A Horrible, Normal Cycle In California
The Sacramento Bee reports from California. “DataQuick Information Systems Inc. said foreclosures in California jumped to 31,676 in the quarter, the most since DataQuick began tracking those numbers in 1988. For the whole year, foreclosures rose sevenfold, to a total of 84,375. ‘We’re still climbing to a peak in foreclosure activity in California,’ said DataQuick analyst Andrew LePage. ‘We don’t even have a sign of the peak.’”
“Linda Caoili, (an) agent who works with homeowners struggling to prevent foreclosure, said the decline in prices makes some clients feel their home can’t be saved. One Natomas-area client, who bought her home for $420,000, just watched an identical home across the street sell for $315,000 after foreclosure, Caoili said. This client, like others, is nearly ready to give up her home.”
“‘They’re living on credit cards now. There’s no equity left,’ she said. ‘I’m seeing people who have been able to hang on (but) are turning around and saying, ‘Hey, why am I hanging on? I’m $150,000 upside down.’”
“Steve Galster, co-owner of Galster Group real estate in Fair Oaks, said lenders ‘are pricing them to sell.’ His firm just listed an Elk Grove home that sold in 2004 for $420,000 and fell into foreclosure. The bank is now asking $299,000. ‘I guarantee that’ll sell this week,’ he said.”
The San Francisco Chronicle. “The housing market’s vicious downward cycle wreaked more havoc in 2007, as record numbers of people in the Bay Area lost their homes to foreclosure, according to a report. The numbers of foreclosures are huge compared with current real estate sales. For example, in Contra Costa County, the 1,558 foreclosures in the fourth quarter are almost equal to the 1,589 homes that were sold in the same time period.”
“For the fourth quarter, Bay Area foreclosures rose 482.5 percent to 4,573, compared with 785 in the year-ago quarter. Again, Contra Costa County, with 1,558 foreclosures, up 533.3 percent from a year ago, had the most homes repossessed, followed by Alameda County with 1,026 (a 514.4 percent increase) and Solano County with 704 (up 528.6 percent).”
“Edward Payne, 70, and his wife Waveline, 71, have owned their four-bedroom San Pablo house since 1965. The Paynes are raising their grandchildren, because their daughter, the children’s mother, ‘took off,’ Edward Payne said.”
“After multiple refinances, their monthly payments are now $3,800 - even though their household income is just $4,000 a month from Social Security and a pension.”
“In April 2006, they refinanced again, bringing their total debt on the house to $505,000. Since home values have slumped, the house is now worth about $465,000, they say. They have not made a mortgage payment in three months. The mortgage is scheduled to reset $738 higher in April.”
“Payne said he thought he would be able to refinance his way out of trouble, as he has done before. ‘I didn’t realize the housing market would fall. It’s hard to sleep at night,’ he said. ‘I just lay there, just thinking about it. If it wasn’t for the grandkids, it wouldn’t be so bad. We could find a place for just Waveline and me.’”
The Marin Independent Journal. “Home foreclosures quadrupled in Marin in 2007, reaching record levels, and will continue to rise this year, it was reported Tuesday. ‘It shows that Marin is not immune from these larger forces out there,’ said DataQuick analyst Andrew LePage. ‘Marin has grown less than most counties, so it actually means a little more to be back at record levels.’”
“In Marin, the median price peaked in June at $1.12 million but has dropped to $836,000.”
“‘I think even this county is being affected by the slowdown in the housing industry,’ said Jim Chapman of First Security Loan in San Rafael. ‘I’m not sure this isn’t just a horrible, normal cycle.’”
The Press Democrat. “A record number of Sonoma County residents lost their homes in 2007 when they no longer could afford to pay their mortgages. Lenders sent 968 default notices in the fourth quarter to Sonoma County borrowers who fell behind on their mortgage payments, up from 749 in the third quarter and triple the number from a year ago.”
“Overall, lenders sent 2,586 default notices last year, shattering the previous record of 1,625 in 1996.”
“‘We’re working our way through risky loans. Those are all adjusting and payments are going up thousands of dollars a month. People are seeing their values decline more and more, and so people are just going, ‘There’s no hope.’ They owe more than the home is worth, so why fight the mortgage payment,’ said Alison Fetherolf, VP for Sterns Lending.”
“Agent Belinda Andrews is busy trying to help homeowners avoid foreclosure by selling properties for less than what they owe lenders, known as a short sale. She has about 40 clients attempting short sales.”
“‘I started with a handful a year ago, and now I’m probably getting two a week,’ Andrews said. ‘The loans I’m seeing now compared to a year ago are very bad. These are people that really stretched.’”
The Modesto Bee. “Final 2007 foreclosure statistics are in and they’re brutal. More than 8,000 homes in the Northern San Joaquin Valley were repossessed by lenders last year. That’s nearly 10 times more than were lost in 2006.”
“Foreclosures in Stanislaus, San Joaquin and Merced counties are among the highest in the nation. ‘You guys have been slammed,’ LePage said. ‘In some pockets of your region, it’s about as bad as it gets.’”
The LA Times. “Leandro Hernandez of Chino Hills…tried to sell his house in 2006 to get out of a mortgage he couldn’t afford but found no takers.”
“Faced with a house worth less than his loan balance, he’s trying to cut a deal with his bank. But if the lender won’t budge, Hernandez says he knows what he will tell them. ‘Foreclose me,’ he said defiantly.”
“Hernandez knows that an eviction is a lengthy process. ‘I’ll live in the house for free for 12 months, and I’ll save my money and I’ll move on.’”
“Woodland Hills broker Eli Tene specializes in short sales. He said affluent homeowners were increasingly distressed. ‘Those people overextended to get in to those neighborhoods. I have people in Calabasas, Encino, Woodland Hills, Agoura,’ he said.”
“When prices drop, some homeowners who owe more on their property than it is worth will often walk away, noted Leo Nordine, a Hermosa Beach broker who sells repossessed homes for banks. Nordine said his workload had doubled in the last year.”
“‘When people see appreciation, they fight to hang on to their house,’ he said. ‘When they see it going backward, they’re more likely to give up.’”
“The foreclosure peak of 1996 occurred at the end of an economic recession, economist Christopher Thornberg noted. That makes the sharp rise in foreclosures more alarming, he says, because the recession is just beginning. ‘If you think the market’s bad now, wait a year,’ he said.”
“In a recession, the risk of foreclosure rises because people face sudden hardships such as an unexpected job loss. That’s what happened to Jacqueline and Oscar Arellano of Riverside.”
“The couple bought their six-bedroom house six years ago, before the real estate run-up, for about $300,000. Last March, Oscar lost his job. Within weeks, the couple began falling behind on their monthly payments.”
“Then in October, the payments on their adjustable-rate loan rose to $3,200, from $2,200. Oscar is working again, but Jacqueline was laid off as a loan officer from Countrywide Financial Corp. last fall. They recently received a notice of default, and are trying to sell their house.”
“‘My home’s been on the market for four months and I haven’t had anybody interested in buying it. The market has just died,’ said Jacqueline, who now works as a bill collector.”
The Union Tribune. “Setting dismal records, home foreclosures more than tripled and notices of mortgage default more than doubled in San Diego County in 2007.”
“DataQuick reported yesterday that foreclosures rose 353 percent to 7,349, while default notices increased 128 percent to 20,138. The numbers were the highest since DataQuick began keeping track of county foreclosures in 1988 and defaults in 1992.”
“‘We estimate that about 41 percent of the people receiving an NOD (notice of default) statewide are avoiding an actual foreclosure, while 59 percent lose their homes to foreclosure,’ LePage said.”
“A year ago, about 71 percent were able to emerge from the foreclosure process, he said. ‘With depreciation, we have prices rolling back further and further,’ LePage said. ‘In the worst-hit markets, prices are back to 2004 levels. For people who never had much equity to begin with, or have tapped into equity, there often is no way to refinance. They owe more than the house is worth.’”
“Financial planner Marcus Frampton, 28, recently bought a house near the ocean on La Jolla Boulevard. The previous owner had bought the two-bedroom, 1,500-square-foot house in May 2006 for $1.35 million, Frampton said.”
“‘This one had an open house in June. They were asking $1.1 million. In October, I saw it was still on the market. My buddy is an agent. I asked him to offer $900,000. We ended up settling at $930,000,’ he said.”
“Frampton worries about taking on too much debt, but he’s convinced that he got a deal that will pay off over time. The sale closed at the end of November. Frampton, who had been renting a nearby apartment, said he knew prices would come down, but he didn’t expect it to be this quickly.”
“‘I thought it would take another year’ to reach current levels, Frampton said. ‘I was surprised they took my offer. Because I had this opportunity, I jumped at it.’”
“Homeowners with good credit…stand to benefit the most from the Federal Reserve’s decision yesterday to cut its benchmark interest rate by three-quarters of a percentage point.”
“But the surprise move yesterday by the central bank will offer little, if any, benefit to some of the people in most need of financial salvation – homeowners with high mortgage rates who are unable to refinance because of bad credit histories.”
“With rising delinquencies on many kinds of consumer loans and the prospect of growing unemployment as the economy slows, banks and other lenders ‘do not want to build up a portfolio of loans to people they consider poor credit risks,’ said Dean Baker, an economist and co-director of the Center for Economic and Policy Research.”
“The lower rates won’t help people like the woman who visited the Credit Counseling Bureau of San Diego yesterday morning. She was worried that she won’t be able to afford her home when her $1,400 monthly adjustable rate mortgage payment jumps to $2,400 in June, bureau manager Sunny Enyoghwerho said.”
“‘She’s not qualified to refinance,’ Enyoghwerho said. ‘She has bad credit.’”
‘They’re living on credit cards now. There’s no equity left,’ she said. ‘I’m seeing people who have been able to hang on (but) are turning around and saying, ‘Hey, why am I hanging on? I’m $150,000 upside down.’
‘People are seeing their values decline more and more, and so people are just going, ‘There’s no hope.’ They owe more than the home is worth, so why fight the mortgage payment,’ said Alison Fetherolf, VP for Sterns Lending.’
‘Faced with a house worth less than his loan balance, he’s trying to cut a deal with his bank. But if the lender won’t budge, Hernandez says he knows what he will tell them. ‘Foreclose me,’ he said defiantly. ‘I’ll live in the house for free for 12 months, and I’ll save my money and I’ll move on.’
