Banks Have Few Options In California
The North County Times reports form California. “Working as a real estate agent, insurance dealer, income tax preparer and credit repair specialist, Miguel Romero has helped Latinos buy 122 homes since 2004, becoming one of his firm’s best salesmen. But his customers have not been so fortunate; at least 75 of the homes Romero sold have fallen into foreclosure. The company caters almost exclusively to Spanish-speaking customers.”
“Romero’s sales practices, and the stories of some clients, provide a window into industry excesses that analysts say contributed to the region’s foreclosure crisis.”
“‘I felt bad; I even felt like throwing myself under a car,’ said Juventino Chavero, one of Romero’s clients.”
“Another client, Hermenegildo Amaya, said he could afford his Oceanside home, which had a fixed-rate mortgage. But after attending one of Romero’s seminars, he said, he saw an opportunity for a better life.”
“Romero promised riches, luxury cars and early retirement, clients said. They said they were referred to Romero by friends, family, neighbors and telemarketing calls. Amaya said he heard the sales pitch and decided to refinance his home to buy a second house.”
“‘They said your house is like a mine, and it has money you’re not using,” Amaya said.”
“After Amaya’s mortgage payments jumped, his second home, which had become his primary residence, went into foreclosure. He was able to short-sell it and will soon be moving back to his first home.”
“Sitting in the home they no longer owned, Amaya and his wife wondered whether they would be able to keep their first home, where payments have also increased under Romero’s plan.”
“Most of Romero’s sales and those of his agents were financed by a lender called FCM Corp., based in Simi Valley. Of Romero’s 122 sales, 75 were no-money-down mortgages with FCM, according to tax documents.”
“Carl Kock, one of FCM’s brokers, said in a recent interview that he worked with Romero on many of those loans. Kock said that he did not believe the clients’ stories that Romero and his employees encouraged them to lie.”
“‘They’re (Helping Build Wealth) a substantial company, and he (Romero) is their number one producer. I don’t think he’d risk his licensing,’ Kock said. ‘I would say that if there’s anybody in trouble down there, they (Romero’s clients) just don’t want to make the payments but they still can.’”
“The clients interviewed for this story said they had trouble keeping up with their mortgage because they were pushed into loans that they could not afford, not because they didn’t want to make them.”
“‘I was so dumb, I believed him and we signed,’ said Rosario, a client who did not want her full name published and who lost two properties through foreclosure because she was unable to make the monthly payments, which she said totaled more than $9,000.”
The LA Times. “Buyers and sellers who choose the short-sale option need to understand the choppy waters they’re entering, lenders and agents say. Buyers complain, justifiably, that the wait for bank approvals of short sales, typically 60 to 90 days, but sometimes considerably longer, seems endless and the transactions often fall apart.”
“Sellers, on the other hand, may face tax and credit problems. Under federal legislation recently passed to help distressed sellers in this type of situation, however, certain owners may not be taxed on that debt relief. This legislation applies only to the debt that the homeowner acquired to buy or improve the property, said Bill Ahern, a tax partner at Allen Matkins in Irvine. It does not shield taxpayers from income derived from cash-out borrowings.”
“Mark Shandrow, a Keller Williams Realty agent in Long Beach, is representing a seller with an outstanding home loan of $600,000. A buyer recently offered $430,000 for the home. The lender has agreed to the short sale, on the condition that the seller take an unsecured loan for $50,000 to offset part of the $170,000 the bank is forgiving.”
“‘I think she’s going to do it,’ Shandrow said. ‘If not, the bank could go after her for the other $170,000. This way, the deal is done. The bank won’t touch her.’”
“‘The waiting is torture,’ said Shandrow. ‘The banks are overwhelmed with short-sale requests, and some make sellers wait five months for an answer.’ That answer, in many cases, he added, is ‘no.’”
“In the Santa Clarita and San Fernando valleys, the number of short sales increased from at least 31 sales from May 2006 to May 2007 to at least 1,956 sales from May 2007 to May of this year, according to the Southland Regional Assn. of Realtors.”
“‘Banks aren’t happy about short sales,’ said Sherri Frost, a senior loan officer with Sherman Oaks-based Metrocities Mortgage, ‘but they have few options.’”
“The sellers also must provide income verification, their most recent bank and income-tax statements, the listing history of the house and other documentation. Then comes the wait. And frequent follow-up calls to the bank to make sure the file isn’t buried.”
“‘Banks won’t grant face-to-face interviews because of the volume of short sales and foreclosures,’ said Mary Ebersole, a Re/Max Realty Specialists agent in Long Beach. Even if the seller gets approval, she added, ‘there’s only room for cautious optimism.’”
“Second and third mortgages and even home equity loans can further complicate matters. Last fall, Pam Kennedy, a Coldwell Banker Ambassador agent in Whittier, was disheartened when her short-sale client’s lender demanded, after a long wait and with a buyer already on board, that the seller sign a promissory note for $15,000, which would be interest-free and amortized over 10 years.”
“The seller had taken out a second mortgage awhile back to buy a recreational vehicle for $25,000 and pay off some debt. The lender wanted to recoup some of the loss it was absorbing.”
“The seller was going through a divorce, starting a new job and was afraid she couldn’t make the payments. Also, despite months of effort, she couldn’t sell the RV — an asset, in the bank’s opinion. The deal fell through and the bank foreclosed on the property. The experience left a bitter taste in Kennedy’s mouth.”
“‘I avoid short sales and advise buyers to avoid them,’ Kennedy said. ‘They are miserable.’”
“Buyers looking for bargains should wait until short-sale and foreclosure prices are down about 35% from the peak market in their search area, said James Joseph, owner of Century 21 Ambassador in Brea and Whittier.”
“‘Short sales and foreclosures are the nails in the floor of the market,’ Joseph said. ‘That’s where the bargains are.’”
The Bakersfield Californian. “Bakersfield’s Parkview Cottages at 21st and R streets were meant to be a model of affordable housing. But the 74-unit infill project was apparently brushed aside when the residential market boomed.”
“Now, the city-subsidized tract across from Central Park - first expected to open more than four years ago - has sold just 28 units. Another 15 or so sit empty and the remaining lots are dirt.”
