When It’s Time To Walk, It’s Time
KGO-TV reports from California. “We continue to feel the effects of the mortgage meltdown; Fannie Mae, the government backed home loan lender, Monday asked for another $8.5 billion dollars to cover its losses. And the mortgage crisis is shaping the California Senate race. Republicans say the two mortgage giants drove the country into financial crisis. Democrats say it was Wall Street’s fault. Monday morning, Sen. Barbara Boxer, D-Calif., pointed to the headlines of the financial collapse and told reporters it was the excesses of Wall Street. ‘We know this all started because of what happened on Wall Street; it’s clear, you can just track it, the whole entire thing,’ she said.”
“‘”It was entirely due to government distortions of the marketplace, specifically Fannie Mae and Freddie Mac,’ GOP Senate candidate Chuck DeVore said. ‘The failure was when Congress told Fannie Mae and Freddie Mac, and I remember this statement from Barney Frank, ‘Roll the dice,’ GOP Senate candidate Tom Campbell said. ‘We had 20 plus regulatory agencies that were not doing their job and, as I mentioned, Fannie and Freddie were a huge part of this problem,’ GOP Senate candidate Carly Fiorina said.”
“In the Senate Monday, Republicans pushed for an amendment to sever the government’s backing of Fannie and Freddie. But the Democratic chair of the banking committee warns if it were to cut the government backing to Fannie and Freddie credit would dry up and housing prices would plummet. ‘You can say a lot of things, but if you don’t have stability in the housing market this recovery will not occur,’ Sen. Chris Dodd, D-Conn., said.”
The Ventura County Star. “A report by the Brookings Institution asserts wage inequality in Ventura County is the fifth-highest among the nation’s 100 largest metropolitan areas. The gap between high and low reflects a county work force that includes about 15,000 to 25,000 low-income farm workers depending on the time of the year, said Bill Watkins, director of an economic research center at California Lutheran University in Thousand Oaks.”
“If farmworkers are one face of the Census preview, Elizabeth Hartung is another. She’s a sociology professor who moved from Fresno County to Camarillo five years ago. She and her husband bought a house for twice what it would have cost in the Central Valley. The housing crash has flipped them. ‘I am, like so many other people, an upside-down homeowner,’ she said.”
From KGET. “It could take 30 years to get housing prices back to where they were in 2006 in Bakersfield. Real estate experts say the local housing market is in an ‘epic hangover,’ and that is forcing some homeowners out of state. ‘I’ve been doing it for 48 years, and I’ve never seen a market such as this,’ appraiser Gary Crabtree explained. ‘And in my career, I’ve been through four recessions.’”
“Bob Beadling bought his Bakersfield home ten years ago, and is moving to Idaho because he feels the California market is too volatile. Beadling remodeled his home before putting it on the market, but he still says he will lose about $160,000. ‘Economically, there is such failure,’ Beadling said. ‘And there’s no control over it, and there’s no control over anything. Basically you can’t afford to retire here. If you want to stay here the rest of your life and work until you’re 90 years old, you can do that.’”
“Donna Moe is helping friends who bought a home at the height of the market. Moe says her friends are taking the loss and moving to Texas where they see a lot more potential in the housing market. ‘They paid over $750,000. It’s listed now for $515,000,’ Moe said. ‘(They bought) about three years ago right before things tipped.’”
“However, a lot of Bakersfield residents who are upside on their homes don’t have that option.”
“Crabtree says there are indications a second wave of foreclosures are on the way, and although housing prices are up 20% from last year at this time, he says there is a reputable study that predicts it will take much longer to see median housing prices around $300,000 again. ‘They estimate that it’s going to take unit 2039 for the Bakersfield market or Central Valley market to reach its peak of 2006 of $300,000,’ Crabtree said.”
The Bakersfield Californian. “The median home price for existing homes in the Bakersfield area rose 21 percent over last April to $138,665 according to the Preliminary Crabtree Report by Gary Crabtree of Affiliated Appraisers. But the possibility of a long-dreaded second wave of foreclosures cast a shadow over the good news. ‘There now are preliminary indications that a second wave of foreclosures are on the way,’ Crabtree said.”
