A Growing Black Cloud Sitting Behind The Mountain
The LA Daily News reports from California. “Desperate homeowners in the northeast San Fernando Valley got a potential reprieve on foreclosures Wednesday when the Los Angeles City Council unanimously approved a $1 million program it hopes will lead banks to lower mortgages to current market values. But the measure is not legally binding on lending institutions, and some homeowners in Pacoima acknowledged that it hinges on lenders who they said have been reluctant to help them out so far.’
“‘The bank hasn’t wanted to reduce the loan principal, which would make our mortgage affordable and sustainable, and our only hope is that this might now make (bank officials) change their minds,’ said Jose Hernandez, whose mother, Rosa, faces foreclosure on the $488,000 home she bought in Arleta five years ago.”
“Hernandez was approved for a $388,000 loan on her Arleta home when she likely should not have qualified, according to her son. ‘My mom was told she qualified even though she only made $10 an hour,’ said Jose Hernandez.”
“Hernandez said his mother’s original monthly mortgage payment was $2,100 which later increased to $2,300 a month before jumping to $4,000 in December, by which time she was retired and could no longer make the monthly payments. Jose Hernandez said that he, his sister and father - who have a combined monthly income of $6,000 - have tried to refinance the loan themselves under their names but have been unsuccessful. ‘We’re willing to negotiate taking over the loan,’ said Hernandez. ‘But the bank won’t budge.’”
The Press Democrat. “A spring surge in Sonoma County home sales picked up strength in April, as sellers in financial distress and banks unloaded houses at low prices. The median sales price fell to $315,000 — nearly 28 percent below a year ago. Prices are hovering near an eight-year low, meaning the housing downturn has wiped away much of the gains from the boom that pushed the median to a record $619,000 in 2005.”
“But looming large is another glut of properties expected to hit the market this summer and later this year. A temporary freeze on foreclosures by the federal government was lifted earlier this year, and a state law requiring lenders to wait 30 days before filing a default notice also slowed the process. ‘More foreclosures are coming down the pike. It’s like a growing black cloud sitting behind the mountain,’ said CJ Holmes, a real estate broker in Santa Rosa.”
“Already, lenders have seized 2,970 homes in Sonoma County during the 12-month period through March, more than double from a year ago, First American CoreLogic reported. A rising tide of foreclosed homes could wash over buyers if their numbers don’t grow to match the busiest years of the last home sales boom, Holmes said. ‘If we have this much inventory and we’re not even keeping up with our peak year — even though prices are so much lower — it indicates we don’t have enough buyers,’ she said.”
“Banks can take several months to review such short sales and may not agree to the price. Buyers may become frustrated or find a better deal and back out of the sale. ‘So no matter what we sell, we’re still getting a bunch of new listings,’ Holmes said.”
The Contra Costa Times. “More than 342,000 households received at least one foreclosure-related notice in April, RealtyTrac Inc. said. That means one in every 374 U.S. housing units received a foreclosure filing last month, the highest monthly rate since the firm began its report in January 2005. April was the second straight month with more than 300,000 households receiving a foreclosure filing, as the number of borrowers with mortgage troubles failed to abate.”
“Foreclosures also rose in the Bay Area. In Alameda County, 3,119 households received at least one foreclosure-related notice in April, up 72 percent from a year ago while in Contra Costa County 3,356 households received a notice, or a 30 percent increase. In San Mateo County, 824 households received a notice, or 42 percent higher. Some 1,874 households received a notice in Solano County, or a 33 percent increase.”
The Mercury News. “South Bay foreclosures surged anew in April after banks ended a moratorium on kicking late-paying mortgage holders out of their homes. There were 294 foreclosures in Santa Clara County last month, up 19 percent from March, according to a report Tuesday by ForeclosureRadar. That spike followed a 41 percent decline in foreclosures from February to March. The peak month for foreclosures in the county was August 2008, when 853 borrowers lost their homes.”
“Sean O’Toole, founder of ForeclosureRadar, said the recent increase is due to lenders ending moratoriums on home repossessions they put in place while awaiting announcement of the Obama administration’s foreclosure-prevention programs. O’Toole and others said it’s hard to say whether the newest decline in defaults means the worst of the foreclosure crisis has passed.”
“‘The numbers are so wild right now, we just can’t predict the future, even a month from now,’ said Dustin Hobbs, a spokesman for the California Mortgage Bankers Association.”
The Press Enterprise. “A near record number of homes entered the first stage of the foreclosure process last month in Riverside and San Bernardino counties after mortgage industry foreclosure moratoriums were lifted. Notices of default, the first step in the foreclosure process, were issued for 6,019 homes in Riverside County last month. That was fewer than the 6,642 record in March but more than the 4,706 default notices recorded in April, 2008. San Bernardino County recorded 4,661 notices of default last month, down from 5,336 a month earlier but sharply up from 3,759 a year earlier. Meanwhile real estate agents complain about a shortage of foreclosed houses for sale because banks have stopped taking over homes and seem to be slow putting the ones they have on the market.”
“New federally sponsored programs for refinancing and modifying troubled mortgages and the lending industry’s redoubled efforts to stave off foreclosures will be undermined by job losses, predicted Chapman University economist Esmael Adibi. ‘The weakening economy trumps all the goodwill coming form the banking system and the Obama Administration,’ Adibi said.”
“Pete Nyiri, owner of Corona-based Top Producers Realty, a high-volume broker of bank-owned Inland houses, said late last week he started getting more repossessed houses to sell. He said lenders and loan servicers ‘are telling us it is going to be back to where it was as far as numbers are concerned.’”
“Christopher Thornberg, an economist with Beacon Economics in Los Angeles, said the slowdown in foreclosures while mortgage delinquencies increased ‘was a mirage. It wasn’t real. At some point you have to foreclose.’”
“Martina Aloi, 62, said she and her 87-year-old husband submitted offers on four houses before they were able to buy their first house for $165,000 in San Jacinto. ‘I was very, very surprised. I didn’t think it was going to be as competitive as it was with prices coming down and the economy,’ Aloi said.”
The Sacramento Bee. “Surprisingly strong demand for a $10,000 state tax credit to help Californians buy new never-occupied homes prompted legislation Wednesday to triple the amount of funds for the buyer credit to $300 million. The state’s home building industry is sponsoring the legislation.”
“Assemblywoman Anna Caballero, D-Salinas and the bill’s co-author, Assemblyman Jose Solorio, D-Santa Ana… and builders cited those revenue impacts – and a larger benefit to a tottering state economy – in countering questions about providing more tax breaks while the state budget is in shambles. The group cited the same benefits when asked about complaints by some who rent and own existing homes about having to subsidize new-home buyers. Caballero said it’s also vital to build out stalled newer neighborhoods.”
“‘It’s a time of crisis, a time when we’re struggling with trying to figure out how to keep home prices stable,’ said Caballero. ‘They have a vested interest in seeing that their home values don’t decline and the market stabilizes.’”
The Desert Sun. “‘The more we can get people back to work, the sooner the state budget will recover,’ said Assemblywoman Anna Caballero, D-Montebello, said., noting that every home that’s built generates more than $300,000 in economic activity.”
“According to the Construction Industry Research Board, 3,317 permits were pulled through California during March, up 39 percent from February. Construction of the new homes dropped from 208,000 housing starts in 2005 to about 66,000 in 2008, representing a 68 percent decrease. At a time when unemployment is at a staggering 11.2 percent, Solorio said this legislation holds potential to get construction workers back into the home-building business.”
“‘For every new home we build, we create three new, direct jobs,’ he said.”