“Local developer Petrini Brothers Inc. (was) chosen because of their expertise in building custom homes, she said. When the market exploded, they ‘jumped on the bandwagon of ag-land conversion,’ said Donna Kunz, economic development director for the city of Bakersfield.”
“On Tuesday, two default notices were filed against Petrini Construction, a business name for Petrini Brothers Inc., by local lender Batey Development Corp.”
“Kunz is disappointed the project wasn’t finished on time. The deadline has been extended - and missed - several times, most recently until December 2007. ‘The frustrating part,’ she said, ‘is that we kind of missed a window of opportunity.’”
“For a time, the cottages were appraised near $300,00 apiece, she said. The highest price fetched was $279,500 in August 2006, according to information from First American Real Estate Solutions. The most recent sale last month brought in $195,000.”
“Even when differences are broken out by price per square foot, May’s sale shows a sharp drop. The 1,609-square-foot cottage sold for $121.19 a square foot. That’s 22 percent less than the priciest of the five units that size, which in February 2007 fetched $154.75 per square foot.”
“Realtor Louie Gregorio, who handled May’s sale, believes prices will have to go lower still. ‘It’s a great product,’ Gregorio said, but the market downturn has made pricing ‘not as attractive as it was.’”
The Fresno Bee. “(A) survey by the nonprofit group California Reinvestment Coalition, which advocates increased access to credit for California’s low-income communities, shows an across-the-board frustration with lenders.”
“Counselors say lenders are difficult to work with, aren’t doing enough outreach to borrowers in trouble and aren’t being consistent in the way they handle the homeowners they do agree to help.”
“The result, the survey says, is that foreclosure remains by far the most common outcome for homeowners in trouble — and it says the problem has gotten worse between the summer and the winter of 2007, when the survey was conducted.”
“‘This is a game that has no rules so far,’ said Kevin Stein, the survey’s author. ‘We need further regulation of these important, life-altering decisions that are being made every day by these loan servicers.’”
“Martha Lucey, executive VP of By Design Financial Solutions in Fresno, said that many homeowners signed on to loans that they could never afford for the long term with the opportunity to refinance based on rising home prices.”
“But that’s an opportunity that a declining housing market has taken away from them, she said. Homeowners who have built up little or no equity in their homes and who have seen the value of their home fall below the value of their loan ‘are going to have a very difficult time making the modified loan payment,’ she said.”
“‘For 60% to 70% of the homeowners we see, our discussion is more focused on an exit strategy,’ Mendoza said. That includes a short sale of the property or, in the worst case, a foreclosure, she said.”
“That means, Mendoza said, that ‘the borrowers need to take responsibility and come up with a plan that’s workable.’”
“The past five years of lending have been marked by loose standards. People who should never have qualified were issued everything from no-documentation loans to loans that left borrowers owing more every month.”
“As a result, said Jodi Woodsmith, foreclosure counseling manager for Self Help Enterprises in Visalia, some homeowners just aren’t in a position to save their homes. She said homeowners definitely need to have a job or some kind of income.”
“In that sense, lenders are ‘going back to the old-fashioned way they used to do it five years ago,’ she said. ‘If they’d stuck with that, we wouldn’t have these problems we have in the first place.’”
“As an example of a loan that cannot be saved, Woodsmith told the story of a client who picks blueberries seasonally and makes $1,400 a month about three months a year.”
“‘Her mortgage payment was $1,100 a month,’ she said.”
The San Francisco Chronicle. “On a sunny Saturday afternoon, a dozen passengers spilled out of a small white bus bearing the sign Foreclosure Bus Tour and flocked into a Santa Rosa ranch-style house with a for-sale sign outside.”
“Foreclosure tours are the latest wrinkle in house hunting. Enterprising real estate agents load up a busload of bargain seekers and drive them to visit foreclosed homes being sold by banks.”
“Last week in Santa Rosa, agents from Cash Back Home and Loans took a small group of house hunters on a two-hour tour of six foreclosed properties, all three- or four-bedroom homes and town homes, built from 2000 to 2003 in cookie-cutter subdivisions on the city’s southwest side.”
“Ranging from $277,000 to $375,000, all the houses were in relatively good shape, although one had a kicked-in bedroom door. ‘They must’ve been angry when they left,’ one house hunter said.”
“Several had the ‘foreclosure theme song,’ a smoke alarm incessantly chirping because its batteries are low.”
“The tours have proved very profitable, said Cindi Hagley, a broker-associate in San Ramon, bringing in people who use her as their buyer’s agent.”
“‘I was a high-end listing agent until this market turned,’ she said. ‘I had two options: I could either sit and cry about it being an awful market, or I could make hay while the sun shines’ - becoming an expert in short sales and foreclosures.”
“In the Bay Area, the biggest home-repo outing is Foreclosure Finder Tours in eastern Contra Costa County, the area hardest-hit by foreclosures. Nine agents in Brentwood banded together in December to buy a 10-passenger van for $20,000; they run four tours every weekend, visiting about six homes per tour.”
“‘We’re trying to help get rid of some of this inventory, to get us out of this mess,’ said Realtor David Navarrette, who said he’s landed two deals from the tours. ‘We’ve got a ton of (foreclosed) homes on the market and are getting more and more in the hopper.’”
“‘I’m looking for a deal,’ said Wayne Bailey of Santa Rosa, who described himself as a ‘retired peon’ taking the tour to look for investment property. ‘There have been vultures down through the ages. Could I be a vulture? Not at my level.’”
“Bailey said the homes weren’t as bargain-basement as he had hoped. ‘With most of these houses, you’re talking 250 bucks a square foot, which is high for me,’ he said. ‘I want to pay $200 a square foot or less. You can do that in Stockton or Sacramento but I’m probably barking at the moon to find it in Santa Rosa.’”
Here’s one I forgot to post a few days ago with a RE guy sounding like a HBBer:
‘It wasn’t supposed to happen here. Not like this. The crashes are expected to hit hard in the Fontanas and the Perrises of the world — cities marketed more to working-class buyers, first-time buyers or sub-prime buyers. Indeed, Temecula is by no means the hardest-hit area of the Inland Empire; many communities here have plunged into record levels of foreclosure.’