‘Woodland Hills broker Eli Tene specializes in short sales. He said affluent homeowners were increasingly distressed. ‘Those people overextended to get in to those neighborhoods. I have people in Calabasas, Encino, Woodland Hills, Agoura,’ he said. ‘When prices drop, some homeowners who owe more on their property than it is worth will often walk away, noted Leo Nordine, a Hermosa Beach broker. ‘When people see appreciation, they fight to hang on to their house,’ he said. ‘When they see it going backward, they’re more likely to give up.’
I’ve often posted that this is exactly what we experienced in the Texas bust. I’ve mentioned that in the hushed talk of the time, it became the conventional wisdom that only a fool would keep making payments.
And Thornberg is right, history shows the peak of defaults occurs years after the bottom in prices. And IMO, what we are seeing now are 2004-2005 defaults, because those are the ones underwater. As prices fall, we should see earlier FBs in the same boat.
And where are those, ‘it’s from such a low base’ people?
Ben,
What amazes me is that people are racking up the credit card debt while still squeeking out one more mortgage payment.
I forgot that defaults peak after prices hit bottom. Do they give up home that prices will rise quickly to what they owe?
I do recall peak defaults usually occur 3 to 5 years after loan origination. My… that implies we’re just entering the window for 2005 loans and we’re exiting the worst window of 2003 loans… or are we?
Got popcorn?
Neil
Or this? That the 2005/2006 timeline given only speaks to the very worst of the lot, and the numbers that should follow out of the coming ‘normal’ downturn running over a 5 -7 year window will be ’shocking, just shocking’
Neil, that 3 to 5 year period is historically accurate, but consider the number of I/O and OA loans that were originated during the boom. Most I/O loans are I/O for 5 years before resetting, and the OAs typically recast around 4 or 5 years after origination (depending upon the max neg am allowed and the payment options that the borrower chose - usually but not always the minimum). For high cost areas like LA and OC, these are time bombs with slightly longer fuses than the historical data would suggest. I’m not saying that the 3 to 5 years is inaccurate, just that IMO it could be a little different for areas that saw a lot of I/O and OAs.
The current housing downturn was precipitated by factors different than those of previous downturns; therefore, the 3-5 year lag time for peak foreclosures will most likely not hold. I would venture to say that the foreclosure peak could come quickly, very quickly, just as the price declines have.
This may not turn out to be the long, drawn out slump that some of us have predicted. There’s a chance that the same deregulation that caused this mess might also produce a quick, but brutally severe flushing of the system… an economic laxative, so to speak.
I agree. Past run ups involved things like qualified buyers, income, and down payments. It took years of price declines to put people underwater to the point they had to go into foreclsoure.
Some of these people are very upside-down on day 1.
I agree with you. We don’t know when the bombs will stop going off. Do any of the historical correlations do more than show the starting point? We do not have the normal savings to pull us out of this. Oh well…
Got popcorn?
Neil
While I agree that the price declines may be more rapid I also anticipate soem dead cat bounces on the way down. There are still many people out there who have absolutely NO clue and these people are shark bait for the hungry Used Home Sellers and Mortgage breakers, er, ah, I meant brokers. Case in point, I got a call from a friend today who told me his mortgage broker called and told him now was the time to refi because the latest rate cut from the fed. I told him that there was a chance for more rate cuts in the near future. If he holds out and there is no cut he is ok unless rates go up. And I do not think Bernanke has the spine to do that, yet.
The fed rate cuts doesn’t mean anything. The cost of a 30-year fixed jumbo with no points is almost 2% higher than in October ‘06; when the fed fund rate was 1.75% higher than it is now.
“What amazes me is that people are racking up the credit card debt while still squeeking out one more mortgage payment. ”
Intertia. Because moving is such a hassle (for most people) most have to be forced to do it. You’re storing stuff, all your computers and TVs and CD players are properly hooked up, your kids have their rooms decorated, there are dogs and cats, and where the hell are you going to go, where the hell are you going to store your stuff?
Gee, if I can come up with another $2500 (or whatever) I can postpone worrying about it for another month.
Question…. If I am a tennant in a home that is going into foreclosure, can an owner who hasn’t made payment to the bank in months file a Notice of Exiction on me if I stop paying him rent?
That type of defiant answer giving by Mr. Hernandez in your comment is the vibe I’m getting from my F’ed landlord. Even at 120x the rent he can charge, it would still only be half the mortgage he has on the place.
And yes, this is happening in Denver, Colorado where we had no bubble, right?
sure he can file a notice, your rental agreement with him has nothing to do with his house going into foreclosure. The question is why would he bother ?
The only reason I can surmize he would bother is he’s groping for cash to minimize the financial beating he is taking. Would such a notice be a serious ding on my credit?
Just as much as if he was not going into foreclosure. Don’t let his problems become yours
He would have to report it to a credit agency somehow, a bit harder for an individual to knock your credit than a mortgage company.
Comment by Mo Money
2008-01-23 16:22:35
He would have to report it to a credit agency somehow, a bit harder for an individual to knock your credit than a mortgage company
You are wrong. If the landlord files anything with a court, it WILL show up on the credit report.
Why not contact his lender and see about sending the payments directly to them? They may even stay the foreclosure and when the landlord goes to evict claiming non-payment, you produce the reciepts of the payments to the lender and point to the forclosure case. Argument would be that you paid the lender because the landlord is in breach of your right to quiet enjoyment (you paid the rent, he didn’t pay the mortgage) and your paying the lender solved the problem.
Technically correct answer (I think): yes, he can. You signed a contract with him, not the bank, and he has the right to enforce it if there’s any time frame you are there but don’t pay.
Real life answer: he must be pretty desperate if he’d threaten such a thing in those circumstances. Personally, I’d play hardball back and tell him you’ll escrow the money with an attorney until he proves the house isn’t being lost. Who cares how he proves it, that’s his problem.
In the meantime, you might want to look for another place to hang your hat.
Question…If you’re living there, why wouldn’t you pay rent? That seems dishonest.
It does seem dishonest, I totally agree with you. However, this person would be in violation of our rental agreement when it goes to the bank. This person has been paying his primary residence mortgage,which I doubt he will lose(no proof) with the rent check I write to him for my primary residence that he supposedly “owns”. How’s that for honesty?
It is a federal crime for a landlord to collect rent without paying the bank on his mortgage. If he takes you to court (which he won’t), you can tell the judge that you didn’t want to be a party to your landlord’s fraud. You can also tell your landlord that if he wants to sue you, then fine. You will just call up his bank and let them know what he’s been doing. They probably don’t even know he’s renting the place out (more fraud).
Why not try contacting the bank. I went through a similar experience when I woke up one day to notice the owner of our duplex had flown the coop in the middle of the night. I researched and found the lender and contacted them directly and they not only lowered the rent, they came in and made all the repairs the owner had not made.
How can this be a FEDERAL crime, especially if the bank in question is not doing business in multiple states? Patrick Henry and Daniel Webster are rolling over in their graves.
It’s a criminal offense. The bank doesn’t have to sue them for it, it just turns them over to the FBI.
nitpick: They usually just inform the IRS about the unreported income. Less paperwork and far more effective. Yes, they can inform the FBI; but the IRS requires so much less proof…
Got popcorn?
Neil
The ultimate abusers were the institutions who lent the money. Nobody else can say ‘yes’ until the bank says ‘yes’, and the banks failed to properly value the collateral offered for those loans. For that, they’re all going to sink. Watching CITI flail around is like watching a drowning man go down with nobody around to help. They are beyond hope.
‘They’re living on credit cards now. There’s no equity left,’ she said. ‘I’m seeing people who have been able to hang on (but) are turning around and saying, ‘Hey, why am I hanging on? I’m $150,000 upside down.’
Ben,
I’m thinking your 1980’s Texas bust stories are gonna be trumped, bigtime.
I guess this sentence, basic economic behavioral theory, sums it up: ‘When people see appreciation, they fight to hang on to their house,’ he said. ‘When they see it going backward, they’re more likely to give up.’
“And Thornberg is right, history shows the peak of defaults occurs years after the bottom in prices.”
Not sure I’d agree with that - the foreclosure peak does come years after the price peak, but not so much the price bottom, at least from what I can see.
As a reference point, San Diego prices’ last peak was 1990/1991, price bottom was 1997. The peak of foreclosures was late 1996:
http://www.sddt.com/Finance/EconomicIndicators.cfm
However it’s irrelevant at this point - it’s still years away from price bottoms, so also years away from foreclosure peaks :-). The same timing for this go-around would be about 2011, if the time between price peak and price bottom is the same (peak was 2006 in SD). Given that the peak was so much higher this time though - I’m thinking price bottom will be more like 2015, for most places.
I was thinking 2011 because of the last bust in Cali peaked in 1990 and bottomed in 1996 but maybe it will drag out longer because of Government intervention. Funny I was told CA would not crash this cycle because Areospace was no longer a major employer. Guess that idea was wrong
Aerospace was replaced with subprime lending. Oops.
However it’s irrelevant at this point
So in 2011, will we have “The Housing Bottom Blog”?
I worked with a guy that was still underwater in the year 2000 on a San Diego condo that he bought in 1992. He ended up moving out to Cleveland.
‘Faced with a house worth less than his loan balance, he’s trying to cut a deal with his bank. But if the lender won’t budge, Hernandez says he knows what he will tell them. ‘Foreclose me,’ he said defiantly. ‘I’ll live in the house for free for 12 months, and I’ll save my money and I’ll move on.’
You want a piece of me Mr. Hernandez? I’ll see your a$$ in front of Judge Judy, then we’ll see how long you’ll live there.
‘Foreclose me,’ he said defiantly. ‘I’ll live in the house for free for 12 months, and I’ll save my money and I’ll move on.’
And did you all see this in response, in the comments section of the LAT real estate blog?
“I am one of these people. My condo has dropped in value from $520K in 5/06 when I bought it to $350K now. My ARM payment will probably go up $900 per month in June.
Despite all this, I would be willing to stay if the bank would refi the loans to a 30 year fixed, but since I’m not a ‘hardship’ case they’d apparently rather foreclose. I guess the only way I could qualify for loan mitigation is to get my boss to fire me, stop making payments, and wreck my credit. In fact, my bank won’t even talk to me until I miss a couple of payments.