“California Building Industry Association chairman Horace Hogan, also president of Brehm Communities in San Diego, said the state credit has done more than get prospective buyers off the fence. ‘This has had the effect of allowing us to start construction,’ he said, of the company that builds on average 118 houses a year. ‘We started construction on another 23 houses in the last month and a half because of rates and stabilization of prices. We’re hiring people again. I think it’s absolutely critical that we fund this at least to get through this sunset date next year.’”
“Layne Marceau, president of Shea Homes in Northern California, said the cancellation rates on sales have fallen to 13 percent. That’s far from the 50 percent averages some builders had been seeing months ago. ‘I had not started a home since December 2008,’ he said. ‘This week, we’re starting over 60 homes.’”
The Ventura County Star. “When taken together with the federal tax credit for first-time homebuyers, low interest rates and low housing prices, the state tax credit is part of the mix that makes it beneficial to buy a home now, said Mark Schniepp, executive director of the California Economic Forecast. But he doesn’t see it as a big stimulus to the housing sector, stating it would have a bigger effect if extended to existing homes.”
“‘Once they get the existing home market going, it would automatically get the new home market going,’ he said. To do otherwise — to bypass stimulating existing home sales — goes against the grain of how the housing cycle works, he said.”
“Schniepp challenges the argument that new home sales create more bang for the buck economically, since buyers of existing homes spend on renovations, new furniture, appliances and other things. ‘It’s short-sighted to limit it to the new home market,’ he said.”
The Burbank Leader. “Home sales are beginning to put the laws of supply and demand at odds with the economic slide, possibly bringing a rebound in prices, Realtors and experts say. The inventory of homes for sale in Burbank and Glendale is growing lean, and competition for the shrinking listings is starting to get fierce, Realtors say.”
“The development should lead to a rebound in prices for some homes, although it is uncertain whether the full market has begun to turn around, said Robert Bridges, associate professor of real estate finance at USC’s Marshall School of Business.”
“‘All of these things are kind of conspiring to create what at some point is going to be a bottom in the market, and that might well be upon us,’ said Bridges, who added that renewed consumer confidence was a major driver behind the competitive home market.”
“Markets are most tight with moderate- to low-priced homes, or about $500,000, with some agents luring multiple shoppers with artificially low postings and forcing bidding wars that can drive up totals by tens of thousands of dollars, Realtors said. The good deals are not disappearing, said Kendyl Young, an independent Realtor who markets homes in Glendale, but with competition on the rise, some buyers might be forced to battle for their purchases.”
“The price for one recent Glendale sale jumped from $299,000 to $480,000 during a bidding war, she said. ‘I believe that some of these agents are being very intentional they are setting the listing price low so that the buyers are encouraged to think about whether the property is truly worth it to them,’ she said.”
“Whether that same interest will continue as the recession plays out, however, is unsure, she said.”
“The market for more expensive homes is not nearly as tight, as banks have adopted more stringent qualifications for home buyers, and sellers have opted to hold their properties instead of selling during the recession, said Keith Sorem, a Realtor for Keller Williams Real Estate Services. ‘The only people who are selling their homes right now are people that have to,’ Sorem said.”
The Voice of San Diego. “In recent months, some regular old houses in the county’s third-largest city have been attracting more attention than the cinematic landmark. In some parts of Oceanside, bidding wars are erupting over foreclosures and short sales. Many are listed at prices about 50 percent lower than what they went for at the market’s peak three years ago.”
“There are still some houses that languish on the market, usually higher-priced coastal homes with sellers who refuse to compete with distressed sales. A luxury condo project may go to auction in the next two months. But in swaths of the city, watchers of Oceanside real estate have begun to tentatively utter the word ‘bottom.’ The city can be held as an example of how a market might start to stabilize once the price becomes right, said broker Jim Klinge, who has listed several foreclosures in Oceanside.”
“‘Half-off is the equation,’ Klinge said. ‘If you’re half-off in Oceanside, you’ve got a lot of buyers.’”
“‘I don’t know if I could say ’stability,’ but what we are seeing in Oceanside is that things that are in good condition, really well-priced, are getting multiple offers on the first day,’ said Deborah Danko with Willis Allen’s Fallbrook office. ‘It’s been a while since we’ve been writing offers on the hood of our car.’”
“The word on the street is ‘bottom?’ — uttered with some uncertainty — for the neighborhoods that have been thrashed by foreclosures, especially in northeast Oceanside. ‘How long it’ll take to come out, nobody knows,’ Danko said. ‘And it’s not to say that there’s not going to be a bank-owned on somebody’s street that is ridiculously low-priced. But it’s a good sign.’”
‘Assemblywoman Anna Caballero said…every home that’s built generates more than $300,000 in economic activity.’
‘Solorio said this legislation holds potential to get construction workers back into the home-building business. ‘For every new home we build, we create three new, direct jobs,’ he said’
Wow, it’s kinda hard to believe they are trotting out this dead horse, but whatever.
‘A temporary freeze on foreclosures by the federal government was lifted earlier this year, and a state law requiring lenders to wait 30 days before filing a default notice also slowed the process…(Klinge) said the homebuyers who want to live in the houses are being outbid by investors who can pay hefty down payments and who seek turn a profit by renting the houses out. ‘That frustration is impacting the buyers and the agents — the buyers just want to get something and the agents want to get paid,’ he said. ‘The buyers are willing to pay over list price just to get it over with.’
Everybody seems to know there are a bunch more foreclosures coming, and throw in the moratoriums, government incentives, etc, and it looks to me like we could see yet another round of FBs.
Have you ever seen somebody get whacked hard in the surf? Sometimes they are so distracted by what just happened, that they forget there is usually another wave right behind that one, and boom.
“(Klinge) said the homebuyers who want to live in the houses are being outbid by investors who can pay hefty down payments and who seek turn a profit by renting the houses out.”
Are homes penciling out as rentals now? Maybe so — I am pretty sure the one we live in would pencil out at what we are currently paying in rent. I will have to put pencil to paper to figure out how much of a rent reduction we should request this fall.
If rents could cover the total out-flow, I think the problem would be solved. And I read about bulk buyers getting a price that may work out that way. But if these guys are running a negative cash-flow, they are speculating, and we know what road that leads to.
But it is interesting to read about writing offers on the hoods of cars, and UHS ’sparking’ bidding wars. It feels sort of like 2005.
It also feels sort of like the late 1970s, when worries that the Fed was going to create inflation by hook or by crook drove speculators into gold and real estate as hedges.
Nah, there are very few “new” speculators. They are the same old idiots pooling money. The new speculators are trying to buy up entire securities and break them back up into individual mortgages. California definitely has another major leg down, too many speculators.
Keep in mind, big down payments being wiped out — is DEFLATIONARY.
I for one am glad there are so many specuvestors willing to throw away their money on helping Mr Market find his way down to the bottom. The more specuvestors buy foreclosures at lower prices that still don’t pencil out as rentals, the larger the base of comps off which to calculate how fast prices are dropping towards the basement.
Suzanne, I researched this!
I can’t agree fast enough. At least the ’same’ specuvestors that aren’t currently under investigation or doing hard time. If you look at the whole “Marriage of a young Real Estate Speculator” thing, they became progessively more jaded.
Oh things started out innocently enough but just like “gateway drugs” most of these @$$clowns didn’t start out w/ equity stripping, straw buyers and fraudulent appraisals/loans etc.
And I’ll jump in to agree with PB.
“I for one am glad there are so many specuvestors willing to throw away their money on helping Mr Market find his way down to the bottom.”
‘It’s been a while since we’ve been writing offers on the hood of our car.’”