‘Still, the downturn has been startling here because Temecula has been sold, successfully, as a sort of Napa of Southern California.’
‘Voshall had nine cases — foreclosed and vacant houses — on the half-mile-long street. It too was now abandoned, its lawn dead and its baby trees withering in the sun. Make that 10 cases on Kingston. There was no “for sale” sign, no eviction notice. Someone simply walked away.’
‘This neighborhood is lovely,’ she said, shaking her head and walking back to her truck. ‘t gets to you after a while. All of these families . . . where did they all go?’
‘Gary Lupo, who has been in Riverside County real estate for 31 years, specializes in conducting assessments of houses for banks. He said homes in the area could lose 80% of the gains in value that have been made since 2001. ‘This was all caused by greed — on the part of everyone,’ Lupo said.’
Just checked the new listings for homes in the San Fernando Valley on Redfin. Low and behold 5 new listings were priced LOWER than what the sales price were when each home was purchased in 2005.
These sellers seems to know it’s time to check their egos, and if they get what they paid in 2005, they are lucky.
I imagine they are trying to get out with the skin of their teeth.
I don’t know where you’re looking, but there are REOs in Reseda, short sales in upper Encino (the gross part), and price reductions and houses languishing on the market all over Valley Village and Sherman Oaks. Of course, prices are still ridiculously high.
Investor Girl,
Welcome back. People have been asking about you.
I’ve been so busy tracking REOs in my target areas, I haven’t had time to post, but now I’m pretty comfortable just sitting back and waiting till ‘09 - ‘10, at this rate prices will then be right where I need them to be. I did, however, pick up a small house by the beach that was priced 55% below its sale price in ‘04, an REO in move in condition (the FB replaced all the electrical wires, plumbing lines, kitchen cabinets, etc. before losing it), I couldn’t resist. Anyway, other than that and thanks to Ben, I have waited all these years and accumulated a nice warchest!
There they go again with their “working-class buyers”. How many of their buyers belong to a class that does not have to work? This is not dynastic England, guys. Even Donald Trump actually has to work to pay his freaking bills!
Residue of Marxism. They really want to say “low class” but they’re too PC for that.
Living off investments is different from living off labor, lower taxes being only a start. Residue of Marxism, indeed.
Temecula is the Napa of southern Cal??
ok. i believe that lol.
Yeah must all those strip malls that all look the same or maybe street after street of homes that all look the same. Sure ain’t the quality wines, ‘rolling hills dotted w/oaks & the weather that’s for sure….
Well, there are about 20 wineries there. There are only about two that anyone has heard of, and they aren’t that good. The vineyards in the area were wiped out by phylloxera, and the area was not able to come back, due to the lack of water, fog, and climate advantages of places like the real Napa. The only original vines that survived are now “old vine” Zinfandel, which is quite good if you like that particular flavor of Zin. The area did get an ATA designation back in the ’80s, I think.
But Temecula is no Napa, it’s just a hilly chunk of desert out where the “Bingo” Indians have their casinos.
Actually there are some 28 wineries (not all are members of the “full of themselves” TVWA) in the valley now. This number was only 12 back in 1998. To say the area has not come back from the lastest infestation of glassy winged sharpshooters is simply not true.The tasting room traffic in Temecula wineries is second only to Napa. My husband worked for Maurice Carrie for a bit as part of our research as to whether we wanted to start a winery of our own there. The average daily weekend visitor count was around 1200 each day (Sat./Sun) at this winery. (Crappy wine-but they didn’t charge a fee to taste and the Baked Brie in Sourdough was the bomb.) Callaway was the winery with the most damage from the sharpshooter investation starting back in 2000. They lost 70% of their vines. Other wineries lost from 5% to 50% of their vines from this outbreak.
A couple of other details: Phlloxera has been an ongoing problem for ALL of California wine regions since the 1850’s. It almost wiped out France’s growing regions at one point (1854-1860). Most growers plant resistant varieties, though this is no guarantee the vineyard wont’ be infected with a muted strain. Grape vines have roots that go down a some fifteen feet. Actually dry farmed wines are more intense in flavor and yes, Zins express that wonderfully. The Temecula area is best suited for Rhone varietals given it’s arid and rocky soil, This is why many wineries are now planting many of these vines. Fog and cooler climates are more suited for Chardonneys and Pinots.
IMO the best wines in the valley are Hart, Callaway (they source from all over CA) and Stuart Cellars..OK wine lesson over….
‘This was all caused by greed — on the part of everyone,’ Lupo said.’
Well, of course he’s right. But how many people will admit to being greedy? It’s more honorable to have been conned and to be a victim, at least in their minds.
For me, I think I’d rather admit to being greedy than to being stupid. You can overcome and reform from greed, but not from stupid.
Actually, you can overcome either, assuming a lot of what we usually call stupidity is willful ignorance. Or in other words the line between stupidity and greed is hard to define sometimes. But, as you say, a person has to be willing to own up to a situation as it really is.
30 years of being a troubleshooter of complex electronic systems has taught me that if you want to fix a problem for keeps, you’d better fully understand the nature of the problem. Taking responsibility for one’s actions isn’t hard nosed at all IMO. It’s simply the best overall approach that’s ever been discovered for bettering our lot in life. (Other than a sugar daddy and/or the lottery, of course, but be careful what you ask for…)
Even pure stupidity can be readily compensated for. There are lots of things in life about which I’m intensely stupid or incompetent, so I leave those things to others for the most part.
“Taking responsibility for one’s actions isn’t hard nosed at all IMO.”
Shoe, you’re just so old-fashioned!
Hey, it’s HOT up here today.
Ya, I wasn’t hip even when I was the right age for all that. Now, well… fuggedaboutit.
Summer hath arrived. There is no spring in Torrey. We put out the outdoor pepper seedlings last night, and now they’re getting scorched by sun and hot dry winds. Only so much we can do, they would have died five times over by now had we put them out at a “normal” time. Thank God for the greenhouse.
And those bloody blackguard gnats are out up here…little buggers.
