Oblivious To Any Kind Of A Peak In California
The Press Democrat reports from California. “Borrowers routinely exaggerated their incomes to obtain thousands of Sonoma County home loans during the housing boom, a major reason foreclosures are now spiraling to unprecedented highs. In their eagerness to buy a home, many borrowers inflated earnings by 50 percent or more to qualify for loans they could not otherwise afford, according to a Press Democrat analysis of loans made in 2005 and 2006.”
“When home prices peaked in 2005, the typical home buyer in Sonoma County claimed to earn $120,000 a year on loan documents, according to federal home loan data. But they actually earned about $80,700, according to Census data. The spread grew in 2006, when the typical buyer claimed to earn $132,000; their actual income was about $79,000.”
“‘The entire real estate debacle is the fault of everybody that was involved. And it was all about greed and speed,’ said Rachel Dollar, a Santa Rosa attorney who represents lenders in fraud and other cases. ‘The brokers wanted their commission. The lenders wanted their premiums. The borrowers wanted their homes.’”
“The gamble isn’t paying off for a growing number of Sonoma County homeowners. Home values have tumbled nearly 25 percent since their peak in 2005 and sales have dropped to a 12-year low. Every week, lenders seize an average of 23 homes from Sonoma County borrowers who can no longer afford their mortgage payments and cannot pay off their loans by selling their houses.”
“How could a Windsor man who supervises trash truck drivers afford a million-dollar Healdsburg home? In this case, by tripling his income on the loan application.”
“Roberto Gomez said he gambled, with assistance from his mortgage broker, that the 3,400-square-foot, five-bedroom, four-bath house would continue gaining value so he could refinance into a less-risky loan. It was spring of 2005 and Sonoma County’s housing market was booming.”
“‘I was really happy because it’s a big house. They kept telling me the values would go up. I figured I could refinance and fix my payments,’ Gomez said.”
“But home prices began falling in Sonoma County a year later as the housing downturn took hold. Gomez’s dream home became a nightmare of debt. He owed more than the home was worth and his mortgage payment more than tripled to $6,200. ‘It was ridiculous,’ Gomez said.”
“Gomez said discussions with the broker at Investors Trust Mortgage identified a dollar amount that he needed to put down for his annual income so that he could qualify for an adjustable-rate mortgage. Gomez would not have qualified for the loan had he put down his actual earnings, $6,000 a month, rather than the $19,500 income he stated.”
“‘She never told me it could happen where one day you don’t have enough money for the payments,’ he said. ‘She was positive.’”
“Gomez has sought help from Marty McCormick, owner of McCormick and Co., a Santa Rosa mortgage broker. McCormick said that no one is blameless in the deal.”
“‘The borrower signed it, but the borrower doesn’t know how to calculate the income needed,’ he said. ‘They wanted to live in a nicer home, no doubt about it. If we were doing our job as an industry, we should never have let the man buy this house. And we’re hearing this story again and again.’”
“The family is back living in the Windsor home they had refinanced, using money from the equity to help purchase the Healdsburg house. Gomez rented out the Windsor home during the two years the family lived in Healdsburg.”
“Gomez faced losing the Windsor home because the loan payments on the adjustable-rate loan were set to more than double to $3,900. Gomez, with assistance from McCormick, convinced the lender to lower the interest rate and payments for the next four years to hopefully give Gomez time to save money and perhaps regain some equity.”
“‘Right now I will try to save this house,’ Gomez said. ‘I’m starting over.’”
The Orange County Register. “A couple of years ago, the local economy looked pretty good. Today, it’s a different story. The number of Orange County residents reporting themselves unemployed rose by nearly 19,000, or 37 percent, in the 12 months through December, according to the state’s Employment Development Department.”
“When Tracy Railsback submits her resume for a job, the first thing managers notice is that she worked in the mortgage industry. It doesn’t get her a warm reception. ‘Reputable companies, they don’t want to look at you because they think everybody in that industry was bad and that’s not true. Not everybody made tons of money and not everybody was dishonest,’ she said.”
“In her last job, she earned about $30 an hour, plus occasional bonuses. She wasn’t getting rich, but she and her husband lived comfortably in a rented home in Huntington Beach. Then came last year’s collapse of the subprime industry. Railsback was laid off from Peoples Choice Home Loan last May and hasn’t worked since.”
“After putting out more than 100 resumes, Railsback, who describes herself as high-strung and a worrier, is feeling a twinge of desperation. ‘Sometimes I just wake up and I’m like, oh God, I don’t want to get up,’ she said.”
“She’s sought jobs as a waitress, a bank teller and in a drugstore. She’s not heard back on any of them. ‘I’m applying for receptionist, minimum wage, anything,’ she said.”
“Ray Kikavousi is another refugee from the mortgage industry’s meltdown. He got into lending about six years ago. He got hired by Quick Loan Funding, working his way up to sales manager over four years. He was laid off last February. He briefly caught on with a mortgage broker, but was laid off again a few months later.”
“‘I went on interviews left and right. Anything: insurance, commodities, mortgages,’ he said. ‘I was feeling like what happened, what am I doing wrong? I have a college degree and nobody was hiring.’”
“Like some other former mortgage workers, Kikavousi decided to get into the debt settlement business, negotiating with creditors on behalf of overstretched consumers. ‘Debt is something that everybody has, including myself, so it seemed like a new and upcoming business,’ he said.”
“He worries about his money running out before the business takes off. ‘If that happens, I will go back to waiting tables at night and keep doing this doing during the day,’ he said.”
“For seven years, Ismael Delgado has worked alongside seven brothers and his father at Goldenwest Plumbing of Orange, installing PVC pipe and plumbing fixtures at new housing tracts. But in September, Delgado and six brothers lost their jobs as construction dried up.”
“‘They told us there’s no more work,’ said Delgado. ‘Now we’re all out of work,’ he said of his family. ‘… If there’s no more (construction) work, I’ll check for factory work or a restaurant – or move out of state.’”
“‘Basically, overall, it’s slow, even in the commercial end,’ said Jim Adams of Anaheim, the Orange County council representative to the Los Angeles/Orange County Building and Construction Trades Council.”
“‘All you’ve got to do is look around the Platinum Triangle. All those projects stopped. And look around in Irvine, at the 405 and Jamboree, and it’s pretty well shut down. I’m not sure which way this is going to go or how long it’s going to last. I don’t think anyone knows,’ he said.”
“Rancho Mission Viejo’s 14,000 home sites along Ortega Highway expected to see bulldozers as soon as last year. Same for the Irvine Co.’s 2,500-home Mountain Park development along the 241 toll road. Both sites still are as pristine as when Gaspar de Portola trekked across the county in 1769.”
“Much of the construction planned for houses and condos has shifted to new apartments. Lennar is exploring the possibility of selling a site in A-Town to an apartment developer, said Anaheim Planning Director Sheri Vander Dussen.”
“KB Homes is shopping for a buyer to convert its Platinum Triangle condos into apartments as well, she said. Apartments being built by AvalonBay Communities Inc. on Katella Avenue started out as condos.”
“Sukut Construction Inc., a Santa Ana-based grading contractor, saw its workforce drop from more than 600 people at the peak in 2005 to fewer than 300 today, said marketing director Mike Bobeczko. ‘Apartments are the only thing that’s really booming right now, and they’re booming strong,’ said Bobeczko. ‘The reason is it’s cheaper to rent than it is to buy.’”
The North County Times. “Buy now or wait? That is the question many potential homeowners face as the region continues to trudge through a housing depression that leaves them wondering how much further home prices will fall.”
“‘I think we’ve already seen the bottom,’ said Susan Anderson, manager of a Coldwell Banker office in Vista, basing her opinion on an uptick in the number of buyers looking for homes. ‘This market’s got good employment, good interest rates and availability of product. Nobody has a crystal ball. But when it turns, it will turn on a dime.’”
“Pessimists point to the last local housing recession, which saw home prices decline for six years in the early 1990s before recovering, according to DataQuick numbers. Riverside County median home prices have so far declined for just one year, so there is clearly at least another year to come, they say.”
“Optimists say this recession has been sharper, meaning it will recover quicker.”
“‘I wouldn’t believe anything a Realtor says unless they have data,’ said Jim Klinge, owner of Klinge Realty in Carlsbad. ‘You can’t just say (the market has hit bottom) based on a feeling. You’re playing with people’s lives. … You can’t just have a vision when you wake up in the middle of the night and say, ‘I know it’s going to get better this year.’”
The Union Tribune. “For decades, tract homes in Southern California have been getting larger, but the current housing slump has led some local builders to downsize single-family dwellings to increase affordability and boost sales.”
“‘The folks we are seeing in the market today are marginal buyers,’ said Steve Doyle, Brookfield Homes’ president for the San Diego region. ‘They can’t afford to buy a $600,000 standard home that San Diego has been offering the last couple of years.’”
“Real estate analyst Gary London of The London Group predicts that smaller houses will become a permanent fixture in the local new-home market. The shortage of buildable land will put a downward pressure on home size for both single-family and attached dwellings, London said.”