I have purchased a cheaper place in a nearby area now, while my credit is good, and will stop making payments on house #1 after house #2 closes. I know the foreclosure will be on my credit for 7 years, but I will have saved a lot of money.
I realize I agreed to the deal when I signed the mortgage papers, but I am within my rights to walk away from a bad deal and suffer the consequences, just as many corporations write down billions of dollars of debt, lose money for their shareholders, and lay off people as a result of their bad decisions.
I don’t really understand why people view a business decision by a homeowner as a terrible moral lapse. However, when large lending institutions, with access to more sophisticated information than any consumer could imagine, make mistakes affecting thousands of people worldwide, they are not excoriated and vilified with the same righteous zeal.”
“However, when large lending institutions, with access to more sophisticated information than any consumer could imagine, make mistakes affecting thousands of people worldwide, they are not excoriated and vilified with the same righteous zeal.“
They don’t know me.
“I realize I agreed to the deal when I signed the mortgage papers, but I am within my rights to walk away from a bad deal and suffer the consequences, just as many corporations write down billions of dollars of debt, lose money for their shareholders, and lay off people as a result of their bad decisions.”
Corporations are not bound by contract to provide certain rates of returns on their investments, nor are they bound by contract to retain employees. You however *are* bound by contract to continue making mortgage payments. That’s the difference.
“Hernandez knows that an eviction is a lengthy process. ‘I’ll live in the house for free for 12 months, and I’ll save my money and I’ll move on.’”
Does this ahole really get to live in the house for 12 months for free. What is the actual/normal timetable for a foreclosure in California?
I’ve always heard like 6-9 months from the first notice of default to the sheriff knocking at your door.
Try that crap in Texas. You get three days from judgment to get out. I can get a judgment in under 10 days.
Lucky thirteen and your time is up.
Maybe if you dummies contributed to our elected judges and JOPs, you could stay longer, but sorry. No.
Oh, how I wish that foreclosure speed was national. I know that sounds cruel. But I don’t mean it that way. If foreclosures were quick everywhere, we’d be to a rational market by May. But it isn’t… and the politicians will try to slow things… ugh…
Neil
I’m not an expert in this, but here is my understanding of the “normal” timeline for a non-judicial foreclosure in CA, which is pretty long. (Judicial foreclosures are allowed in CA, but they are rare since they cost a lot of $ and take a lot more time than non-judicial foreclosure; they are only done when the loan is recourse and the bank thinks it can actually recover the deficiency from the FB.)
The NOD is usually not recorded until after the FB misses 3 payments (so there’s 3 months), and then the Notice of Trustee’s Sale is recorded 90 days after the NOD (so, now we’re at 6 months). The trustee’s sale is usually 3-4 weeks after the NOTS was recorded, assuming that the sale is not postponed for any reason (that takes it to about 7 months).
Then the bank can start the eviction process. The amount of time this takes varies depending upon the action/inaction of the person being evicted (e.g., do they default or do they file an answer and force a hearing?; do they file for BK, so they get the automatic stay until the bank can get relief from the automatic stay, etc.). The fastest evictions (default, no problems) normally take at least 1 month (the bank has to file and serve the complaint, get the default, get a writ of possession issued from the court, have the sheriff serve the writ on the FB, and then the sheriff will perform the actual eviction 5-7 days after they serve the writ). If the occupant fights it, 2-3 months is typical (but longer is certainly possible depending upon the tactics used and the court calendar).
So, you’re typically looking at 8-10 months of free living (and that assumes that the bank is on top of things and filing its NOD and NOTS promptly; a lot of banks/servicers are overwhelmed right now and are waiting up to 6 months just to file the NOD, which pushes everything else back). So, I would say that he isn’t too far offbase when he talks about living in the house for free for 12 months. Also, keep this timeline in mind when you see those NODs escalating (foreclosures will keep rising for at least 3-6 months after the NODs peak).
“Steve Galster, co-owner of Galster Group real estate in Fair Oaks, said lenders ‘are pricing them to sell.’ His firm just listed an Elk Grove home that sold in 2004 for $420,000 and fell into foreclosure. The bank is now asking $299,000. ‘I guarantee that’ll sell this week,’ he said.”
Galster thinks he is Broadway Joe Namath with guarantees like that one…I think he has confused Fair Oaks, Sacramento with NYC’s West Village…
“In April 2006, they refinanced again, bringing their total debt on the house to $505,000.
So they blew thru 1/2 a million bucks (assuming they bought cheap in ‘65), and now its “think about the children” line… makes me wanna puke.
got cash?
oh yes… the “the kids! the kids! bullcrap. Yes… the kiddos. Haveta’ make sure you can line em’ up for the school lottery in the best school district, which in of itself is probably worse than the public school systems in Texas, which means you better move to one of those expensive areas in the Bay Area like Marin, then you’d better buy a massive Mcmansion so yer kids will have a big enough room to house their own bathrooms and flatscreen TVs. Yes… for the kids: You have to buy a Volvo, which even though is owned and in some cases produced by Ford motor company will protect your little darlings in an accident.
And what about those kids? oh.. well they’ll probably wind up moving somewhere else anyway.
Many a divorce court use the same argument: “For the good of the Kids!” to screw over the Dad. Of course the child support money in most cases goes to the ex-wife’s Prada handbags and beach vacations with her boyfriend.
Dear Bostonian:
I am taking it as my own personal mission to insult every last poster on this blog who comes on here with something irrelevant and stupid to say about women. You are paying child support because your ex-wife should not be expected to pay for your children. She bore them and is raising them. It’s your job to pay for them. If she works and earns money in addition to providing you with children, then she deserves to have a few creature comforts for herself. If you can’t afford to pay child support, then you are a loser.
God Bless You! Bostonian…you are a saint. My children have very nice clothes for school and I run around in sweats or loungewear or whatever I find on sale or clearance. My ex pays little child support and has complained about it since day one since I have a very small income. I give my kids everything because at age 36, I do not need much.
Great point. We are still paying alimony to my husband’s first wife (and will for the next 10 years) for that very reason. She was a great mother and raised fabulous, stable kids, while my husband worked 80 hours a week. Unlike some second wives, I never begrudge her a penny.
“You are paying child support because your ex-wife should not be expected to pay for your children. She bore them and is raising them. It’s your job to pay for them.”
Ladies…..take my word for it.
For every story you can come up with about the “noble single mom who sacrifices everything for the kids”, there is another story about how the dad has been screwed/shafted/whatever terms you want to use, by women and the court system.
The problem,for about the past 15 years, has been the AMOUNT of the support ordered. Because of pressure from the Fed. Govt on the states to get them to increase the amount of support collected by custodial parents (and thus theoretically reduce the number of single parents needing welfare), the states went to using formulas.
These formulas are not based upon reality but upon a ‘but the kids need’ version of fantasy. There is only so much money that the parents have and it takes more to pay for 2 households than 1. These formulas, however, do not take those facts into account. I have seen child support orders that took 50-60% of gross pay - and left the non-custosdial parent with so little money it was if they had worked 20 hours a week for minimum wage. They end up where they either have housing, food and/or car insurance or pay the support.
For example, household with $40,000 income between 2 people. They divorce and she gets the 3 kids. He has $25000 in income, she has $15000 as only worked part-time and doesn’t want to get a fulltime job. Under most formulas, the court will order around $500-600 a month in support and SHE gets to claim the kids as dependents for federal income tax purposes.
$25000 gross = after tax net of around $19500 - $6000-7200 in support = he is trying to pay for housing, food, and everything else on $13,500-12,300 a year or around $1000-1100 a month.
In fact, they could not afford to divorce.
Bicoastal: you are a class act.
oops read it too quickly…”Big V” you are the saint!!!
yes, I do agree there are women out there like that but for kids sake, thank God many are not
There are some women out there who have no problem “taking from what should go to their kids.” They have no shame. GREED and why the housing market has done a major “flip-flop”
Moot Point,
I dont know to many men who want to have kids for this reason.
“the kids! the kids!”
Rent a multi-room apartment, and teach the kids about delayed gratification, saving, hard work, and investing. They will grow up better in the long run, and appreciate what they have a lot more.
I think the San Pablo couple were fools, but at least they took responsibility for the kids of their LOSER daughter.
And their loser grandbaby daddy. Whe does everyone blame the woman in these situations? The kids were abandoned by both parents.
If you go to the article you’ll find that this couple took in three grandkids. This is a huge financial undertaking for an older couple. According to a study by the U.S. Department of Agriculture, a family with a child born in 2000 can expect to spend about $165,630 ($233,530 when factoring in inflation) for food, shelter and other necessities to raise that child over the next 17 years. That works out to about $9200/per year for each child (not factoring for inflation). If they took out the 500K in the last twenty years that works out to about 25K a year. I guess they could have let the foster care system “raise” them. I can imagine the associated costs of taking on this responsiblity between food, clothes, medical, dental and court costs (to establish custody, etc.) having raised fours kids of our own. I think they were just trying to do the right thing. Often times emotion is not the best guide but at least they stepped up to the plate and took it on. I just don’t know enough about their situation to second guess it.
Towards the end of the $500K equity withdrawal, the $25K would only service the debt. Treading water.
hey AG-
When is the CC gonna crash? Those white trash towns like Atracadero, Paso, AG, GB, Nip and such need to return to what they really are. SLO was is the only bright spot, but it is no Santa Barbara (but the prices are similar). Go have a fat TA’s burrito for me.
AG is already down somewhere between 10% and 20% from the peak, depending on the area.
I’m watching Pismo and Shell Beach to see how those “retiree/rich people” markets go.
Just had some nice ribs at Jocko’s last night…mmmm mmmm good!
OMG, I LOVE Taco’s Acapulco!!!! That place is the neutron bomb of burrito heaven. (The old-timers remember before they had to change their name to Tio Alberto’s, or whatever it is now.)
Come visit for Central Coast news:
http://centralcoasthousingbubble.blogspot.com/
Grandparents in Marin — probably means they were in their 20’s in the Bay Area during the 60’s; and with a name like Waveline, I’m venturing to say they’re teaching their grandkids the finer points of cannabis horticulture.
Oops, just went back and saw their ages, so they were 29 and 30 during the summer of love (’67). But I stand by the rest of my comment.