From CNN Money. “Despite the housing bust and high foreclosure rates, in some areas real estate agents are complaining that they don’t have enough homes to sell. In California, almost all cities have a short supply of single-family homes. That’s especially true in the lower-priced categories, according to Leslie Appleton-Young, chief economist for the California Association of Realtors.’
“Ordinarily, rising prices are an indication of shrinking inventory. But these are far from ordinary times. Never have there been so many properties that could be for sale — but aren’t. This so-called ’shadow inventory’ comes from two main sources: properties lenders have not yet repossessed or have not yet put back on the market; and homeowners who want to sell but who have refrained because of low prices.”
“Lenders are also holding back on foreclosing at all, either because they’re having trouble handling the volume of repossessions or because they want to sell off some of the inventory they already have. ‘Notices of default are filed, but they’re not taking the properties back,’ said Appleton-Young.”
The Voice of San Diego. “At a time when normal real estate deals are muddled with extra negotiations and delays, there’s something striking about the unadorned procedure underway every day at the courthouse steps in downtown San Diego, El Cajon and Oceanside. Sometimes homeowners show up that day to present valid bankruptcy papers, a last-minute trump card to save a home from auction. Otherwise, the bidders at the steps don’t know the faces behind the address. The address could be home to victims or loafers, those with lost jobs and hospital bills or those simply giving up on the mortgage payments.”
“They range from a lot in Rancho Santa Fe for more than $1 million to a spot near Chollas Creek for $85,000. Also up for bid: homes in Santee, Ramona, El Cajon, Oceanside, Escondido, Chula Vista and several neighborhoods of San Diego. These daily trustee’s sales are the official format for disposing of foreclosed homes. Notices of these auctions have been flooding the county’s mailboxes increasingly in recent years, with more than 2,400 sent out in March, according to ForeclosureRadar. In the vast majority of cases, no one bids.”
“Home prices are rising in the county, especially in some lower-priced pockets like Lemon Grove or parts of Chula Vista. Prices there are going up, making them especially attractive on the courthouse steps. Many investors are buying with the intent to rehab and sell the homes on the regular retail market as soon as possible. Not that the rising prices actually make sense to many of these long-term investors, who think the market still has a ways to fall.”
“‘They look at it and look at each other and we’re shaking our heads, but you just deal with what it is,’ said Ward Hannigan, a mainstay in the local foreclosure scene since 1982 . ‘If there’s a pocket over here that’s booming, for whatever reason, even if it doesn’t make sense, then let’s take advantage of it.’”
“There’s been a growing number of auctioned homes selling at these auctions on the courthouse steps, rather than just going back to the bank. In March there were 397 such sales, the highest number recorded since January 2007, according to ForeclosureRadar. But there’s also been an increase in the number of sales that banks have canceled. In March, the most recent data available, 961 properties went back to the bank in the auction, and 1,263 others were cancelled.”
“On a recent morning on the courthouse steps downtown, a crowd of close to 50 stretches from the sidewalk, up the stairs, and all the way to the courthouse building. Jay Gafner starts reading a long list of addresses — these are properties for which the banks have postponed or canceled the sale today. The borrowers may have declared bankruptcy, or they’ve worked out a loan modification or a short sale, where the bank has agreed to let the borrowers sell for less than they owe. By 1:10 p.m., Gafner has sold 12 properties, sent 22 back to the bank, announced 12 cancelled sales and called out about 200 cancellations.”
The Daily Journal. “Mendocino County District Attorney Meredith Lintott confirmed Saturday that she and her husband filed for bankruptcy, a move she said became necessary when her Fort Bragg home of 15 years wouldn’t sell. She and her husband bought a home in Ukiah when Lintott was elected district attorney in 2007 and rented out the Fort Bragg home until Lintott and other elected officials took a 10 percent pay cut last year. ‘I knew that meant I had to sell the house,’ she said, noting that she’s not complaining about her pay.”
‘The tenants moved out when the couple decided to sell the Fort Bragg home, and Lintott said she couldn’t afford to wait out the depressed housing market after she lowered the price of the home and there were still no buyers. The Fort Bragg home is now in default. ‘I think I’m in the same boat as many other people,’ Lintott said. ‘This is a reflection of what is happening to the economy right now.’”
