A Lot Of People Have Been Greedy In California
The Ventura County Star reports from California. “Brian Hill jokes about his uncanny timing. He finely calibrated the moment in the spring of 2006 at which he bought his $630,000 home on Thames River Drive at RiverPark in Oxnard. ‘I think the value started dropping right after we put in the down payment,’ Hill said. ‘Right when I signed. Probably right when I removed the pen from the paper it started to tank.’”
“Hill knows exactly what his home is valued at now because houses with the same floor plan are being built and sold a few blocks away for $440,000. ‘We’re way, way upside down,’ he said.”
“The Hills aren’t alone. In Ventura County, 40 percent of the homes bought in the past five years are worth less than the purchase price, according to Zillow. For those who bought in 2006, seven out of 10 are now in negative territory, according to Zillow’s most recent figures.”
“Those statistics might actually underestimate the problem because Zillow’s home estimator does not look at properties from which homeowners drew out equity, said Zillow’s Katie Curnutte. Bob Davis, branch manager of First Mortgage Corp. in Ventura, thought the estimates were conservative because of how many people have ‘used their homes as ATMs.’”
“It’s one of the biggest differences with previous downturns in the housing market. ‘It’s significant in the fact that if you go back to, oh, 1998, a consumer who had negative equity position at that time hadn’t counted on the equity in their home to buy their next TV or car or any number of things,’ Davis said.”
“Many of the home equity loans taken out from 2002 to 2006 fueled consumer purchases, he said. ‘You put candy on a plate and people are going to eat it until their belly aches, and I think that’s what happened with some consumers,’ Davis said.”
“It could be 10 years before the home’s value rises to the original purchase price, but no one’s offering a bailout, a lower interest rate or reduction in principal, Hill said. ‘My impression is that those who continue to make payments and are in good standing are the ones who’ll get screwed,’ he said.”
From The Signal. “Streets in Stevenson Ranch will be darker and bleaker this Christmas. No Christmas lights are being strung on scores of darkened foreclosed homes that now pepper this affluent community. ‘This is a really terrible situation,’ said Dickens Court resident Jeck Narciso, who nodded to an empty house across the street.”
“One day he has a neighbor, the next day he’s looking at an empty house, he said. No goodbye. No discussion. A woman who lives two doors from Narciso stands on the sidewalk and points to homes recently vacated. ‘That house, that one, the one on the other side of that truck - all foreclosed,’ she said. ‘It’s terrible to say, but I feel these people did it to themselves,’ said the woman, who declined to have her name published. ‘They bought houses they couldn’t afford. It was just keeping up with the Jones’. I have little sympathy.’”
“‘There are so many foreclosures, it’s unbelievable,’ said Rhonda Chobanian, a real estate agent who has been selling homes in the Santa Clarita Valley for 23 years. Her toughest battle is playing out on Wilde Avenue. She is trying to sell a home there - a house that boasts a big pool and a beautiful view - but appraisers are dropping its value by the thousands of dollars because of foreclosed homes down the street.”
“‘I’m locked in a battle with the appraiser,’ Chobanian said. ‘I have an offer on it. I’m trying to get what it’s worth but the appraiser comes in far lower than we can go. He looks at the foreclosed home down the street and then lowers the value. When the only things for sale out there are foreclosed homes, it really affects Mr. and Mrs. Homeowner.’”
The LA Times. “Over the last three months, Father John Lasseigne and other community leaders have come up with an unusual response: They have organized more than 500 Latino immigrant families who are behind on their payments into teams that will seek to negotiate with banks as a group. Community leaders say the story of the Hernandez family is sadly typical of what happened to many in the northeast San Fernando Valley.”
“Hernandez’s parents, immigrants from El Salvador, bought their house for $488,000 in 2005. Although they both had low-paying jobs at a local dry cleaner, they were approved for a loan. And they were able to put $100,000 down, mostly from the proceeds of a small town house they had sold.”
“Hernandez said his mother had wanted a fixed rate but was instead steered toward a negative amortizing loan, in which the family was allowed to make less than a standard principal and interest payment each month, and so the total principal slowly increased. Today they owe more than $500,000. At the same time, the value of their house has plummeted and might now be worth less than $300,000.”
“Looking back, Hernandez said he can’t believe he was foolish enough to let his mother get into a loan under such terms, but a broker he trusted assured him he would be able to refinance. Recently, the terms of the loan changed so that the family must now start paying back their principal, meaning their monthly payment has shot up to $4,000 from $2,300.”
“‘This is our home. We don’t want to lose it, but at the same time, there is no way we can do a $4,000 payment,’ he said.”
The Tribune. “Whether it’s action at the federal or state level, some say that it may take some time before there’s anything more concrete to aid troubled homeowners. The state Legislature in November called a special session to discuss a proposal by Gov. Arnold Schwarzenegger that would have created a 90-day moratorium on foreclosures, said Tom Pool, spokesman for the California Department of Real Estate.”
“‘But that didn’t go anywhere,’ he said, noting that there are many proposals on the table that ‘never get any traction.’ The governor plans to reintroduce the 90-day delay as part of a broader mortgage reform proposal, Pool said.”
