Taking A Dive Worse Than Anyone Thought
The Greeley Tribune reports from Colorado. “Banks and lenders foreclosed on 2,869 Weld County homes in 2007, a 38 percent increase from record-setting 2006. That’s not quite to the level of Denver’s 41.5 percent increase to more than 26,000, but it dwarfs Larimer County’s 1,578 foreclosures for the year. The boom of the past few years prompted an inordinate number of home sales in the region, with brokers helping many new homeowners into homes they could not afford.”
“High foreclosures have helped push down home values in the area, which mean homeowners aren’t gaining the equity they expected in their homes. Without equity or money down, refinancing to get out of bad loans isn’t possible, said Angell Fuchs, a mortgage consultant in Greeley.”
“‘We can’t lend them more than 100 percent, and in order to pay closing costs and loans, and maybe a couple of months (in late payments), you have to have equity,’ Fuchs said. ‘They may not have as much down and now the values have dropped and now they’re upside down. They see their rates are going to adjust and they say, what’s the point? That, I think, is part of the problem we’re seeing with the bailout.’”
“For those who cannot avoid foreclosure, all is not lost, Fuchs said. ‘It’s not a death sentence to have a foreclosure,’ she said. ‘After three years, you can buy another home. People can’t feel like they’re failures. This was a very difficult situation and they were trusting everyone around them to know what they were doing.’”
The Arizona Republic. “Home buyers, sellers, real-estate agents and lenders all rely on comparable prices as the benchmark for an area’s home values. But in many Valley neighborhoods, those comps can’t always be trusted. Bad appraisals are often to blame.”
“It’s becoming apparent that inflated appraisals are behind many problems plaguing the Valley, say regulators, market watchers and many appraisers. ‘Almost all the mortgage fraud and foreclosures in the Valley now can be linked to appraisals that were too high,’ said Drue Bates, who has been a Valley appraiser for 18 years. ‘When a home appraises for $400,000 but recent comps of similar houses on that block are $300,000, it’s easy to see something is wrong.’”
“Home buyers in areas with inflated home values could have paid too much for their home and now owe more than it’s worth. People ‘upside down in their homes’ are now driving Valley foreclosures to record levels.”
“Heather Minton lost her home to foreclosure. A year after she bought her Pinal County home, it appraised for $200,000, about $75,000 more than she paid in 2004. So she applied for a home-equity loan based on her neighborhood’s new, higher comps.”
“She fell behind on her payments and tried to sell last year. By then comps in her neighborhood showed her house was worth only $150,000, so Minton ended up losing it to foreclosure.”
“‘We believed that we had that equity because that’s what our new neighbors seemed to be paying,’ Minton said. ‘Our appraisal came in at $200,000. We got the loan.’”
“In metro Phoenix, the problem worsened during the housing boom when home prices in many neighborhoods were jumping 5 to 10 percent just about every month. Appraisers couldn’t count on neighborhood comps to keep up with rising values. That opened the door for some inflated appraisals that continued even after the market slowed.”
“‘People in the Valley are in denial about how hard inflated appraisals have hurt the housing market,’ Bates said. ‘I am still seeing cash-back deals and inflated appraisals that are going to lead to bad loans. There needs to be more regulation in the mortgage business or it won’t stop.’”
“The final tally is in. No drum roll please, because it’s nothing to celebrate. Last year, more than 10,000 homes were foreclosed on across metropolitan Phoenix.”
“Almost 90 percent of those houses were taken back by the lender, which means most struggling homeowners couldn’t sell before foreclosure. Most of those homes are sitting empty, and when they do sell, it will probably be for less than what other homeowners in the neighborhood paid a few years ago.”
“The worst came in December when a monthly record 1,617 Valley homes were foreclosed on, according to Information Market.”
“The number of notice-of-trustee sales filed soared to 30,124 in 2007. And these precursors to foreclosure reached a monthly high of 3,852 in December, which isn’t a good signal that Valley foreclosures are going to slow anytime soon.”
“But here’s the good news for Arizona. Nevada has a higher rate of foreclosures.”
“Clark County, home to Las Vegas, had more than 26,000 pre-foreclosure filings in 2007. Maricopa County is more than twice the size of Clark County, but the Valley has only about 3,000 more pre-foreclosures.”
In Business Las Vegas from Nevada. “Southern Nevada’s white-hot growth trends hit a brick wall in 2007 with housing slumps and foreclosures making the biggest business headlines of the year. The price correction that many predicted started to unfold and is likely to continue in 2008.”
“By the end of 2007, the median price of resale homes had fallen to $257,000, down 13 percent from its peak of $290,000 in 2006. The price drop is attributed to the inventory of existing homes that was about 26,000 in December.”
“The sale of existing homes was off about 40 percent in 2007. In the new-home market, the housing recession was evident with sales down about 45 percent for the year.”
“The winners were consumers who saw builders go back to the drawing board to redesign homes to make them less expensive and more to buyers’ liking. Many builders touted prices of less than $200,000, and by December the median price was more than $80,000 below the market peak in April 2006.”