McScrooge Duck: “listen junior, when you done inking your commission, I’ll need you to polish that chrome $ hood ornament for me.”
Martina Aloi, 62, said she and her 87-year-old husband submitted offers on four houses before they were able to buy their first house for $165,000 in San Jacinto. ‘I was very, very surprised. I didn’t think it was going to be as competitive as it was with prices coming down and the economy,’ Aloi said
If they didn’t pay cash, I think his life insurance payments might be more than the house payments…just a thought.
SanJacinto for 165K?! Gimme a break.. have you ever been to San Jacinto in July, August or Sept.? That ain’t liv’in!
Now now, let’s not underestimate the car hood. I wrote a 10 percent down payment check on a car hood in front of the first home I bought, mebbe 25 years ago. Estate auction sale in Lexington, Ky.
Yup, I was happening then. Inspection? What inspection. I had not noticed that the BR did not have a door on it. Lived there a long time with, er, a U-Haul blanket hanging from nails outside the indoor commode.
Those were the days. They continue.
(Some of the elder statesmen/women might do the math, cuz I really laugh when some of y’all break out with the “grasshopper” takes.)
Not so green any more. Or at least wise enough to know what I don’t. I think. Or…
I digress.
Slim checking in from Tucson. Permit me to add my $.02 worth to Ben’s comment about rent covering the total outflow on a property.
As y’all have been reading, I’ve been having the water line to my house replaced. (The new line’s working quite well, I’m happy to report.)
In my previous accounts of this project, I noted that my line traverses two other properties before it reaches the Arizona Slim Ranch. The other two properties are rentals owned by those investor-types. You know, the ones that we have such a good time thrashing on the HBB.
Well, one of the infestors was not to happy to get the following bit of news from my plumbers: Your water line is broken. And it’s broken to the point that your tenant’s water meter is spinning ’round and ’round.
My plumbers removed the broken pipe, then grafted a PVC section onto the tenant’s line. They didn’t charge the infestor, who’s in California.
Long story short: The infestor spent a few days hemming and hawing over the decision to replace the whole water line. Now, if you’re familiar with galvanized pipe, when it gets old, it springs leaks. And sometimes it just explodes. I’ve seen this happen, and the resulting flood isn’t pretty. Talk about an outflow.
A couple of days ago, the infestor gave the green light to the plumbers, and they started work on the water line replacement yesterday. Now, you may be wondering what the moral of this story is, and it’s coming up in the next verse.
The fee for replacing the water line, combined with the property tax and insurance, will probably kayo this infestor’s profit margin for this year.
Backgrounder: The house was purchased in an all-cash deal back in ‘06. I suspect that somewhere in California, a house was HELOC-ed for the cash. The infestor tried to flip the house in ‘07, which was the year that he graduated from the University of Arizona. Alas, the young lad was unsuccessful. His failed flip has been a rental since September ‘07
Before it’s over with, there will be about a million and a half different ways to get absolutely HAMMERED financially by owning real estate. The ways are only limited by the trials life deals you, and the imagination of the scammers.
67% or thereabouts of housholds “own” their house. Which means that two thirds of the population is financially hosed for the next 10 years.
And us renters have front row seats for watching the whole mess unfold.
Would it have been possible for all three of you to team up to do the work? I would think you all could have gotten a break on the price if done all at once rather than as it was.
Slim, I love it that your infestor-neighbor graduated from UofA the same year he started getting his Real Education (the year when he found he couldn’t Flip That House). The recent water-line snafu is his latest course in self-improvement.
Some homes are penciling out as rentals here in Sacramento, but the margins are slim and values will still decline, after which time I’m guessing many investors will walk.
Oh fer’ cryin’ out loud, can we be honest here? The money’s in the MEW Yo! ( Any fool knows dat’ )
Yeah, these guys are lining up throwing darts and using the shotgun method to buy properties and the only reason I can think of is they’re anticipating it’s going to be “The Raping of MEW Part II”.
Who in their right mind wants to be a LL?
Any fool looking to be a landlord right now might as well go play soccer in the freeway. As long as rents are falling, and a tsunami of unseen inventory sits on the horizon, it is impossible to know where your rental will be cashwise at anytime in the future. Garbage In. Garbage out.
That said I am landlord. (why do I feel like I should be introducing myself with an AA greeting?). I bought my homes in the early 90’s. I paid cash. Never took a penny out of them. They were bought for the rent they threw off, every month. If the city told me my house was worth less, or more, BFD.
I have been fortunate that I have had tenants that took good care of my rentals. But they also knew that they were getting a great deal and I was not looking to get rich off of their backs.
So I guess I am not in my right mind but it has worked out for me.
I couldn’t agree more, Patient. It seems to me that the only way you could make a lot of money as a landlord is to be rich in the first place and buy a lot of property when prices are low. Owning two or three rental houses would be a pain. And it will be a lot of years before prices creep up again. A fool’s game . . .
My former landlady owned four rental houses and a duplex. (I was the front tenant in the duplex. She lived directly behind me.)
From her perspective, property management was indeed a pain. Hearing about it made me decide never to pursue it as a career or a sideline.
I was lucky, according to the prop mgr I found through the yellow pages. 1- she and I became friends. I came to respect her opinion and advice. 2- when the tenants left, I was dismayed at the leftover at my house, but she told me I was lucky as LLs are concerned.
Wish I had followed her additional advice. I would now be an owner/part owner at least of several storage facilities. Raking in the dough since 95. more or less!
OK everyone, let’s do some SoCal real estate investing. We are gonna have to put down a big down-payment because the house won’t rent for our total monthly payment otherwise. Here are are some assumptions:
Home price = $500,000
Down-payment = $250,000
Annual property tax = 1.25%
Annual insurance = $500
Annual maintenance = $600
Let’s see how much money we can make under this scenario:
Monthly rent = $2,000
Monthly PITI (+ maintenance) = $1,955
Annual rent increases = 3.0%
Annual appreciation = 3.0%
OK, now I sell in 5 years and pay a 6% sales commission and pay off the loan balance.
Internal rate of return = 5.7%
Jeez, that was a lot of work for only a 5.7% return on my $250,000. At 5.0% annual appreciation and 5.0% annual rent increases I can get a 9.6% IRR. If I can somehow rent it for $2,500 per month to start and get my 5.0% increases on appreciation and annual rents I can make 12.0% on my money. Again, a lot of work and I’m not getting rich doing it.
****************
But look what happens under this scenario:
Monthly rent = $2,000
Monthly PITI (+ maintenance) = $1,955
Annual rent increases = 0.0%
Annual appreciation = 0.0%
Internal rate of return = negative 0.6%
Boy I’d better have some price appreciation and be able to raise the rents or I am in big trouble. Maybe this real estate investing is hard after all.
very good analysis as far as it goes, but in reality you’ll have substantially higher expenses. Factor in vacancy and rent loss (not every tenant pays regularly), management if you get tired of doing it yourself, reserves for replacements (roofs, flooring, furnaces, etc do wear out over time), etc. etc. etc.
I love that line of thinking, PB — if you are a tenant whose landlord is actually making money, then seek a rent reduction to make sure they don’t! …thereby fully acting out the slogan on the HBB tee-shirt, “I caused the housing bubble to burst.” (Had a good time wearing mine tonight.)
Yes, there’s going to be a lot of pressure on rents in the next year. There’s also going to be substitution competition from the next rung up.
Right now what’s selling is the low end. Mostly purchased on subprime loans, the buyers don’t typically have a lot of resources to fall back on once prices stopped going up. The next rung up is Alt-A; they have a bit more in savings and don’t have to throw in the towel right away if they get into trouble. Right now the sales in that segment have stopped, the classic sign that prices are preparing to drop.