FYI-San Pablo is not Marin Co. it’s Contra Costa Co. San Pablo is a couple of miles from Richmond. And if they were into cannabis they wouldn’t be hurt’in for money…….
Okay, so I got their ages AND their county wrong. But throw me a bone here!
How is it you know so much about the economics of cannabis horticulture?!
“got cash? ”
Yeah but i just put a little bit in the “Trash” this month!
Fecaltime!
“Edward Payne, 70, and his wife Waveline, 71, have owned their four-bedroom San Pablo house since 1965. The Paynes are raising their grandchildren, because their daughter, the children’s mother, ‘took off,’ Edward Payne said.”
“After multiple refinances, their monthly payments are now $3,800 - even though their household income is just $4,000 a month from Social Security and a pension.”
WHY would you do that? If you’re retired, getting $4,000 a month in SS, which equals more than enough to live on, have your house paid for, etc etc… then why would you refinance? That makes absolutely zero sense to me whatsoever. Then again, this is the Bay Area and fully half the people who live around me bought their house in their 50’s. geniuses.
Why Refi ? To stay retired is my guess and use the house a a source of income.
They could have done a reverse mortgage.
Reverse Mortgage won’t give you a lump sum to spend and given their ages the income wouldn’t be as much as doing the serial cash outs. JMHO
Got a friend who got a reverse mortgage. Sorry to say, it’s enabled her to go on a nonsensical spending spree. The rest of us are doing some serious head-scratching over some of her purchases.
However, she is in a rehab center following a fall, and once she’s discharged, she’ll go and live with her son. One of her neighbors had quite a chat with the son re: her financial management. I surmise that the son is going to take over that responsibility.
“…..his wife, Waveline….”
Man, you guys are slacking tonight. I thought there would be somebody ALL OVER that!
Don’t tell me, let me guess. The mom that disappeared is named “Sunshine” and the grandkids are Dylan, Rainbow, and Blossom.
This blog is bitchin’!
Hells yeah! This blog is rockin’ rockin’ rockin’!
Waveline, why can’t you be true?
bank will take 7-8% of that spending spree p.a. until the equity is sucked out. Reverse mortgages are great for seniors but hell on heirs. I’ve given my mom one of my credit cards so she doesn’t have to do the RevMo on the soon-to-be-paid-off homestead.
I’ve heard that in a Reverse mortgage, if your equity falls below a certain percentage the lender can force the owner to sell. In a falling market we may see this wave coming soon, to add the the rate adjustment foreclosures.
Please correct me if I’m wrong.
These reverse mortgages are heavily marketed to the elderly and may become a huge problem, as grandma and grandpa are kicked out of their houses with little or nothing left.
“have your house paid for, etc etc… then why would you refinance?”
From the look of all the recently bought $60,000 Hummer H2s roaming my area (heavy retiree contingent), I can hazard a guess…
Unbelievable. You know, when you refinance you have to pay it back. Kind of like asking for an increase in credit on your credit card. You can max it out but you have to pay it back.
I guess the meaning of refinance to these folks is “free money”.
That is so true. I’ve heard people say that it’s their money, it’s their equity - why should they have to pay it back. It’s the most clueless part of this whole thing. I don’t know why they can’t figure out that there is no equity payoff until the house sells.
Say what you will about the elder Paynes and their current unenviable position, but their daughter deserves fifty lashes for her irresponsibility.
Well, they raised her…………
On Sunday, The Los Angeles Times printed a Dataquick list of Zipcodes with that showed a median LA COUNTY price of 560K with a 3.7% INCREASE for the year 2007. I have been cutting these charts out monthly for years and this one seems BLATENTLY inaccurate. Did anybody else notice this, or was this somehow correct?
Fecaltime!
When sales slow substantially, the mix of properties sold is critically important to changes in the median. For example, there was one zip code in San Diego (RB) where the median was up, but there were only 4 sales!
That’s way too small a sample size to make any meaningful year to year comparisons.
“Edward Payne, 70, and his wife Waveline, 71, have owned their four-bedroom San Pablo house since 1965. The Paynes are raising their grandchildren, because their daughter, the children’s mother, ‘took off,’ Edward Payne said.”
Haven’t we heard this exact story before, several months ago? Are these the same people or a different set of grandparents with nearly an identical story?
Fecaltime!
I certainly don’t remember reading about a grandma named Waveline.
What about an “ointment” called Vaseline?
I thought exactly the same thing–we definitely had a similar story about 3 mos ago but I’m not sure if same name. Grandparents, had to raise the kids, re-fied up the ying yang. Somehow I remember those people bought their house in 77 though.
i think the grandparent story you’re thinking of took place in Orange County:
http://www.ocregister.com/ocregister/homepage/abox/article_1937672.php
“he will tell them. ‘Foreclose me,’ he said defiantly…”When people see appreciation, they fight to hang on to their house,’ he said. ‘When they see it going backward, they’re more likely to give up.’””
But…but…but…
i thought that the easy loan guidelines that made it possible for anyone with a pulse to afford a house were a good thing, because it automagically turned us deadbeat renters into “pride of ownership” homeowners, defiantly hanging on to their depreciating asset in the face of any evil. The whole goal was to get as many warm bodies “owning” a home as possible, because the magic fairy pixie dust in the homes would make them more responsible citizens, and we would have prosperity and harmony for ever.
Don’t tell me that even “homeowners” look out for their own self interests, and that the mere act of owning a home doesn’t magically transmogrify you into a responsible and financially astute citizen! What is this world coming to?
He sounds pissed I bet hes going to trash that house before he leaves
“Payne said he thought he would be able to refinance his way out of trouble”
HOW?? Explain to me, in logical terms, how can you ‘refi out of trouble’ when you are adding debt?
Why did so many fall into this trap?
I mean, your equity is only equity when you sell for more than what you owe.
When these people took equity out, they converted their equity into DEBT. And the stupidest thing to do to get rid of debt is…to create MORE debt via MEWs.
Stupid people…just can’t be helped…
Gamblers heavily in the the whole will frequently double down to try to get out. Same thing.
If I give a holding deposit to a landlady, then isn’t she obligated to rent to me if I “qualify” under the disclosed standards (I do)? I ask because I gave one to the property manager of my neighbor (first-time landlady), and got a message from him she has to ask her dad before she can decide what to do. I’m thinking she has to offer me a lease, right? Is she legally allowed to accept another tenant first? What is her problem, anyway?
Her process is screwed up. She should ask u to fill an application form and then do a credit check before accepting any holding deposit. Holding deposit means she is ready to sign you up as a tenant. Is she even authorized to accept the deposit if the property is not under her name? I doubt it.
I will ask her for the deposit back if I were you.
The property IS under her name. I don’t understand this crap about her dad being her “financial advisor”. Why did she bother hiring a property manager if she was just going to ask her dad about everything after the fact? I want to ask for the $$ back, but I am interested in renting the house. I want to see what she comes back and says first. How long do you think I should give her?
I hope she is not another FB. If she can’t handle simple thing like this (i.e. screening/selecting tenant), she is going to have problem later on dealing with problems with the property like oh tiolet leaking, heater not working, appliance broken etc. etc.
You have to ask yourself “Is this house really worth the headache that will bring later on since she doens’t appear to have experience dealing with that”.
If I were you, I give her like 3 days max and give u an answer if you really want it. But you need to be mentally prepared to handle the headache later on.
She’s not an FB, but the property manager just told us she rejected our application without giving a reason why (she left a message for him). She’s probably embarassed because she originally offered the house to me at $2500/mo (before it went on the market), but I offered $2100/mo, and she decided to try the market. 2 months later, her asking price is $2200/mo, so that’s why I applied. She certainly has no reason to reject our application. Our income, credit, etc. are more than sufficient to pay the rent. It’s either embarrassment, or she was shocked to learn of my husband’s last name (a Hispanic one).
Whether she’s legally obligated to rent to you depends on what state you’re in and what the landlord-tenant laws are in that state. In MA, the landlord (or lady) is legally obligated not to discriminate against anyone, but until the point that the lease is actually signed and the checks are cashed, both parties can change their minds. Would like to chime in on what others have said: renting from a first-time landlady is not the greatest idea in the world, unless you are very handy with a wrench and are not afraid of Reddy Kilowatt!
Our landlord has not given every excuse in the book on why our leaking shower has not been fixed yet. This has been going on over 2 months now.
What recourse do we have to call a plumber and then deduct the cost from our next rent payment?
That’s what I would do. If the landlord doesn’t like it, surely there are many choices of places to rent in your area.
“What recourse do we have to call a plumber and then deduct the cost from our next rent payment?”
Ben’s LA Times clip above does not do justice to the MASSIVE visual that takes over the entire top portion of the Business Section. I’ve gotta think that will effect (affect? Too many hits on the head to remember the difference) people’s continued negative perception of real estate now.
Most negative articles to date have been page 2/3 or smaller blurbs in the lower half of page 1, on occassion.
My buddy is an agent. I asked him to offer $900,000. We ended up settling at $930,000,’ he said.”
“Frampton worries about taking on too much debt, but he’s convinced that he got a deal that will pay off over time.
There really is an endless amount of dumb a$$es out there. I’m sure his “buddy” the agent researched it for him… It must have been one of those no brainers, ain’t that the truth!
Got to think, who lent him the money. I bet it’s countrywide.
“Financial planner Marcus Frampton, 28, recently bought a house near the ocean on La Jolla Boulevard.”
***
“Frampton worries about taking on too much debt, but he’s convinced that he got a deal that will pay off over time. The sale closed at the end of November. Frampton, who had been renting a nearby apartment, said he knew prices would come down, but he didn’t expect it to be this quickly.”
“‘I thought it would take another year’ to reach current levels, Frampton said. ‘I was surprised they took my offer. Because I had this opportunity, I jumped at it.’”
——————————-
This guy is a financial planner? He’s worried he took on too much debt, and he says that he recognized that prices were falling but he “jumped” anyways? Way to knowingly catch a falling knife on a property that will soon be (if not already) upside down. Genius.
OC, I read this and thought to myself who in their right mind would pay for advice from a 28yr old financial planner? Apparently plenty of people due to the $930K home purchase. It must be different out west…
He probably advised a lot of people to buy houses between 2000-2005, and they thought he was a genius. Never mind that any chimpanzee could have made money in that same period.