“In the meantime, those in the trenches like Patty Guertler, spokeswoman for Consumer Credit Counseling Services, which services San Luis Obispo County, say they’ll look for more lender participation and educate the growing list of distressed homeowners, many of whom signed on to mortgages that were well beyond their ability to pay. ‘It’s a tough lesson that we are all learning,’ she said. ‘Consumers who have lost their homes should know that this could be a break for them to start fresh. This is not the end.’”
From KTUV. “Another well-known company with a strong presence in the Bay Area went public about pending significant layoffs Monday as Dow Chemical representatives announced that thousands of employees are set to lose their jobs. What would cause such a worldwide downturn for dow? Much of what the company makes is used in industries that are in serious trouble right now.”
“‘We make the things other people turn into products,’ explained Dow spokesman Fischback. ‘So, Dow globally is very invested in the automotive industry with things like plastics and urethanes that go into those. The housing industry, we’re very big into that.’”
“This news prompted one contractor to philosophically place blame for the entire economic fiasco. ‘It’s a lot of people that have been greedy over the years. And all this has added up. Their greed has brought a lot of grief across the nation,’ said Dow Chemical contractor Glenn Beier.”
The Press Enterprise. “A proposed organization partnering Inland county and city governments with private investors to purchase and resell foreclosed homes has drawn the interest of state housing officials, who were briefed on the plan Monday. The Inland Empire Economic Recovery Corp. still is in development with many questions and no members or budget.”
“Paul Biane, chairman of the San Bernardino County Board of Supervisors, has spearheaded the effort and hosted the meeting. ‘This is an effort at restoring and retaining the value of our local real estate,’ Biane said.”
The LA Daily News. “Despite skyrocketing unemployment rates this year, California will face a potential shortage of college-educated workers over the next two decades, researchers say in a study released today. The high cost of housing is driving job-seekers away from California, causing the gap to widen between educated workers and employers, according to the Public Policy Institute of California.”
“Economist Deborah Reed, author of the PPIC study, looked at recent Census figures and labor statistics to make the study’s conclusions. ‘California has historically imported workers, but what we have seen is that college-educated workers are leaving the state,’ she said.”
“Sunshine and the West Coast lifestyle used to lure more college-educated workers from the Midwest and East Coast. No more, Reed said. California now exports workers. ‘Part of it is high housing costs,’ she said. ‘Even if we had high migration like in the 1980s, we still would not reach the levels we need.’”
The Voice of San Diego. “These days, at a downtown condo project, window-washers come biannually instead of every three months. Painters touch up the halls once a year, half as frequently as they once did. Security guards work fewer hours. Renovation plans for the sparsely furnished lobby are on indefinite hold. Homeowners fund those services and save for future expenses by paying monthly dues. But one of five homeowners at Gaslamp CitySquare, a 200-plus unit project in downtown, is in some stage of delinquency in paying homeowners association dues.”
“The lion’s share of those delinquencies comes from units in foreclosures or short sales…One owner in the building owns six units and recently went into bankruptcy on his business, leaving the dues on his units in limbo.”
“‘The lobby in our building is like a mausoleum — no furniture and no art on the walls,’ said Mark Mills, real estate agent who owns a unit in the building. ‘If you want to meet people there you pretty much have to sit on the floor.’”
“In addition to dragging down values as banks slash prices to unload distressed properties, foreclosures in communities with homeowners associations whack neighbors again, leaving them to make up the difference in monthly dues. Gregg Neuman, homeowners association board president at Gaslamp CitySquare said he’s filing personal judgments against the former homeowners who left the building’s association high and dry when they defaulted on their units. If they buy anything in San Diego County or sell another property, the HOA has a right to be repaid.”
“Such a judgment costs $500 to file, a cost many boards don’t want to undertake, Neuman said. ‘But if a guy owes $5,000 you may as well throw $500 after it,’ he said.”
pending sales down
? do foreclosures and short sales get recorded here ?
they are selling the sht (caution offensive) out of foreclosures here.
http://finance.yahoo.com/news/October-pending-home-sales-rb-13782899.html
‘Hernandez’s parents, immigrants from El Salvador, bought their house for $488,000 in 2005. Although they both had low-paying jobs at a local dry cleaner, they were approved for a loan. And they were able to put $100,000 down, mostly from the proceeds of a small town house they had sold.’
The LA Times can sugar coat this as much as they want, but these people were gambling. What would $100k buy in El Salvador, the Presidency? And they couldn’t have rented for less in 2005?
From the VCS article:
‘Hill knows exactly what his home is valued at now because houses with the same floor plan are being built and sold a few blocks away for $440,000.’
Why don’t we hear about these mean builders undercutting the prior buyers? Because these guys need to make a living, and are selling at what the market dictates. Next year it will be lower still, so this FB is right about one thing:
‘My impression is that those who continue to make payments and are in good standing are the ones who’ll get screwed,’ he said.’
No one should feel sorry for builders going BK when they were charging buyers such an incredible mark up. If you really knew what the house cost to build would you pay an extra $300K ?
Partially, what you say is true.
However, you must remember when the bid wars started, there was a “shortage of land”. The builders started paying quadruple or more for finished lots.