“Adding to her financial woes, Lintott notes she had debt from three campaigns and two children in college. ‘We did everything we could to sell the house,’ Lintott said. ‘It’s heartbreaking; we raised our children there and put our time and money into it.’”
The Fresno Bee. “For many families whose homes are worth far less than what they owe, financial and emotional stress is changing the ’stay-at-all-costs’ mindset. In areas hardest hit by plunging real-estate values — including the San Joaquin Valley — some people who can afford their mortgage are opting to walk away from their loan. ‘It’s very stressful to get to that point,’ said James Graham, a 48-year-old power-plant worker who walked away from his home in Bakersfield last fall. ‘You’re raised up to do the right thing and pay your mortgage, pay your bills. But when you get to that point where it’s time to walk, it’s time.’”
“‘If you’ve got a mortgage that’s $400,000 and the homes around you are selling for $150,000 … it doesn’t take a rocket scientist to figure out there’s a compelling reason to walk,’ said Robin Kane of RCK Organization, a Fresno property broker. ‘Especially when you find out the guy across the street is renting for $1,200 a month and your mortgage payment is $3,600 a month.’”
“‘People are walking away from homes in every county in California,’ said Walter Dees, the Los Angeles-based lead housing counselor. ‘They don’t see the value of continuing to pay for a house that will take 10 years or more to regain the value it had before.’”
“Graham bought his three-bedroom, two-bathroom Bakersfield home for about $162,000 in 2003. As property values roared upward in 2005 and 2006, lenders inundated Graham with offers to refinance against the rising value the house. ‘People were just dying to give me money and I was just dying to take it,’ said Graham, who eventually refinanced for $320,000 to consolidate some other debt. ‘I thought I’d always have my house to back me, that it would keep going up in value.’ But when the market collapsed, ‘my house was worth 60% of what I owed…My life has improved greatly since I walked away from that mess’”
“Bob Beadling bought his Bakersfield home ten years ago, and is moving to Idaho because he feels the California market is too volatile. Beadling remodeled his home before putting it on the market, but he still says he will lose about $160,000. ”
Are we to imply from this that the house is worth $160k less than he paid for it, because that seems very unlikely, since he bought before the RE bubble really got going. Or are they saying that he is going to lose money BECAUSE of a poorly thought out remodeling, rather than DESPITE it? Or did they never even think to ask “where did the ReFi money go?” ARRRGH! The pity party for those who have engaged in gigantic amounts of mortgage equity withdrawal seriously irritates me. I will go out on a limb and say that he DIDN’T lose 160k on his house purchase. Hey MAY have lost that on a remodeling spree, or perhaps he simply spend that money, perhaps doing the popular “paying down credit cards.” But the fact that they don’t even seem to ask steams me to no end.
Or is he “losing” money he never had. Meaning, will he still be making a profit, but considers it “losing” since it’s not selling for what it would have at peak? I hear this ALL the time. Case-in-point, my parents. Bought in late 70s for $75K. Paid off. Peak value was ~ $475K. They listed a year ago for $450K. Ended up selling for $375K and told everyone how the “lost” money on it. Um, no - you actually made $300K from what you paid for it. How’s that a loss?
What about all the interest paid over thirty yrs. I bet they did lose money even with the appreciation.
If you factor in interest, everyone loses pretty much.
Though at $75K assuming no money down, 12% rate and 30 years the interest paid would be just over $200K. Still wouldn’t have “lost”.
If you factor in interest, yes everyone loses…except ME.
People like to think that unrealized gains are “money in the bank”, hence “they lost money”.
If Mr. Beadling studies the money trail very carefully, he will discover that he is not the one losing the money. It was never his money in the first place. The bank is the loser in this scenario.
Stupid Mr. Beadling says that he’s moving to Idaho because one couldn’t retire in Bakersfield. Wrong. He could have easily retired in Bakersfield if he had paid off his house originally. If he had bought in Idaho five years ago he’d be underwater now. I feel sorry for Idaho to have to absorb one more idiot from California.