I have never discriminated because of someone’s youth. I would rather have a young aggressive sharp child than an older plodding spirit with decades of experience.
Agreed.
However, the crime in this case is talking to the newspaper not the house buying. Discretion matters.
If raw talent is needed, age matters less. If experience matters more, age may be helpful. That being said, I’ve known older people who’ve learned little from all of their experiences and younger people that had very good instincts even if lacking in experience.
Jim, I thought about the age issue, too. But I think I was more stunned that this “genius” financial planner would talk to a newspaper, using his own name, about his stupid financial decision. And, yes, it is different out here (people were chugging the Kool Aid and willing to trust really young folks with really important decisions).
His next big hit: “Frampton Comes A-Cropper”
featuring the hit singles:
“Do You Feel Like an FB”
“Baby I Love Your Debt”
“Show Me the Weight” (of your payment”
roflow
hehe
I’m glad he has an easy-to-remember name like his pot-smoking guitarrist brother, because I live in SD as well, and if I ever need a financial advisor, it’ll be a big red flag when I hear his name and I won’t use him.
They didn’t take his offer. He ended up paying them an extra 30 k.
I wish I could look through the finances of these people. That elderly couple bought a home in 1965, refinanced it a few times to the tune of $500K+, and now, they can’t cover the note?
WTF? Where in the hell did the money go?
They must have borrowed their way through the last 20 years. That is simply amazing.
My husband used to say to me that he wished he made more money. Even though he makes a damn good living, somehow, he thought that because he couldn’t go out and buy us everything under the moon, there was something wrong. I repeatedly tried to make him understand that we could buy tons of crap if we decided to go into massive amounts of debt, but that was just plain silly to do.
My husband now understands that all of these people were not really making any more money that he. They were simply (and foolishly) using debt to finance these lavish lifestyles and now, the chickens are coming home to roost.
It has been a real eye-opener for him.
Most, if not all folks, could make $10,000 per year or $100,000 per year and still say “I wish I made more money”
I will tell you, the tide going out has shown me just how many people were swimming naked. I make a damn good living, and I work 60-70 hours a week to do it. So many of my friends have lived better than my lifestyle putting in 40 hours at marginal jobs. It used to baffle me how they could support that level of consumption, I always just assumed they were making about the same as me.
Then this year the forclosures started, two of them so far this year. These are clsoe friends, so I’ve asked, “What happened, you guys looked like you were doing OK?” Of course I knew they were refi-ing, but I didn’t relize they had taken everything out of the house. They never thought about paying it back, somehow housing would keep going up forever. It was classic cognative dissonance. Turns out both couples make about half what my houselhold income is.
This is just the tip of the iceberg, and BTW both of them work in Real Estate. Once the job losses spread to unrelated industries, Katie bar the door. I have never been this bearish, I think there is going to be blood in the streets.
I feel so relieved to realize that not only can’t *I* afford 600,000 houses, none of these other people who bought them could either. I was starting to think everyone must be making a lot more money than me! But, turns out, they were just clueless and I wasn’t crazy after all. Whew.
My husband used to say to me that he wished he made more money. Even though he makes a damn good living, somehow, he thought that because he couldn’t go out and buy us everything under the moon, there was something wrong. I repeatedly tried to make him understand that we could buy tons of crap if we decided to go into massive amounts of debt, but that was just plain silly to do.
My husband now understands that all of these people were not really making any more money that he. They were simply (and foolishly) using debt to finance these lavish lifestyles and now, the chickens are coming home to roost.
Stories like these on the HBB are a real eye-opener for him. And, they make us both glad that we choose to live within our means and save money!
ok, I got it the first time. lol, just kidding. I know what your talking about. My wife and I go through the same thing. In Charlotte it seems everyone spends about 30% more than they make. I do well and we have no debt, but sometimes its hard to not go buy a 750il. But I have will power. I must not do it.
Lane
Buy a used one for 40 cents on the dollar.
Yea your right, I bought a 850i 4 years ago, list in 1992 $90,000 I bought in 2004 for about $20,000 a little high but have never seen one in such good shape. I drive every week or so, will never sell.
Lane
850i, that is a sweet ride. The design’s going on 15 years old now but every time I see one I smile. The only part that doesn’t look modern is the relatively small wheels.
for RE content - I met a realtor who had one in 1999. Not a very good car for a realtor as the back seat is small.
I’ve been wondering that for years as I see people with new cars, big houses, lots of clothes, taking vacations, going to high end restaurants. I kept thinking they must know something I don’t. I guess what they knew was to buy everything on credit.
It turns out that many a house, was the actual financial workhorse in people’s lives, after their jobs petered out or went elsewhere.
Who loaned them the money???
Darrell I did a quick research on what is available in your 401K.
The only one worth owning after the load fees - assuming you do not have to pay load fees.
American Funds EuroPacific Gr A
Morningstar Return Rating: High
Year to Date Return: 18.96%
5-Year Average Return: 22.81%
Number of Years Up: 19
Number of Years Down: 4
Best 1-Yr Total Return (1999): 56.97%
Worst 1-Yr Total Return (2000): -17.84%
Best 3-Yr Total Return (1985-87): 26.68%
Worst 3-Yr Total Return (2000-2): -14.57%
If you could transfer tomorrow (or tonight) and get tonights settlement prices you will make out like a thief. pick up 5%+
Wrong! 1 year on EuroPacific is 18.96% - *Year-to-date* is on -11.58%*! Every single American Funds stock fund is down significantly year to date.
True, I took the info from the usual unreliable source.
In fact I meant to correct when I got time. Laughing at myself.
Take your pick of the usual suspects:
CountryFried, WashMyTushy, Wells Fargone, CITI Rank.
GO read the full story:
“Through the years, the couple used their home equity to supplement Payne’s salary as a shipping clerk and “pickler” at a galvanizing plant in Berkeley. As they raised three daughters, when they needed money for home repairs, family emergencies or items such as a new car, they refinanced the home and took out cash.”
In April 2006, they refinanced again, bringing their total debt on the house to $505,000. Payne said he thinks he was overly trusting of the family friend who arranged the refinance and now won’t return calls.
The refinance paid off credit cards and gave the Paynes cash for a new roof, fresh paint and other needed repairs. They tapped into that cash to help pay the new mortgage of $3,800 a month. But eventually it ran out, and they have not made a mortgage payment in three months.
The Paynes are raising their grandchildren, ages 12, 13 and 16, because their daughter, the children’s mother, “took off,” Edward Payne said.
If they took in the kids even just 6 -7 years ago, they would have not yet been receiving Social Security.
They have an income of $48000 for a household of 5. That puts them at 198% of Federal Poverty Level. A liittle too much for Food Stamps, and assistance with heating/cooling bills. They probably do not qualify for assistance with their Medicare D (prescription) premiums and copays (limit is 165% FPL for assistance) nor their Medicare B premiums (cap is 150% FPL for assistance.) The Medicare B & D premiums alone will eat up $265 a month and Medigap policies will take another $400-500 for a total of around $666-765 for just their healthcare expenses (14.9% of gross without copays and deductibles.) The kids should qualify for the CA version of SCHIP for medical coverage since the household is below 200% FPL.
Sounds like their income just quite never stretched to paying for emergency bills and unexpected expeneses so they used the house to cover those. Then they got stuck with the kids.
DO have to wonder why the father(s) are not paying child support
No way could they have ever paid that kind of mortgage on their income - with 3 kids, I would say $1000 a month MAX. Given the cost of San Fran, don’t see how they can stay there even renting.
I forgot to add that not only the father(s) owe child support but so does the mother.
They really need to sic Child Support collections on both parents. Definitely can see that helping to bring in a pretty good amount of money - may be close to $1500-3000 a month depending upon the parents ‘ incomes.
Trying to collect money from junkies is pointless, assuming they could be found anyways. Daughter is in the wind, father or fathers also MIA. Grandparents are screwed, so are the kids.
“Linda Caoili, (an) agent who works with homeowners struggling to prevent foreclosure, said the decline in prices makes some clients feel their home can’t be saved. One Natomas-area client, who bought her home for $420,000, just watched an identical home across the street sell for $315,000 after foreclosure, Caoili said. This client, like others, is nearly ready to give up her home.”
What happens when they want to rent, after throwing in the towel, and nobody wants to rent to them, because of their ominous debts?
This is how our society will begin to break down, along with the people…
That’s why if you are smart you rent and get a 2 year lease way before any NOD or anything hits the credit report. So you cant really live rent free for a year before they evict you, with out it really hurting.
‘I’m seeing people who have been able to hang on (but) are turning around and saying, ‘Hey, why am I hanging on? I’m $150,000 upside down.’”
So does this mean that people are bailing who technically COULD make their payments? So they refuse to wait until the market gets better (which it will eventually —–OK, a long, l-o-n-g wait but still……….).
I am thinking the same thing you are. Why are you going to pay rent for shelter? Why not stick it out and at the very least, take the tax deductions? I realize there are many factors to consider, but still…
Most people couldn’t save up $150K to make up for the loss is my guess. Wasn’t there an article yesterday that a lot of people had no more than $35K in savings for retirement ? The value of the interest deductions are wiped out by that kind of loss and the smart thing to do is walk away. Hey, more houses for us !
35K won`t get you thru one year of retirement. Retirement costs just as much as non retirement. Nobody gives you a discount, beause you`re retired.
Hey Earl:
I’ve been meaning to tell you that you’re a true scuzz bucket. I told my husband what you had to say about marriage and women, and he thinks you deserve a tenderizing.
Big V–You are so funny. This made me laugh out loud. Thank you!
“I’ve been meaning to tell you that you’re a true scuzz bucket. I told my husband what you had to say about marriage and women, and he thinks you deserve a tenderizing.”
Hey, Big V, you’d better keep on your toes if you’re going to try to find answer every sexist comment in this joint. Any excuse for some woman-bashing with some of these folks.
heaven forbid diversity of thought!
Because it probably costs half as much to rent
Proabably beacuse the ‘owner’ finally figured out that renting will be cheaper than paying the mortgage.
They were willing to shell out more per month for the mortgage when they thought the house was or would ‘appreciate’ and make them easy money but are not prepared to pay more to live in the house when not only are they not ‘making money’ but are actually losing value.