“‘We are going to have to get much more density just to make development projects pencil out, given the higher costs of all factors of production, particularly costs of materials and labor,’ he said. ‘Small units sell for less money.’”
“Suzie Ek, VP of sales and marketing for Standard Pacific Homes in San Diego County, said that her company has created smaller-than-average homes in Santee at the Stoney Creek at Riverwalk development. Seventy-one detached single-family houses range in size from approximately 1,818 to 2,607 square feet.”
“The two-story homes range in price from the low $500,000s to $550,000.”
“‘The average lot size there is 3,300 square feet,’ Ek said. ‘Your backyard is 10 to 14 feet deep. The higher density you can get, the more cost-effective you can make it.’”
“In times of slow sales, smaller houses begin to make sense, despite the fees, Doyle said. Bank loans taken out to finance developments can be paid off sooner. And with each sale, builders can eliminate homeowner association fees, which they must pay on unsold units.”
“When sales are slow, the clock keeps running on the costs of marketing, advertising, utilities and insurance, he added. ‘The whole game is ‘How can I get out of that project quicker?’”
The Arizona Republic. “A condo-market meltdown has put the dream of owning a piece of downtown San Diego within the reach of more Valley residents. While still lofty, prices for some units are now more than 30 percent below previous highs and still falling.”
“A new 725-square-foot ‘bank-owned’ studio, two blocks from the San Diego Padres’ ballpark, is listed at $189,900, down from $289,900 at the end of September.”
“Terms like ’short sale’ and ‘lender-owned’ have become the bywords of the real-estate market downtown, along with ‘desperate’ and ‘make offer.’ Lockboxes for real-estate agents cover railings outside buildings. Inside, residents come home to find foreclosure notices on their neighbors’ doors.”
“Real-estate speculators fueled the frenzy, flipping (selling, often before taking occupancy) properties from building to building while creating an artificial demand that sent prices through the roof.”
“‘The market was so good and prices were going up so fast that we were oblivious to any kind of a peak,’ said Ken Baer, an agent in San Diego. ‘We knew things were high but thought they would keep going up.’”
“Unit 211 in Discovery at Cortez Hill, for example, sold in 2002 for $409,000 and in 2004 for $699,000. The unit sold to a Phoenix couple in December for $470,000. Downtown, there are more than 1,000 condominiums on the market in a roughly 125-block area. That is up from 700 last year and 500 in 2005.”
“Of the 1,000 units, about 400 are in new buildings that are just being completed.”
“Most of the others have been built within the past few years, and many, bought by speculators, have never been lived in. They are generally small. One-bedroom and studio units, some under 500 square feet, make up the largest category of unsold condos on the market.”
“‘An entry-level condo that sold for $400,000 a year ago is practically impossible to sell at that price in this market,’ said San Diego real- estate agent Mark Mills. As a result, prices are dropping fast for the small condos, and many are landing in foreclosure.”
“Scottsdale real-estate agent Bob Sutton has owned a second home in San Diego since 1997. Sutton started out with a $73,000 condominium in Pacific Beach and moved up to a downtown high-rise four years ago. He bought another unit as an investment at the peak of the market and has been trying to sell the one-bedroom, 800-square-foot unit since. He’s hoping to break even or take a small loss on the property.”
“‘It hasn’t turned out to be such a great investment,’ he said.”
“‘Everything went into the crapper the same time I bought this place,’ Vern Scholl said of his 1,550-square-foot penthouse in the Park Place complex downtown.”
“Scholl paid $1.9 million for the unit in 2006 and had been trying to sell it ever since. He originally asked $2.3 million but was trying to negotiate a short sale for $1.65 million prior to its sale for $1.5 million at a January foreclosure sale.”
“‘What do you do when you owe more than it’s worth?’ he said.”
It’s unfortunate that the Union Tribune still prints ’shortage’ quotes from the same people that haven’t been right about anything for years. I guess I’ll have to remind them of that when Standard Pacific rolls over and their land is sold for pennies on the dollar.
OMG! The Schadenfreude meter is pegged.
Thanks for the OCR, NCTimes articles.
BTW, Ben, earlier this week when you contrasted Toll’s comments now versus his idiotic comments from 2005. That was pure GOLD!
Ben:
Did you catch that you and your blog were noted in the LA Times RE section today?
http://www.latimes.com/classified/realestate/news/la-re-blog10feb10,0,1437518.story
That’s the same paper that was touting converted condos as a solution to affordable housing a few years ago even though the costs to “own” these units were three times the previous rent.
‘Apartments are the only thing that’s really booming right now, and they’re booming strong,’ said Bobeczko. ‘The reason is it’s cheaper to rent than it is to buy.’”
That’s no different than during the condo conversion craze. Isn’t the real reason for the shift is that there are very few buyers? How long will this supposed boom last? How long before we have a glut of rentals to go with the glut of houses for sale?
Tijuana-adjacent deserves a better fishwrap, for the time-being.
LoL! So true. Why would people listen to others who have been wrong year afer year?
A not so subtle change in language.
“The gamble isn’t paying off for a growing number of Sonoma County homeowners.”
A gamble, not an investment, not a home. Some won, most lost.
More accurate language perhaps, but was it a gamble? Really, weren’t they acquiring real estate call-options for nothing down? No real asset gamble; doctor your income a bit, get teaser loan, wait - if price goes up, exercise the call and Refi - if price goes down, call expires worthless send jingle mail.
The gamble was their bet that they would not get busted for fraud.
But yes, they were handing out free call options to people who were willing to commit fraud.
Right - there was the fraud and future credit risk. I certainly didn’t have the guts for it.
I wonder if the banks can threaten to bring fraud charges to keep those payments coming.
The trick is, if the banks knew how prevalent the fraud was, and were in fact encouraging brokers to assist it, it will be hard for them to argue now that they were misled and surprised and that the court should tar and feather the borrowers when the banks were knowingly participating in the scheme…
“The house always wins.” How appropriate that saying now is.
In this case, the house lost. That’s what is so wierd.
Gambling is a zero-sum win for all concerned.
Perhaps in theory, but in the real world, gambling is a negative-sum game. All those oversized and lousily built houses took real resources to build and they wouldn’t have been built had the gamblers been out of the pictures.
Huh? - how did the house lose? Unless you are discussing the physical house, the banks made out like thieves. The problem with the banks is, after securitizing their mortgage debt, they believed their own lies and bought back toxic MBS and CDO. So long banks. , its been good to know ya.
Did they buy it back, or were just unable to unload the last toxic crap?
They will survive by being bailed out; but they will be impaired for years.
When Tracy Railsback submits her resume for a job, the first thing managers notice is that she worked in the mortgage industry. It doesn’t get her a warm reception. ‘Reputable companies, they don’t want to look at you because they think everybody in that industry was bad and that’s not true. Not everybody made tons of money and not everybody was dishonest,’ she said.”
Cry me a river, Fraudster Girl. You worked in a dirty industry where even the tiny minority who weren’t actively in on dishonest lending practices, maintained a convenient and cowardly silence that allowed the schemes and scams to continue. In my book that makes you as cupable as the worst of the shysters.
If the whole mortgage lending industry is being tarred by the same brush, it’s because they deserve to be - as do the realtors and appraisers. Maybe in your next line of work you’ll be a little more aware of the value of that defunct virtue called personal and professional integrity.
Definitely on the bad side of the a priori probability distribution for level of respect for “real estate professionals”.
In May 1945 there were no Nazis in Germany.
In February 2008 there are no dishonest people in lending. “It was that guy over there. And that guy over there,” said the former lending industry veteran, pointing at several people around her. “It wasn’t me. I was just doing my job.”
Oh I don’t know Sammy. Remember your friendly neighborhood loan shark, a/k/a “az_lender”. Absolutely taking advantage of her clientele, yet still enjoying an excellent reputation among them, receiving Xmas cards from them, etc. This despite charging typically 9% or more. No I/O, no ARM, no neg-am, no points, no fee, no BS. But, if I were to fall on hard times via the defaulting of said clientele, I would not dare write “private mortgage lender” on a resume. Instead I would list scholarly publications (in geophysics and planetology) to make it look as though I had an actual job.
“Real” lending of one’s own money is so unusual that nobody would interpret “private mortgage lender” as meaning really what it says. “Loan arranger” has always been a fraudulent “profession,” because the value it adds can’t support a “professional” salary. I wouldn’t hire anyone with that history and I share your Schadenfreude w/r/t their distress.
I would say it is a sad commentary that we could probably find people that would agree with your satirical assessment of yourself. As somebody that has met you, lender, I have to say you are a credit to that industry. You were one of the few honest lenders out there, upholding common sense standards and practices. Of anybody in the lending industry you have the least for which you must apologize. If all lenders had been like you we would have no mess at all.
az-
How about “Estate Management”?
AZ Lender,
I make a sharp distinction between lenders who are up-front and ethical in their dealings with borrowers - they are, after all, offering a service - and the vast majority, apparently, who were deceiptful and deceptive as they brokered fraudulent or unsound loans of other people’s (institutions’) money. If you charge usurous interest rates, but your borrowers are fully and frankly informed of the obligation they’re taking on - and you exercise due dilligence to make sure they’ll actually be good credit risks - then I would exclude you from my condemnation of the mortgage lending industry as a whole.