Here in Florida, we saw $10,000 lots go as high as $80,000.
The house on the lot used to cost $80,000.
Still, people got financing to pay higher and higher and higher prices, and Realtors ™ assured us that if we didn’t buy NOW, we’d be “PRICED OUT FOREVER!!” Remember how this played out? I sure do.
The bubble was entirely in the land. The cost of building is somewhat static. These developers paid STUPID prices for land. They’re getting creamed now. The mls is littered with overpriced developed parcels with no buyers. It’s game over. I know a few delusional land sellers, and I’ve casually mentioned that land is soon to be worth what it was in the 90’s, in nominal dollars. I can almost feel their blood pressure.
True but in the pecking order of things I believe the #1 thief’s were in New York second only by the builders….
“….his mother had wanted a fixed rate, but was instead steered toward a negative amortizing loan…..”
Perhaps she was steered toward a negative-am loan, because she didn’t qualify for a fixed rate loan? But she is a “victim”, so she was “steered” to the neg-am.
The plan worked, until it didn’t.
“…….GSfixer went to the Chevy dealer for a new Corvette, but was steered to the Chevy Cobalt instead…..”
Let’s have a “National Victim’s Day”…….aka, the National Pity Party
“….his mother had wanted a fixed rate, but was instead steered toward a negative amortizing loan…..”
Shouldn’t have been a problem. The Hernandez’s could have simply banked the difference between the ARM payment and the fixed rate payment (assuming they could have really afforded the fixed rate payment which they claim but I doubt), using laddered CDs. By now they should have saved at least $100K and at least had their down payment back; they could simply stop paying mortgage now and save like squirrels until the sheriff comes a callin’. At least they’d have some cash in the bank for a new start. But no, they probably blew the money living the American dream that they were not entitled to. i.e. McMansion plus fancy rides (with little shiny spinners in the hubcaps), trips to Disneyland, fancy furniture, parties, dinners out, etc. etc.) And I’ll bet they sent lots of photos back home to their amigos bragging about how rich they were.
HA! HA! It’s tough going from riches to rags. But the Hernandez’ will learn their life lessons - EGO, GLUTTONY and GREED. Better luck in your next reincarnations, Hernandez’. Neil, please pass the popcorn.
Portland Homedebtor Living Below His Means All His 36 Working Years and Smiling From Ear to Ear.
You ever notice how so many of these articles focus on people who are not from America who think they’re living “The American Dream”? I think they might have been misled as to what exactly that dream is all about. Shiny hubcaps it is not.
Oh, I think they know *exactly* what the “American Dream” is: Lie, cheat and steal your way to easy riches. Leverage yourself up to your eyeballs pretending to rich using OPM. When the current asset-bubble-of-the-moment pops, cry “victim” and demand your bailout by the suckers/taxpayers.
The foreigners seem to know us better than we know ourselves.
“‘Hernandez’s parents, immigrants from El Salvador, bought their house for $488,000 in 2005.”
This is in Northeast San Fernando valley/Pacoima. Let me state for the record that Pacoima/Arleta/Sun valley/Sylmar have some of the worst slum areas in LA, as bad as south central. Pacoima is a completely ghettoized slumified rat-zone - i know because i have been thru there a plenty.
No decent home in Pacoima is worth $200,000 tops. They brought that home at height of the bubble insanity when homes in Pacoima and other jewel spots in LA such as Compton and Inglewood were being fraudulently appraised and sold for $500,000 -600,000 and up.
There was a ton of RE fraud in LA’s marginal areas which i have documented back in 2006-2007 on this blog.
Prices in NE SFV have fallen farther than any region in LA and indeed there are tons of foreclosures . Banks might re-negotiate these loans but they cannot alter the basic area, which is a ragged gang- infested crime zone where homes should be priced at no more than $200.000.
BTW one of the reasons La Times is close to insolvency is that they print too many sob stories about the plight of immigrants , and in fact LA times is nothing more than an adjunct news release outlet for mexico and central america.
Amen, brothah!
I consider the L.A. Times to be the English-language version of La Opinión.
‘My impression is that those who continue to make payments and are in good standing are the ones who’ll get screwed,’ he said.”
Truer words have never been spoken. My friend in La Qunita, CA bought his home in 2004 for $535k. He saw it go “up” to $750k in 2006. 6 mos ago the house next door was foreclosed upon. It just sold last week. Although the realwhore refused to tell him what the selling price was, the asking price was $450k. My guess = $400k. Another knife catcher. Expect prices to drop another 50% in the coachella valley. Overbuilt with no jobs.
BTW he asked me in 2006 what to do. I told him to sell and rent the same house for $2500. He didnt do it and now is under water.
If he wants to see what the house sold for, tell him to go to redfin.com.
You can do a zip code search for only sales, going back a couple of years. Zoom in on the map to the relevant street and click on the house in question….no realtor needed…..
Plus we just supposed to forget the fact that the made at least 100K on the sale of a previous home? Argh
‘They bought houses they couldn’t afford. It was just keeping up with the Jones’.
Jonestown 1978: Spiked Kool-Aid
Jonestown 2008: Spiked prices
Yes, but for some of us keeping up with a Jones has saved us a heck of a lot of money!