Better Idaho than Montana.
Idaho is a much nicer place than Bakersfield. Trust me on that one.
Idaho is much nicer than Bakersfield. Trust me on that one.
I will ask again in January.
Don’t bother…. I’ll be on Silver Mt. carving fat lines in the powder on my 165cm Libtech. World’s longest gondola (don’t know if it still holds the record) Condos are getting cheap there, but HOA/taxes are STEEP.
January in Idaho is incredible. The snow induces a new landscape that is breathtaking- 4 real seasons. I lived in southern Colorado and got so sick of blue sky and sun… 300+ days of the SAME weather. Bo-ring.
And since the banks never really lose, the real loser is the US taxpayer.
+1
Yah, I don’t know what he’s complaining about. Did the reporter really believe he refinanced $160k+ in OTHER debt into his house? Oh no. He probably payed of 10k of credit card debt and blew 150k on all kinds of crap like cars and vacations.
Then he walked away.
This guy is one of the ‘big winners’ in that he got to spend his peak price money.
The real winners sold in 06 and rented.
sfbb,
Correct, and then the Bobster bemoans the fact had he reamined there “he’d be working until he was 90″. So he’s at an age where he’s got retirement in mind, but wants a pat on the back for having bought a home just 10 years prior to it?
No offense to our Cali posters but this is such a common mentality. Buy house, wait one decade, retire. I mean, isn’t that how it’s supposed to work?
’cause the house is supposed to be doing your saving for you, you’re not supposed to be able to save your own money for retirement. At least that seems to be the California bubble thinking.
No offense to our Cali posters
DinOR,
I would not care one jot about “offending” your average Clownifornian. I’m one of them and believe me, they richly *deserve* insulting. As often and artfully as you can manage.
I can’t imagine most of them realizing they’d been insulted if it’s done artfully.
HARM!
Hey guy! DennisN said you stopped by the other day. I’m sure there are plenty of nigh-on-retired folks that attempted the same stunt in other bubble markets but this whole ’strategy’ seems to have found it’s roots in Cali where it’s also the most prevelant?
Hope you’re having a good one!
DinOR
“The real winners sold in 06 and rented.”
That would be ME.
And thanks largely to Ben Jones’s HBB.
yep, me too, though it was in the spring of 2007 was also mostly due to the HBB (and a few other excellent blogs)….felt the crash was imminent due to visiting here daily, “discounted” my place in CA by 10K, and had it sold in a week
I sold in 06, bought in 06 and sold in 09. i still had 6 figure gains on each sale, renting now.
And I’d bet that he’s deducting, illegally, the interest on his home-equity loan. And the IRS will never go after him.
(The IRS just sent me a letter telling me I owed them an additional $300! Why, because even though I sent in more than enough estimated taxes over the year than was required, I didn’t pay enough in Q2 (according to them) and need to pay a penalty. I had scaled back Q2’s payment because earnings were down then. My CPA said “just pay it.” I wish the IRS were as diligent going after actual tax cheats than Honest, Hardworking, Taxpaying Americans like me. And I wish they’d collect income tax on forgiven mortgage debt.)
There’s that comment and this one:
“Moe says her friends are taking the loss and moving to Texas where they see a lot more potential in the housing market. ‘They paid over $750,000. It’s listed now for $515,000,’ Moe said. ‘(They bought) about three years ago right before things tipped.’”
Both of these folks are thinking a move is what is needed to cure what ails them. That the move will change their fortunes. It’s California’s fault. Who are they going to blame when their bad choices lead to things “not working out” in Idaho and Texas?
sleepless,
Then there’s our friend Graham in B’Field who bought in ‘03 for a buck sixty-two then re-fi’d to the tune of $320k “to consolidate some other debt”.
Some..? Wowsers, that’s ’some’ debt? I think what you’re describing above is just another expression of MEW-dependency. Where the afflicted simply can’t imagine a life that’s not awash with cash-out re-fi offers? If you can’t get it where you’re ‘at’ ( then I guess a move is in order? )
Yeah that phrase “consolidation of debts” always rubs me the wrong way.
They should be concerned with paying off a debt, not just playing games with existing debt. Just refinancing a debt doesn’t make it go away.