AZ lender . You were not making a bum loan and passing it on to a investor, based on a fraudulent loan application for a commission . You were taking your own money as a private lender and taking your own risk on behalf of yourself ,and apparently you made prudent loans ,(based on your record you talk about ).You were fully aware of any risk factors you were taking and you were selling a reasonable loan for the product .
But the investors ,or you could call them lenders ,that relied on investment firms ,ratings, and loan packages not being fraudulent , or even being underwritten with a fair appraisal ,got shafted . Sure lenders take a risk on any loan if wide scale job loss takes place in a area ,but the foreclosures in this cycle are the result of faulty lending and fraud that was widespread .
My point is that you are a lender ,but your a private lender who puts up your own funds and you do your own underwriting .From what you have posted, your also a fair lender .
What sets az_lender apart from the maddened crowd, is she’s hands-on.
People appreciate the human touch and it’s awfully easy to tell a computer somewhere in nowheresville, you aren’t paying your mortgage anymore, but a lot harder to do it in person.
Computers are magnificent and utterly evil, all at the same time.
Friend was mtg broker but quit after too many ppl would not qual with their income. He is now nursing.
He would turn people down because he knew they could not qual for the loans needed for the props.
I did tell him in 05 to sell his home in RM and he didn’t. He said the typical ” where would we live”. Well, he barely got out for what he reno’d it at.
I had heard that line many times, but but “where will we live if we sell the house now”, or ” we couldn’t get back into the mkt”.
Now, that one time has gone poof. Hopefully, they didn/t Heloc their homes and lose them anyway.
OMG, AZLender, you’re a girl???! (never noticed you using a personal pronoun, maybe I missed “her” before.) Rock on, you are my hero.
Something else that was called on this board - these jacka$$es are now UNEMPLOYABLE - no one wants anything to do with the lowlifes.
WHOO HOO…..i was so worried about this, that they would be hired first because they had a recent job on their resume.
Also called on this board, many of these REIC people get to enjoy their extended vacations without the benefit of any unemployment checks.
For their sake, we can only hope that there are fast food managers who are willing to overlook all of the evil these people where doing.
Well you know, poison CAN be served in different ways.
Karma’s a bitch. And so is Tracy.
her company has created smaller-than-average homes in Santee at the Stoney Creek at Riverwalk development. Seventy-one detached single-family houses range in size from approximately 1,818 to 2,607 square feet. The two-story homes range in price from the low $500,000s to $550,000.
Must be a quiet sales office out there……no more liar loans, falling prices and the few suckers left are at the auctions. Next bad idea?
It’s pretty sad when 1,818 to 2,607 square feet houses are considered “smaller-than-average.” And for half a mil.
And they are in Santee!
Also known as Klantee, no thanks. Seriously though, a half mil to live in Santee, what a joke!
With my LIBERAL (and damn proud of it) political views, I’d be sure to be lynched in Santee. And LIBERAL doesn’t mean we just love to pay more taxes to pay for more government as Dittoheads spew all the time. It means that the little guy/gal should get a fair shake, and not be subsidizing the military industrial special interest financial corporatist complex.
I’m not a liberal by any means, but share your sentiments.
Since when? are 1,818 to 2,607 square feet houses considered small. I rent a 1,600 square foot 4/2 now and its quite large enough for my family of 4. With the price of utilities in california there is no way in hell I would buy something that large, specially a 2 story house. We had friends renting a 2 story house that size with a pool, and it was costing them 600+ a month just in electricity and that didn’t even keep the second story cool. Then add in the half million cost.
NO Thank You
Wow what a difference in utility costs when the house is more inland. Our place (sold in 2004) was 2,000 sq ft 4/2.5 2-story with a 16×32′ ft pool. Our typical SDG&E bill was about 175.00/mo. We didn’t have AC (didn’t really need it in Rancho Del Oro area of O’side) and we didn’t heat the pool (hell I’ll swim at 68 degrees… though the temp was around 78 mid-May to mid-Oct.) Still 1800-2600 is NOT small. I grew up with seven siblings in a 1200sq ft 3/2. Now that’s small but we all learned compromise early and often…
I would like to see a graphic that charts square foot per resident over the years. Growing up our family had about 150 square feet per family member. There wasn’t much privacy but we never saw it as the world’s greatest tragedy either. We did a lot of things outdoors.
Two small bedrooms, small living room, small kitchen, small bathroom. 4 kids (no, not Mormon). As the youngest, I got to sleep on the living room couch. Older brother got a cot in the kitchen. Two older sisters got a bedroom. To this day I feel claustrophobic sleeping in a bedroom. But we had the whole world at our feet outdoors, had horses, could stay out all day, just had to be home by 10 pm.
I grew up in east el lay, in the hills…
We never lacked for adventure, real or imagined.
Hey Lad, if you read this, I spent all last eve watching utubes of Tommy. Jeezlouise he’s good and as you said, entertaining.
Here’s a full concert, from the Netherlands…
http://www.youtube.com/watch?v=cjwEOtQLMdk
(just one of about 20 parts)
Cool, thanks! That guy has to be one of the best guitarists in the entire universe. And I thought Robben Ford was good…
Dude, you’ve got 8 people living in a 1200 square foot house. That can’t be right.
Actually, Big V, 150 per person would be a big stretch. It was more people than your number and less space than the 1200. It was the 1970s. We were a Catholic family and we just dealt with the limitations of living within the family’s means.
My brother and I (I’m a girl) shared a room for 13 years with one very tiny closet between us. 2-bedroom house my parents rented. One living room, one bathroom, one kitchen and a small dining room. That’s it. Maybe 1000 sq ft. I may be being generous. In comparison, most places I visit today are mansions.
Built shelters / homes in Cambodia for a family of 12. about 180 sq ft. Place to sleep with roof over head, no electricty, water by hand pump well. We overdeveloped the neighborhood and new owners cried that were so grateful.
Funny you comment on the house size issue..hubby has partner who is all about “image” aka a Joneses wannabee..scoffed at our not living in his CC enviroment and that we bought a “smaller home in a cheap neighborhood”(that according to his words..we actually have a very nice home)..well times are now tough, everything he has is for sale(so underwater he makes the titantic look like its floating above seal level)..and we are on our way to the mountains for a vacation with family and friends..of course partner made some stupid comment..but you know what..he just doesn’t get it..its about being able to live for more than 4 walls, leased lexus in the driveway and the ILLUSION of wealth! I grew up in a home where kids had vacations with their parents because you lived in an everyday house and you looked forward to Friday night pizza…hey I want to live not just exist…
Ann, I think we had the same parents! Pizza on Friday night and all cash, family vacations too!
There is something to the size of a house that one innately is comfortable.
I have lived in very small homes growing up, living as room mates 4 young women, one bathroom in college, and in training, and then much much later a large home, Never ever was comfortable in that big space.
After previous home burned down, having smaller spaces, less STUFF is so much easier. Freeing.
I fondly remember the days playing outside. It wasn’t a choice back then either. On the other hand I don’t remember my parents being worried about perves living close by either.
Life was so much easier back then. Atleast it seemed that way.
In my area, the main cost is land. Land is where most of the appreciation seems to be (at least here in Virginia).
“It’s pretty sad when 1,818 to 2,607 square feet houses are considered “smaller-than-average.” And for half a mil. ”
My thoughts exactly. Those homes are still quite large and quite expensive with very few making enough to buy houses at that price. The builders are in as much denial as the Detroit auto makers. They downsize from a Hummer to an Expedition and wonder why they still don’t have sales. The market has shifted and yet builders are still unwilling to make fundamental changes in the way they operate. That’s usually a recipe for extinction.
It depends how you figure it……We had a 3 bdrm maybe 1350 sqft. but we also had a open heated basement and a cold room under the back porch…add maybe another 1000 sq ft. plus a nice side yard to play in… but our bedrooms & living room were small. Nice big kitchen though.
“It’s pretty sad when 1,818 to 2,607 square feet houses are considered “smaller-than-average.” And for half a mil. ”
“Scholl paid $1.9 million for the unit in 2006 and had been trying to sell it ever since. He originally asked $2.3 million but was trying to negotiate a short sale for $1.65 million prior to its sale for $1.5 million at a January foreclosure sale.”
But..but…this can’t be! The NAR has expressly justified realtors’ 6% fee by telling us nobody knows the local market like they do. That being the case, why are so many realtor/flippers getting their heads handed to them?
Very good point Sammy . I suspect that this transaction was a cash back fraud deal anyway .
There you go. You too, could live next door to a poseur millionaire who is actually the man who collects your trash…This is why I rent in a multiple unit dwelling owned by large corporations. I have a higher class of neighbors and they are far more honest than these liars who want to live like millionaires on 1/10 the income I make.
“How could a Windsor man who supervises trash truck drivers afford a million-dollar Healdsburg home? In this case, by tripling his income on the loan application.”