Thanks Ben
For heavens sake, please stop with the incorrect Jonestown references. It was not Kool-Aid it was Flavor-Aid.
” Following Jones’s lecture a large vat of purple Fla-Vor-Aid, mixed with lethal potassium cyanide as well as a variety of sedatives and tranquilizers including Valium, Penegram, and chloral hydrate was brought out and the people were organized into lines”
http://jonestown.sdsu.edu/AboutJonestown/JonestownReport/Volume6/tapeyohnk.htm
Flava Fla-Vor-Aid?
It was not Kool-Aid it was Flavor-Aid. It may have been something in the Flavor-Aid at Jonestown, but here on the Jones blog, it’s the Kool-Aid that does the FB’s in. Also the economists.
“…California will face a potential shortage of college-educated workers over the next two decades…”
Last week I helped a fella out who was moving to San Diego this very week. He had just left Motorola (MOT is on the rocks) as a project engineer to work for…………………..Sony.
Stand up guy with a great family, but they are far from the only ones. The stories are becoming commonplace.
Gee, i thought everyone wanted to move to California, as it was a mecca of “multiculturalism”. Lots of third worlders coming to live the American dream, bringing their ghetto mentality and gang-bang culture to help provide a taste of other-worldliness to California.
I guess it hasn’t worked out too well, has it?
Now they are organizing Latino gangs to deal with the banks to keep “THEIR” houses,which they haven’t and cannot pay for.
Yea, Arnold, have a little moratorium so they can squat in the house they supposedly “bought”.
Same crap happening here, diogenes, in our own Bay area. Although Good Time Charlie hasn’t quite gotten around to being a Benedict Arnold.
Personally, the biggest change that I have seen (95050-54) in in migration in the last 10 years or so is the diversity of the cultures.. Ukraine, Russia, Poland, etc…Not just middle eastern anymore…
My post of a year ago was met with stony silence when I suggested California be converted to a territory on par with Puerto Rico and run by a military governor. LOL.
Mission accomplished!
I don’t think so.
care to elaborate on MOT?
Aside from this guy, my sister’s husband also works at MOT. From both I’ve been told that the product development wheels are spinning but so far - no traction. The latest moves to pare down their cell phone platforms and go with Android are causing quite a bit of pain. We will see, but it looks like the dismantling will continue and one chose to bail and one has chose to hang on.
At least San Diego is still in California, yes? Ok, ok, its by the border!
Me and my Wife are two more examples. We’re booking flights to Austin in a month. We will visit, and if we like it, we’re moving from the Bay Area to Austin. Reason? Cost of living. Other then that, we make good money, have good jobs, enjoy things here. But the cost of living overrides all of the positive.
Make sure you check the property taxes in TX. They are much higher than in CA. But with no state income tax you have some wiggle room.
The higher property taxes are actually worse than a state income tax. It’s about 3% on the appraised value of your home and increases most years as home values increase.
So my $150k home pays $4500 in propery tax. My girlfriend recently moved from CA, and her state income tax + property tax were lower than our property tax alone, and her condo was purchased at $200k and last valued at $400k.
High property tax functions much like high interest rates –it helps to act like a brake on the purchase price of housing. IMO, it’s the prudent buyer’s friend, not an enemy. If you cannot afford the same property tax as everyone else, then you can always: a) rent, b) buy a smaller house, or c) negotiate better and pay less next time.
By contrast, here in completely UN-affordable CA, we have Prop. 13, which allows thousands of business to virtually dodge paying property tax altogether (subsidized by the working class via payroll and sales taxes), and is constantly used by Realturds as a selling point to encourage buyers to grossly overpay for their McCrapshack.
Pray Texas doesn’t adopt a Prop. 13 style tax-redistribution system.
Make sure to check out the job situation first, JB. I know a person who moved to Texas, but now she can’t find a job. Not like there are a lot of jobs in CA at this moment, but you have one now.
Texas is awful. I did the same thing you are doing and ended up in Santa Fe, NM. Or try San Diego, CA, it is getting cheap.
I moved from CA to Austin a decade ago; after two years I headed back to CA. There’s more to life than a cheap big house.
It’s not for everyone. If you grew up in CA the weather is horrible. The landscape is ugly and boring and the rednecky right-wing mentality of TX can be grating for some. The cultural scene, like many aspects of Texas, is more bragged-about than truly impressive. And it feels like living in an isolated backwater compared to the plugged-in big metro areas of California. It depends on your priorities and tastes.
he better not count on sony…they just announced 10% workforce layoff!
Yet Another Extreme Makeover Home May Face Foreclosure
http://blogs.wsj.com/developments/2008/12/09/yet-another-extreme-makeover-home-may-face-foreclosure/
Why, yes, they did refinance that house.
My kid used to love watching those flipper shows… until we better managed the remote. She was getting idea that buying and selling houses to turn a quick profit was as “easy as making cookies,” as she said. Cookies burn, too, I managed to put in. We eventually switched to “Dirty Jobs,” so she could see the gritty and low-paying jobs that may await people who don’t do well in school. (The old “Flipper” show is not on our overpriced cable lineup.)