Whenever people crow on about the mortgage interest deduction it always sets me a little on edge. Most of these people seem to have no idea how it actually works. All it does is reduce your taxable income, thus saving you about 30 cents for each dollar spent. I’ve had my mortgage for awhile, and last years total interest payments didn’t even top our combined personal deduction. Even if it had, I’m really only getting benefit for the amount *over* the personal deductions, so big fucking whoop. You know how everybody here has at least one thing that pushes their buttons? HELOC morons, or whatever? This is the thing that pushes mine, I just want to tell them where to stuff their goddamn deduction. It is NOT a factor in home ownership.
Preach it Eggman!! People who have never done tax work don’t understand that the gub’mint subsidizes all of us, renters and homeowners alike, with the standard deduction. When I was still an undergrad, I would help certain friends understand their taxes. Not ONE of them who were homeowners itemized since the standard deduction was several thousand dollars more. ‘Course this was likely because they bought in the 80’s for 60-80k. Lower basis means lower prop taxes AND lower interest expense.
““‘They’re living on credit cards now. There’s no equity left,’ she said. ‘I’m seeing people who have been able to hang on (but) are turning around and saying, ‘Hey, why am I hanging on? I’m $150,000 upside down.’”
Wasn’t this exactly the point that Jim Cramer made a while back in his famous streetside tirade on CNBC?
Cramer Says Walk Away from Your House
$150K is A LOT OF MONEY!!!
Could be a simple financial decision.
$150K buys a pretty good education for your kids.
Several cars.
Vacations.
etc.
It may make financial sense to take the credit hit rather than continue paying for an asset that will not return to its value for a loooooong time.
$150k will buy you a dozen houses in a historic area of Detroit.
Hell, make it a baker’s dozen…
Imagine this home in Pasadena, Ca., instead of Detroit?
Add a coupla zeros to the price, perhaps?
http://www.realtor.com/realestate/1081345689/
Whoa.
$2.75 per square foot!
Oscar is working again, but Jacqueline was laid off as a loan officer from Countrywide Financial Corp. last fall.
‘ The market has just died,’ said Jacqueline, who now works as a bill collector.”
Anyone else catch the sweet perverse irony of her work history?
Irony is coming so hot and fast, it’s hard to keep up…
I sure did. Nothing like a step up in life to bill collecting.
I wonder if her own name popped up on the call list ?
lol
Yes this is similar to opening 2 franchise locations, right next door to each other: a Baskin Robbins and a Jenny Craig! …
Nice, very nice!
I did.
She can now make the harassing calls to herself.
That`s funny!!
Shut up, Earl.
Big V: I’m laughing so hard I can barely type. What did Earl say?
Take it back to the playground, V.
He said “Why bother getting married? You might as well find a bitch that you can’t stand, then buy her a house.”
Then he also agreed with Sammy Schadenfreude when he said that it was controlling housewives who caused the housing bubble. I’ve been meaning to get him back for that ever since. I feel much better now.
Yeah dude! you really “got him”.
You should write a monologue. You could sell tickets.
Can’t wait for another bill collector to show up at her residence!!
Am I the only one who thought it was brilliant?? She has re-positioned herself in the one industry guaranteed to see lots of growth!
She won’t make any $$ as a bill collector; she’d have to get them to actually PAY for that.
Professional $word $wallower…
“Financial planner Marcus Frampton, 28, recently bought a house near the ocean on La Jolla Boulevard. The previous owner had bought the two-bedroom, 1,500-square-foot house in May 2006 for $1.35 million, Frampton said.”
“‘This one had an open house in June. They were asking $1.1 million. In October, I saw it was still on the market. My buddy is an agent. I asked him to offer $900,000. We ended up settling at $930,000,’ he said.”
The percentage of NODs going to foreclosure is amazing. In 2006, 29% of NODs in CA resulted in foreclosure. In 2007, that more than doubled to 59%. With property values continuing to fall and lending requirements getting more restrictive, it looks like that percentage will increase again in 2008. With NODs already at historic levels (surpassing the highest levels of 1996, even adjusted for increased population) and still rising, the number of foreclosures in CA in 2008 will be enormous.
As I said over a year ago: greater than 90% of these toxic loans will go full foreclosure.
“Homeowners with good credit…stand to benefit the most from the Federal Reserve’s decision yesterday to cut its benchmark interest rate by three-quarters of a percentage point.”
I’mone of those people with “good credit” that stands to “benefit.” But why would I , with prices dropping every week where I live and no end in sight, just more bad economic news coming out every day. Even at the “lower” prices I’m seeing and 100k downpayment, my payment/property tax nut would still be $1,000/mo than my rent. Not gonna happen.
“more” than my rent….(left out a word)
dude - don’t buy in the IE! At any price!
I love watching the evening news broadcasts to see the day’s memo.
From NBC, all the benefits of the rate cut…consumers should see lower credit card interest, business will get better loan rates so they can expand and home owners will be refi-ing into lower rate mortgages, saving them hundreds of dollars a month. And not a word about the effect on the stock market.
It was all to help beleaguered consumers. And that’s the official word this evening.
See, it’s all good in the best of all possible worlds.
We have a 6.6% 30-year mortgage. I called my mortgage guy yesterday after the cut and he quoted me 5.1% for a 15-year fixed. I told him I’d wait a little more. He called me this morning and locked us into a 4.87% 15-year fixed. This will reduce the pain a little from the losses in our bond and money market yields.
“If the liberties of the American people are ever destroyed, they will fall by the hands of the clergy.”
Marquis de Lafayette
Simon Bolivar liberated Andean America to throw off the clergocracy and emulate Jeffersonian Repulicanism. It didn’t quite work. Lafayette was a contemporary of both, and understood why the United States was unique in the Americas.
In the modern age banks displaced the church and structured finance engineers became the new clergy.
“Hernandez knows that an eviction is a lengthy process. ‘I’ll live in the house for free for 12 months, and I’ll save my money and I’ll move on.’”
As a responsible person who has lived below his means for years, put up with insulting remarks made by neighbors whose net worths are a fraction of mine because I chose to rent starting in late 2004, and who will end up bailing out these yahoos, this kind of comment really gets my goat. These people should not be allowed to save one penny and “move on.” They should be made to pay for the mess they created for their children and grandchildren.
The only justice is his name popping up like Neon sign on the Landlord deadbeat list and having a shot credit rating. He’ll have money no one wants to take.
He’ll find a victim eventually — probably another amateur FB.
Yep, that happened to my parents in the last RE crash. They had to move out of state in ‘93 and ended up renting our home in OC. The first people they rented to were serial bankrupters. Guy didn’t pay the first 3 months of rent and BK’ed when served with an eviction. My parents carried the mortgage on the house for a year before they found a paying tennant. It almost killed them financially,and almost ended their marriage as well. They finally made it through, much wiser for the experience (and me as well!).
“The first people they rented to were serial bankrupters. Guy didn’t pay the first 3 months of rent and BK’ed when served with an eviction.”
How do you think the Chinese authorities would deal with these folks?
The current facist government, or the prior communist one?
I have a serious question, those who know the finance markets please respond. Something just does not compute here - on one hand we supposedly have some sort of a credit crunch, where MBS and related paper are not selling - nobody bids. On the other hand, we clearly see the retail mortgage rates clearly responding to the lower Fed fund rates. So the question is - which one is it? Either we have massive discounting on MBS, which must push the rates higher, or we don’t.
If the financials are on the defensive, why is it not reflected in the retail rates, and where does the (still apparently massive) funding keep coming from?
There is one safe harbor in a financial storm, and at this late hour alchemy is still easily performed…
Paper into Gold
There are bids for Government sponsored enterprise loans. There is an implicit government guarantee. The Jumbos are not guaranteed in any form by the government and trade at a significantly higher rate. The MBS that have defaulted were originated prior to August 2007. It is currently believed that loans underwritten since August are less likely to default. The premise of fewer defaults is based on stagnant to rising housing prices. A drop in house values will result in expanding defaults.
Thank you Hoz,
what I’ve been counting on for a while is that the sinking collateral values will have to push the risk spreads higher. So far we see two conflicting trends - lenders ask for downpayments and recalibrating their FICO bins, and at the same time advertise significantly lower rates.
WHen Fannie and Freddie report bigger and bigger losses and struggle to raise capital… conforming loan rates will start to rise.
what mr. market is not getting through higher rates; he is getting through much tighter lending standards.
I think the loans offered today require a downpayment and proof of income and can be sold to the government which will guarentee interest payments to investors. higher interest rates than treasuries and government backed. I would be suprised if other types of RE loans can be sold to investors? Who will buy a second mortgage that is used for the downpayment ?
“and government backed.”
FHA is government backed, but not Freddie and Fannie. Wait until the GSEs start spilling red ink… investors will get very nervous about being paid back IN FULL. If Freddie and Fannie went belly up, would/could the Federal Gov really make good on all debts?
“Wait until the GSEs start spilling red ink…”
That is why they get a pass on black hole balance sheets when necessary. The alternative is honest reporting, which could result in lots of red ink, price discovery and dire implications.
Contra Feedom Fighters
“For the fourth quarter, Bay Area foreclosures rose 482.5 percent to 4,573, compared with 785 in the year-ago quarter. Again, Contra Costa County, with 1,558 foreclosures, up 533.3 percent from a year ago, had the most homes repossessed, followed by Alameda County with 1,026 (a 514.4 percent increase) and Solano County with 704 (up 528.6 percent).”
“In Marin, the median price peaked in June at $1.12 million but has dropped to $836,000.”
Did Leslie Appleton-Young drop dead?
I think she got lockjaw when she saw those numbers, we can only hope.
There’s an analogy or metaphor or innuendo or something in there that perhaps is better left to NYCboy or auger…
I would be game, bu not in the mood tonight…
Rigor-Mortgage
I thought that an innuendo was an Italian suppository!
Hah! I had forgotten about that! Does this mean she’s obligated to commit Hari Kari by her RE code of ethics?
Not yet. She said 30% would not happen in her lifetime.
“It’s God’s country, what can I say,” Leslie Appleton-Young, chief economist for the California Association of Realtors, told an audience of agents Tuesday in Terra Linda. “When is the 30 percent decline in Marin County’s market going to happen? Not in my lifetime.”
April 11, 2007
We’re only at 25% loss. I guess it is fair to start the death watch though. Somebody should take her belt away.