In 2010 I think Alt-A will capitulate, and those who still have resources and are buying at the low end will think “hey, for a little more I can get a much nicer place.” The low end will have to compete with that via lower prices.
I think the low end right now is “rational, but not cheap”. You can make a case for it penciling if you’re a sharp buyer.
“‘Assemblywoman Anna Caballero said…every home that’s built generates more than $300,000 in economic activity.’”
Sounds like the path to prosperity is to build an endless number of homes, eh? The old Keynesian claptrap…
Yes, how hilarious. PB did convince me the other night that there are already 19 million vacant homes in the United States (though that counts vacation homes and many other houses that are probably NOT part of the “shadow inventory”). In any case we have plenty more houses than we need.
Yeah, because what Salinas needs is more homes built and added to inventory. The place is rife with foreclosures, and prices are down 60% YoY. That’s a sure sign more resources need to be poured into real estate.
Sigh.
I got whacked hard by the surf a few miles north of Cape Hatteras, NC.
The time: mid-August 1969. Hurricane Camille was still offshore in the Gulf, but it was already having an effect on mainland weather. Those Outer Banks waves were already nasty.
“Assemblywoman Anna Caballero said…every home that’s built generates more than $300,000 in economic activity.”
A California gang-banger with a sucking chest wound also generates about $300,000 in economic activity.
MGIC pursues approval to write new business
By Paul Gores of the Journal Sentinel
MGIC Investment Corp. is hoping to win regulatory approval for a plan that would allow it write new business though a subsidiary while the parent company deals with delinquencies and losses from the ongoing housing slump, the firm’s chairman said Thursday.
The Milwaukee-based mortgage insurer, which has suffered a series of quarterly losses as housing prices have declined and the economy has sputtered, also continues to seek an infusion of capital from U.S. Treasury, Curt S. Culver, chairman and chief executive, told shareholders at the company’s annual meeting in Milwaukee.
“Our company and our industry are really at Ground Zero relative to the problems that have been and now continue to shape our economy,” Culver said
At the meeting, Culver outlined a proposal now before insurance regulators in which the company would create a subsidiary for writing new mortgage coverage. MGIC’s ability to write new mortgage insurance could be in jeopardy from regulators if the downturn drags on and the company’s risk-to-capital ratio weakens.
The company believes it has enough excess funds from sources internally, such as its investment portfolio and incoming premiums, to shift some to capitalize the subsidiary, which then would start with a clean risk-to-capital slate for writing new insurance.
Asked after the meeting whether that plan was the best hope for the company, Culver said, “I think it’s the one that makes the most sense.”
“The problem with the Treasury approach is we don’t know if that might become available, and at what cost,” Culver said. “I do think we’ve made a great case in Washington relative to the importance of our industry to lowering the costs of home ownership.”
MGIC had a loss of $518.9 million last year after posting a loss of almost $1.7 billion in 2007.
What Does This Company Do?
With more than $228 billion of insured loans, MGIC Investment is the largest U.S. mortgage insurer. MGIC’s client base includes more than 13,900 master policyholders, and the firm insures almost 1.5 million mortgages. MGIC’s mortgage insurance protects lenders against higher default rates on homes purchased with less than a 20% down payment. MGIC owns 24% of Sherman Financial, an investor in delinquent credit card debt.
http://tinyurl.com/ovdszu
“Desperate homeowners in the northeast San Fernando Valley got a potential reprieve on foreclosures Wednesday when the Los Angeles City Council unanimously approved a $1 million program it hopes will lead banks to lower mortgages to current market values. But the measure is not legally binding on lending institutions, and some homeowners in Pacoima acknowledged that it hinges on lenders who they said have been reluctant to help them out so far.’
I fail to see the public purpose here to justify allocating LA City monies. But regardless, how many otherwise-wealthy but underwater LA homeowners could be helped with a $1 million program? Maybe 10?
I fail to see the public purpose here to justify allocating LA City monies. But regardless, how many otherwise-wealthy but underwater LA homeowners could be helped with a $1 million program? Maybe 10?
I’d say one friend of the mayor at current LA prices.
Got Popcorn?
Neil
The million bucks is probably salaries. Hire the mayor’s cousin who is a psychiatric social worker. (OK, I made that up.) Hire a councilman’s sister-in-law who is an aromatherapist. And so forth. Thus put together a team whose Job is to sweet-talk the banks. No effect on house prices, of course.
“In recent months, some regular old houses in the county’s third-largest city have been attracting more attention than the cinematic landmark. In some parts of Oceanside, bidding wars are erupting over foreclosures and short sales. Many are listed at prices about 50 percent lower than what they went for at the market’s peak three years ago.”
How to ignite a bidding war: List a home below what flippers believe to be current market value and let them have at it…
Nitpick,
If a seller wants to be the one to get out in a down market, all they have to do is price the home below that day’s market value and they will attract multiple bidders. I watched this happen in the 1990’s LA downturn.
I see nothing wrong with this. Its natural market economics. Its also part of the knife catching process.
For every property that is offered at an attractive price, three (or more) sit and a half dozen ‘homeowners’ sit on the sidelines crying as their equity evaporates.
But hey, California is taking steps to *increase* home construction. My… that *must* be a good thing (creating more inventory). Bwaaa haaa ha!
Got Popcorn?
Neil
“I see nothing wrong with this.”
I don’t either. I was making a positive statement, not a normative one.
yep, that is true….sold my place in northern Calif. in spring 2007, “discounted” it 10K thanks to what I learned here (the pop was imminent) and had it sold in a week….a coworker was greedy. priced his place too high, 2 years later is still trying to unload it for 200K less
Wife and I have sold two homes over the course of our married life, both within one week, by pricing at just below what our UHS suggested was the current market value.
“‘For every new home we build, we create three new, direct jobs,’ he said.”
You also either add one new home to the inventory pyre of vacant, unsold new homes, or displace the potential sale of an unsold existing home.
“‘For every new home we build, we create three new, direct jobs,’ he said.”
“You also either add one new home to the inventory pyre of vacant, unsold new homes, or displace the potential sale of an unsold existing home.”
Just wait till the UAW and the US government start buiding cars based on this kind of economic reasoning. Oh wait, never mind, I think I just exposed the plan.
Isabel
YEP, Supply and demand people, it’s really not that complicated.
“…we create three new, direct jobs”
None of which can purchase the homes built to create the jobs.
so well said
“Markets are most tight with moderate- to low-priced homes, or about $500,000, with some agents luring multiple shoppers with artificially low postings and forcing bidding wars that can drive up totals by tens of thousands of dollars, Realtors said.”
The notion that $500,000 is a low price is pretty funny!
And these UHS are clueless about the relationship between list price and bidding wars. If a home is listed for sale at a price of $1 (outside of Detroit), I can assure you there will be a bidding war, and the home will sell for tens of thousands of dollars above $1. But that does not mean the price was driven up above market value; rather the low listing price tests what the market will bear.
The notion that $500,000 is a low price is pretty funny!
$500,000 is low for a decent-sized house in any decent area in SoCal that isn’t out in the hinterlands. Unless you want to go for a 800-1,000 square foot SFR….you can maybe get one for $400,000 or a little less.
Welcome to California……..
More like “Welcome to the Hotel California.” (I’m told that the Eagles’ song was actually about a mental hospital.)