There’s nothing wrong with consolidating debt. The problem is getting it in the first place. Which is part of the MEW (mortgage equity withdrawal) conundurm. MEW was a lagging indicator because much of the spending ALREADY HAPPENED. These FBs deluded themselves into thinking that they were doing a responsible thing by using a ReFi to pay down CC debt. But really they’re just persistantly unable to live within their means. “Consolidating” like hitting the Jersey barrier instead of oncomming trafic. It’s an improvement, but the car is still totaled.
“These FBs [thought] they were doing a responsible thing by using a ReFi to pay down CC debt. But really they’re just persist[e]ntly unable to live within their means.”
This brings to mind the problem I had with my client Gloria. In 2001 my loan demand was quite slow, and I began making noise among my existing clientele about how people who had big CC debts could and should come to me for loans on their [wholly-owned] real property. I got just one inquiry, and I made the loan. THEN, Gloria came back for MEW four times. The fifth time, in 2006, I said, “Sorry, your balance is going in the wrong direction.” It’s been hard for her, but her balance has gone in the right direction (downward) since then. Until I read Jim A’s post just now, I hadn’t thought of the obvious fact that I should’ve predicted the many MEW requests from someone who was accustomed to running up CC debt.
The HBB ate my other post.
Good luck with that Texas RE “potential”. There’s no shortage of land to build on and property taxes in Texas are ugly.
Wickedheart,
And it’s not like there’s anything “different here” about TX either way? Hell, you can insert Grass is Greener State _____ here and still adequately express.
The HBB ate my other post.
== burp! ==
“(They bought) about three years ago right before things tipped.”
I especially have no sympathy for anyone who bought in ‘07 — there was already a lot of news in the MSM of the market going south — and anyone who bought then was either in denial or thinking they got a “bargain” because prices were dipping a little.
I had just the same thought upon reading that statement…”right before things tipped” ?? — were they blind and deaf??
People are buying into the “the streets are paved with gold” mirage about Texas.
There’s been a growing number of auctioned homes selling at these auctions on the courthouse steps, rather than just going back to the bank. Which is really the only evidence that we have of lenders trying to limit their exposure to REO.
“‘You can say a lot of things, but if you don’t have stability in the housing market this recovery will not occur,’ Sen. Chris Dodd, D-Conn., said.”
How many investment properties does doddering Dodd own? I’m thinking he and a bunch of his Congress buddies might lose their asses if Fan and Fred stopped their program to make housing unaffordable.
Wall Street cashes out investment in Chris Dodd
By: Chris Stirewalt
Political Editor
April 19, 2010
Sen. Christopher Dodd, D-Conn. (AP file photo)
If Chris Dodd hadn’t been so cozy with the financial industry, he wouldn’t have been hounded out of the Senate.
But if he weren’t retiring, he wouldn’t have a free hand to write the legislation to change the way the financial industry is regulated.
The financial industry built Dodd’s career, so why shouldn’t it profit from the demise of it? It’s like a political credit-default swap.
It’s a perfect fit for the Goldman Sachs era on Wall Street: No matter who loses, they win.
Dodd had been on political auto pilot for decades, but he tried to liven things up with a run for the presidency in 2008.
The biggest investor in his presidential campaign was Connecticut-based hedge fund SAC Capital ($248,200). But the management teams at all of the big financial houses came across for Dodd’s bid. Employees of Citigroup, Bear Stearns, Goldman and American International Group were all high on his donor list.
Despite moving his family to Iowa, he finished last in the state’s Democratic caucuses — behind Joe Biden and “uncommitted.”
Read more at the Washington Examiner: http://www.washingtonexaminer.com/politics/Wall-Street-cashes-out-investment-in-Chris-Dodd-91414684.html#ixzz0nijpIJga
His statement is a true one. We cannot have recovery until housing prices stabilize (i.e., fall low enough that they are in historical equilibrium without government interference). I do agree, however, that it is questionable that whether he understands what stable means (i.e., whether he comprehends that the need for constant outside support to prevent a fall is not technically considered stable).