Naw, if I had her address, I’d mail her some rope.
A Joshua Tree suppository inserted by a volunteer team of HBBers would at least be an interesting way to go.
“A record number of Sonoma County residents lost their homes in 2007 when they no longer could afford to pay their mortgages.”
Soon to be replaced by “A record number of Sonoma County residents lost their homes in 2008 when they no longer could afford to pay their mortgages.” Ad infinitum. Just kidding it will be safe to buy in 3 years (95% of the drop will have occurred).
I enjoyed Sonoma. The first password for my computer systems was ‘Sonoma1′. I loved bird hunting in Sonoma. “Progress for progresses’ sake must be discouraged” Professor Dolores Umbridge. (The only professor at Hogwarts that reminds me of my own limited education, Sister Mary Battleaxe - my grade school principal). Maybe soon I’ll be able to go hunting there again.
They can always drown their sorrows, as they wine.
I have a friend who makes his own wine from grapes that he buys. His dream is to grow his own grapes. He and his wife have been saving to buy a little land north of Sonoma (couldn’t afford Sonoma) for seven years. Today he received an email from a realtor, and he’s happy to report that now he can afford 20 acres in Sonoma. He’s going to wait a little longer to buy.
The NAR will be producing its monthly (pack of lies) report soon. But reading about all these foreclosures, do they include these as sales? And if they do, should they?
Yes, they record them as sales. All the while insisting that their sales prices should be exluded from comps when appraising the value of surrounding houses.
Time for my monthly update on NODs and other fun things in my neighborhood.
93552 Palmdale showed 228 NODs for December, up 60% MOM from November’s 142, a new record and talk about hyperbolic acceleration! That number is also 374% of Dec. ‘06.
There were only 17 sales in the zip in Dec., that’s not a typo, 17! If I do the simple math I get just about 13 NODs per sale. If I was a flipper or FB trying to unload an alligator I think these numbers would probably inspire me to throw the keys on the roof and walk away. Luckily, very few of them read, so they’ll just continue to suffer in ignorance. As I drove into the valley this afternoon I noticed that KB has a brand new billboard advertising new homes “from the 180s”. The death spiral continues.
If there is a bright spot in my report this month it is that months of inventory (MOI) isn’t at it’s highest level EVER. That record currently belongs to Sep. ‘07 at 30.6 MOI. December was down to 29.2. To put that in perspective, if no new homes are listed and we maintain the current pace of sales we’ll be half way through Billary’s 3rd term before they all sell. OUCH!!! Listing are 152% of same date last year, this despite wishing price having fallen 25% from the peak. There was one listing for a 4+3 in a so-so neighborhood listed for 160K. It sold in less than a week. I wonder why? Maybe 3-3.5X household income really is the level these houses need to fall to. The next one up on the list is at 200K and has been sitting for 6 weeks.
At 319K the current median wishing price needs to fall off quite a bit further, and it will, oh yes, it will. Oh, and BTW, the median sales price in that zip only dropped 27% MOM (Nov.-Dec.) 27% in one month!!!
Nothing to see here folks, move it along.
“Life’s not a matter of holding good cards, but sometimes playing a poor hand well.”
Jack London
I might have already posted this, but I think I forgot to click “add comment”.
What is the law on holding deposits in CA? I gave one to the property manager of my neighbor (first-time landlady), but then got a message from him saying that she has to ask her dad what to do next! Isn’t she obligated to offer me a lease as long as I qualify under the disclosed criteria (I do)? Isn’t she restricted from considering any other applicants unless I am rejected and my holding deposit is returned?
Thanks for any advice,
Big V
Waveline? I thought I was reading about some jet skis and had to look back and see it was the FB’s name. yet another eccentric name to add to the list.
How are you doing with your house in RSF?
Yeah, sdsurfer, how’s your property in RSF and South America? Still making 7 figures? Wife and kids still overcompliant?
Gees Big V - you are on a tear! Remind me never to get on your bad side!
Or when I do please let me know what I did.
lol
We are not worthy, we are not worthy, we are not worthy….
Yeah, sdsurfer, how’s your property in RSF and South America? Still making 7 figures? Wife and kids still overcompliant?
It’s not only the masses that have borrowed and lived beyond their means, corporations have too. That’s why in many towns here in SoCal, you’ll see Best Buy, Frys, Circuit City next to each other. And a Lowes and HD next to each other. And A SBUX next to another, well, SBUX. This credit contraction has a long ways to go to work off 20-30 yrs of partying.
Yes, but you miss the point. They like to cluster restaurants and electronics stores and clothing stores and car dealerships for CHOICE and EASE OF SHOPPING. Big indoor malls started this with clothing several decades ago and the trend isn’t going to reverse any time soon. It saves time for customers by drawing all of them to 1 magnet area.
But you do have a point about many weak corporations out there. Circuit City springs to mind–they fired all their senior sales staff to hire cheaper high-school dropouts wearing red athletic jerseys! The quality of service is now a joke, and you feel like the employees may give you a wedgie at any time.
‘I’ll live in the house for free for 12 months, and I’ll save my money and I’ll move on.’”
Can someone please show me what the emoticon for the middle finger to this knucklehead? This goes right up there with, “I’ll leave my debt for my children to take care of.”
I wondered the same thing, although perhaps someone can clarify, are you allowed to walk away from a house if you’ve got money in the bank? Unless this dipsh&t hides his money under a mattress, I’m not sure his plan will work so flawlessly.
Of course, if Ms. Clinton has her way, he can live rent-free for even longer…
Walking away from a house you cannot afford and living in the place rent-free until eviction might be unethical, but from a coldly rational financial perspective, it might be the smartest thing to do. Sort of like lender that hand out million-dollar NINJA ARMs to unqualified mouth-breathers that are sold downstream to MBS/CDO investors, and paying unlicensed mortgage “brokers” huge YSPs under the table –the worse the loan, the bigger the commission check.
“Financial planner Marcus Frampton, 28, recently bought a house near the ocean on La Jolla Boulevard. The previous owner had bought the two-bedroom, 1,500-square-foot house in May 2006 for $1.35 million, Frampton said.”
“‘This one had an open house in June. They were asking $1.1 million. In October, I saw it was still on the market. My buddy is an agent. I asked him to offer $900,000. We ended up settling at $930,000,’ he said.”
Wow! Bought a 900K house (1500SQFT no less). He was previously renting. Hmmm. let’s just say he does the right thing and puts down $180 (20%) and it leaves him with 720K, which leaves him with a $4000 mortgage (6%rate) not including Insurance and tax. It will probably be $5000. He must be making bank…..1500sq ft?
frampton may stay alive.. no pun intended.
la jolla is an international town. currency issues may prop up demand in this locale. 930k for ocean fron may not be too bad on the world scale. then again, u.s. dollars are confetti.
I think that if it was oceanfront, it wouldn’t say “near the ocean”.
LJ Blvd ain’t oceanfront.
Yeah, depending on the location there’s lots of commercial and lots of traffic along this street.
NYC is an international town. It tanked big time 89-93. (must be the 50th time I’ve posted that). NYTimes RE section in those years was full of stories on how to find a renter to cover some fraction of your mortgage and maintenance, since even renters were thin on the ground.
So, you think La Jolla will do better than Manhattan?
Smug vs. Smug
sdsurfer:
I am from SD. La Jolla has always been there, and always will. Nothing about it has changed over the last 5 years. It will always be about 2x more expensive than central SD. Property values will decline by the same percentage across the board when this is all said and done.
2x nothing is what?
LOL! “2 times shit is still shit” - Dennis Miller
check this out… http://marinraffle.com/
Property raffles are becoming common. Pretty soon, they will be competing with one another on the price of a raffle ticket.
“Hernandez knows that an eviction is a lengthy process. ‘I’ll live in the house for free for 12 months, and I’ll save my money and I’ll move on.’”
evidence that these people are NOT the “poor little me, i got taken advantage of by the big, mean nasty bank”.
they KNOW how to game the system…and they WILL…they HAVE.
“‘They’re living on credit cards now. There’s no equity left,’ she said. ‘I’m seeing people who have been able to hang on (but) are turning around and saying, ‘Hey, why am I hanging on? I’m $150,000 upside down.’”
I fail to see how a drop in their house’s market value would force them to use credit cards to live.
Yes, it is economically rational to walk away from your stupid house purchase, albeit unethical when you knew that you were gambling.
“I fail to see how a drop in their house’s market value would force them to use credit cards to live.”
Because they were living on the MEW (mortgage equity withdrawal) to cover expenses. With no more equity, they have no MEW, so they turn to the CCs to make up the difference between their income and expenses. That won’t last long, and they’ll be in foreclosure and BK before long.
“Because they were living on the MEW. . . ”
I get that (sorry for seeming oblivious), but the realtor quote left that part out. Really, if they could afford their normal living expenses, the current retail value of their house would do nothing to increase their expenses. But when the house serves as an ATM, that is a horse of a different color.
‘89 - 93 didnt have the currency crisis of the variety we have now.
it is getting increasingly cheap for the rest of the world to buy america. that is all. and that will be buoy things. whether that turns a 70% drop into a 35% drop in the int’l areas remains to be seen but there is and will be an effect.
I love the that is ‘why it is different here’!
Foreign buyers will save Miami and LaJolla and Chicago and New York and Vermont and Montana and Ohio. Foreign countries are in deep doodoo. Especially the Euro countries. And frankly not many people like to buy into third world countries. The US is trading and acting like a third world country.
It’s every country for themselves!
Hail, Hail Freedonia!
Or
Forgottonia!
I guess , I’ll have to go back and buy the ocean front property in Georgia. I loved the view of the Black Sea. And a flat 10% tax.
Hail Freedonia! Is that from Duck Soup?
Japan is in a lot of trouble as well. And don’t think for a moment that China and India are all in that great of shape either. Both Japan and China depend so heavily on selling stuff to the US.
Every morning and every evening the news is about the coming recession in the US and what it means for Japan and they are freaked out.
With open borders, Europeans have plenty of much cheaper sunny destinations closer to home. And even the eastern European airport immigration officers aren’t any nastier than those in the US.
REIC seems especially fond of spinning the foreign investor story. It’s true there’s been an increase of foreign buyers in NY but only a by a few % points. One problem with the story: why would wealthy foreigners want to own a depreciating asset in a debasing currency?