“Nevada has garnered national and international attention for its No. 1 ranking in the country in property foreclosures, In Business’s No. 3 story. Media have come to Las Vegas to document the housing market woes worsened by a large number of investors who bought homes with the anticipation that the high rate of appreciation would continue.”
“When it didn’t, many could no longer afford payments and some neighborhoods turned into ghost towns.”
“The tough times may not be over for the housing market in 2008 unless demand picks up dramatically. That’s not expected to happen until the openings of resorts in 2009 attract workers to Las Vegas.”
“Buyers had some the best bargains in years. The median price of existing homes reached $290,000 in 2006, but fell to less than $260,000 by the end of 2007 — the lowest prices have been since January 2005.”
“Las Vegas housing guru Richard Lee, first VP of First American Title, predicted the decline in 2007 when a year ago he said prices could fall as much as 15 percent. Lee said prices will continue to fall in 2008, but doesn’t have an amount.”
“‘There is an opportunity for those in a cash position with a high (credit) score can take advantage of the marketplace,’ Lee said. ‘This is the first time in four to five years that people can find an affordable house.’”
“It’s getting to the point where there will be opportunities to purchase homes and rent them and possibly break even, Lee said. That hasn’t been the case in recent years.”
The Review Journal from Nevada. “Some people are losing their homes, life savings and good credit as a result of mortgage scams that have become increasingly prevalent in Southern Nevada’s weak real estate market.”
“Mortgage fraud is being conducted through a system that is broadly referred to as ‘equity skimming,’ Secretary of State Ross Miller said. His office is investigating mortgage fraud complaints totaling hundreds of millions of dollars, stretching investigators’ loads to near capacity. ‘And it’s only the tip of the iceberg,’ Miller said.”
“It’s not just sellers who get caught up in mortgage fraud, Steve Hawks of ReMax Platinum said.”
“Thousands of unsuspecting home buyers in Las Vegas become victims through cash-back deals involving the seller, mortgage lender, appraiser and other essential parties in real estate transactions. Almost every one of them is pitched as an investment, he said.”
“‘Let us use your credit and you’ll get $5,000 back,’ Hawks said. ‘Little do they know that there’s anywhere from $25,000 to $180,000 getting kicked back to a third-party LLC (limited liability corporation) that the buyer doesn’t know about.’”
“The houses were never worth what they were sold for in the first place, Hawks said.”
“The Greater Las Vegas Association of Realtors’ MLS showed a Feb. 1, 2005, sale price of $490,000 for a house in Henderson. However, the Clark County Assessor’s Office has a recorded value of $800,000 for the sale. The home apparently went into foreclosure and was purchased from U.S. Bank trustee’s deed in September for $375,000.”
“‘Buyers don’t find out it’s happening until they get a notice of default. The third party rents the house and pays no mortgage. Now when the buyer tries to sell the house, they’re overpriced,’ Hawks said. ‘It’s happening to thousands of people.’”
“Jim Garvey of Las Vegas said he got suckered into real estate investing through a client in his automobile detailing business. Garvey ended up buying five homes that were supposed to be recorded under a limited liability corporation.”
“He got suspicious when his sister, who joined the real estate investment venture, called and said her name was on a foreclosure list. All of the homes have started foreclosure and are up for short sale.”
“Hawks said he examined title work on several homes and found that someone had removed an addendum that instructs the title company to issue checks to a third-party limited liability corporation. The document is removed or hidden, either way with same result, he said.”
“For example, a $500,000 listing is bumped to $800,000 and $300,000 gets kicked back to the third party through the addendum. If the institutional investor knew about the $300,000 cash, they would never buy the loan. That’s why the addendum has to be pulled or hidden, Hawks said.”
“‘This is why Credit Suisse and other institutional investors are pulling out of Vegas. This is why Vegas is going to take a dive worse than anyone thought,’ he said.”
“‘We can’t lend them more than 100 percent, and in order to pay closing costs and loans, and maybe a couple of months (in late payments), you have to have equity,’ Fuchs said.
What is this blasphemy? “Equity” is something you get “instantly” at closing, and keep getting as your house continues its uninterrupted rise into the stratosphere. Is Fuchs implying folks need to actually put money down, or *gasp* repay their mortgage to gain equity?
Relax. The Easter Bunny will be making equity deliveries right after the Superbowl.
“For example, a $500,000 listing is bumped to $800,000 and $300,000 gets kicked back to the third party through the addendum. If the institutional investor knew about the $300,000 cash, they would never buy the loan. That’s why the addendum has to be pulled or hidden, Hawks said.”
And the FBI doesn’t care about these disguised bank robberies ?
“This is why Vegas is going to take a dive worse than anyone thought,’ he said.”
This type of immorality is not just isolated to Sin City. This game has been played across the board. It’s this kind of madness that has led me to believe all along that the PTB cannot bail this out. We use the term “too big to fail” often in regards to various aspects of our “free market” (wrongfully so). Well, this one is too big not to fail. The finacials will eat it big in ‘08.
don’t tell bob kamikazi
lost wages
Absolutely. Those “let us use your credit” ads ran every day on Craigslist in Dallas until last fall when it became obvious that no one had any credit left.