The host, Mike, digs clams, makes calf fries, cleans sewers, does hazmat work and generally makes a mess.
For the uninitiated, “Dirty Jobs” is a Discovery program, not one of those HBO peep shows late at night.
Yeah, you know it’s bad when you’re even tired of reading about people that were basically ‘given’ a home and still managed to HELOC it into oblivion.
The line about “their property taxes increase by 50%” really doesn’t wash either. Let’s see? I can’t afford my new property taxes so I should A) Sell the house and move where I ‘can’ afford the taxes and pocket the difference or… B) Do a cash-out re-fi and live as high-on-the-hog for as long as I can and then… declare victim status?
Some folks are just meant to be permanently poor.
To which must be added: Some rich are permanently poor in spirit. Don’t think they are “meant” to be that way, IMHO.
best sly comment I read in awhile
Cheers milkcrate
Cinh
Good for you! I also recommend “How it’s Made.” I’m an old manufacturing guy (remember when we made stuff?) and I’ve even got my wife watching it. It’s industrial dance. Sadly, sometimes when I watch it, I think of all that clever tooling, crated, loaded into containers, and carted off to China and beyond.
Milkcrate,
That is a pretty good show.
“Hernandez’s parents, immigrants from El Salvador, bought their house for $488,000 in 2005. Although they both had low-paying jobs at a local dry cleaner, they were approved for a loan. And they were able to put $100,000 down, mostly from the proceeds of a small town house they had sold.”
1. Legal or illegal?
2. Do they speak and read English?
3. How did they EVER expect to own a half million dollar house (and service the mortgage/taxes/insurance) on two low paying jobs?
4. Oh - they made a small fortune on their townhouse so they thought they could go “Donald Trump” on a half million dollar house.
“Hernandez’s parents, immigrants from El Salvador, bought their house for $488,000 in 2005. Although they both had low-paying jobs at a local dry cleaner, they were approved for a loan. And they were able to put $100,000 down, mostly from the proceeds of a small town house they had sold”‘Hernandez’s parents, immigrants from El Salvador, bought their house for $488,000 in 2005.”
This is in Northeast San Fernando valley/Pacoima. Let me state for the record that Pacoima/Arleta/Sun valley/Sylmar have some of the worst slum areas in LA, as bad as south central. Pacoima is a completely ghettoized slumified rat-zone - i know because i have been thru there a plenty.
No decent home in Pacoima is worth $200,000 tops. They brought that home at height of the bubble insanity when homes in Pacoima and other jewel spots in LA such as Compton and Inglewood were being fraudulently appraised and sold for $500,000 -600,000 and up.
There was a ton of RE fraud in LA’s marginal areas which i have documented back in 2006-2007 on this blog.
Prices in NE SFV have fallen farther than any region in LA and indeed there are tons of foreclosures . Banks might re-negotiate these loans but they cannot alter the basic area, which is a ragged gang- infested crime zone where homes should be priced at no more than $200.000.
BTW one of the reasons La Times in close to insolvency is that they print too many sob stories about the plight of immigrants , and in fact LA times is nothing more than an adjunct news release outlet for mexico and central america.
X this story by the thousands in Cali. The middle class here is getting crushed. As the article indicates many are leaving. Add the destruction of small businesses here and you have a recipe for disaster. The million $$ question is who pays for the $20B+ tax shortfall here? Shrinking middle class and small business thats who. Cali will be in trouble for many yrs.
ADD TEN CENTS A GALLON TO THE LOW GAS PRICES AND ALL IS SOLVED, MOST WON’T EVEN KNOW
X this story by the millions in the US. The middle class here is getting crushed. As the article indicates many are leaving. Add the destruction of small businesses here and you have a recipe for disaster. The million $$ question is who pays for the 10-15 trillion dollar tax shortfall here? Shrinking middle class and small business thats who. The US will be in trouble for many yrs.
This is one of the primary reasons I am happy I rent. Ever since I moved to LA in 1998, I’ve had this feeling that it is on the fast track to third-world-dom. You look at the population, the overbuilding, the aging infrastructure, the bad schools, etc. etc. and it is hard to imagine this place having a decent future.
And to add to your point, I think housing cost is possibly the biggest reason why the middle class is in bad shape. You just can’t pay $25,000 plus for housing on a $75,000 salary; at least if you have a family you can’t.
Bad schools are everywhere. Top 4 states for good schools per USWNR: Mass, Conn, Verm, Calif
$25,000 a year, or just under $2100/month? ‘Scuse me, but good luck finding a traditional FRM on any L.A. house in a neighborhood where you don’t have to dodge bullets *that* cheap. If such a deal existed, buyers would be lined up round the block –even now.
“….the value of their home……”
IMO opinion, there is no “value” in a house, unless owning it costs less than renting, and/or it’s price appreciates more than inflation, or what interest/dividends you could get by investing the same amount of money somewhere else.
Any other sense of “value” is subjective
You mean subjective, and “value investors” would agree with you.
“I’m locked in a battle with the appraiser”
Firstly, the appraiser said it, you heard it, start liking it. That’s final. Secondly, if she’s “trying to get what it’s worth” can we assume it’s likely a short sale anyway?
