager, has taken a highly unusual step to shore up two of its funds hit by the turmoil in the subprime market in order to protect its brand.
The group said it would invest its own money in both funds to ensure their liquidity while allowing all investors to sell their holdings if they wish.
http://news.yahoo.com/s/ft/20070802/bs_ft/fto080220071733067554
Members Equity Scraps Bond Sale; Subprime Woes Spread (Update4)
By Laura Cochrane
Aug. 3 (Bloomberg) — Members Equity Bank Ltd. scrapped a A$500 million ($429 million) sale of mortgage-backed bonds, the first Australian company to withdraw a planned offer as the U.S. subprime mortgage rout spreads across credit markets.
The lender, which counts former Reserve Bank of Australia Governor Bernie Fraser as a director, pulled the sale after failing to find enough buyers, it said in a statement today.
http://www.bloomberg.com/apps/news?pid=20601081&sid=aj.0C4HWDsqg
“David Gray, a partner in Mid-State Realty in San Luis Obispo, watches the foreclosure market closely. Gray hasn’t bought any homes recently because the debt owed is often higher than the value of the home.”
“‘It’s just not profitable,’ Gray said. ‘I’ve seen novices come in and they think they are getting a deal, but they get burned.’”
Ha! Nothing like willingly buying a house with “instant negative equity”! That’s not a novice move, that’s just pure stupidity.
Jorge Figueredo, fromally of WAMU mortgages in Pinecrest is nothing but a crook, if you need confirmation, why did Detective Amy sacremento, Sgt Richard Davis, put the closing Attorney Delailia J. Estefano in jail for organized fraud for 14 years, they actually came to our house with a stack of files on Figueredo, Estefano, Kyle Baker, Rosie Rodriguez, Prestige homes, in Miami wantining us to cooperate, then they said they had SO MUCH evidence they are constantly watching the entire crew, shut them all down and put the Attorney in jail…. so eventually they will all be in jail, according to the Miamidade economic Crimes task force!!! If this guy or any of these people try get you to do busines with them RUN!!!