“Roberto Gomez said he gambled, with assistance from his mortgage broker, that the 3,400-square-foot, five-bedroom, four-bath house would continue gaining value so he could refinance into a less-risky loan. It was spring of 2005 and Sonoma County’s housing market was booming.”
This douche admits fraud and all that will happen is he loses his house? Whole thing makes me heave more every day. Geez, I hope they ream this as#hole. Sounds like Sonoma County is just overflowing with these losers.
“Gomez faced losing the Windsor home because the loan payments on the adjustable-rate loan were set to more than double to $3,900. Gomez, with assistance from McCormick, convinced the lender to lower the interest rate and payments for the next four years to hopefully give Gomez time to save money and perhaps regain some equity.”
The banks are scared. They are helping this clown hang onto his house, in the vain hope that the bubble will reinflate. Maybe II should approach my lender and ask for a similar deal: 4% or I walk!
Whenever making a threat you must be prepared to follow through on the threat. I would guess anybody that is willing to walk could play hardball with the lenders and win. Why should only the losers get helped out? Go for it, Colorado!
This Gomez guy admits that he lied about his income on the loan application. Is that not a crime? He seems so unconcerned about the fact that he committed fraud.
This is the problem in a nutshell. Borrowers, lenders, brokers and sellers all lied yet they are not being held criminally responsible. Instead, pols like Hillary and Chuck Schumer want the taxpayers to bail out the fraudsters.
“collects your trash” — Bill! Where have you been? not paying attention to the successes of the public employee unions? I think the man who collects your trash probably makes a good deal more than those who provide some of the more intellectually demanding services in your life! Heck, the trash man possibly makes more than Ben Jones! [???] The only thing that makes this fair is, Ben Jones would not choose to exchange his blogging occupation for the occupation of the trash man.
The trash man has far more respect in my book than the vast majority of REIC or financial services “professionals.” He and his crew perform an essential service using honest labor - try going without trash pickup for a couple of weeks.
The article stated that he makes 6k a month but he lied and stated his income was 19k to get the loan. I don’t know why someone can’t live comfortably on 72k a year. What do these people do with their money?
$72k/yr is not that much in California. as was stated earlier in this post, the median for his county was $80k.
Of course one can live on that amount, and he should not have gone for the big house. But it’s not really comfortable. Housing of course costs much more here, and other stuff is usually 10% more or so.
But…
This weekend was one of the great reasons to live in Silicon Valley. I know a lot of people don’t like CA, too expensive, too many immigrants, etc, but the weather was fantastic. 65-70 degrees and sunny. Great for playing outside with the kids, talking to my friendly immigrant neighbors who gave us some toys, bike ride. ahh..
On a RE note, this neighbor owns two houses on our street. Lives in one, rents the other. He had a vacancy that he was able to fill in 2 days by advertising on craigslist.
Also, two other anecdotes:
went to an open house in Saratoga (cupertino schools). Crowded, taking offers next week. Probably will sell quickly and over asking based on neighborhood comps.
But, biked by another open house in Los Gatos, but non Los Gatos schools. Empty. These two houses are similar size, and the LG house is nicer with a recent remodel. But the price difference is at least $200k. The school district premium seems to be increasing, as the top district houses still sell quickly but the B-grade district houses are in less demand. I guess this can’t go on forever; at some point the spread is such that private school is more attractive. With one child it’s about a wash at $200k, so if the spread goes to $300k then the one child familes will be more likely to choose private school. If it goes to $400k then two-child familes will choose private.
hope this stream-of-consciousness post is comprehensible.
Unbelieveably (or maybe it is believable) this moron oopnely admits (in print) that he committed felony fraud and obtained money by false pretenses.
I can’t think of ANY state where what he did is not a big time felony that will make him the guest of the state for 1 - 10!
Not only is he a thief who commits crimes of dishonesty but he is a STUPID thief who tells the world what he did.
Only defense to the criminal charge is that he is mot menatlly competent in view of the highly public admissions.
Yup, but what are the odds that he will be prosecuted? This fraud epidemic is starting to take on the characteristics of mass civil disobedience, which is generally not prosecuted for practical reasons, except in the few exceptional cases. Is Casey Serin facing prosecution yet?
This crime has been going on all through the bubble. And the political pundits have never been blaming the greedy buyer like Gomez. Why? Because he’s not a business. This is part of the anti-business bias that has been infecting our culture. Next you will see them stating that lying about your income is not a crime whatsoever.
Welcome to 21st century America. When a contract is no longer a contract.
When people like Linsay Hohan serve 86 minutes in jail for drunk driving, the courts should mete out about 17 minutes of community service for this joker.
not good…there is a companion piece to the article that disccusses the criminality and includes an interview w/ an FBI agent
http://www1.pressdemocrat.com/article/20080210/NEWS/80173583/1033/NEWS01
it is interesting that the PD published these stories though, they have been bigtime RE cheerleaders up until now
Given the privacy invading system of information we have on consumers in the U.S., there are other, perhaps better, ways to punish these guys. A special new (what’d they call it during the Nixon era, “uncharged accomplice”? meaning you’re guilty but we didn’t bother prosecuting you.) black mark on the credit reports of everyone who lied on a loan app would work well. First of all, the banks would enjoy putting it on there, and it would impact everything from cc apps to job apps for the rest of the person’s life, or eight years out barring a legislation change. I’d be all for that. Much cheaper than jail and these people aren’t dangerous to others in a direct manner, so incarceration would just cost us financially careful people all the more money.
And we could work out a deal. You do 1000 hours community service we’ll cut it down to a grey mark.
Given the way the credit reporting system is set up it wouldn’t surprise me if it won’t be easy to spot these people later for future societal payback.
That would be great. I am all for that. It should be for the rest of one’s life. It is an invisible form of punishment, for sure. In a generation after enacting this law, the people who built up wealth honestly will be living among honest people while the liars would be forced by bad credit to live with in low cost housing.
I would like to see a “F” for fraudster tatooed on their forehead.
It’s almost like driving on a freeway unhampered by traffic jams in the city of angles, doing 85 per, like everybody else, and there aren’t any cops around, but if there were, they’d have their pick of any of many dozens of cars, to stop and write a citation, for breaking the law.
Fraud is that common, right now.
The whole country looks more like a perp walk…
Right, like you could ever do 85 on an LA freeway!
Actually, there are both federal and state criminal cases>
State: Conspiracy to obtain money and goods by false pretenses, and Obtaining money and good by false pretenses (that is 2 state Felonies.
Federal:
(1) Bank fraud
(2) Mail fraud (had to send documents and information through mail and wire services (fax, internet etc)
(3) Conspiracy couonts on both
That is 4 federal felonies.
Now, the state (CA) probably won’t do squat - partly because the reporter to whom he made the admissions is a key witness and CA won’t force reporters to testify.
The Feds however play by different rules and will make the reporter testify or sit in jail for contempt. Given the facts that (1) he inflated his income not by the garden variety 25-50% but by 300% and (2) the value of the property (then) which was in 7 figures, they US Attorney may just get interested in making an example of this one. (Particularly when the guy has made it so-o-o-o easy by running his mouth to the press.)
Fed investigation can go through either the FBI or the US Postal Inspectors. (Saw the lot of them get real excited over a $250,000 mail fruad by the heir to Cellular One and put him in Federal Prison for 5 years.)
Anyone care to call the US Attorney’s office for that area and raise hell about why this guy is not sitting in jail trying to make bond?
Looooooooooooooooooong arm of the law.
Ann Scott …Didn’t someone post a article the other day about a investigations that concluded that 70% of the borrowers inflated their income by a big % .
In my view ,this was a major crime wave if you add up all those loans and the effect they had on real estate prices ,supply and demand ,property taxes ,extreme money losses on the foreclosures that followed , people being priced out of the market ,on and on . I get a little pissed when I think about the fact that I was competing with criminals that were looking for a “perceived gain” who were willing to commit loan fraud in order to obtain it .
Its just like the sellers/buyers that engaged in cash-back fraud ,they didn’t care who they harmed in order to get their perceived gain .
Is loan fraud any less criminal and harmful to society than any kind of crime that a party takes the funds of another party by false and unlawful means . In some of these cases the loss is 200K ,300K ,or 500k , or more ,which isn’t petty money .
Just because the so-called professionals in the business set up these borrowers to commit fraud ,it doesn’t excuse the so-called commissioned sales people or the borrowers or sellers .
Didn’t the loan arranger help that borrower commit fraud for the perceived gain of a big commission ?
When is the next group of professional looking people going to come along and make regular folks commit crimes on a widespread level . One of the reasons for the housing bubble was this loan fraud crime wave ,and it needs to be addressed in a meaningful way ,if not simply for the reason that the problems cannot be solved in a just and constructive way as long as we consider the borrowers innocent parties in need of a bail out .
Ann: this topic has been discussed on this board for over 1 year.
Apparently, the FBI would like to prosecute, but lacks personnel to do so.
Since the lender is willing to do a work-out, it is my guess that the FBI would decline to prosecute.