“if you want to fix a problem for keeps, you’d better fully understand the nature of the problem.”
Hah!! That would mean, work, you know, boring stuff like critical thinking and fact-finding ability, to be exercised from the hordes that get flummoxed and cranky at the thought of programming the TV remote so they can watch American Idol.
DOC
Romero as a agent’s greed is not new. Most likely after all the easy fellow gulliable suckers are gone, he will move on, perhaps Mexico where he can “sell” something there.
“‘I avoid short sales and advise buyers to avoid them,’ Kennedy said. ‘They are miserable.’”
That must be so horrible for the sellers to come up with money to get out of their albatross.
“‘I was a high-end listing agent until this market turned,’ she said. ‘I had two options: I could either sit and cry about it being an awful market, or I could make hay while the sun shines’ - becoming an expert in short sales and foreclosures.”
My girlfriend sold pretty coastal homes in Encinitas and now she is selling Timeshares in Reno. In the last downturn, she sold Jeep wagons in San Clemente, while trying to save her Leucadia home, circa mid 90’s. She will survive.
“‘I felt bad; I even felt like throwing myself under a car,’ said Juventino Chavero, one of Romero’s clients.”
What a selfish mother-f*****! Not only does he not want to pay his debt, he wants to get out of it by inconveniencing some random driver by throwing himself under a car!
Here’s a suggestion, Mr. Chavero: Slit your wrists. In a bathtub, so it’s easier for the bank to clean in up.
Or find a volcano to jump into, so there’s nothing to clean up.
“Or find a volcano to jump into, so there’s nothing to clean up.”
Awesome! ROTFLMAO!!
Thinking Man says: He should have said throw himself ‘in front of a fast moving car’….throwing himself under a parked car would just make him a mechanic…..or an catylatic converter thief….and besides, technically it’s impossible to ‘throw yourself’ anyplace…how can you pick yourself up first?
The bank can throw him under the bus.
Yes, the foreclosure bus.
“‘I felt bad; I even felt like throwing myself under a car,’ said Juventino Chavero, one of Romero’s clients.”
———————————————————————-
give me a call. have car will travel.
Any commissioned sales person who has 75 foreclosures out of 122 sales was helping the borrowers commit fraud IMHO . These sit up artist knew exactly what they were doing .
If the lenders were willing to loan without due dilgence and without any money down, and the buyers only played the game because they could either sell for profit or walk away if the market turned, the fraud is not at this link in the chain. Clearly the game should have been shut down, but the government made a concious decision to let it continue unregulated. Given the rules of the game, even if 100% went into foreclosure it would merely be evidence that the game existed and the market turned, not that the borrowers were committing fraud.
I believe its the government’s responsibility for mixing non-recourse and 100% or higher max LTV loans. With such conditions and an appreciating market, the outcome couldnt have been different.
When you lie on a loan application ,especially to the degree these FB’s did ,you committed fraud for a perceived gain . I don’t care who talked the borrowers into it ,or who wasn’t watching the crimes being committed ,it’s still fraud or misrepresentation .The loan agents/real estate agents knowingly helped these borrowers scam the lenders who closed their eyes .
If a agent has 75 defaults out of 122 sales ,that is major involvement in a Ponzi scheme or a scheme to put unqualified buyers into homes .In past lending cycles ,if a agent had more than a 1% foreclosure rate ,they would get investigated .
I grant you that the entire REIC /Loan industry was corrupt during the mania ,including the appraisers ,but that doesn’t make fraud or misrepresentation any less fraudulent .But ,don’t tell the the loan investors that they aren’t victims of a chain of fraud because they are filing lawsuits by the boat loads and perceive themselves as victims of frauds and schemes .IMHO many people helped the borrowers commit the liar loan fraud but the borrowers agreed to it also . Believe me ,agents and borrowers know it when they inflate their income by 200% to buy a investment and it’s still fraud in my book .
There clearly was some fraud, but I am also aware of many situations in which the Lender’s knew the buyer’s would walk if prices went down but closed anyway eyes wide open. If you are not requiring any money down in a non-recourse state you should expect those going under will walk, and that is exactly what is happening. Once prices drop 30% or more as they already have in certain parts of CA and FL you would expect close to a 100% walk away rate fraud or not.
I should add that I am not trying to defend the ponzi scheme which this clearly was, but merely pointing out that they can be done legally with the same consequences. For example, I could have qualified without committing fraud for the purchase of several CA properties with the intent to flip or walk away using 100% financing. If I chose to do such a thing with the make money or walk mindset which this guy was clearly selling, I would probably have let them all go into default by now. No fraud, just lack of regulation. Personally, I think there should be a 20% down requirement for all real estate transactions.
Tim ,I’m sure the lenders and their agents and borrowers all thought that real estate would not go down and that would hide all faulty lending and liar loans .
This does not make it any less corrupt and fraudulent IMHO.
IMHO ,the real victims of this faulty and fraudulent lending cycle are the following .
(1) People who did not commit fraud on their loan applications and people who put life savings into down payments not knowing the system was corrupt ,who now have loss life savings .
(2) The investors in loan paper who were hook-winked into buying bad paper that was rated AAA.
(3) People who were forced to sell long term homes because of property tax/insurance increases that were based on fraudulent buyers and lenders pushing up bogus prices .
(4) People who didn’t commit fraud who now have their neighborhoods destroyed ,or HOA destroyed because of the fraudulent group of investors , lenders ,builders and real estate agents .
(5) People who got priced out of the bogus fraudulent market
(who are now the people who will gain if they didn’t buy during the madness ).Still people were deprived of affordable housing during the boom and everyone paid higher rents because of the fake market.
(6) All people are paying pursuant inflation because of the bogus Fed policies of low Fed rates to save the banks .Savers are paying by not having decent rates on insured deposits .You have to agree that it is very difficult to find a safe investment in funds these days ,all because of this bogus mania . The people were cheated by not having funds directed into constructive investments because of the Ponzi schemes.