Spot on JohnF,
In my Socal neighborhood they are still flipping houses. $390K for 686 sqft. Flippers paid $273K in Dec. 2008. Nice payday. Bank had foreclosed on $387K and held it for a year.
http://www.zillow.com/homedetails/2718-Hornblend-St-San-Diego-CA-92109/16924474_zpid/
John F:
How long have you lived in CA? Cause I’ve lived here for a few years and I can tell you that $500,000 is NOT low for a house in CA. It may be low for a house in bubble-era CA, but the bubble era is quickly speeding past us.
Does everyone in CA make 200K a year? If not, how on earth can 500K be considered “low”?
500 is low in many areas of the desert.
Just drove by a house $2,695, 000k in between commercial medical facilities and right off of a main main busy street.
The Deepwell area where I almost bought in 97, the homes are in high 6s to low 9s. I almost bought at $225-140k.
Such is my past luck.
The Deepwell area where I almost bought in 97, the homes are in high 6s to low 9s. I almost bought at $225-140k.
I suspect you will see these houses revisiting the $140-220k range. The bubble is nowhere near deflated, and every reflation scheme the federal and state government throws up (foreclosure “moratoriums”, DAP first-time buyer incentive programs, HOPE Now, etc.) merely serves to delay the inevitable day of reckoning a bit longer.
We still have the next hump of the Alt-A/prime jumbo reset/recast tsunami coming from 2010-13. Relax, rent responsibly and enjoy the show.
I’ve lived in SoCal since 1981….
John,
Glad you are so knowledgeable about California home prices. Has anyone mentioned to you that the current median SFR sale price in SoCal is $250,000? It has been there all year. I got this information right off DataQuick’s web site:
“The median price paid for a Southland home was $250,000 last month, the same as in January and February. That was down 35.1 percent from $385,000 for March a year ago. The median peaked at $505,000 in mid 2007.”
“Glad you are so knowledgeable about California home prices. Has anyone mentioned to you that the current median SFR sale price in SoCal is $250,000? It has been there all year. I got this information right off DataQuick’s web site:”
Not to speak for John…..but he said it is cheap for a **decent**house. Median does not equal decent. Detroit’s median is probably $100K. Do you want to live in “median” Detroit? Which means that it will take at least double the median to get something livable. Same goes for Los Angeles. You need double the median, at a minimum, to live in a nice area.
There are whole swaths of SoCal that I wouldn’t want to live in under any circumstances.
Any area where you wouldn’t have you car broken into regularly or feel comfortable sending your kids to the the public schools is going to cost well above the median.
YEP. I tell people that they can ALWAYS sell if the price is right. The thinking that I hear again and again is “We’ll just wait for the market to get better THEN we’ll sell.” As if we’re going back to bubble prices ANYTIME soon. Yes, I suspect that in a year or two the market will improve, prices will hit something like bottom etc. But bubble prices are NOT comming back. I believe that you’ll get a better price today than next year or the year after.
“According to the Construction Industry Research Board, 3,317 permits were pulled through California during March, up 39 percent from February. Construction of the new homes dropped from 208,000 housing starts in 2005 to about 66,000 in 2008, representing a 68 percent decrease. At a time when unemployment is at a staggering 11.2 percent…
…sigh. Every time I think I can safely call a bottom on ’stoopidness’, something like this comes out and dashes my hopes. What is wrong with these people? It’s like a brain illness! A Stoopid Flu!
And speaking of illness, I’ve been a puling sicky for a few days. I didn’t get the Stoopid Flu, though. (I’m just as stoopid as I was before I became sickly, is how I know.) It was a different kind. Maybe I had swine flu. Yes, really!!
But, back to the subject, it takes a very special kind of stoopid to cause builders to pull 3,317 new freakin’ permits when the freakin’ state is going bankrupt. That’s beyond the realm of medical attention, orange juice, and a few days of bed-rest and incessant whining.
That’s like, a terminal condition.
I feel almost all the way better today, and now my only regret is that I didn’t make it into the Olympia Master Builders office so I could breathe germs on everyone and slobber on the doorknobs and stuff. Maybe I still could—how long will I be contagious?
Now I must go catch up on all the posts I missed. Did you guys do something fun? You had a big party, huh! Without me! Meanies!
*sobs weakly *
My daughter’s friend had the swine. I was hoping to get it and get the damn thing over with. I bet I get the damn thing when it makes another go round in the fall, phooey.
I bet I get the damn thing when it makes another go round in the fall, phooey.
Oh, yeah, like the ‘Captain Trips’* version various sources are predicting?
When you do, let’s you and me have a Pouty-Armageddon-Party!
*That’s from ‘The Stand’, by Stephen King. I was going to read it again recently, or else The Book of Revelations because either one is nice and doomey but instead I didn’t. Instead, I learned that there is a simply amazing amount of utterly worthless crap that can appear on the teevee during the daytime! Who knew?
Except for the Spanish language channel, of course. That there channel provides some quality and educational entertainment…
*laughs until head a’splodes *
I got the swine flu vaccine in 1976. Apparently it won’t protect me now. But I’ll be damned if I’m getting another flu shot ever again.
But I’ll be damned if I’m getting another flu shot ever again.
Well, they often don’t even work, is one thing. Flu shots, I mean. It’s only ever been a best guess about future potent germiness, as I understand?
And I’m willing to be educated about this, if I don’t understand right.
Anyone know about flu vaccines?
Look, like when you get a tetanus shot you KNOW you won’t get tetanus later, when you fall out of a tree onto an old wooden pallet jammed full of rusty staples that was piled up under that very tree waiting to be burned in a bonfire later, for instance. It’s a real shot in the arm. It’s comforting. Because it’s real. It will make the bad thing not happen. That’s the beauty of a vaccine! I don’t even scream when I get one of those vaccines.
Whereas I know many people who go leave work and get flu shots all obediently and then get sick as dogs a very short while later, * with what certainly looks and sounds like flu. Right?
It’s almost like getting a flu shot is a magic gesture. Maybe it works, maybe it doesn’t?
*But in any case I’m going to be more sympathetic towards those people from now on. Before this I thought they were just lying for attention. Now I see they might have been feeling sick for real.
Ben, I TRUST that you were able to catch Olygal and that you sprayed her down good with lots of Lysol, before, she managed crawl in from under the HBB’s bolted door !?!
I would never breathe germs onto a pal, Mr. Man! Only onto those who totally deserved the germiness, numbered from off my list of enemies.
Anyway, I’m hardly ever sick, so when I AM sick and can’t move around much I’m the most irritating and annoying person on the entire freakin’ planet, all whiny and maudlin and grouchy and full of stupid philosphical insights…just like some of you are allllll the time!
Hahahaahah!
*laughs loudly *
Look, right now I’m just feeling quite grateful I didn’t feel chipper enough to reach the keyboard, because then you would all know exactly what I mean.
Anyway, moving on: one thing that today cheers me upwards like a helium balloon is that this selling season here in Thurston has so far been a total bust! I heard that raw land prices hereabouts are falling like a granite counter-top hurled off a McShack rooftop! Huh huh huh?
I barely heard this, so now I must go find some real numbers to complete my joy. That’ll fix me up, you bet.
all whiny and maudlin and grouchy and full of stupid philosphical insights…just like some of you are allllll the time! .
Oh, now, come on. I didn’t mean it. All HBBers are super.
Yeah …right Bug-girl, you’re just afraid of getting hit with some more Lysol.
Yeah …right Bug-girl, you’re just afraid of getting hit with some more Lysol.
This could be bit of a segue, but I have to ask you: do you ever watch the Spanish language channel, mikey? Because that channel is totally awesome! Why didn’t someone tell me?