(Nevertheless, I agree with you that Gomez meets the criteria for prosecution under 18 U.S.C. Sections 1014, 1028, 1341, 1343, 1344.)
I would like to see “Emmi”’s ideas put into practice. I think if there’s going to be any discipline, it’s going to have to come from the private sector.
~Misstrial
Feebees are always swamped on white collar crime. (i dealt with some FBI investigations oover the years in white collar stuff.)
Here the Postal Inspectors would be a real good option. They aren’t as busy and love to get their hands on cases like this. One of my husband’s clients (before we marreid andstarted practicing together) was being ripped off by a ring of sales rep for about a $300,000 -500,000. not even a Fortune 50 corporation could get the FBI to move but hubby called in the Postals who jumped on in a New York minute. Got a conviction on all of them in 8 states.
Because this guy was so egregious - inflating by 300% as compared to the garden variety 25-50% liars, the loan was into 7 figures rather than the garden variety $400000 house, and he made it so bloody easy by ‘fessing up to the media - the Postals could get very interested.
Everyone forgets about the Postal Inspectors as a criminal enforcement agency but they are very effective in the interstate mail fraud cases which has included things like insurance fraud. This should fall within their scope.
At the very least the IRS should make these buyers pay taxes on the cost of this fraud especially where “cash out” financing was involved.
That’s because your husband’s client had standing. In the Gomez situation only the lender has standing to ask for enforcement.
~Misstrial
Typical, these days. Did you read the article in the new New Yorker about a guy who murdered someone, got away with it, then wrote a novel about it?
You guys are missing the point.
It is not the government’s job to find out who lied in their contract and prosecute them. It is the lender’s decision.
They can do the same as the music industry is doing, extort as much as possible from those liars while taking the house to foreclosure.
Instead the bank tries to keep the loan as still good and on its books by providing this guy refinancing, knowing fully that they will never get their money back.
In a real true free market with no bailouts of the banks, shareholders would make certain that mechanisms such as “EMMI” would be put in place and that borrowers would have suitable documentation of their loans. Moreover, loans would never be more than 2 and a half times ones income.
Agree, please see my comment above.
~Misstrial
poseur millionaire is also know as a ‘Thousanaire’ They have maybe a $1,000 net worth but live the millionaire lifestyle. The free money tide has peaked and the tide is going out, we are starting to see some naked swimmers and the tide has a way to go before it reaches bottom. They have amazing gold and jewel crusted swim caps but forgot / couldn’t afford the bathing suit. With the expanding waistlines of the average American this nakedness is going to be ugly!!!
Quick, somebody give this man a c-gar!
(…but what was he saying 2 years ago???)
“‘I wouldn’t believe anything a Realtor says unless they have data,’ said Jim Klinge, owner of Klinge Realty in Carlsbad. ‘You can’t just say (the market has hit bottom) based on a feeling. You’re playing with people’s lives. … You can’t just have a vision when you wake up in the middle of the night and say, ‘I know it’s going to get better this year.’”
Jim Klinge is a legit bubble believer and he was saying the same thing 2 yrs ago.
I have been going to his http://www.bubbleinfo.com for a while he shows the numbers and discusses what the numbers may be missing. If I were interested in buying in Socal I would want him on my side. He is no RE cheerleader, he understands RE and from what he writes on his blog he would ensure he would get you the fairest deal under the current market conditions and yes he has been spouting the ‘bubble word for a couple years now.
How many mom-and-pop realtors are there anymore? With all the Century 21’s, Ream-axes, etc., don’t expect too many honest voices in that profession. Ditto for any other industry that’s conglomerated into 3 or 4 major players.
He just lost his NAR card.
“‘I wouldn’t believe anything a Realtor says unless they have data,’ said Jim Klinge, owner of Klinge Realty in Carlsbad. ‘You can’t just say (the market has hit bottom) based on a feeling. You’re playing with people’s lives. … You can’t just have a vision when you wake up in the middle of the night and say, ‘I know it’s going to get better this year.’”
Even when they have data, it’s “data” that was cherry-picked to fit their latest vision. Too many in the industry are nothing but self serving liars.
Why doesn’t the MSM ask Realtors why they took borrowers to property that they couldn’t afford in which that borrower ended up committing loan fraud in order to get the property ? Isn’t part of the job of the Realtors to screen borrowers for qualifying and not waste the sellers time or lenders time with faulty fraudulent buyers making offers? This crime wave was a team effort ,but the darn Lenders allowed it or even encouraged it .
During 2004 one of my kids was told by a Realtor that they could qualify for about twice the price home he could really afford ,but he wasn’t interested . After scratching my head ,I advised my kid to stay away from such a retard and I assumed that Realtor must of been a bad apple or had no math skills . Now looking back, I am just so grateful that the kid didn’t get sucked into this fake and fraudulent market . I wish I knew at the time how widespread this faulty fraudulent lending was .
Even when they have data, it’s “data” that was cherry-picked to fit their latest vision
But that is what our government does, cherry pick, every wonder how we got into this war in the first place?
It is systemic from the top down and the bottom up in our country and probably every country that we have touched ie: Chile, Argentina, Peru… Panama, and don’t forget
Iran / COntra. Guess we all forgot those ways of our gov laundering money to overthrow other govs .
But in terms of Lenders/banks, it is all the same from the leaders we choose/to the ones that get in anyway.
Speaking of the downtown SD condo market, I do hard money loans and this broker called me and told me that his client put down 180K in 2005 for a condo development which was just breaking ground at the time. 2-2 1300 Sq ft. The agreed sell price was 1.1 mil. Holy $hit I thought.
On top of this nonsense, she wants to put down another $220k cash for a total down payment of 400K and STILL WANTS TO BUY IT. (she cannot qualify for an A paper loan because she is self employed and doesn’t report squat) I haven’t done the comps yet but I would imagine that there is no way this thing can comp out anything past 700k, 800k tops I asked this guy why in the world would his client put down $180,000 when she probably could have put down $10,000 to secure it. He didn’t have an answer.
I told him upfront that it may be cheaper to forfeit the 180k. My buddy, who has been in the hard money biz for 8 years, told me he heard that you can only forfeit up to 3% of the purchase price in Cal which would be a little over $30,000…but he wasn’t sure. She should be doing handsprings if that is the case.
My questions are these:
1. Is this 3% rule valid because I and a few other people I know have never heard of it?
2. Do you think the builder will renegotiate because no one in their right mind would loan money on a 1.1mil outdated sales price? The broker says he might not negotiate because he would rather keep the 180K.
3. Are there any other legalities that would force this builder to void this price and give her a true market value?(if there is such a thing as true market value)
The fact is she still wants to buy it but it’s not worth 1.1 mil. Does anyone have advice for this person or knowledge about this supposed 3% law?
What’s a person who is incapable of handling simple math doing with 400K in the first place would be my first question? Has she not opened a newspaper for the past 6 months or what? The woman needs a guardian appointed not a frickin loan.
Auger- I thought the same thing. How can she be wise enough to accumulate 400K but dumb enough to WANT this property.
1. Typically, yes but it depends on how the builder contract was structured.
2. Again yes, but the broker will have to do some footwork and a appraisal would have to be done.
3. No as far as legalities, but market realities are a different matter.
In short it depends on how the builder contract is structured it’s hard to render a opinion without seeing the contract. Above is just vague guesses based on typical experiences. Historically builder contracts are heavily favored towards the builder, if a standard CAR form was used and escrow instructions were drawn to the letter of that contract without any ammendments the buyer should have plenty wiggle room.
Susan Anderson, manager of a Coldwell Banker office in Vista, says “it’s time to buy”.
Does it ever end with these people? Somebody should tar and feather one of these greedy jerks. I’m sorry but I now put a Realtor’s on the same level as a used car salesperson. They are however, much more dangerous.
This Used House Salesperson would disagree. Check out her blog.
Julie
Well I know how to copy and paste so here is what the Used House salesperson wrote…
Buyer’s - Now is a great time to buy a home in my market. In fact, now is a wonderful time to be a buyer in most any market in the U.S. I keep saying this over and over to my clients, but I think they are looking at me, but seeing the guy in the picture.
I showed a home on Thursday to walk-in clients. They drove by the home and called our office because we were the listings agents (another case for signs being the best form of advertising). I showed them the home, but after talking with them, knew of a different listing that would meet their criteria much better than the first home.
We walked through the second listing, and I was right, they loved it. It was exactly what they were looking for. This particular listing was priced right, only on the market about 1 month, and in the price range that is currently moving in Del Norte County, so I suggested they write an offer, getting the home under contract so they wouldn’t lose out. They wanted a parent to have a look first.
If the kids didn’t see me as the guy in the picture, it was evident the second we shook hands that their parent did. The prospective buyer, who had tears of happiness on her face just a short while before over finding the perfect home, now came up to me and in a serious voice, said she would call me later. And that was that.