(7) The public is paying by bail-outs and the money market is tighter and more expensive than it would of been ,absent all the fraud .All this fraud might lead this Nation into the government being the only lender that insures loans based on taxpayers paying for the risk . The health and crime problems that are now increasing because of vacant pools and houses are another byproduct of this liar loan crime wave.
(8) People who didn’t commit fraud ,who bought into projects that will not be completed or went belly-up and they can’t get their money back .
(9) People who will lose their job because of a over-all depression or recession because of the cut-backs that are taking place ,who were just minding their business and didn’t commit fraud ,who are now forced to sell in a bad market .
I could go on and on . But this fraud in lending is about as destructive a force that you can get . In fact,this fraud by borrowers and the corrupt loan and real estate industry has proven so destructive a crime wave that it makes petty crime look like a day at the beach .This fraudulent crime wave is bringing America to it’s knees and I can’t say that this weakness doesn’t pose a security problem .
I don’t know when black became white and white became black ,but the roots of this mess is described in one big word ,which is FRAUD . Of course I also believe that the loan crimes were so widespread that the Courts and law enforcement will not be able to justly address it .
Tim, I made another post ,but I don’t know where it went.
IMHO . If you did not commit fraud on the loan application ,but you walk and give the property back to the bank ,you will take a credit hit ,but you didn’t commit a act of fraud ,especially if you don’t trash the property out the door . But it deserves saying that for every person who walks ,who doesn’t pay the tax bite on forgiven debt ,means money that could of gone to better tax use is used up by people who decide to not honor their debt ,so it does affect the public in general ,(not to mention the loss to the investor/lender in that loan ).
This real estate bubble has contorted everything to the point that it’s turned into a cover-up circus where there is no chance that Justice is going to prevail . For God sakes we have a Congress women who has defaulted on 4 or 5 loans ,and this person is one of the lawmakers . You have Senator Dodds getting favorable loan/fee treatment by one of the most corrupt lending outfits (CountryWide) and this doesn’t come into play on the absurd bail-out talks that Dodds was one of the first to propose ?
The law is being twisted right now because this housing mess is so big . The lawmakers will keep changing the laws to fit the cover-up bail outs, unless they are stopped .
I go back to if you see a fire in the distance ,and it destroys a million homes ,don’t think that your insurance won’t be raised to cover the cost just because your home didn’t burn down .
Tim, I don’t know where my posts went in response to you but I agree that the faulty lending ,whereby lenders breached their duty to prevent fraud ,or require proper down payments ,is the big reason why all these loans are defaulting . It was absurd from day one to give low down /low documentation loans to borrowers without underwriting .The corporations were also benefiting from people spending money from loan funds .
Wall Street and the lenders had no right to breach their duty to prevent fraud ,or even change their risk models as far as I’m concerned . The final insult is that the politicians and lenders want to sweep this crime wave under the carpet and make everyone pay for the sins of Wall Street ,the lenders ,the REIC ,and the borrowers . Life isn’t fair I guess , and I agree with you that the lenders are to blame for their faulty lending and not preventing fraud and passing on the junk paper up the line ,but does the borrower get off the hook for the part they played in the fraudulent greed scheme?
Thanks for your thoughtful posts. I agree with everything you said. In response to your question - Does the borrower get off the hook for the part they played in the fraudulent greed scheme? - I believe to the extent they committed fraud by lying about their income, whether it was a primary residence, their debts, etc. they should be held personally liable. I think this is legally the case even in non-recourse states. Unfortunately, those that didn’t commit fraud but simply had the profit or walk mindset didnt commit any crime, and fall within the protection of non-recourse laws to the extent applicable. Unfortunately immoral or amoral conduct, in and of itself, is not actionable. Thus, I dont think anything can be done and all they will be stuck with is bad credit for a bit. That is why regulation is needed and we cannot have a system of laws that when combined with legally available products provides an incentive for such destructive conduct. I have mentioned previously that anytime housing appreciates more than 10% in any single year, warning alarms should be sounding and it is the government’s responsibility to take immediate action. Although I understand this would not be welcomed by self interested ppl, it could be done without being obvious such as changing interest rates, regulating questionable loan practices, etc. Not only did such alarms not result in a call for action, ppl like Greenspan were singing the praises of subprime. The best outcome I can see is having housing collapse to 1999 or 2000 levels, while somehow managing to prop the banks up enough so they dont default big time on their obligations. I know some ppl dont like that view, but I am really only talking about preventing system wide bank defaults on their obligations. If banks start going into default, your list of victims would probably grow exponentially.
I expect that we will never see anything closely resembling justice, other than the fact that those most over extended will have their credit shut off for the short term and banking profits are taking a huge hit (although those mostly hurt will be the mid to low level employees that will be terminated and who shared the least in the profits). Although this sounds depressing, I cannot agree with the view that society is changing for the worse. History is full of much worse conduct.
I can’t agree that there should be a legislated 20% minimum down payment. Caveat lendor!! Right now, I have a new client who is in possession of 100% of the purchase price of a property, but it’s in an IRA and the client doesn’t want the tax consequences of pulling the money out all at once. I have been asked to lend a little more than 80%, at 9% interest. On my own initiative, I sweetened the interest rate to 8.88%, because I regard the deal as very very low risk. The buyer wants to live in this place, the loan will amortize in less than 10 years, and whatever further deterioration occurs in the low low end market will probably be too slow to put this buyer under water. Ever.
Was interested in someone’s comment above that more than 1% foreclosures would bring investigation of an agent. By that standard, I am not so smart: the number of repo situations I have had in my business is 3 out of about a hundred, plus one slightly short sale (though the repos were accomplished w/o foreclosure)… luckily, all the repos occurred when the market was robust, and I hope to have no more in future. We’ll see. Still no repos since 2003, and not even a technical default in the past couple of years. Currently nobody is late except for two people whose June 15 payment will probably appear tomorrow. Guess I should say “today,” as it’s after midnight EDT.
Sorry I was out so it took a long time to respond . I’m saying that Lenders use to take a close look at foreclosure rates and late payment rates and track them to areas or the agents involved in the good old days of lending .I remember when loan managers were demoted or fired if they had to many loans go bad . If the loans where the result of fraud ,than major investigations would take place to make sure the lenders agent or employee wasn’t in on it . Course this was back in the old days of prudent lending .