I seem to recall the Japanese buying a lot of land here in the US during the 1980s. That didn’t turn out so well for most of them, since most were buying at peak prices. We heard about foreign buyers buying up all of the Miami condos this time, too. That didn’t seem to work out to well for them, either. Sorry, I just don’t put too much faith in the foreign buyers argument.
sdsurfer:
Have you noticed how all the other countries in the world fall into deep poverty every time the Americans decide to tighten their belts a little?
Besides, if it were true that all the “pretty” places in America will always get bought up by all the wealthy foreigners of the world, then why have all these places suffered repeated declines in the past?
The “international” buyers profiled by the NYTimes a month or so ago with the same tagline…saving the NYC market…were a joke.
Example, an Irish carpenter paid 750k for a 1 bed on Wall St…a bleak, non-residential neighborhood, deserted on weekends. Turns out he has 11 unsold spec houses back in Ireland and the Irish re market is tanking…
Serious money will buy low, if and when it suits them. But Dubai is already more of “must buy” than anywhere in the usa.
cayo ron. everything checked out on the rsf house. and it will close.
also, yes, i meant lj blvd. is a short walk to the ocean. i’ve lived in both lj and nyc. i’d take lj any day to live. most people would agree i think?
NYC has more jobs available than La Jolla. La Jolla is a tourist destination. Prices will drop in both cities.
I would take LJ in a New York minute. I don’t understand how people can even compare the two on anything perhaps other than dining and overpriced houses. Other than that, NY is OK I guess, if you like concrete, traffic, skyscrapers, more concrete, and crappy weather.
concrete, traffic, skyscrapers, more concrete, and crappy weather.
Nothing against La Jolla, but come on. There’s plenty of traffic and concrete and ugly buildings, but the marine layer often sticks around until noon or so and you need a jacket at the beach after 5 p.m., even in the summer. Coastal CA weather is more of an acquired taste than you might think.
If I didn’t have to work, my idea of heaven would be dividing my time between the California coast and NYC.
More art museums per square mile, two operas, food of every stripe, more sesqui-linguals than any other place.
LJ has an ocean and a few surfers. Bankrupt boredom on the sea.
NYC is what you make of it, kiddo!
“‘This one had an open house in June. They were asking $1.1 million. In October, I saw it was still on the market. My buddy is an agent. I asked him to offer $900,000. We ended up settling at $930,000,’ he said.”
AND this guy is a financial analylist? Holy $hit no wonder this country is in trouble.
“Hernandez knows that an eviction is a lengthy process. ‘I’ll live in the house for free for 12 months, and I’ll save my money and I’ll move on.’”
Very funny guy, talking about ‘his money’.
Guys like these are geniuses - they are on our side, they teach the lenders to be prudent.
“In Marin, the median price peaked in June at $1.12 million but has dropped to $836,000.”
Timber!
This ain’t no Antioch, it’s the real deal…
I dont really like Marin and I dont like rust and mold.
someone convince me not to buy a house now….the bubble is back in force…..i dont see how housing prices can continue to go down….sellers will see lower interest rates and raise their prices. ARM resets wont happen
i am getting zilch in savings and cds now….
Housing prices will continue to go down for next several years. Seller cannot refinance because of lower housing price which is the problem they are facing. i.e. lower equity. You can be sure that lender ‘learned’ their lessons and will be more careful to do any refinace.
Tom, you are right that this will delay the inevitable, but you’d be a fool to buy before late 2009. Unless you don’t mind losing your downpayment over the next year.
This exactly why I asked the question earlier in the thread - where is the supposed credit crisis? We now see lower mortgage rates, nothing really changed from the euphoria years (or so it seems). Lower mortgage rates mean everybody got back their confidence in the housing market.
If it continues like this, I will choose a house, take a mortgage, not pay, live for a year before they kick us out, choose the next house, not pay… rinse and repeat.
Interest rates are down, but underwriting standards are up. You have to have 20% down and good credit, full doc, no interest-only payments. That’s enough.
No more “free” gambling without showing the money first. i.e. no more 0 down payment BS and interest only. yes, full doc (1040, pay stub, bank statement) doesn’t hurt either. That should do it.
You forgot the “pent up demand” argument, troll.
Adjustable mortgage rates haven’t budged much. Most are indexed to LIBOR, which hasn’t dropped much despite the headline Federal Funds Rate cuts. Analysts say banks are still nervous about lending to each other because of credit solvency and counterparty risk issues.
You can’t get a mortgage from the Fed.
“Edward Payne, 70, and his wife Waveline, 71, have owned their four-bedroom San Pablo house since 1965. The Paynes are raising their grandchildren, because their daughter, the children’s mother, ‘took off,’ Edward Payne said.”
“After multiple refinances, their monthly payments are now $3,800 - even though their household income is just $4,000 a month from Social Security and a pension.”
“In April 2006, they refinanced again, bringing their total debt on the house to $505,000. Since home values have slumped, the house is now worth about $465,000, they say. They have not made a mortgage payment in three months. The mortgage is scheduled to reset $738 higher in April.”
“Payne said he thought he would be able to refinance his way out of trouble, as he has done before. ‘I didn’t realize the housing market would fall. It’s hard to sleep at night,’ he said. ‘I just lay there, just thinking about it. If it wasn’t for the grandkids, it wouldn’t be so bad. We could find a place for just Waveline and me.’”
Even if house prices kept rising, there’s no way he could have come out ahead in this situation. If you borrow $500K, you have to pay it back eventually. Duh!
Either they’re really dumb, or they’re scamsters. Or a little of each.
They’re in their 70’s - perhaps they were hoping they would die of old age before the refi train quit running…
No Payne….no gain
Marcus Frampton comes alive!
Do you
you?
Feel
like I do?
I DON’T NEED
NO DOCTOR!
Thirty days/weeks/months in the hole,
yes indeed.
“Faced with a house worth less than his loan balance, he’s trying to cut a deal with his bank. But if the lender won’t budge, Hernandez says he knows what he will tell them. ‘Foreclose me,’ he said defiantly.”
I made the news!
“I made the news!” — LOL!
I love how our esteemed media write this drivel up:
“Edward Payne, 70, and his wife Waveline, 71, have owned their four-bedroom San Pablo house since 1965.”
They don’t OWN shiite if they owe $500K on the joint.
On the current “fiscal stimulus” negotiations (AP, “Agreement Closer for Economy Rescue Pact”)
“Both sides reached agreement to allow Fannie Mae and Freddie Mac — government-sponsored companies that are the two biggest U.S. financers and guarantors of home loans — to buy loans much larger than the current $417,000 limit, aides and lobbyists said. Frank said that lending cap might reach as high as $700,000 in areas with the highest home prices.”
Is this a done deal? Well well well…
Ben B. in November:
” Testifying before the House-Senate Joint Economic Committee, Bernanke indicated he does not support raising the loan limit, now at 417,000 usd, and said if this step is taken, it should only be temporary.
‘If we do that, I think it ought to be a very temporary measure and be done in a way that assures us that doing so doesn’t risk the underlying safety and soundness of those institutions,’ he said.
When pressed on whether this step would help provide liquidity to the troubled mortgage market, he countered that the federal regulator of both companies has continued to insist that the risks of buying subprime or jumbo mortgages would add an unacceptable level of risk for both Fannie and Freddie.
‘It’s very important that we not override the regulator’s view that the safety and soundness of these institutions must be protected,’ he said.”
S-t! S-t! S-t! S-t!
This is going to jack up Silicon Valley like crazy.
Based on the average income in California, the typical family will soon be unable to pay the utility bills on these monstrosities, much less the mortgages. After filling up the tank that is. Remember, during the last depression property values declined by 90 percent. In the economy of the future, however, they will still be unaffordable even after a decline of this magnitude. The easy motoring utopia was a one shot deal and now it is over. We should have started dealing with reality many decades ago. Now reality will deal with us instead. Don’t blame me, I’m only the messanger.
Esp. the folks who thought “Pleasanton” was the Bay Area and commuting 4 hours/day to and from their job in San Jose in their SUV was a good idea because they just *had* to have a house and way out in unPleasanton was the only place they could afford.
When one starts digging into the mountain of debt out there, it is easy to understand why the Fed, the White House, Congress, Wall Street, and CNBC need to cut rates, cut taxes, hand out cash, and lie, lie, lie. Total losses on mortgage bonds are in excess of three trillion dollars. Yes, $3,000,000,000,000.
This number is based on outstanding MBS’s and market prices. So, while the official line might be that most of these mortgages won’t foreclose, the market is paying only fifty to seventy cents for the paper backed by these mortgages.
And, of course, you don’t have to sell if you don’t want to. But if you want to or need to, you will be hard pressed to find a buyer who can get a loan to pay for your over-priced home. If he has 40% down and can justify the payments based on traditional methods (old-school, 2.5 times income stuff), the maybe he can buy your home.
That means median house prices have to drop (well, they don’t but that is a different story) to probably under 2.5 times median income. The last median income figure i found was 48500 for 2006 so I will be kind and call it 50000 for 2007, unchanged for this year and next. Guess what? $50,000 x 2.5 = $125,000. What is it today? $218,000. How much pain is that?
Meanwhile, we will probably see the median price rise, something Yun will seize on as a sign of Utopia and the Perfect World. As we have seen, lower end homes are sucking wind and hardly selling at all, so a few millionaires buying homes (face it, us millionaires still have our bucks for the time being) will skew the median. The result will be sellers RAISING prices and holding out even in the lower and mid-range. And still, they won’t sell, resulting in more skew.
It is going to be a shocking time. Not Armageddon, but pretty bizarre and painful for many people.
The solution is for the Arabs and Chinese to keep bailing out the banks AND to directly bail out the consumer. Basically, they take their dollars, which will soon drop another 25% anyway, and just give them back to the US consumer. The US consumer can then buy more plastic crap from China, drive his Hummer and pay for his McMansion. Ultimately, massive inflation will pull wages and prices up until house prices make sense again.
So, start lobbying OPEC and China. Tell them to send money since it’s in their best interest.
Everyone,
I want to thank you all for your concern and thoughtful comments. Rest assured, the property is doing fine and I am current on my mortgage. The investment management business is well and I am continuing to enjoy living a couple blocks from the beach in one of the most beautiful areas of the country.
Best Regards,
M. Frampton