I know parents and friends mean well. They want to give you, the buyer, their years of wisdom and experience in making a sound financial decision. However, remember buyer, that you will be the person living in the home, and your agent is an expert in their field. They look at the listings in their market everyday, they see sold prices every time a home sells, they do extensive market analysis when listing a home, your agent knows their market.
Friends and parents, know the market from their personal experience, which in most cases is limited to one, two, maybe three purchases in a lifetime and if they haven’t purchased or sold real estate recently, current prices will assuredly bring sticker shock. A good agent handles 10 times more real estate transactions in one year then the average friend or family member will handle in a lifetime. Your agent is a professional and they know their market.
Does this mean don’t bring along friends or family when purchasing a home? It could. If you find yourself changing your mind on home after home after the advice of a friend or family member, it may be time to leave them at home and listen to your real estate professional.
Again, now is the time to buy in my market. Your real estate professional knows their market. They know a well priced home and they know an overpriced home. Let them do their job and you do yours.
Happy house hunting.
Del Norte County is the other California…come check us out and see why.
Del Norte County…The Other California
(By the way the picture she refers to is a slimey used car saleman.) Julie
By the way the picture she refers to is a slimey used car saleman.
He’s probably her husband.
“Come into my den, said the spider to the fly.”
Eee gads!
“Does this mean don’t bring along friends or family when purchasing a home? It could.” — Help, she’s using the same tactics cults use. Potential buyers, PLEASE BRING A FRIEND. Never buy a car, a house, anything big without a friend, preferably a pessimistic one. You know that one, the one who always says the weather will be bad for the picnic… the one who swears that potato salad is spoiled five minutes after it’s come out of the fridge… They are useful people in these circumstances. My current boyfriend, before he dated me, brought a friend to the dealership who pretended to be his difficult, stingy wife. He played the, “oh, I really really want this car” guy to keep the salesman working with them. Got a great deal on his car as a result.
A voice of reason is the only defense against these manipulative sleezebags. Blech, now I have to take a shower just thinking about this woman.
Right.
One of the first steps in brainwashing is to isolate your victims. Your friends and family are actually your enemies. Only I care about you; Only I can be trusted.
Call me a cynic, but I’m convinced the parent that stopped the buyer’s ‘tears of joy’ did so by saying I’m not loaning you the down on that overpriced pos.
Has the NAR, or any Realtor that you know, EVER at any time…. said “Now is NOT the time to buy”?
I didn’t think so…..
People in San Francisco are all about “it’s a good time to buy”. I have heard this at least half a dozen times this past week, from regular folks who I know make no more than 70K a year. All the priced-out renters think that they have to jump now …the delusion here runs so deep.
love to hear about CA stories where things are going into the crapper. Couldn’t happen to a nicer area where everyone thought their $$$ doesn’t stink (and now are finding it does).
“Gomez would not have qualified for the loan had he put down his actual earnings, $6,000 a month, rather than the $19,500 income he stated.”
——————————–
Why is this man not in jail?
If we released all of the non-violent offenders there still wouldn’t be enough room. We’d have to build tent cities for the petty mortgage fraudsters who lied about their incomes. Collectively, it’s the greatest swindle of our lifetimes. Lie on a loan for a house, refi for cash, buy stuff, get foreclosed on, keep the stuff.
Exactly Lou! BTW, I’d volunteer to drive tent stakes for a few days if it would swing the decision towards mass prosecution.
Why? As part of their punishment, make them pound in their own damn stakes! Or just throw them on an island a la “No Escape”. Since they are non violent, let em get to know each other nicely.
For those who committed flagrant loan fraud (a felony) like Gomez then under what circumstances does the IRS loan/income forgiveness apply to them?
Do they first have to be convicted of a loan fraud felony to have it NOT apply? If most will never be prosecuted then does this mean that most of these fraudsters get IRS loan/income forgiveness by default?
They should at least get an option: Either pay income tax on the stated income, or face prosecution.
It sickens and disgusts me that nobody is going after these fraudsters. They feel safe enough that they’ll gladly detail their fraud to newspaper reporters.
Why aren’t we putting these people in jail for grand larceny? Lying in order to steal hundreds of thousands of dollars should be a serious crime, shouldn’t it?
“They should at least get an option: Either pay income tax on the stated income, or face prosecution.”
Paying back the income tax home deduction would be a start even if it were over a 15 to 30 yr period. These people should not be allowed locked out of buying for a 7yr time period.
Ah, you know, as a long-term rule to fix this problem, the rule should be that the loan application gets filed with the IRS who adds it to your tax file. If it doesn’t jive, audit time. ‘Course enforcement on that end has been for crap the last decade too… at least it would make people stop and think. Boy, we’ve really let the system get rigged so the honest, humble people have to foot the bill for the idiot thieves.
Because he is probably a very good consumer? The salt of the earth in the eyes of our CONgress.
“‘She never told me it could happen where one day you don’t have enough money for the payments,’ he said. ‘She was positive.’”
How about that statement from Gomez? He should be more aptly named “Gomer”.
‘Gomez would not have qualified’
- Juan, er Gomez used our SoCal ‘MexiMath’ loop hole to become a real estate Millionaire!
Please understand that Californians feel entitled to the Big Life and all of the bling that goes with it.
There isn’t room, it’s full of pot smokers.
Why aren’t the other 3 million loan borrowers in jail along with all the people that helped them . These wonderful commissioned sales people are going to be the new loan reps for the Government Backed Loan programs coming up .If you get a spite in prices coming up ,ask yourself how many are going to be cash back fraud still ,as long as Justice does not prevail concerning the crime already committed .
Off topic:
Today feels like the eye of the storm.
It is a sunny, calm and beautiful day today.
It feels good to have some time to remain peaceful before the rest of the unwinding takes place.
What’s coming up for this week?
I heard yahoo pulled out of MSFT deal.
Crap!
Nope, Yahoo is just negotiating for a higher price. The only thing that could stop that deal would be anti-trust action or a white knight bid, neither of which look like they’re in the cards.
Crap? Ever heard of Vista? If MS gets Yahoo, it’ll turn into another Hotmail or AOL. SOL, Yahoo.
Ok maybe MS will do another three way repurchase for its patrons.
That would shut me up.
“‘I think we’ve already seen the bottom,’ said Susan Anderson, manager of a Coldwell Banker office in Vista,
She must have researched it.
Uhhh…isn’t that spelled S-u_z_a_n_n_e?
Translation: please, please somebody buy a house!
Suzy, I got two words for you …
http://www.youtube.com/watch?v=esbnkTvQv3k
The only bottom that she is seeing is her own . She has her head up her ass!
That’s the same thing we’re being told in the weekly RE propaganda article in one of the freeby weeklies in my area. And guess what? The person who writes the column is also with Liewell (er, Coldwell) Banker.
“‘The market was so good and prices were going up so fast that we were oblivious to any kind of a peak,’ said Ken Baer, an agent in San Diego
Ok - they’re oblivious to any kind of peak but hypersensitive to any kind of bottom.
Could it be that most NAR members have a manic-depressive disorder? The diagnosis is offered in the spirit of NAR’s continuous unflattering psychological profiles of those refuseniks who will not buy.
“‘What do you do when you owe more than it’s worth?’ he said.”
Act like a victim seems to be the typical MO for all of you investors.
‘What do you do when you owe more than it’s worth?’
Just walk away, Renee,
and hope that they don’t come after you…
Oh man, ever since Hoz resurrected that song… I just get it outta my head, then it comes back again…LOL
“‘What do you do when you owe more than it’s worth?’ he said.”
Go get a real job.
You speculated and you lost, live with it.
We need urgent congressional action to stop all forms of depreciation, decay, and aging! Laws against reality for a faith-based economy.
“‘We are going to have to get much more density just to make development projects pencil out, given the higher costs of all factors of production, particularly costs of materials and labor,’ he said.
Not true - land, labor and materials are all cheaper than their bubble costs.
Higher densities probably aren’t going to fly. Sure, there are commuting and energy concerns supporting higher densities, but building more and smaller houses going into a bust just seems like pouring water onto a magnesium fire.
Downtown San Diego (even La Jolla) homeowner’s assoc. fees are so outrageous. It would literally have to be free for me to take one. I ran numbers on several of them a few months back–the property taxes and assoc fee combined was more than I could get for rent on one of them!
http://www.freecondobook.com (pdf)
Unemployment #’s misleading
http://online.barrons.com/article/SB120233585023248793.html?mod=b_hpp_9_0002_b_online_exclusives_weekend
According to the productivity numbers, total hours worked fell by 1.5% in the fourth quarter. Looking at the Labor Department’s payroll data, however, hours worked rose 1% during that period.
Why the discrepancy? The payrolls data count workers on companies’ payrolls. The productivity data, by contrast, count all workers, including the self-employed. If the latter rose while the former fell, it’s reasonable to infer that the self-employed were working less.
That’s important because the self-employed have become an increasingly large portion of the U.S. economy, and not just because of the E-bay entrepreneurs that Vice President Dick Cheney is fond of citing.
During the housing bubble, the army of mortgage brokers and realtors swelled. The barriers to entry into those fields are minimal. As the former head of mortgage operations of a major New York bank once told me, a mortgage broker is a used-car salesman with a better suit. (Apologies to used-car salesmen.)