I agree with you AZ- lender that some loans that are made at a high loan to value are solid loans ,and that is what good underwriting and good appraisals are all about .Your a private lender and you can get up close and personal about any loan you make ,but in the final analysis ,if you make a mistake it could cost you .I hope that doesn’t happen to you and it looks like your track record have been pretty good so far.
Great posts, Housing Wizard!
We live in strange times where laws mean nothing. Remember Dubya’s “Contract with America?” Good thing Wall Street didn’t get to administer Social Security because they’d steal that too.
Tim, all my post ended up showing up ,so it looks like I keep repeating the same points .I guess I should of been more patient .
When multiple foreclosure bus tours start operating in Marin county, California and the passengers include renters who can buy a place for less monthly cost (mortgage + property taxes + maintenance + insurance) than the monthly cost of renting, that will be a sign that the housing crash has mostly run its course.
I expect that to happen around the fall of 2010. Stay tuned.
Keep the popcorn popping,
Red Baron
Curse you, Red Baron!!
Just kidding - someone had to say it… but I think 2010 may be a bit early.
We’ll see…but I think some foreclosure bus tours will be established in Marin by the fall of 2010. Realtors (TM) will be begging people to buy in Marin at below $200 per square foot as option-ARM resets and recasts expose how many Marinites are over their heads.
The median household income in Marin is about $80K, while the median home price is $800K. There is no way there are enough trust fund babies to support current home prices, even in Marin.
Keep the popcorn popping,
Red Baron
Hope you’re right. Colorado is behind, so by then I think we’ll still be on the downward spiral, but not the bottom. May take awhile. But I would love to be wrong, really tired of the wait.
That would be great. I would love to snap up a place in Marin, but need to keep waiting so I do not loose it.
“I don’t think he’d risk his licensing,’ Kock said.
Jeez, sometimes I think they make up these names just for HB bloggers to laugh at.
Too bad his first name isn’t Harry!
“I don’t think he’d risk his licensing,’ Kock said.
Do they invent these names just for HB bloggers to laugh at?
Yeah, it’s hard to take your eyes off a name like Kock.
‘We’re trying to help get rid of some of this inventory, to get us out of this mess,’ said Realtor…
There! I see it, the solution to the housing crisis, and stated so eloquently by an actual realtor, no less. To all the politicians and bailout morons, here’s the solution, staring you in the face: sell off the inventory! After you push all the pending foreclosures through and resell them at market, then the market will recover, and it’s just that easy.
So to those politicians and other people searching for a solution, here it is: do everything you can to ensure the foreclosure to resale process is as quick, efficient, and close to actual market price as possible. Making it slower contributes to the problem. Making it less efficient by putting in barriers contributes to the problem. Making houses sell above market (though FHA taxpayer-subsidized loans, incentives, bailouts, or other measures) contributes to the problem!
Stop being part of the problem, and start being part of the solution!
True. I never understood why Realtors are trying to keep prices up, if we get them back to historic norms quickly, they would have more secure and stable positions; but then again, they are the biggest consumers of McMansions and investment properties . . . oh well.
The people are too far underwater. They can’t lower their prices.
The banks are having trouble unloading the property because they have to book the losses. When they book the losses they become capitally impaired.
Government needs the tax revenue cause they already spent the money. Its not like they can cut spending and fix things. They are already spending future money. That is what debt is. They are spending future income.
Finally, the people in the best position to work the system and holding on to the most properties are Realtors. So many of them are burned with underwater properties so they NEED prices to go back up.
So, in summary the systems is pretty fooked.
I don’t know why they just don’t flip the houses for profit. That would solve all of their problems.
For the trolls who posted last night claiming that San Jose prices were not budging, here is the y-o-y price/ft2 change for all San Jose zip codes for April 2008 (DQ News has become suspiciously slow at updating their numbers). You will see that all but 1 of the zipcodes are negative, and the vast majority of the negative numbers are in the double digits. I looked up the single zip code with a positive number on Onboard Neigborhood Navigator, and found that their median and average sales prices have plummeted by 12% since their peak in Q2 of ‘07. And yes, rents are still relatively cheap.
95110: -22.8%
95111: -33.3%
95112: -32.9%
95116: -44.5%
95117: -19.2%
95118: -8.3%
95119: -49.7%
95120: -9.5%
95121: -20.3%
95122: -31.3%
95123: -20.1%
95124: -8.4%
95125: -3.9%
95126 -16.3%
95127: -34.8%
95128: -9.7%
95129: -8.8%
95130: 13.5%
95131: -17.1%
95132: -19.3%
95133: -12.0%
95134: n/a
95135: -1.2%
95136: -15.6%
95138: -12.6%
95139: -16.6%
95148: -17.0%
If you are referring to my post, I never said prices aren’t budging. I said they are still ridiculously high.
“They said your house is like a mine, and it has money you’re not using.”
Funny they conveniently forgot to mention mines are quite susceptible to deadly cave-ins and release of toxic gases.
DOC
He may have been referring to a land mine.
“‘We’ve got a ton of (foreclosed) homes on the market and are getting more and more in the hopper.’”
Hey Dave, if these beauties were built w/in the last 8 years, they belong in “the hopper” and should be ground up for mulch.
DOC
“The tours have proved very profitable, said Cindi Hagley, a broker-associate in San Ramon, bringing in people who use her as their buyer’s agent.”
I find it hard to fathom how even the dumbest sheeple failed to be somewhat alarmed watching Cindy walk up and down the aisle of the bus, waiving her Tabasco-coated strap-on side-to-side while pitching her sales mantras.
DOC
It only proves that all you need now to be a success in real estate sales is a van and some gas money .