Wait ’til we get the flood of news on credit card defaults and upside-down auto loans coming home to roost in. If anyone thinks that last August was a one time deal, wake the F up!
I can’t believe that anyone was stupid enough to fall for those pitches. Call me naive, but I just can’t imagine it. How stupid is J6P, anyway?
Oops, gotta go, secretary says I have the Nigerian royal family on the phone…
As they say, you can’t cheat an honest man. These marks were undone by their own greed.
Nah, goobermint the needs to go after the real criminals, chocolate makers.
Don’t encourage them. Local chocolate company has been getting hounded by the EPA for “polluting” the neighborhood with that lovely smell of chocolate. I wish I was making it up.
Chicago used to be the candy-making capital of the US. Now the largest chocolate processing factory in America might get pushed down to Mexico because it emits a fantastic smell that nobody complains about. But hey, nobody needs those blue-collar manufacturing jobs anyway!
This does not seem any worse than the buyers closing the deal with $100k “equity” and then pulling the money out for themselves. The end result is the same (over inflated value), but simply appears more legitimate.
It sort of makes you wonder why the terrorists even bother going after us. We seem to be very capable of destroying this country without their help.
“But here’s the good news for Arizona. Nevada has a higher rate of foreclosures.”
Why is this good news for Arizona?
In other positive news for Arizona, New Mexico has been destoyed by space aliens….
The only reason I can think of is it makes Arizona buyers look slightly less stupid.
I thought this was funny. Its bad here, but not as bad as there…
ROTFL.
If you’ve followed the saga of Phoenix inventory at BMIT, you understand how bad that city will get.
The banks haven’t even recognized their wounded yet, much less run off to their corners to whimper yet. There is a lot ahead.
Got popcorn?
Neil
Neil, when are you planning to buy? When does it make sense to buy? I have been holding to buy since 2004, and I am glad I did or I would be in a lot of hurt. My question now is when is the good time and how long we have to wait. Meanwhile, my side fund is earning 11% per year since 2004.
I’ve been asking the same question since 2002. Now that we actually have a RE crash I believe the best time to buy is when inventory starts to decrease. As of right now inventories are still increasing and getting worse. As always you can buy anytime as long as you can “afford” it.
I would like to buy a used 3-bed with a 30 yr fixed mortgage. I’m hoping that my payment will be around 1600 to 1800 per month. Here in San Luis Obispo, CA I need a 40% drop. With the current conditions I think this will happen very soon. Two to three years maybe. It’s just a guess but I’m willing too wait. The local economy does not support 650K homes. Once the the RE cooks are gone I believe average homes will be inline with local jobs.
I can tell you 2008 and 2009 will not *yet* be the time to buy.
When is a good time? I’m sure someone will post price to rent, but for me if will be based on when those that report to me can afford. I’ll accept a risk of downside once its obvious prices are affordable.
But previous trends show we’re just entering the correction. The next two years should have the greatest ‘equity losses.’ At that point… my spreadsheet says the ‘tax benefits’ outweight the potential losses.
However… its all based on your assumptions on wage inflation, rents, taxes… But I’m also predicting a 10 to 15% drop in 2008 and a 20% to 30% drop in 2009.
Partially my predictions are based on 2009 being the reversal of 2004. With the magnitue of this bubble, the year of greatest appreciation should be erased in another year. I think things are going so slow that 2008 won’t be that year but rather a warm up year. Partially this is based on my understanding of the current real estate emotions. If I’m wrong… it will be a $100k mistake.
So please make your own judgement. Just no waiting is far cheaper than jumping in to early.
Got popcorn?
Neil
The time to buy is when the inventory levels are at 3 months or shorter.
That’s the long-term indicator of a stable RE market.
If you’re seeing even the 3-6 month levels, the prices are still falling. At 6-9, they’re falling substantially and anything more than is deep sh**.
Mosts markets are way beyond deep sh** at the moment.
As to investments, I’d look at bear funds. The gubmint will try to inflate the heck out of the economy, so in nominal terms the bears are in a disadvantage over the bulls, who benefit from the implicit and understated inflation. But I’d say it’d be pretty hard to lose money in a well run bear fund these days. Smart guys are shorting all the overblown equities that rocketed upwards in 2002-2006 - construction, financials, home improvement, etc.
The only reason I can think of is it makes Arizona buyers look slightly less stupid.
At least until the fraud stories about the Arizona deals hit the papers.
There’s no way the same stuff wasn’t happening in AZ.
I hope my wife’s Beeeotch of a cousin that insisted on buying a house in PHX with an ARM in ‘05 burns. Sour mood today.
Sept ‘05 was the month that the market turned in North Phx, so yes, unless she has a desirable yard, or gets lucky, she’s going to be burned.
Because misery loves company, and since Nevada is right next door, the travel time to get together is short.