In any case, thousands of people began to earn a living by getting a slice of the housing boom. But even when they went to work for a mortgage or real-estate firm, they remained independent contractors, not employees. That meant that they weren’t on firms’ payrolls (and not counted in the establishment survey of the monthly employment report.)
Their independent-contractor status also precludes their receiving unemployment benefits. The legions of freelancers extend beyond the salesmen and saleswomen who raked it in during the housing boom to those did the honest work in the construction trades, from electricians to carpenters, who worked for contractors (also entrepreneurs.)
Many of this corps that swelled and prospered during the housing bubble are out of work. But they can’t file for unemployment insurance.
According to Paul Kasriel, the director of economic research for Northern Trust, hours worked by the self-employed were down sharply in the fourth quarter. Jobless claims, meanwhile, are moving up but not as rapidly as in past recessions.
“So, the independent-contractor hypothesis might be the explanation given everything else seems to indicate we have entered a recession,” he writes in an e-mail.
The household survey will be more meaningful in this environment. Is it out yet?
And I wonder how many worked off the books
Does anyone actually believe the official unemployment rate anymore? It’s so politically doctored it makes mortgage loan applications look good. Ostensibly, the U.S. rate went from 4.6% in late 2007 to 4.9% in Jan 2008 and yet there was general recognition that the labor market had radically changed, yet - that’s only one lost job for every 300 people at work! I think everyone, including the FED, use a secret multiplier when factoring that number. Question is, what’s the multiplier?
Loved the line, “a mortgage broker is a used-car salesman with a better suit.”
Oblivious To Any Kind Of A Peak In California…
don’t be harshing my mellow, man.
I come back from a nice lunch of mushroom soup and a walk, to this headline…
“Oblivious To Any Kind Of A Peak In California”
I used to be a peak bagger growing up in Colorado, climbed a bunch of 14ers. Cally has some nice peaks, too.
er, not that kind of peak.
“When Tracy Railsback submits her resume for a job, the first thing managers notice is that she worked in the mortgage industry. It doesn’t get her a warm reception. ‘Reputable companies, they don’t want to look at you because they think everybody in that industry was bad and that’s not true. Not everybody made tons of money and not everybody was dishonest,’ she said.”
In 2001, I refused to hire or look at resumes for “dot-commers”! I’m glad to see people are realizing that people who worked in R-E shouldn’t be hired, either.
“‘Everything went into the crapper the same time I bought this place,’ Vern Scholl said of his 1,550-square-foot penthouse in the Park Place complex downtown. Scholl paid $1.9 million for the unit in 2006 and had been trying to sell it ever since. He originally asked $2.3 million but was trying to negotiate a short sale for $1.65 million prior to its sale for $1.5 million at a January foreclosure sale.
‘What do you do when you owe more than it’s worth?’ he said.”
How about admit you’re a greedy, worthless, clueless, financially incompetent dumba$$?
Fourth down and 25? You punt.
Problem is, they’re down by 6 points with 27 seconds to go. They have to go for the Hail Mary.
“‘Everything went into the crapper the same time I bought this place,’ Vern Scholl
I like this crapper analogy so much better than - “the market’s gone soft.” What does that mean? Break out the Viagra so we can get this market back to f***ing everybody?!
“‘I think we’ve already seen the bottom,’ said Susan Anderson, manager of a Coldwell Banker office in Vista, basing her opinion on an uptick in the number of buyers looking for homes. ‘This market’s got good employment, good interest rates and availability of product. Nobody has a crystal ball. But when it turns, it will turn on a dime.’”
Well if a used home seller thinks the bottom is passed, then it must be so.
“Nobody has a crystal ball. But when it turns” prices will have fallen to the point where they are in line with traditional affordability standards and buying will result in a monthly payment that is in-line with the price of rents. I think about 3 years of double digit declines will do the trick.
“‘The
folksbuilders we are seeing in the market today are marginalbuyerscompanies,’Who you calling marginal, pal?
“The spread grew in 2006, when the typical buyer claimed to earn $132,000; their actual income was about $79,000.”
Am I the only poster who thinks that sounds like a major felony?
The other interesting thing is that the average buyer’s actual income declined from 2005 to 2006.
Those felonious statistics were so outrageous I felt compelled to print the article. It is a keeper for my grandkids.
PB…..You are not the only poster that thinks loan fraud is a major felony . These borrowers didn’t inflate their income by 2% but by 50%,60% or even 120% . To the degree the borrowers inflated their income was the degree of excess loan dollars that they got by fraud that someone is going to lose because of it .We are all losing because of these crimes because we are all putting up with Fed policies that are designed to respond to this emergency . We are all being punished because of current and future taxes that will be required to bail out this crime wave . Not only were these toxic loans faulty by designed in the first place ,it adds insult to injury that borrowers committed fraud in order to get the property or the ATM money .
I don’t know about you ,but I’m getting sick and tired of FOR SALE signs everywhere and now I have to worry about West Nile Virus because these criminals decided that real estate fraud was a great way to pick up some easy money .
When a borrower pays a lot of cash to get into a area ,I’m sure it isn’t pleasant that because people decided to commit crimes, those honest borrowers might lose their life savings ,and I won’t even get into money overpaid on property taxes and insurance because of this fraud .
And think about how a real honest buyer might have problems even getting a loan today or in the future because of these loan criminals and don’t forget how all the buyers that were honest who got priced out of the market because the criminals decided that investment opportunity gained by fraud was a OK thing to do .
This loan fraud crime wave was not acceptable and it’s not Justice to bail out criminals or offer them 4% loan re-writes so they won’t walk .
The damage is already done ,the horse is out of the barn ,so therefore lets just bail out the gamblers and debt people ,many people propose ,after all foreclosures are not good . Doesn’t the Judicial system always usually prosecute crimes after the damage is done and the horse is out of the barn ,after all injury from crime is not good .
Do all these borrowers get the “Mania Defense ” and a 31/2 % interest rate and a grand reward for their crimes or else they will walk ? I would like to hear one politician say that they believe that all borrowers that committed loan fraud would have to pay all the money back that they got in excess of their true income .
My reaction is this: I certainly am boycotting SFH’s (whether for sale or for rent) until something is done to weed out these liars from those neighborhoods. I want to live among honest people. If it takes ten years for emmi to weed them out, fine. If there are way too many for them to jail, emmi is what is needed. It’s a damn pretentious society. If America crashes and burns, it’s fine by me - although I do think in a generation we all will have to be honest in order to keep a job. Technology is at hand to have a foolproof lie detector test that studies voice patterns or brain waves. I’ve seen this on TLC.
Proposed: The current move by the credit card companies to raise rates dramatically is a move to capture the $150 billion windfall that we taxpayers will be mailing out to J6P this Spring.
Discuss.
I think the cc rate raise is the bank’s way of squeezing their customers.
Lots of people are running their lives on borrowed money and their everyday cash flow requirements depend on the continuance of this borrowing. The lenders know this and are cashing in on the borrower’s dependence on their credit by making this credit more expensive.
The message “debt sucks” used to be directed to the borrower’s ears where it was ignored. Now it’s being directed to the borrower’s wallet where it may finally get through, IMO.
But the banks are pretty much doubling the rates from what I have heard. That will rapidly bankrupt anyone who carries a big balance and can’t afford to pay it off. I’m thinking that they are putting the squeeze on just long enough to capture the “stimulus” windfall, then they will back off just before they put their customers into BK.
Remember, from the bank’s POV, debt is good. It’s how they make money, and it’s less risky than borrowing short and lending long like they tried to do with mortgages. If everyone actually paid off their CC bills, you would see a lot of dead banks soon after - not to mention a trashed economy.
I think the banks are simply desperate. They are taking huge losses and are looking for income to offset losses.
If they have bundled your debt and resold it, do they really care if you default? As long as they get to book the interest as income in the mean time.
Yep that 300,600,1000 dollars is really going to stimulate the economy. Why doesn’t the FED stop playing games, just cut the banks a big check.
Again , here we have another byproduct of the liar loan crime wave ,with lenders needing to make up loss by raising the cost of money on credit cards . At the same time S&L’s are paying very little on CD’s and saving accounts . I thought the cheerleaders said that the cost of money (which would include credit cards )would go down with BB lowering the Fed rates .
I’m sorry that I’m ranting so much tonight ,but what’s happening just sucks .
Measton …Right on ….I’m getting sick of all this game playing also .
. It’s seems to me that the banks and investment firms that can survive this downturn just need a big big loan ,much like a sub-prime borrower . The attempts at the game of PAST TO A NEW BAGHOLDER is getting pretty annoying .
I welcome significantly higher borrowing rates. It’s another approach to prevent a lot of fraud in the future. It’s a free market approach and voluntary. If we see credit card rates above 40%, fine by me.