All the wasted years…
There’s this one story, where Marisa is being brutalized by her evil lover, who is also secretly her long-lost twin clone brother who was abducted by goat-herders! (That’s what I gathered, anyway. I admit I haven’t spoken Spanish for a while, so I’m a bit rusty. But anyway, it hardly matters, because there’s lots of shouting and slamming doors and threats, and that is good enough for me: a cloned brother here, and cloned brother there—whatever.)
Also the Spanish-news channel is more exciting than the White-people news channel. Everyone has bigger hair and more dynamic camera-eye contact, for one thing.
I’m totally done with regular teevee, I’ve decided.
No, no..Soy americano y hablo poco espanol
In 1977, I was in Spain for a summer study abroad program. That was the year after Franco died, and, oh was Spain throwing off the shackles.
The national TV had the most, uh, provocative camera work I’ve ever seen. As in, if a woman was on TV, the cameraman would pan her up and down. Repeatedly. Ever seen *that* happen on PBS?
Then there was the afternoon when I was on the bus and a young man commanded his girlfriend to come hither.
He used a word to refer to her that would get his face slapped in this country. (It was the Spanish equivalent of an American word that rhymes with “hunt.”)
Girlfriend heeded boyfriend’s command. Without complaint. But I remember the rest of the bus ride being pretty quiet.
I’m sick too, Olygal. Symptoms first appeared late Monday/all day Tuesday. Tuesday I spent three hours taking notes in a Senate Finance Committee roundatable discussion, and I definitely coughed a few times. Is that what you mean about breathing on the right sort of people?
I speak just enough Spanish to get:
1. Get thrown off the bus in Spain.
2.To be thrown under the bus in El Salvador.
3. To be stabbed repeatedly by the bus driver in Mexico.
Is that what you mean about breathing on the right sort of people?
Oh, heckfire, yes! My heart beats fast with joy just thinking of it!
I only hope you spared the innocent staffers. Some of them might not deserve your germ-warfare coughs. How about you store your precious cache of germs up for the deserving and then go make an appointment! And then cough in your hand right before you greet them!
Hahahaah!
PS. I’m sorry you’ve got sicky symtoms.
Later this week when you’re home on sick-leave, you can go ahead and log on and be all grouchy and maudlin and display all your philosophical thoughts and I will personally listen to you without even laughing or criticizing once.
Yes, that’s right!
I speak just enough Spanish to get:
1. Get thrown off the bus in Spain.
2.To be thrown under the bus in El Salvador.
3. To be stabbed repeatedly by the bus driver in Mexico.
Wow! Did this all happen in just one day!? Tell us the story, my good fellow! Quick!
I’ll go get my blankey and a cup of broth.
Girlfriend heeded boyfriend’s command. Without complaint. But I remember the rest of the bus ride being pretty quiet.
Ahh?
Hey….wait just a minute, here…
Is this the same bus-ride in Spain that Mikey got thrown off of?! Boy, wouldn’t THAT be a startling and fabulous example of ’synchronicity’!
It wouldn’t surprise me at all, actually. Ben’s Blog is totally Jungian. the ‘Collective Unconscious’, all of that mysterious stuff.
I’ve already noticed it. Even more so lately. It used to creep me out a bit, but now I just wake up in the morning knowing that I’m going to learn the answer to something I didn’t even know I wanted to know the answer to, already, before I even eat my scrambled eggs and drink coffee.
Can’t…I’m busy watching my old homeboy in the ‘Hunt for Red October”. I’m practicing my Scottish rrolling R’s. It’s a Celtic pagan guy thing.
Snuggle with Stanley the bear until I get home little sickie girl .
V…we only tease her because she enjoys the fun and allows it.
Olygal may well be one of the overall smartest people on this blog. I would never dare to underestimate her merely because she’s mischievious and has a weird sense of humor. I sense that she has one hell of a creative, technical and analyical mind to boot. This is one woman that is far from “Stoopid”.
Snuggle with Stanley the bear until I get home little sickie girl .
‘Buh- hubba- bup-hubba- pubba-blubba…’ :
That’s exactly the precise sound I’m making this very minute, just because you said that.
It’s totally pathetic. Man, I’m glad no one can hear me.
You know what, I DO want my bear! So there! I want my ugly tatty Panda-bear my Aunt Ivy made for me when I was five! I left it at my mom’s house this last Christmas, yet again, like I have every Christmas, because I picked it up and said robustly ‘I’m a big girl! I don’t need a bizarre looking home-made Panda-bear! Not me!’
Then I tucked him into his afghan again and now he’s getting all dusty…
Here, I’m gonna call my mom up and tell her to go hold up the phone to Panda-bear’s ears. Then he can hear me good when I fuss like this…
‘Buh- hubba- bup-hubba- pubba-blubba…’
Now wondering if there is any way I can retract a previous comment?
Now wondering if there is any way I can retract a previous comment?
The one you said I was fat in?
Hahahaha!
Oly, I never really said you were fat. IMHO, a base weight of 155 lbs for an healthy, active and well endowed outdoor PNWwoman with an extra large fluffy noggin who welds a chainsaw and throws lots of rocks is just fine.
However, your height of 4′ 7, on tippy-toes , MUST be factored into the Mayo Clinic BMI calculator for an accurate equation and any final judgement.
so when I AM sick and can’t move around much I’m the most irritating and annoying person on the entire freakin’ planet, all whiny and maudlin and grouchy and full of stupid philosphical insights
Worse than guys when they get sick?
Wow.
Keep getting better Oly.
Oly:
Why don’t you go just write “UR Stoopid” in some of the newly poured concrete? Sign it “Oly”, then take a pic and send it to Ben.
That’s a good idea. You have good ideas, I’ve noticed.
….if only there WAS some ‘newly poured concrete’! But there isn’t any to be had nowadays, hereabouts!
BWAHAHAHAHAAHA!
*cackles loudly *
Man. That does my heart good!
Not out here in the desert right now. There are tons and tons of houses for sale. New, used, custom, low end…..
“‘More foreclosures are coming down the pike. It’s like a growing black cloud sitting behind the mountain,’ said CJ Holmes, a real estate broker in Santa Rosa.”
“Already, lenders have seized 2,970 homes in Sonoma County during the 12-month period through March, more than double from a year ago, First American CoreLogic reported. A rising tide of foreclosed homes could wash over buyers if their numbers don’t grow to match the busiest years of the last home sales boom, Holmes said. ‘If we have this much inventory and we’re not even keeping up with our peak year — even though prices are so much lower — it indicates we don’t have enough buyers,’ she said.”
Do all the flippers and specuvestors grabbing foreclosure homes apprehend this growing black cloud?
Do all the flippers and specuvestors grabbing foreclosure homes apprehend this growing black cloud?
Not yet.
The Joshua Tree cometh.
Got Popcorn?
Neil
And the Iceman won’t be there to cool the heat.
ha ha ha ha
If I had a reason to go back to Sonoma County, I’d snap up our old house in a second. Comps are now about $10k less than the profit we made on the sale in 2005.
With all these incentives, aren’t we stealing future demand?
Get everyone who can buy to buy now. When the Option Arms reset along with the Alt-As, will there be anyone left to buy?
At what point do the incentives stop?
Think I’ll wait until the gov’t or banks start a program to give away homes.
Yeah, a free home - I deserve it.
“When taken together with the federal tax credit for first-time homebuyers, low interest rates and low housing prices, the state tax credit is part of the mix that makes it beneficial to buy a home now, said Mark Schniepp, executive director of the California Economic Forecast.”
I’m sure there are more of his species yet to crawl out from under a rock. Yep, let’s line up another round of idiots to buy so that they might just have enough money to service their monthly debt.