This is a little off topic, but I wanted to see what you folks thought about this:
Five Ways You’re Killing the Planet
The everyday actions that are wrecking the environment, and how you can quit
(#4)
Living in the ‘Burbs
Your little house may be cute, but under its toxic vinyl siding, it’s an environmental monster. Add the average 25-minute daily commute an American suburbanite makes to the emissions from a lawnmower (one hour of pushing is equivalent to 100 miles of driving), the toxic chemicals put on lawns, and the loss of green space and farmland created by sprawl, and your enviro-mojo drops pretty low. Compare that with an urban condo where you can bike to work or take mass transit and skip the lawn care, and downtown begins to seem a little rosier.
http://www.popsci.com/5ways
Humans kill the planet? Well, that’s mighty egotistical of us…
i don’t think the planet gives a crap what we do nor is it affected in the least.
Humans are just one among the millions of species it has given birth to, watched evolve for a geologic blink of an eye, and is destined, for whatever reasons, to ultimately become extinct.
Someone wrote a book about Earth after human life.. here it is.. good old wiki..
http://en.wikipedia.org/wiki/The_World_Without_Us
Written largely as a thought experiment, it outlines, for example, how cities and houses would deteriorate, how long man-made artifacts would last, and how remaining lifeforms would evolve. Weisman concludes that residential neighborhoods would become forests within 500 years, and that radioactive waste, bronze statues, plastics, and Mount Rushmore will be among the longest lasting evidence of human presence on Earth.
If anyone (anything?) cares what humans do to this planet, it’ll be whatever thinking species takes our place. And they will appreciate whatever we did because they needed whatever enviornmental conditions we left behind. Their evolution and very existance depended on us creating those conditions.
A lot off-topic. Plus, your quote/original thought says:
“Add the average 25-minute daily commute an American suburbanite makes to the emissions from a lawnmower (one hour of pushing is equivalent to 100 miles of driving)”
One hour of pushing? One hour of pushing for me uses about one litre of unleaded. One litre of unleaded CANNOT equal 100 miles of driving, unless my usual driving is getting about 375 miles per US gallon.
It doesn’t.
Well, if the enviro-Nazis want me to live in an urban condo, they can just go an f**k themselves.
Let the free market do its job. A lot of people are going to have live in urban condos. We can hope it won’t be us.
Don’t we normally refer to them as the “projects.”
If it was the right urban condo, I’d move. Traffic in metro Atlanta is no fun
Wrong. It’s equivalent in EMISSIONS (as it clearly states), not amount of fuel used. Lawmowers typically run too rich and have no emissions control equipment. Your car runs much, much cleaner due to fuel injection, oxygen sensors, catalytic converters, etc.
I know this was completely off topic, sorry to digress, just wanted to get some opinions. You make a great point joeyinCA, a friend of mine always got pissed when anyone said we were “killing the planet” for the same reasons. I tend to agree.
I don’t want to live in a condo, but this article got my attention because of all the massive residential structures that I see all over my city (Sac). There’s this new mansion/castle that was built right off of a street called Sierra College Blvd, it’s one of the biggest houses I’ve ever seen. And the only thought that goes through my head when I drive past it is, “I wonder what the utilities cost per month?”.
To make up for my off topicness, here’s a local observation. The Real Estate office that I work next to in Folsom, CA is having a Wine party for all their real estate buddies. They’re advertising it on the door of their office. The best part is the title of the party, “United We Stand”. Bravo.
off topic off schmopic.. take a gander at the duck thread down below..
There is so much money in environmentalism it’s un-frickin-believable. It’s tentacles extend into everything. However, I have a strong conscience and could never use a scam like global-warming or ozone-holes to make me money… maybe i’d get into recycling, but that’s about it.
My guess is the people at the top like algore see it as a pathway to power and/or wealth while the vast majority of the followers are genuine believers.
House values are dropping , but not enough. It must come down to a realistic price. Sellers are still unwilling to lower their asking prices to make a difference. Little 2% drops here and there is not enough to attract any buyers. Realtors needs to start thinking of increments of 5%, 10%, 15% … big drops, come on, forget about your commissions — houses are not selling!!! …. prices have to go drop and go down a lot to stir buyers. This ridiculous the games realtors/sellers are playing. Do you need to sell your house or not??
Buyers’ wages are not going up so house prices need to drop to meet their level. Southern California is a real mess, there’s a record amount of foreclosures. Personally, California would be the last place I would buy a house no matter what price. It’s too expensive to live there plus all the taxes you have to pay for support welfare programs for the illegals. I’m getting out of California, their future looks very bleak. Don’t enjoy paying more taxes, fighting traffic, etc., even the weather isn’t worth it anymore. Liberalism has destroyed my beautiful birth state.
“Liberalism has destroyed my beautiful birth state.”
Well said, Don! Testify!!
If only there were more people like Don. IMO the problem with California is too many people. My plan is to pay people to leave the state. If we could get about 10MM people (plus or minus Don and his family) to leave, traffic and pollution would be so much better. And if we pay ‘em enough, most of the undesirables would be out of here, so we’re killing two birds with one stone!
Good riddance.
I JUST ADOPTED A DUCK!
Um, congrats?
Yes, please explain yourself! Are you using it in place of a Joshua Tree on Dumb FB’ers?
This duck is really clingy! Every time I walk away from it, it quacks. I Googled it and found out it’s a white crested duck. I orderd a diaper harness for it. Does anyone here know what to do about an overly clingy duck? I’m about to call my mom.
clingy.. you prefer standoffish?
the do tend to attach themselves to whatever they think is momma.. With the diapers and all, it sounds like you’ll make a good momma.
Tuck it in at night but forget about bedtime stories unless it includes a duck (one that doesn’t get eaten somewhere along the line).
Big V,
Use Google. I’m sure there is someone out there that may even have created a FAQ for ducks as pets.
Good luck.
I have to find somebody to take this duck. It eats kitty litter and has to have someone around ALL THE TIME. It’s real cute and likes to snuggle. I just posted a craigslist ad. I will post later today on the CA thread to see if any of you want it, although I kind of doubt you will, since you all rent like I do, and I haven’t heard any of you express a desire for an overly clingy bird that can’t stand to be by itself ever and probably needs to live with at least one other overly cling bird too.
i’ve had a duck.. good pets.. the don’t eat much, and will devour every slug in the garden (even gorge themselves to the point of upchucking them onto the kitchen floor an hour later). They also like new, tender vegetable shoots, so some wire fencing may be a good idea.