Nevada may fall really hard, but AZ is just behind them. I am starting to see some serious price reductions - 20 to 25% kind of moves on a few houses. One near my ‘hood went from $375 in June to $300 now - but is still not selling. Absolutely nothing is moving - I think one house out of about 250 on my “watch list” actually sold in the last 6 months. All the others with status changes just dropped off the MLS. Whatever the sales numbers for 2007 were, I’d estimate 2008 will be about 1/5 of that. Buying a house this year will be like going to the grocery store at 1 AM in a blizzard - only if you ABSOLUTELY have to.
“…Buying a house this year will be like going to the grocery store at 1 AM in a blizzard - only if you ABSOLUTELY have to.”
ROTHFL! 1am…That’s also a good time to get caught up in “sudafed” robbery!
“It’s getting to the point where there will be opportunities to purchase homes and rent them and possibly break even, Lee said.”
Wow, so let me get this straight. I invest a bunch of money, and if I’m really lucky and do a bunch of work as a landlord, I’ll….(drum roll please)… not lose any?!! I’ll break even! Man what an “opportunity”! This is almost as good as that lottery scratch-off investment plan.
For the next few years investments that don’t lose money or loose just a little might be as good as it gets. Ponder that.
Then why bother investing in things like that? Might as well keep the money in CDs or Gold.
Don’t tell that to Berkshire Hathaway.
An investment is an expansion of capital. Capital is a factor of future production. In order to have something to invest, one MUST actually save (consume less than one produces).
Now for those who speculate (purchasing something (with either savings or leverage) with the anticipation of a future increase or decrease-depending on the type of option involved in the speculation), there is certainly an opportunity to properly predict future price levels in certain sectors of the economy. Speculate, and invest, wisely (and hopefully folks don’t forget what they mean and the difference bewteen the two).
I was about to post this little snippet, SFC….
Still people out there who can’t quite grasp the fact housing isn’t an “opportunity” to make money anymore. Rent?? To whom??
All I see (North AZ) is classifieds, craigslist, and MLS FULL of houses for sale, houses for lease/purchase and rent. Nothing getting any action. Discounts on rents all over the place.
And being a landlord is work. It’s not like you just sit in your easy chair all day watching the checks roll in. All of these little McTrumps who think they are big-time landlords because they decided to rent out a couple of over-leveraged single-family houses are about to get a hard lesson in economics. On the business end of a JT.
No kidding! It’s been four years since I managed a 50 unit complex. I’m still sensitized to knocking on the door. A knock on the door is like fingernails on the blackboard.
My comment wasn’t just about housing (which is going to suck as an investment for years to come) but about everything. What happens when the best investments just break even or post a small loss, especially when compared to purchashing power? CDs that pay 5% when inflation is 7%? Gold which platueas at $850 while inflation is 6%? The stock market which losses 15%/yr while inflation is at 10%? The bond market which pays 6% when inflation is at 8%? Or some other combination. But my point is that I fear this is the environment the world is headed for over the next few years. Where it is very difficult to earn a positive return on even the best investments.
That’s where you get into the inflation/deflation argument. If ALL investments are losing ground, could we really see inflation increase forever? Is it possible for the number of dollars/(or amount of credit) to increase in such a world? Possibly, but I would think with all the money/credit evaporating at the moment that simply not losing too much ground with investments would be a victory.
If housing and stocks both plunge, and I think they will, then I doubt that inflation will be 7%.
The credit bubble and especially the housing bubble part of it created the bubble in the money supply that caused the inflation, or increased prices, that we have seen in the past few years. But there is a time delay of at least a year with the housing boom ahead of the inflation, so I believe that we will see inflation falling now that housing has been falling and the collapse of the credit bubble has begun. It will be interesting to see how far it falls.
Any safe refuge for cash will pay in the next few years. Inflation must have at least one of two things: an increasing money supply, or increased velocity of the money. How will the money supply increase in an environment of a collapsing credit bubble? Will velocity increase when people need to sell things to raise cash? The opposite should happen.
I agree given your definition of inflation. I’ve always meant to ask for someone to find a word to define actual purchasing power of the money J6P recieves. i.e. - My wages have increased 4% over the last four years but milk which used to cost $1.99/gal two years ago now costs $3.99/gal. Kind of the inflation rate for Walmart if you would.
I wouldn’t think the investment environment would remain horrible indefinitely but 3 or 5 or 7 years - yes. So definitely not inflation increasing forever but definitely for a few years.
IMO,If the economy recesses the demand for oil goes down, the price should follow. The cost of housing goes down , building stops and the pric eof materials follows (already happening). The pressure on wages eases because of unemployment and globalization. I see stagnation and deflation, not inflation.