I know of at least three friends right now who are underwater on their mortgage and are turning their home into rentals for less than the monthly mortgage payment. Two just bought a house together because it was too good to pass up. All had equity ($100K+ down) and didn’t want to lose it so believing the RE cheerleaders plan to hold on until prices go back up. There go the IRA’s to make up the short fall and when the dusk clears equity and IRA monies will be shift into someone else’s hands
“Yep, let’s line up another round of idiots to buy so that they might just have enough money to service their monthly debt.”
Perhaps his perspective would make more sense if you thought of them as sources of more state tax revenue.
Right, especially as they go to pay the early withdrawl penalties against their now evaporated IRA’s?
“The numbers are so wild right now, we just can’t predict the future, not even a month from now” said Dustin Hobbs a spokesman for the California Mortgage Banker’s Association”
WhoTF gives a rat’s dyin’ azz over what some loan peddler thinks about foreclosurez!?!
Maybe you could just go into your recordz and look at all the loanz you boyz extended to people that made $10 an hour for $388,000 homez?
Looks like we have another poster child for the bubble. And this is what we’re bailing out?
This one can’t actually compete with that $15K/yr strawberry picker a couple of years ago with the $700K house.
Maybe you could just go into your recordz and look at all the loanz you boyz extended to people that made $10 an hour for $388,000 homez?
Even better… just go into the records and foreclose on the defaulted mortgages! 1/8+ of my coworkers have a sibling who has been in default > 3 months. This is starting to snowball as people realize their best upside is to live rent free for X months. The current record, among siblings of coworkers, is 20 months mortgage and tax free (Riverside, CA).
No coworker has admitted doing this (as far as I know). I only count siblings as ‘friend of a friend’ starts going too far out there.
This hasn’t really started.
Got Popcorn?
Neil
“This hasn’t really started.” Neil, sometimes you exaggerate. Just a tiny little bit.
‘WhoTF gives a rat’s dyin’ azz over what some loan peddler thinks about foreclosurez!’
Well, I’ll tell you what I think is significant about this statement. Default rates are sort of like actuary numbers for life insurance, etc. Back in the day, I would pore over communications from Fitch and Moodys, etc, and post about this stuff often. Now, all those historically tiny rates of default have been blown out of the water, and we’ve got CMBA crazy talk to the media. Can’t even predict a month out? Oh, dear.
“Can’t even predict a month out? Oh, dear.”
That, IMO, is an unintended but natural consequence of myriad ad hoc interventions and market manipulations in play.
“historically tiny rates of default”
That kind of was my point. Back before this started unraveling faster than a re-treaded tire the CBMA ( along w/ Data Quick ) were screaming at the top of their lungs that “default rates were only ’slightly’ higher than historic norms!”
I may be reading too much into it but I sensed there was also a bit of “There’s some crazzzzy cheap prices out there folks! Don’t want to miss out cashin’ in on those great deals do ya’?” ( Or did I read that all wrong? )
Those defaults are spreading and covering California maps like a shower-drain fungus on meth.
AND we’re having blow-out specials on meth AND homez!
Agent’s MLS note on this discount property: Mind the dog at rear of the Modesto property. Aggressive. Also, occupant is exercising a right to possession so must be afforded all professional courtesy. Manufacturing operation included, permits unknown.
Knock knock.
“Wuh?”
“We are here to show the home, please. We called?”
“Take yoself and yo’ briefcase and yo’ sprayed hair there off my stoop, lady. Brutus? Brutus? Where is that dog? Waitaminit. That a cellphone?”
Hurried steps.
Hey DinOR…Glad you are sounding more spunky this week, compared to last, when your posts seemed to reflect a funk… and not the musical kind. Or maybe I misconstrued, entirely likely.
milkcrate,
Oh no, it was a definite funk. And I suppose like most, it’s not that I’m “feeling oh so much better” ( I just don’t give rip any more! )
What Neil describes above ( 20 months w/o making a ’single’ payment ) can’t help but be depressing. And when you ’see’ the state of affairs these homes and communities are left in, you wonder if it hasn’t been longer?
The same sheeple mentality that the banksters exploited to the max could come back to haunt them big time. Just as the idea that “there is safety in numbers” might have led the sheeple to go along with those to the left and right of them, and to “tap” their supposed home equity to the limit, so the same idea might lead them to go along with those in the flock who are just blowing off the mortgage payment. I think we are quickly approaching the tipping point where hard-pressed FBs look at the numbers defaulting around them and think, “Hey, everybody can’t be wrong.” I also think that TBTB are seriously worried about the consequences that will follow once this idea really takes hold. The system, in so many ways, simply lacks the capacity to deal with the numbers of defaults coming down the road.
Just thought of another comparison/analogy: The 55 mph speed limit. I mean, “there’s safety in numbers,” so if everybody on the road is doing 70 mph, then the state trooper can’t stop them all, can he? And if everybody defaults– or enough hard-pressed FBs default– then what are the mortgagees going to do? Foreclose on all of them? I doubt it, and so do all those FBs now considering putting their mortgage payments toward one last, monumental summer fling.
Yes, you are basically repeating what I said to one of my clients a couple of years ago. She said, “You own all the houses and lots in this [mobile-home] park.” I said, “First of all, I only have notes on about 5% of the lots in this park. Second of all, what the H would I do if you all got together and stopped paying?”
(So why don’t they do that. Beats my a$$. They have too much “equity,” or so they think.)
“Hernandez was approved for a $388,000 loan on her Arleta home when she likely should not have qualified, according to her son. ‘My mom was told she qualified even though she only made $10 an hour,’ said Jose Hernandez.”
“Hernandez said his mother’s original monthly mortgage payment was $2,100 which later increased to $2,300 a month before jumping to $4,000 in December, by which time she was retired and could no longer make the monthly payments.”
OK, I’m not an econ major or anything, but ummm…SHE NEVER COULD AFFORD THE MONTHLY PAYMENTS.
$10/hr. X 160 hrs./mo. = $1600 per month income before taxes. Her original monthly mortgage payment was $2100 per month. Whiskey Tango Foxtrot?!?
Sweet little baby Jesus.
2nd disconect:
by which time she was retired and could no longer make the monthly payments.”
Retired off a $10/hr job? I don’t think so… I’m thinking either a layoff or she decided to enjoy
mortgagerent free cable TV viewing for a year or two.Got Popcorn?
Neil
The whole story stinks and none of it makes sense. The house is $488,000. She has a $388,000 mortgage. She made $10.00 an hour and put $100,000 down? Also what’s missing whether or not she TOLD the bank she made $10.00 an hour. The house is in her name, what about her husband, her son, her daughter?
Loada BS.
3rd ( or was it the 4th? ) disconnect was the family trying…to…get… the mortgage changed over to ‘another’ party..?
Uh… who’s living w/ whom and who’s on 1st here? Sounded to me like it was some kind of “Community Mortgage Plan” where whoever was the most able is supposed to make the payments? When it’s uh… convenient?
Besides, their names don’t have to be on the mortgage in order for them to pay the mortgage. They only way they can afford is to all move in. Maybe they will.
Maybe they already did a long time ago.
“Hernandez was approved for a $388,000 loan on her Arleta home when she likely should not have qualified, according to her son. ‘My mom was told she qualified even though she only made $10 an hour,’ said Jose Hernandez.”
“Hernandez said his mother’s original monthly mortgage payment was $2,100 which later increased to $2,300 a month before jumping to $4,000 in December, by which time she was retired and could no longer make the monthly payments.”
No she shouldn’t have qualified Hernandez, but your mom doesn’t have to be a genius to understand that her mortgage was greater than even her gross pay.