Hello all,
Rough weekend out here in CA. Spent most of yesterday and today in Monterey and Carmel, nice sunshine, PGA golf classic, beautiful seas and good food. While in a Carmel shop yesterday I overheard the owner talking on the phone saying that sales all week had been very, very dismal and that sales that day were worse yet. One of our favorite restaurants that is standing room only had one family of 4 and plus us 3. Several other restaurants had the cooks standing outside looking for business and in all the years I visited I’ve never incountered that. Apparently tourism is down and people aren’t buying and the golf classic was siphoning off the lunch traffic; it will be an interesting spring to summer to see who stays in business. I know of 5 shops that have been in business at least since 2003 go out of business in the last 6 months. Today in Monterey and Pacific Grove I counted 6 businesses that have gone under in the last 2 months. The best information is coming from the business owners and not from anyone related to the RE business.
Ron, didn’t get down to Pebble this time. Looks like we missed perfect weather. Given conditions, it’s truely amazing that Carmel businesses woudn’t be packed. How was the Pro-Am turnout?
Tying this with the previous talk about banks charging higher credit card rates and “emmi” potential in the future, I can imagine more elbow room in upscale shops and eateries in “tony” places such as Carmel and Carmel Valley. I eagerly await the day. I’ll pay debit card, I’ll pay cash, or I’ll pay silver. Whatever! And most likely fellow patrons at the next table will be honest people, rather than people who ever lied about their incomes.
“‘The folks we are seeing in the market today are marginal buyers,’ said Steve Doyle, Brookfield Homes’ president for the San Diego region. ‘They can’t afford to buy a $600,000 standard home that San Diego has been offering the last couple of years.’”
So if you can’t afford to buy a $600k home you’re “marginal”? I would think you need to be doing pretty well (relative to average Americans) to buy a $600k house using normal underwriting standards (20% down, no more than 2-3 times income, etc.)
” I would think you need to be doing pretty well (relative to average Americans) to buy a $600k house using normal underwriting standards (20% down, no more than 2-3 times income, etc.)”
Haven’t you heard. California is different.
We’ll return to that situation early in the next decade. However, in the city of my primary residence, Phoenix, we will once again see the day when $200,000 homes are upper middle class. For now, a burger flipping couple typically resides in $300,000+ homes. Not my type of neighbors.
““Scholl paid $1.9 million for the unit in 2006 and had been trying to sell it ever since. He originally asked $2.3 million but was trying to negotiate a short sale for $1.65 million prior to its sale for $1.5 million at a January foreclosure sale.”
“‘What do you do when you owe more than it’s worth?’ he said.” ”
What a crybaby. This happend to me in the early 1990s with the house I owned in Saratoga, CA. What I did is CONTINUE to pay my mortgage and live my life. I took on the debt, and whining or walking away was not an option. The silver lining is that I learned from that experience and I sold that 1950s ranch shack in Oct. 2005.
“The silver lining is that I learned from that experience and I sold that 1950s ranch shack in Oct. 2005.“
Talk about timing the market, Oct or Nov of 2005. Awesome!
Well, thank you although May 05 would have been better. And, unfortunately, I was a total idiot regarding the stock market bubble at the beginning of the century.
Actually, prices in Saratoga have gone up from 05 to 07. Now it’s maybe a bit lower than summer 07.
Nonetheless that was a great return by selling in 05, missing out on that last 15% probably doesn’t matter too much. And you’ve got a pile of cash now.
Yes, but this situation is different because most of these FB could NEVER, EVEN IN THEIR WILDEST DREAMS make the fully amortizing payments on their house, even if they could refinance into a 5% interest rate.
I remember three times in which my property value dipped below my original sales price of a house I use to own ( one time was after the Northridge Earthquake ,another time was after a lot of lay-offs in the aerospace business ). I also just continued to pay my mortgage and whining or walking was not a option in my mind .
The difference today is that the borrowers feel they were entitled to a profit within a short amount of time ,and they never could afford the payments anyway in a lot of cases ,so they walk .
I’m scared to go to sleep tonight and wake up to the never ending crash on wall st.
Oh I forgot commodities are heading up forever.
Ben Jones loves us.
I feel safe now.
Comment by bill in Maryland
2008-02-10 12:02:02
Why? Just to buy a house one can afford? Is that the main thing someone must want? We need food, clothing, love, and shelter, but you can find shelter where there is good climate, lots of culture, lots of high paying jobs, and a lot of universities. You don’t have to own a house to have shelter. Good grief. I imagine NW Pennsylvania is beautiful every day of the year and comfortable 30 days out of the year but gee whiz! It’s as funny as me saying I should buy a house in Midland or OdessaTexas because you get a lot for your money. Think Jobs, culture, education, conveniences.
My comments: You can find everything, including cheap(er) housing by relocating. Why do you think thousands leave FL, CA, NY, AZ, NV daily for more affordable locations? You can have shelter by renting but not everyone can afford the $3000 monthly rent, much less buy in “desirable” locations. Even if one could afford it, it often makes sense to relocate where rents are a third the cost, yet your salary is 75%! Theres other locations that fit people’s criteria. And for those who are self employed or retired, they just want a laid back location and don’t care about jobs, education, culture(for the most part)
Everything, except the friends you grew up with and your family. Way, way more important to me.
I can understand…. after living in Seattle for 5 years I needed a break from the rain. Went to the dryest place in the entire world and spent 12 months on the beach (Arica, Chile).
You need an anti-Florida
Theres other locations that fit people’s criteria. And for those who are self employed or retired, they just want a laid back location and don’t care about jobs, education, culture(for the most part)
Check out WV. Beautiful and cheap. Jobs..not so much but bargins galore……right next door to the decaying PA rust towns…
test
“Auger- I thought the same thing. How can she be wise enough to accumulate 400K but dumb enough to WANT this property.”
I am betting she didn’t earn a single dime of that money. Could be lotto/game show winnings or an inherience. People usually waste money that they didn’t work to earn. Those who worked hard to earn money are much more careful because they know the value of money, they remember how much work it took to save this much.
It’s because housing should be 25/30% or less of your monthly income ,and that drives people to move away from expensive areas .Whatever happened to the concept of a balanced budget for a family ?
The experts figured out years ago what % of the income should go to what needs in life . To high of a % of income is going to medical expense these days and to high of a % of income is going to shelter needs these days . Currently food has started to get more expensive than the ratio that should be alloted for food ,and energy and oil costs are getting scary .
If there was enough job security in this Country ,would people have resorted to trying to make money by the real estate mania ?
Cheaper houses have a tendency to “move away” from where you live if you are on either coast during a bubble. Your line of work does not have a tendency to move. Embedded software engineer job moving to Liberal, Kansas? No way. More likely in a big city. Plus the pay is higher in larger cities. The Specialization of Labor is best taken advantage of (much higher incomes) in large metropolitan areas.
Just because “the experts” figured it out doesn’t mean it is right in all circumstances.
There’s one thing to remember about the “2.5x-3x” rule. If someone makes more $ than average, all expenses don’t necessarily go up by the same ratio. I make 2x what I made 10 yrs ago, but my car costs the same. I spend less $ in restaurants. Therefore I can spend a higher percentage of $ on housing if I so choose. Californians generally make more than the US average, therefore can choose to spend a higher percentage on housing. And there’s reasons to do so; someone who likes the weather and the variety of recreation would choose to pay the premium. Someone who doesn’t care about the weather or prefers cold winters and hot summers would live in a cheaper place and spend money on something else. Maybe parkas!
anyhow my point is that someone making more $ could choose to safely exceed 3x income. I’m sure that many people have unsafely exceeded 3x income but it’s not a disaster per se to exceed that. And in fact median income vs housing costs have been over 3x for decades in silicon valley.
Ben must be sleeping! God bess’m!
“When Tracy Railsback submits her resume for a job, the first thing managers notice is that she worked in the mortgage industry. It doesn’t get her a warm reception. ‘Reputable companies, they don’t want to look at you because they think everybody in that industry was bad and that’s not true. Not everybody made tons of money and not everybody was dishonest,’ she said.”
That’s not the reason she’s not getting a job. I’ve had one of these ex-real estate people looking for a job at my clinic, too. I don’t think anyone is looking at individuals and judging them as “bad”, per se.
The main thing , of course, is that there are few jobs available to begin with. I’m certainly not hiring right now.
But the other thing is that we owners suspect these people will not stick around once the economy rebounds. Why should we take the time and effort to train someone who will leave us in the lurch?
In addition, my experience with ex-dotcommers makes me leary of anyone coming into our field from something far different. They look down their noses at entry level jobs, but then fail to do what’s expected.
“‘I think we’ve already seen the bottom,’ said Susan Anderson, manager of a Coldwell Banker office in Vista, basing her opinion on an uptick in the number of buyers looking for homes. ‘This market’s got good employment, good interest rates and availability of product.”
You forgot one major detail. This market doesn’t have affordable prices. You could have 0% unemployment, 0% interest rates, all the idiotic types of loans in the world, but if the house prices aren’t in line with people’s incomes, the market is in trouble.
Why do so many realtors ignore the actual prices of houses when they say it’s a good time to buy? As if price is not important.
Because now is always a good time to buy when you have a payment to make on your rented lexus.