Paulson: No Easy Answer to Mortgage Woes
http://biz.yahoo.com/ap/080107/paulson_housing.html
Just a few weeks ago Paulson was saying that the sub-prime problem was contained and that the broader housing market was fine (’denial’). A few weeks ago in an interview with the LA Times he became defensive when asked whether he thought housing prices had risen too high (’anger’). Now he accepts that housing prices must correct but the administration’s ‘rate freeze’ plan will soften the impact (’bargaining’). Seems to me that he is still 2 steps away from ‘acceptance’ of the housing meltdown that is ahead because of this unprecedented housing bubble.
this is crap.
they are not losing their home because the value is going down. they are losing it because they cannot make the payments.
in the end analysis, most sold their home years ago when they took out those heloc’s and bought their toys. fact is, they never owned a home, rather they are just paying exorbitant rent on a property they are occupying that has their name on a trust deed filed at the county recorder office.
here is the calculation:
1300 monthly fair market rent
3700 monthly costs for maintaining the trust deed
5000 montly payment
“most sold their home years ago when they took out those heloc’s and bought their toys”
I like that, and will be using it in future conversations. Imagine coming to this realization that you sold the roof over your head for low post-bubble prices DURING the bubble, without ever getting any cash out of it? Well, unless you count the four year old Harley and worn out Jet Skis as assets.
Between a rock and a hard place:
http://www.detnews.com/apps/pbcs.dll/article?AID=/20080107/BIZ01/801070365
You are so right. I am irritated with all their whining. They got hundreds of thousands of dollars tax free and will be able to now walk away with their toys or short sell with no tax implications. Why are they complaining and why does the media portray them as vicitms? I always wonder what did they spend all that money on - do tell folks, if you had received $3-500K tax free over the last five years, how much would you have left?
At least $1M
…
But it’s a zero-sum game. Somebody had to buy all of those iPods so that we could make money investing in AAPL.
Yup, basically we’ve all snorted bubble-equity.
“Mortgage-fraud scams that have hit the Valley often rely on an inflated appraisal so the buyer can secure a loan for more than the actual sale price or value of the home. Home buyers in areas with inflated home values could have paid too much for their home and now owe more than it’s worth. People “upside down in their homes” are now driving Valley foreclosures to record levels. ”
Bill Slowsky (Comcast turtle): “And/or DUH!”
Karolyn Slowsky (Mrs Comcast turtle): (Head QUICKLY jerks around and stares STRAIGHT at Bill)
Bill Slowsky: (silent oops, and replies) Sorry. And/or my bad.
Gotta love those Comcast turtles.
http://www.youtube.com/watch?v=6bDhmM6tgvs&feature=related
BayQT~
My new theory du jour is the cleverer the commercials the worse the customer service.
Comcast, GEICO, Bank of America, . . .
No Vig, No Viva Las Vegas…
“Hawks said he examined title work on several homes and found that someone had removed an addendum that instructs the title company to issue checks to a third-party limited liability corporation. The document is removed or hidden, either way with same result, he said.”
“For example, a $500,000 listing is bumped to $800,000 and $300,000 gets kicked back to the third party through the addendum. If the institutional investor knew about the $300,000 cash, they would never buy the loan. That’s why the addendum has to be pulled or hidden, Hawks said.”
“‘This is why Credit Suisse and other institutional investors are pulling out of Vegas. This is why Vegas is going to take a dive worse than anyone thought,’ he said.”
For those who cannot avoid foreclosure, all is not lost, Fuchs said. “It’s not a death sentence to have a foreclosure,” she said. “After three years, you can buy another home.”
Correction: you can TRY to buy another home. If you don’t meet the current requirements, you’re probably SOL then.
Or you could always rent.
Who in their right mind would want to right back for more punishment?
Let’s see: J6P: “I just lost my house in foreclosure. What should I do now?”
a. Get into another 100% LTV mortgage to buy another money pit.
b. Max out all of the credit cards and declare BK.
b. Just shoot myself.
d. Rent.
J6P: “Hmmmmm. That’s pretty tough, but I’ll take (a) for two million dollars!”
Bob Barker: “Bzzzzzzt. Wrong! Prepare for JT insertion!”
“Heather Minton lost her home to foreclosure. A year after she bought her Pinal County home, it appraised for $200,000, about $75,000 more than she paid in 2004. So she applied for a home-equity loan based on her neighborhood’s new, higher comps.”
I know that there are countless examples of this, but it still disgusts me. You bought a modest house in a modest area. Why would you believe that it genuinely rose in value 60 or 70% in the short term? If you could have actually sold the thing for $200K, then you should have. But borrowing tens of thousands of dollars every time that someone else (comp) sells their house is nuts.
“She fell behind on her payments and tried to sell last year. By then comps in her neighborhood showed her house was worth only $150,000, so Minton ended up losing it to foreclosure. ”
She did not lose her house to foreclosure, she simply sold it using the stupidest method possible.
But the real estate people said it was worth more than I paid for it! Buy real estate and “hold” for the long term. I guess it something like stock brokers say.
“You bought a modest house in a modest area. Why would you believe that it genuinely rose in value 60 or 70% in the short term? If you could have actually sold the thing for $200K, then you should have. But borrowing tens of thousands of dollars every time that someone else (comp) sells their house is nuts.”
Let’s say she honestly believed (Ha!) that her home had risen 70% in value in the course of a year–what I still don’t get is why that meant she HAD to go out and get a HELOC for the amount of the increase? This is the part that the media always leaves out–it isn’t the “rise” or “fall” in values that is driving foreclosures–it’s how people have responded to these so-called “rises” and “falls.”