The Sacramento Bee. “Surprisingly strong demand for a $10,000 state tax credit to help Californians buy new never-occupied homes prompted legislation Wednesday to triple the amount of funds for the buyer credit to $300 million. The state’s home building industry is sponsoring the legislation.”
Ah, to live in California where you can help people buy houses with your money.
Swoon.
I’ll bet somebody a plate of Splenda-enhanced chocolate-chip cookies that the association not only “sponsored” the legislation, but that its general counsel, or his/her designe, wrote it, word for word.
It is a frequent and appalling occurrence with industry-related “legislation,” not limited to Mexifornia.
30,000 new homes a-hoy!
“‘It’s a time of crisis, a time when we’re struggling with trying to figure out how to keep home prices stable,’ said Caballero. ‘They have a vested interest in seeing that their home values don’t decline and the market stabilizes.’”
I D I O T
Of course anybody who want to BUY a house has a vested interest in seeing prices fall as much as possible first.
City Council unanimously approved a $1 million program it hopes will lead banks to lower mortgages to current market values.
A whole $1 million? What is that - two houses in the LA area?
“‘The bank hasn’t wanted to reduce the loan principal, which would make our mortgage affordable and sustainable, and our only hope is that this might now make (bank officials) change their minds,’ said Jose Hernandez, whose mother, Rosa,
Yeah - I HATE it when people want to be paid back what they lent you.
Holmes said. ‘If we have this much inventory and we’re not even keeping up with our peak year — even though prices are so much lower — it indicates we don’t have enough buyers,’ she said.”
Never mind that prices might still be too high.
It also indicates that the buyers Don’t. Have. the. Money.
You know, cash.
Also on the subject of cash, the state’s budget woes have hit school children in another way. Used to be you could write a check for an elementary schooler to take a bus field trip to Monterrey Bay or Sacramento. New rule at Clovis Unified School District: cash only. A gentle inquiry with a desk secretary alerts me that they have been getting too many bounced checks from parents.
The checks for Brittany and Julio to take a bus to the coast aren’t any good? That is a barometer reading that the household wealth is evaporating. This is a school district that hasn’t rejected a bond issue in five years, I believe the only such one in the state, so the parents often open their wallets for libraries, expansions and the like. Now they are having a hard time covering bus fare.
Oh. The warning that kids used to get to bring their lunch accounts current? No three-day stays are given any more. No cash in your account and you get the stale-cheese and expired-milk lunch option automatically. Or go try to mooch food from your buddies.
Your momma so poor she defaulted on your school lunch.
Your momma so sorry she got liens against them deviled eggs. And that juice box, she got it with TERMS!
LOL
LMAO
You owe me a new monitor
Interesting tidbit on bounced checks.
MEW libraries?
I know far too many laid off school teachers in Los Angeles county already… Most have a job until summer break, then…
Got Popcorn?
Neil
Isn’t this a sad state of affairs? The only thing a school kid should need for a damn field trip is a f@cking signed permission slip.
Have fun kids!
(not)
“Hernandez said his mother’s original monthly mortgage payment was $2,100 which later increased to $2,300 a month before jumping to $4,000 in December, by which time she was retired and could no longer make the monthly payments.
1)Get $400k mortgage on $60k/yr net salary
2)Retire in five years
3)???
4)Profit!
I’m reminded of the old cartoon where the scientist is looking at a blackboard filled with a complicated equation that ends “Then, a miracle occurs.”
“‘For every new home we build, we create three new, direct jobs,’ he said.”
Am I missing something here, or is this statement a load of hogwash?
You might create a few months of temporary employment for a small construction crew, but no new net jobs are created unless you keep building houses on and on and on forever.
And overbuilding has not turned out to be a good thing for employment or or much else in the economy.
The number of unneeded homes is probably in the millions just in this country alone. From that you get lots of job creation, including but not limited to: repo men, bankruptcy attorneys, divorce attorneys, moving companies, repair men, judges and prison guards.
This country’s still got manufacturing. We make PAIN.
The most recent figure from the U.S. Census Bureau is actually 19.1 million vacant homes…
You did persuade me of this, but it does include mostly houses that are not for sale now, and probably a lot of them are not just waiting to be for sale. I’m thinking of the “vacation rentals” I live in for much of the year. They are vacant some of the time, and their owners use them once in a while. Whatever…I agree there is some 8-figure number of unused houses out there.
“Hernandez, for instance, was approved for a $388,000 loan on her Arleta home when she likely should not have qualified, according to her son.”
If she never should have qualified for the loan, then she is living in a house she never should have been able to buy, right?
So what’s the big deal if she loses a house she had no business living in to begin with?
She got to live beyond her means for the last five years at well below the true cost of ownership (as did many others), while the rest of us either bought homes we could afford or rented instead.
She had a nice ride while it lasted, but now it’s time to move.
“She got to live beyond her means for the last five years at well below the true cost of ownership (as did many others), while the rest of us either bought homes we could afford or rented instead.”
In addition to bankrupting millions of FB’s, the bubble also masked the reality of lower or flat incomes for most households, rising health care costs, rising education costs, etc….the squeeze isn’t so obvious when you’re able to HELOC your way to a certain “lifestyle.”
“Surprisingly strong demand for a $10,000 state tax credit to help Californians buy new never-occupied homes prompted legislation Wednesday to triple the amount of funds for the buyer credit to $300 million.”
And the brilliant minds who run this wonder ful state of ours wonder why they are operating so far into the red. Do they honestly think that giving money to someone who can not otherwise afford a house is somehow a good idea?
Won’t that somebody who buys a house likely have to pay more than $10,000 a year in property taxes?
In the last thread, I talked about how Bush/Paulson forced banks to accept TARP money, banks that didn’t want or need the money, and how this was an unconstitutional taking because it effectively nationalized those banks.
I quoted this story, which showed up on Denninger’s Market Ticker. It talked about how Obama has done everything he could to cover up this scandal.
Nobody seems to care, except to point fingers at whether it was Bush or Obama, as though their man is less worse at destroying our liberty than the other.
I suppose this is why the United States is becoming a tyrannical crony state.
Had the government pulled this crap in earlier years, there would have been an uproar. This is much worse than Watergate but nobody cares. Paulson walks away with his $800 million, Bush goes back to Texas to give $150,000 speeches to oil companies, and Obama carries on with his lies about transparency and abrogating contract law in favor of unions.
Yep!
“It talked about how Obama has done everything he could to cover up this scandal.”
There is lots of stuff to cover up in the wake of W’s term in office. I am envisioning Obama as a guy in a parade whose job was to trail behind the elephant that W rode and clean up whatever came out the back end…
That doesn’t exonerate him from not throwing down his broom and scoop and yelling from a bullhorn “STOP PARADING ELEPHANTS THROUGH YOUR TOWN IF YOU DON’T WANT SH*T IN YOUR STREETS!”
Ron Paul might have done that. Obama is not doing it. McCain certainly wouldn’t have.
In fact, Obama’s solution to elephant poop in the street is to hire two more elephants to push a giant broom in front of them to clean up that first elephant’s poop.
Then he’ll hire four more elephants to push giant brooms to fix up those second two elephant’s messes.
+1
Possible move to San Diego on the horizion, maybe July.
Have to check rentals now in the Rancho Penasquitos area or poway?
You might try driving around in areas that appeal to you. I see lots of “For Rent / For Lease” signs out front of single family homes these days… (We are in RB — High Country West)
http://finance.yahoo.com/news/Insurers-get-preliminary-OK-apf-15253572.html?sec=topStories&pos=main&asset=&ccode=
We have to bail out the life insurance companies. Otherwise they may not be able to payout when people start committing suicide.*
(*After more than two years of owning the policy of course.)
quiz
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