Allow me to translate…
“locked in battle” = COERCION
You don’t do battle with the appraiser if your a realtor or a loan officer unless you’re trying to twist their arm. It ain’t legal! The only legal thing she can do is order another appraiser and pray she finds one that’s willing to sacrifice his/her license to bend to her will.
ex,
LOL! Thanks for that, ahem “translation”.
Right, if you don’t like what you’re hearing, move on down the line. At this point I wouldn’t know a single appraiser willing to go out on a limb to make some realtwhore’s “deal” work.
“Hill knows exactly what his home is valued at now because houses with the same floor plan are being built and sold a few blocks away for $440,000. ‘We’re way, way upside down,’ he said.”
No he doesn’t! He won’t know ’til he’s lucky enough to find a buyer. And if the builder is building new, identical, houses for $440K, he’ll probably have to start at $400K and work his way down…..
“‘I’m locked in a battle with the appraiser,’ Chobanian said. ‘I have an offer on it. I’m trying to get what it’s worth but the appraiser comes in far lower than we can go. He looks at the foreclosed home down the street and then lowers the value. When the only things for sale out there are foreclosed homes, it really affects Mr. and Mrs. Homeowner.’”
While this logic sounds ridiculous to us, it’s starting to be used by county tax assessors! They’re ignoring foreclosure sales, claiming they’re not “arms length transactions” when valuing property for tax purposes.
With tax receipts plummeting, it won’t be long before we see some really, really ridiculous tax valuations.
Good luck with that approach! Just another attempt to forestall the inevitable.
Is that so bad? I mean, when the govt (stupidly) readjusts the FB’s loans, they will use the appraised *higher* value of the property in their equation.
Meanwhile, when new buyers lowball offers in the area, they will only buy the Foreclosures. Also because they will buy a property at so much less than the *value* (HAHA!), the new homeowner will have an easier time financing.
The reason I’m OK with this is because the flippers are out. Now you have a few prospective landlords, but mostly families looking for homes.
Zillow has similar issues. When a house sells for substantially less than “the comps”, then its sales price is excluded from the Zestimate. However, when a house sells for substantially more than the comps, then, all the sudden, the Zestimate shoots up like a heroine addict out of an AA meeting. Right. Overleveraged infestors are only valid data points when they’re increasing the value of your own assets.
Big V -
I’ve been following my two former residences in Ventura County (So Ca), and using a calendar to record the history. My most current former residence shot up $20,000 in just over 30 days on Zillow’s Zestimate. I say “bull”. So thanks for the one up on what’s going on.
It really affects Ms. Bank Shareholder, and Mr./Ms. Taxpayer too, Ms. Realtor. Sorry about your personal problems… please tell me, why should all of us solve them for you?
What about the days builders said, “take a number, we will call you” and its ok to sleep here over night, you might get a great first chance to buy on of our houses” . O, the good old days of “big profits, fees, Christmass bonus, etc. Don’t forget the bankers, real estate agents also. Unemployment lines are where they are standing now!
“The Hills aren’t alone. In Ventura County, 40 percent of the homes bought in the past five years are worth less than the purchase price, according to Zillow.”
The only difference between worth less and worthless is a small space…think about it.
“Brian Hill jokes about his uncanny timing. He finely calibrated the moment in the spring of 2006 at which he bought his $630,000 home on Thames River Drive at RiverPark in Oxnard. ‘I think the value started dropping right after we put in the down payment,’ Hill said. ‘Right when I signed. Probably right when I removed the pen from the paper it started to tank.’”
or…..no, it was when I had my first coffee this morning…..no, it was at 3am when I got up to take a wiz……yeh….thats it.
“Many of the home equity loans taken out from 2002 to 2006 fueled consumer purchases, he said. ‘You put candy on a plate and people are going to eat it until their belly aches, and I think that’s what happened with some consumers,’ Davis said.”
~~~~~~~~~~~~~~~~~~
The American Consumer was a kid in a candy store, or was it a bull on a China shopping expedition?
“It’s one of the biggest differences with previous downturns in the housing market…Many of the home equity loans taken out from 2002 to 2006 fueled consumer purchases, he said. ‘You put candy on a plate and people are going to eat it until their belly aches, and I think that’s what happened with some consumers.”
Indeed. And when “help for homeowners” gets talked about, as when Brokaw interviewed Obama on Sunday, we never hear about this. We hear about “too much house.” The example given was one person who bought a McMansion, and is in default, being subsidized by someone who bought a smaller house and is paying the bills.
What about the HELOCs? Will the HELOCs be subsidized? And after a taxpayer hit to bring down payments, will the “homeowner” be allowed to HELOC again? What is to stop them? If millions do it, you can’t throw everyone in jail, because if you could millions would be in jail for mortgage fraud — on all sides of the transaction.
The youwalkaway advertisement on this blog appears to teach people how to beat the system by living for “months rent free” in their home (bank’s home, actually) before they. walk. away.
Yeah, I know about revenue streams and operation costs. Enough to know that you don’t usually get something for nothing in the world of commerce.
And maybe people should be taught how to exercise their rights.