“I still don’t get is why that meant she HAD to go out and get a HELOC for the amount of the increase?”
That is what kills me. I guess people will pick up a bag of money in front of a teller or bank without knowing the consequences.
My parents bought their house and NEVER took out an HELOC. (I asked).
In my household growing up the idea of a HELOC was about as far from my dad’s thinking as chartering a boat to the moon.
true that. i remember whispered tones about this or that neighbor who got a “second mortgage.” very much a move of desperation that brought tsks from the neighborhood.
Heather: But…but…you people JUST DON’T UNDERSTAND. My neighbor had a new Lexus SUV and stainless appliances…I was ENTITLED to have all those things too! None of this is my fault…I am a VICTIM! A Foreclosure Survivor!
In a whacked sort of way - maybe she is better off. She got the money out, she walks away and doesn’t have to ride the market down anymore and she can start over. Somehow, it doesn’t seem right.
All tax free ! And no RE commission.
TRUST ME…What went through her mind was “I CAN’T BELIEVE I’M GETTING AWAY WITH THIS!!!!” That’s just before she begain losing her house….but just before then, I can guarantee you she was thinking she was going to get away with it.
Heather Minton the big spender has surfaced on the comments section of the AZCentral article.
Included is a portion of her correspondence to her lender that she posted:
“. . . After almost four months of trying my hardest to find a reasonable outcome, you can not tell me there is nothing you can do besides tell me to “sell or rent” my home. That is not an option, as previously dis-cussed. In addition, due to the current real estate market, the house will not sell for the balance of the loan. I have contacted two real estate agents who have relayed the same information to me. I have attached some information from http://www.realtor.com on a similar house in my area (Attachment B). The builder is also still selling new homes in our community, in which our model list for approxi-mately $159,000 and offers incentives for move-in such as new appliances (Attachment B).
After reading and researching Predatory Lending, I feel my husband and I were victims. . .”
http://www.youtube.com/watch?v=Ubsd-tWYmZw
After reading and researching Predatory Lending, I feel my husband and I were victims. . .”
Some victims. I can hear this harpy in 2004 cajoling and browbeating her husband: This house is special…Suzanne researched this…I’m ENTITLED, dammit!
RE: “‘We believed that we had that equity because that’s what our new neighbors seemed to be paying,’ Minton said. ‘Our appraisal came in at $200,000. We got the loan.’”
Your appraiser hit the number he was told to come in at, in order to get more work from your L/O.
Shoulda hired your own person.
It’s a tough fookin’ world out there.
(Tongue in cheek) I don’t understand what the current value of the house has to do with what Minton has to pay per month. My house note is the same month to month no matter what the appraised value of my house is — in fact it is better that the appraisal doesn’t go up to insane values because then my taxes will go up.
What the article didn’t say is the they could not afford the mortgage at 200K, but they obviously refinanced for more that they could afford to pay and counted on being able to play the ATM game in order to make the payments. When the gig was up, their income did not support a 200K house. If they hadn’t played the game, they would still be looking at a 125K mortgage, which they might have been able to afford. If they had to sell, they might have been able to get the 125K for the house and avoided foreclosure.
The whole thing could have been avoided if they only borrowed what they could afford. It is a tough fookin’ world out there, so why fook yourself?
Hey, Greeley Colorado! A great place to live if you can tolerate old people and college students (at least that’s the way it was 20+ years ago). As a boy I made a “killing” there delivering newspapers, raking leaves, shoveling snow, painting houses and irrigating corn outside of town. Not a dime to show for it, but did get quite good at the original Star War’s arcade game at the U.N.C rec center.
Ahh yes Greeley. Here’s some timely RE results - December 2007 sales figures from realtytimes dot com:
“In Greeley, 67 single family homes were sold, as compared with 93 sold in December last year, down 27.96%; new median price $137,500 (down 8.27% from last year, when the median price was $149,900). Only three (3) new homes were sold, median price $183,909 (as compared with fifteen (15) new homes sold last December, median price $222,865); down 80% in number of units, and down 17.48% in median price.”
Gonna get uglier yet.
Don’t invest, young man…
(with apologies to Horace)
FWIW, I can’t imagine that anyone bought flipper type investment property in Greeley. There just hasn’t been any appreciation there in the past 15 years.
On the other hand, a lot of Spanish language only, low wage buyers signed on the dotted line. And are walking away.
Greeley isn’t a big town. 4,000+ homes foreclsosed in just 2 years. That must be something like 1 out of every 3-4 houses so far. It will take years to sell them off. New construction is toast for years.
I don’t think you would like Greeley much any more. I don’t go down there often, live about 45 minutes away but when I do it looks worse than it ever did when I was a kid. Monforts has attracted a bunch of illegals and foriegn nationals to work at the meat packing plants and I would not be surprised if at least a percentage of the foreclosures in Greeley are fueled by those people walking away from loans and rental agreements when they were deported or left voluntarily because of the big bust that took place last year. The construnction bust has probably sent most the rest of them off in search of greener pastures. Isabel.