And, since they’ll follow you, you can take them for walks without a leash.
Um ducks as ‘great’ pets?? We called ours “Pick” & “Plop” Yeah they ate all the snails & slugs and some other bugs too but man o’ man we had to hose off the patio EVERY DAY. They worked out WAY, WAY better out at the farm…..
“A diaper harness” ….. if you’re wiping your ducks a$$…who’s the pet?
Joey:
How many ducks did you have? I think the problem is that this duck has to be around its flock all the time, but its flock is only us, and we have to go to work during the day. Do you think that a single duck can be happy hanging out in the back yard for 9 hours or so M-F?
Unlike dogs or cats which can show a range of emotions, i don’t think ducks have the capacity to be lonely or unhappy.
When you’re around, you are the center of attention. When you’re not, something else is… It’ll be perfectly happy roaming the yard by itself.
In my experience they do stay close to one another and move together if there’s more than one.
That reminds me.. dogs love to hunt ducks.. larger dogs are most dangerous and ducklings are most vulnerable, but a full grown duck can defend itself pretty well.
Being near a source (farm suppliers) I bought several chicks at different times for other people. One was a suprise gift for someone who’s dog died.. it grew huge and was around for at least 5 years. When it finally kicked the bucket it was a real heartbreaker, as bad as the dog.. even i felt bad.
That person’s oriental neighbor asked me for a pair for breeding.. i forget the type.. anyway, there were eggs and ducklings all over that yard (and in sauce pans) after a couple years.
… never raised one as a pet myself so what little i know comes from tales of other people’s experiences with them.. As pets they can have a weird affinity with humans, and vice versa.
hmm.. talk to a vet about vet-things.. trim flight feathers if it likes to fly. From what i heard it may not ever want to fly.
But they won’t fly far away from home, unless they’re stupid or by accident or to escape a threat.
couple more things until you get up to speed..
It’ll likely try to eat or drink a-n-y-t-h-i-n-g within range… Bugetta pellets, puddles of oil or antifreeze, glass shards, nuts and bolts, etc.
And, the young ones having either no sense of depth perception, an overpowering sense of curiosity, or an underdeveloped sense of fear combined with the inability to fly, stairs and table tops are danger zones.
“‘I was a high-end listing agent until this market turned,’ she said. ‘I had two options: I could either sit and cry about it being an awful market, or I could make hay while the sun shines’ - becoming an expert in short sales and foreclosures.”
Always remember that the key thing Realtors (TM) care about is how they can extract money out of your checking account. How they do it matters not to them.
Keep the popcorn popping,
Red Baron
OT sort of.
Taxi driver in Chicago. Nice Indian man, educated.
Has a fleet of 4 Prius, in order to save money. He had unfortunately
bought in Chicago 2 yrs ago. Paid 30% down. Needs to refinance.
Bank is making him jump through hoops. Doesn{t claim his taxi income. Has other incomes, and tax preps. Banks aren{t satisfied. Otherwise, he was told to put down Another 80k and show 8 months of separate funds for his mortgage. Always on time. Has done all this.
That is when he decided to buy another Prius for his taxi business. Makes min 1k over costs on These investments, and yet he doesn{t get putting anymore into this house per banks demands. He has put even more than the bank demanded and yet… He was a very nice man, educated and it is obvious that our entire banking system is totally screwed up.
He, like so many americans, are not poor enough, nor connected and wealthy enough to get that BIG SAVE from the gov. But fortunately for this guy.. he has the dough.
According to the Chi papers, Cook Co has over 54% increase in Foreclosures. Or was that 58%.
Taxi driver in Chicago. Nice Indian man… Bank is making him jump through hoops. Doesn{t claim his taxi income…
Cry me a river…
OT - anybody know a free way to check the status of loans on houses in Florida? We have discovered the way to find out if taxes are current, but need to know the status of the loan(s) too.
What are the keywords to lookup?
We are looking to rent and want to ‘credit check’ our landlords before we give them any $$$. So far we found 2 that are delinquent on taxes yet advertise on Craig’s list.
Thanks in advance for your patience, we don’t want to get burned.
oh, and of course 10 seconds later I stumble across a good article on the information, with a specific link for my area of Tampa. How cool!
Good info here http://www.realestatejournal.com/indinvestor/20050203-lucier.html
CEO compensation rises again. Everyone else takes it in the shorts but CEO compensation rises.
http://biz.yahoo.com/ap/080615/executive_compensation.html
The AP review of compensation for the heads of companies in the Standard & Poor’s 500 index finds the median pay package added up to nearly $8.4 million. That’s a comfortable gain of about $280,000 from 2006.
The 3 1/2 percent pay increase for CEOs came even as the landscape for both workers and shareholders darkened considerably and the economy was choked by a housing market in free fall, layoffs and soaring prices for fuel and food.
Thank GOD they also got the bulk of the tax cuts.
[Calif Reinvestment Coalition sez] “This is a game that has no rules…We need further regulation…”
Of course it has rules, idiot. The rules are spelled out in the mortgage contract. Further access to credit for low-income Californians (the objective of Calif Reinvestment Coalition) is probably not what is needed anyway!
“‘Short sales and foreclosures are the nails in the floor of the market,’ Joseph said. ‘That’s where the bargains are.’”
The initial round of foreclosures are the nails in one of the higher floors in a multistory building. Each round will be on successively lower floors.
Most are bargains only relative to the sky high prices of a few years ago, not relative to prices a few years from now.
More like nails in the coffin for the overextended and underincomed FB.
Any predictions on when prices will actually be realistic in Dublin/Pleasanton? Knife catchers keep buying for some reason here.
It’ll take some time. It’s easier to drive someplace meaningful from Dublin than it is to drive from Tracy. People will continue to move inward towards job/transit centers.
“(Woodsmith) said homeowners definitely need to have a job or some kind of income.”
Perhaps sufficient income would be a better idea?
“As an example of a loan that cannot be saved, Woodsmith told the story of a client who picks blueberries seasonally and makes $1,400 a month about three months a year.”
“‘Her mortgage payment was $1,100 a month,’ she said.”
Obviously she should have made the career move to picking strawberries.