But after I clicked on ad it looked like a seminar entitled: “How You Too Can Squat.”
Yuk.
If it’s good enough for Wall Street, it’s good enough for the street you live on.
All the “just walk away” folks are saying is to apply the same cost/benefit analysis that any corporation would do… and pick what’s best for you, just as they would.
Or is “responsibility” only for humans, and not for legal fictions?
Goose, meet Gander…. meet Sauce.
–Shannon
“And after a taxpayer hit to bring down payments, will the “homeowner” be allowed to HELOC again? What is to stop them?”
Rest assured, they will again…eventually. But for now, the HELOC window is closed at the bank, unless you really don’t need the money. So, in the short term, the thing stopping them is a lack of willing lenders.
As someone pointed out in the Bits Bucket, several recipients of a Extreme Makeover home have HELOC’d themselves into foreclosure. People who were “bailed out” with Habitat for Humanity handout homes have sinced HELOC’d their homes (and lost them) ( http://www.msnbc.msn.com/id/15654489/ for example.)
So we can expect bailed out people in general to repeat the borrow-and-become-a-victim cycle.
http://blogs.wsj.com/developments/2008/12/05/could-news-of-lower-rates-ice-home-sales/
News of potential government intervention causes some buyers to hold out for better rates:
{A spokesman for Bank of America says that customers should make decisions based on where mortgage rates currently stand, not on where they might go. “It is as difficult to time rates in the mortgage market as it is to time the stock market. If a borrower determines the current rate makes sense and provides them with an advantage in their situation, that’s a good time to consider taking action,” says Rick Simon, a Bank of America spokesman.}
These morons act like people are trying to “time the market” that’s not it at all. People are trying to time the politicians, that’s way easier.
What about all of millions of dollars of PMI that we’ve been paying over the years? Wasn’t that extra money supposed to protect all of us (mortgagees, lenders, FNMA, …) from defaults? If you can’t pay your mortgage, at least pay the PMI. Did it make any difference at all?
I think those guys went belly up first. Fleckenstein covered it a while back. Those guys were so levereged they could only cover a moderately bad year, not a disaster.
Doug Noland compared it to flood insurance where there had been no flood for 100 years.
There were many ways to avoid PMI (2nd mortgage being most common) and most financial advisors pointed out ways to defeat it (even the supposedly prudent ones), so not that many were paying it.
FitzClarence,
I’ll have to agree, at least in principle. As mentioned they were among the FIRST casualties. ( Some great “last line of defense” huh? )
Anyone recall the specific explanation for their folding under the slightest stress? Not that it matters but you have to imagine it was yet another REIC Cartel member w/ way too much overhead and very little teeth. Great job fellas.
PMI doesn’t protect the borrower, it protects the lender. Even then, the lender is only insured for a fraction of the loan amount. I think most FBs have far exceeded their PMI coverage by now, and AIG had to get a bailout just to cover their part of it.
Well right and of course they didn’t see any need to participate in any way shape or form in Robert Schiller’s CME Housing Futures as that would have been a waste of money, right?
I think Fitz’s point was that for many years many people paid many dollars into PMI and it went through like sh!t through a goose. Where’d it all go?
Goose shit gets washed back into the water when it rains.
Where’d it all go?
Did you see that fancy Learjet just fly by on its way to Aspen?
Sucks to lose sometimes, doesn’t it?
Today they owe more than $500,000. At the same time, the value of their house has plummeted and might now be worth less than $300,000.”
It’s not just ignorant immigrants with these problems. My wife’s best friend is (was) a loan officer and bought a tidy little home in Rancho Cucmaonga for a mere 600k in 2005. I’m thinking about making a low-ball offer on the home right next door to her. Asking price: 365k. Ouch! (I think I’ll wait another year when it’s a nice even 300k).
I can’t believe you didn’t talk her out of it! It’s gonna be hard not to gloat now, yo.
An anyone comment on the SF Bay Area? Seems most stories are out of LA or Sacto.
There’re been plenty of articles posted in the past. The East Bay is tanking. The rich West Bay and South Bay held on longer, like NYC, but are going down now.
BTW, the economic downturn is hitting New York with a vengeance right now. Businesses were having trouble for a while, but they were trying to hang on and keep their people. Now job cuts and closings are coming fast and furious, everywhere.
I expected it to happen after Christmas. They didn’t make it that far.
I live in the Bay Area. This is a pretty good place for ducks. Prices are tanking everywhere now, although some fools are still getting crazy loans and making crazy purchases. I don’t know how they’re doing it, but I don’t see this market holding up.
Dickens Court?
Sometimes the stories write themselves…
“Streets in Stevenson Ranch will be darker and bleaker this Christmas. No Christmas lights are being strung on scores of darkened foreclosed homes that now pepper this affluent community. ‘This is a really terrible situation,’ said Dickens Court resident Jeck Narciso, who nodded to an empty house across the street.”
Bleak House
Published in 20 monthly installments: A foretelling of the future like ‘Titania’
Possibly one of my favorite novels of all time (for sentimental reasons.)
My dad bought it for me on my thirteenth birthday. I think I p*ssed off both parental units by spending the evening reading it in my room rather than paying attention to the food, etc.