Plus HP closed shop in Greeley, and moved what was left of the Greeley site to Fort Collins.
Even though is its only 20 miles west of Loveland and Fort Collins the contrast in demographics is remarkable. Greeley has always had an above average number of American hispanics, but the more recent wave of illegals there has been quite pronounced. Lots of po’ folks == lots of foreclosures.
Totally OT, but the pro-big-business crowd is going to be forced to start meeting in back rooms like Nazi war criminals, but instead of reminiscing about the Fuehrer, they’ll be wistful for the days when greed was good and Fox news had people convinced that regulation was bad for America. Unfortunately there will be no Nuremberg for Greenspan, Congress, Lobbyists, Bankers, Hedgies and Raters — but there will be plenty of small-fry hucksters doing time.
Got Buenos Aires?
I’m with you dude. I’ve said it before and I will say it again. You can blame 90% of this mess on the Wall Street Gangsters and the slime that they bought and paid for.
“The Boys from Bernanke”
“‘People in the Valley are in denial about how hard inflated appraisals have hurt the housing market,’ Bates said. ‘I am still seeing cash-back deals and inflated appraisals that are going to lead to bad loans. There needs to be more regulation in the mortgage business or it won’t stop.’”
Another classic quote.
As noted here many months ago-the crooked appraisal number hitters are keepin’ what’s left of the sales biz afloat.
With declining property values and no one with the financial means to front any kind of a down payment, there is no other way for the previous mid-six figure income lending trash to keep up the payments on the McMansion and his and her M-Benzes.
Government continues to refuse to pass appropriate laws addressing the issue of collusion between loan agents and appraisers.
“But here’s the good news for Arizona. Nevada has a higher rate of foreclosures.”
Why is this ‘good’ news? Hooray, your giant pulsing veiny malignant tumor is bigger than mine is?
Shucks, I feel a loooot better now.
Yep Dr. great news>
Nevada has been told they have about six months to live and the rest of the country has about 9 months , gosh i feel better already?
Were you looking out the window at a Joshua Tree when you wrote that
“For those who cannot avoid foreclosure, all is not lost, Fuchs said. ‘It’s not a death sentence to have a foreclosure,’ she said. ‘After three years, you can buy another home.
is this true?
Sure, if you can pay cash.
i was hoping that wasent true. i have a relative that did the samething with his first home (he is 24), and i dont think it would be fair if he was able to take out another loan to buy a house in 3 years. i also hope the bank gets back every penny that he borrowed to buy all those toys and take all those elaborate vacations!!!!
Not a chance…the banks are your relative X10…they care less about things than the individual does..it’s just under a corporate umbrella.
The bottomline is that the reason why people like your relative do what they do is because they can…and who let’s them? The banks do…why? Because the individuals working at the banks are cut from the same cloth…just as scummy, just as dirty.
The whole system is corrupt. Banks laugh at people who want to go the straight and narrow…we don’t make money for them…we are weights just weighing them down.
You say people do what they do because they can and the banks let them. I don’t agree. Lot’s of people including I suspect the majority here could have done every scam that’s been done but chose not to. I don’t see how you can blame the banks for peoples’ personal immorality or irresponsibility. And no bank that I know of forced anyone to participate in any scam.
The banks participate by offering loans that are more appealing and money saving over other products they have. They know fully well what the consequences of, for example, liar loans are…you think the banks didn’t know? But they had no problem whatsoever dishing those things out when it made them money did they? You need to look at banks as an institution made of people who want to put more money in their own pockets by making more loans, by telling appraisers to appraise properties more than they are worth or else they’ll find someone else to do it? Don’t think that’s immoral?
You don’t have to force anyone to directly do anything. Just limit their choices instead.
The blame goes to both sides. Buyers and sellers are just as big sleazebags as are the realtors, brokers, and bankers. This mess didn’t happen because one side was honest and the other wasn’t…it takes two to tango.
Heck, I’ll finance her today as long as she has 50% down.
3 years? Talk about a slap on the wrist.
Someone explain this to me…if you get, say, a car that’s upside-down repo’ed, you’re going to be sued for the deficiency amount. If you stop paying your credit card bills, they’ll come after you. Medical bills, same. Hell, if you terminate a damn cell phone account early, ditto. But if you walk away from a mortgage (or two or three) leaving the lender with the bag to the tune of possibly hundreds of $K you walk away scott free? What the hell…?
“The Greater Las Vegas Association of Realtors’ MLS showed a Feb. 1, 2005, sale price of $490,000 for a house in Henderson. However, the Clark County Assessor’s Office has a recorded value of $800,000 for the sale.
Clark County you are NOT smarter than a fifth grader
Ben we need another TX thread soon so we can dance around the corpse of the DFW market. I really was beginning to think I was crazy, that maybe I was seeing things that weren’t there. After I got that trash I posted in the bits bucket, I went out onto the ledge and the neighbors had to talk me down.
If loving that is wrong, I don’t want to be right!
What? Welsh Dragon said it is THE place to be.
“Invest in Amarillo!” My new motto…….