LOL
PBS did the Bleak House series, quite entertaining.
Stevenson Ranch (Valencia -Magic Mountain area)is a sea of two story McMansions, just like it’s sister area Wood Ranch in Simi Valley. I’m not so sure its that affluent, its more pseudo affluent like my former hood, Wood Ranch. People were drowning in debt, with the illusion of wealth. Its perfect foreclosure territory.
And if they must die, why don’t they die NOW and decrease the surplus population?
“It could be 10 years before the home’s value rises to the original purchase price, but no one’s offering a bailout, a lower interest rate or reduction in principal, Hill said. ‘My impression is that those who continue to make payments and are in good standing are the ones who’ll get screwed,’ he said.”
he is right and should walk, but to play the victim when we all know 90% of these buyers losing houses wanted to make a 200k killing in 2 years or borrowed heavily from the home ATM and spent “their home”. I really hate the my home mentality, when it is really the banks home. I would never feel like it is my home until i payed it off of payed cash!
foreclosures will skyrocket in 2009 as buyers can’t get loans, too many homes on the market, and owners have 1 year to bail or the tax loss will count as income to them. watch them flee so they won’t have to pay uncle. watch for ads to promote walking to avoind the tax liability! the next year will be interesting
“You ever notice how so many of these articles focus on people who are not from America who think they’re living “The American Dream”? I think they might have been misled as to what exactly that dream is all about. Shiny hubcaps it is not.”
“X this story by the thousands in Cali. The middle class here is getting crushed. As the article indicates many are leaving. Add the destruction of small businesses here and you have a recipe for disaster. The million $$ question is who pays for the $20B+ tax shortfall here? Shrinking middle class and small business thats who. Cali will be in trouble for many yrs.”
One thing it is, the American state of California is a great place to go to have an anchor baby. When the baby is due, just show up in the Emergency Room of any hospital . Refuse to speak English. Demand the best of medical care. Just say you have no money or insurance. Demand cash back for your trouble when you leave. Demand free child care, food, and housing. Demand all the privileges Boxer, Pelosi, Waters and others have created for their dear undocumented guests. Then find a lawyer and sue the hospital because they didn’t have enough interpreters to speak your lingo 24 x 7 and it hurt you and your baby. Never work, never pay taxes. Allege discrimination at every opportunity. Someday sign some papers, move into a house, and don’t pay the mortgage. Then get ACORN to organize a protest for you, the victim.
Now THAT’s the American dream.
And they wonder why people are leaving California.
Actually, I like California and don’t mind seeing it become a little less crowded. If you don’t like living somewhere that has a mix of nationalities then perhaps you should hie your crabby old ass back to Iowa where you came from.
Ca use to be a great mix of nationalities. We all learned from each other. Now it’s flooded with illegals. Americans of Hispanic decent, don’t much appreciate the illegals either. My friends from So America turned U S citizens,aren’t happy about the freeloaders either.
I think you did not read the comment about the people moving out of CA correctly. More highly educated and skilled workers are moving out of CA. The population is still growing.
If more educated and more highly skilled are moving out, guess what portion of the population is growing?
That is not a healthy picture.
Eggman, if you’d like to Clownifornia a “little less crowded”, then you may want to pay some attention to the sky-high numbers of illegals flooding in, not to mention their sky-high birth rates once they arrive here.
Hint: CA’s population growth is *not* due to American immigrants from other states.
Yes, these Latinos are taking over the world!
take your xenophobia elsewhere, please!
Cinch
Yes, anyone anywhere who objects to the wholesale looting of the public treasury to benefit illegals (or more accurately, to benefit large businesses that strategically exploit cheap, non-union illegal labor) is a racist/xenophobe. Quod erat demonstrandum, END OF STORY racists!!!
When the baby is due, just show up in the Emergency Room of any hospital. Refuse to speak English. Demand blahblahblah…
Do you actually have any familiarity with hospital ERs in California? Or are you, as I suspect, just parroting some rubbish from a drug addict with a radio show?
Do *you* have any familiarity with hospital ERs in California? What cobaltblue described is (sadly) pretty close to reality in much of L.A. County.
Careful…
Your shirt is showing… it’s lookin’ kinda brown.
–Shannon
cobaltblue,
Thank you for the “truthiness”. Check out Cali’s EBT (electronic benefits transation) website. Free $ directly deposited to your bank acct w/ ATM access, Citibank general retail debit card… (stuff I had no idea about) H*ll, I wish I was an illegal.
As a small business owner in Ca, I’m jealous. We pay $838/mo for two adults for Kaiser. Ca is toast!
Thanks for being an intelligent angry taxpayer, like me, who has had it up to…
That is cheaper than New Jersey was a few years ago.
Obvious rational choices are being ignored in favor of grand plans. Some state government could simply negotiate a bulk rate with their existing insurer. If they want to do business with the state government, they take all residents who pay the same rate as the state government.
Or, more draconian, force insurers to take all comers at the same rate, whether you are IBM or Joe’s deli (mmmm, roast beef sandwiches).
LongIslandLost
Is NJ’s cost of living as high as NY’s?