On a side note. I was enjoying my weekend here in The Mile High City when what did I receive in the mail? Why, it was the notice that my speculandlord is going into foreclosure on my condo. I just love fighting to get a sizable deposit back, then moving, with a 5 month old in tow, in the middle of winter. I’m sick of renting, and getting angrier by the day at the whole situation.
Denver lowB I think that is going to happen alot. I worry about my Landlord as he owns a real estate apprasial bussiness and bought a 800K house a few years ago. How soon do you have to be out?
Remember to buy in Alamo!
Did you see the DMN article today?
Yes and I am engulfed in the warm fuzzy feeling it has given me.
Nice 4 pm stick save, PPT.
“Foreclosure not so bad”,”Nevada has a higher foreclosure rate”, these statements really make me feel better? Kinda makes you wish we all bought a overprice home and went broke at least i wouldn’t feel bad because i didn’t buy it in Nevada???
“‘There is an opportunity for those in a cash position with a high (credit) score can take advantage of the marketplace,’ Lee said. ‘This is the first time in four to five years that people can find an affordable house.’”
“It’s getting to the point where there will be opportunities to purchase homes and rent them and possibly break even, Lee said. That hasn’t been the case in recent years.”
i wonder how many homes this guy has for sale? it sounds like he has a boat load of bad investments he is trying to sucker people into.
“Heather Minton lost her home to foreclosure. A year after she bought her Pinal County home, it appraised for $200,000, about $75,000 more than she paid in 2004. So she applied for a home-equity loan based on her neighborhood’s new, higher comps.”
“She fell behind on her payments and tried to sell last year. By then comps in her neighborhood showed her house was worth only $150,000, so Minton ended up losing it to foreclosure.”
“‘We believed that we had that equity because that’s what our new neighbors seemed to be paying,’ Minton said. ‘Our appraisal came in at $200,000. We got the loan.’”
Heather is an idiot. She did not lose her home because the appriasal changed, she lost it because she could not pay the debt load she took upon herself. What did this nimcompoop do with the $75000? If the property now appraised fro $400,000, it would only buy her the time it takes to blow through another $200,000.
We are in trouble.
nah uh…. had prices kept going up, she would have had no problem just refi-ing again. It is the fault of the appraiser that wouldn’t let her do another cash-out refi to keep the plan going forever.
“Taking A Dive Worse Than Anyone Thought”
“taking a dive” in boxing, means a fixed fight…
How can home owners claim that they had no clue that what their homes were worth and had no clue what the appraisers were up to? So no appraiser would come and talk to the home owner and say…HEY GUESS WHAT…I can appraise your house for $XXX and make sure you get money in your pocket? Nooooooooooooooooo…..of course home owners never discussed that or had a clue…no of course not.
No remorse whatsoever…I really truly hope 2008 brings pure hell and misery for homeowners who know what’s coming to them. I want to see an absolute tsunami of losses. Why? Because while I was taking the BS dished out by smug owners in the past few years, I want them to really eat it hard.
Call me bitter, call me callous, call me whatever you wish. It’s time people who deserved better to get better and the people who don’t to take a hike.
It would be better if their toys got taken away when they lost their home….
“Call me bitter, call me callous, call me whatever you wish.”
You sound OK to me
A bit more on the “all contained” issue.
http://www.marketwatch.com/news/story/economists-say-2008-year-forget/story.aspx?guid=%7BF1BD8B30%2DB628%2D4AA3%2D853E%2D1FDD8D54A33E%7D&dist=morenews_ts
Hmmm. Starbuck’s CEO replaced. Wonder if there might be some kind of mathematical correlation between incredibly overpriced coffee and incredibly overpriced real estate? Should we be looking for “The Starbuck’s Bubble”? Pricing graph lines trending downward for a double half-caf, no cinnamon, low-fat, mostly foam, mocha latte’?
Nah.
Would one surmise their potential losses from grossly overbuilding franchises, to be?
Venti, Grande or Tall?
Another amusing line from Heather Minton in the AZCentral comments:
“Thought I would post this, the letter I sent a year ago in vain effort to save my home. Mostly it is for all the bashers to see that I tried, and it was to consolidate not get some fake titties or new Lexus or HD TV, just got sucked in and found out what was happening was wrong too late.”
But what if she was consolidating her “titties” payment.
Just sitting here laughing about the banks trying to start a tittie repo department. What would you call it?
“Enchanced Mammery Portfolio Recovery Department”?
Would love to be able to sit in on the presentation for that program.
Time for Bank of America to open up a “Gentleman’s Club”?
Could those be considered “Non-Performing Assets”?
Just wondering
Only if they are not “performing”
Who makes stripper poles? Are they listed on the NYSE or NASDAQ? A future bull market?
A buddy of mine (unfortunately, now deceased) were thinking about how you would franchise a nationwide chain of Strip clubs.
The main feature would be that they would be located within a short courtesy car/van drive from major metro airports.
Working name of the franchise? “Boobs-R-Us”
My three daughters didn’t think it was a good idea at all…..party-poopers……..:)
I am unsure if Arizona is a recourse or non-recourse state on those particular assets.