Well CONSTANT support would be stable. But the current levels of support are higher than can be sustained indefinatly. they are therefore NOT constant and the market is NOT stable.
So if a building’s foundation has to be checked each morning for cracks and sinking, with regular remediation work needed to prevent collapse, you would consider the foundation to be stable as long as such remediation work was continuosly being done?
Well buildings DO require maintenance. The fact that most roofs only last 10-15 years doesn’t mean that the building won’t last 100. But if you can’t afford to keep the roof maintained, the building will start rotting from the inside pretty quickly once water starts getting in. And the level of government intervention being attempted is in NO way supportable for the long, or even medium term. The housing market can and will stabilize, but not at current prices. The fact is that the massive government intervention trying to keep prices at unsupportable levels is a waste of time, money, effort and even hope. That is not to say a priori that government intervention to keep the market from overshooting too badly isn’t a useful idea, but we’ve wasted too much too early. And this may well make intervention impossible (fiscaly and politicly) when prices fall to a point where it MIGHT actually do some good.
Currently the government is paying people millions to stand on the roof holding up umbrellas.
Wouldn’t private mortgage lenders have the incentive to willingly make home loans if home prices were at stable, affordable levels? I thought the GSE mission was to help provide for affordable housing. At what point did it get hijacked into a money losing scheme to use American tax dollars for making home loans so subprime that no private bank would touch them, in an open effort to artificially support home prices at a level that prices young families and renter families out of the purchase market?
And, here in Arizona, Slim growls in approval!
At what point did it get hijacked into a money losing scheme to use American tax dollars for making home loans so subprime that no private bank would touch them… Pretty much when the big banks could no longer sell their poo on the open market. WaMu was originating all sorts of stuff that the GSE weren’t interested in buying. But when the private securitization market came to a screaming, aburpt halt, there was a great illusion by the politicians that they constituted a big enough carpet to hide the poo under. Not even close, not even with their history of fraudulent accounting.
Our only hope is once they’ve swept as much poo under that Freddie/Fannie carpet as possible, they set the whole shebang on fire.
“a big enough carpet to hide the poo under” LOL.
Yeah, WaMu were complete innocents. By the time they pulled the plug on their subprime patented Filth Spreader (TM) it was already over.
Wouldn’t private mortgage lenders have the incentive to willingly make home loans if home prices were at stable, affordable levels?
And also if interest rates were at stable, higher levels…
Exactly.
And I AM making home loans at stable, higher interest rates. “Stable” in the sense that I am now writing 30-year fixed-rate notes. My new clients all have lousy credit scores, I think; I don’t really know, because I have always been a no-doc lender, and I remain a no-doc lender. My security starts with two words — DOWN PAYMENT — and in many cases I have to think about whether I would mind actually owning the property myself in the event of default. The latter consideration would not be helpful for the mobile-home-lot side of my business, but it’s very helpful for the “real houses” side, which is the only side where I write 30-year notes.
Anyway, since they can’t get bank loans, they get loan-shark loans at rates that I consider cheap, around 8%.
I heard of people paying 12% for 2nds on props with enough equity for the lender to get his money back. Are you doing 2nds?
“Notices of these auctions have been flooding the county’s mailboxes increasingly in recent years, with more than 2,400 sent out in March, according to ForeclosureRadar. In the vast majority of cases, no one bids.”
What’s in it for the auctioner to try to sell a home for above market value in the ‘vast majority of cases’? Can’t these greater fools admit to themselves they have lost a bundle of money and move on from their denial?
I think it’s because if they accept a bid for less than they were owed, then they have to book the loss right away, whereas if they simply hang onto the property, they can still carry it on their books for what they had “in” it, so their next-quarter financial statements don’t look any worse. Don’t forget we’re talking about publicly-traded companies as the bagholders.
If it were ME, I would take the best bid, but I am not owned by shareholders or creditors.
The Daily Journal. “Mendocino County District Attorney Meredith Lintott confirmed Saturday that she and her husband filed for bankruptcy, a move she said became necessary when her Fort Bragg home of 15 years wouldn’t sell. She and her husband bought a home in Ukiah when Lintott was elected district attorney in 2007 and rented out the Fort Bragg home until Lintott and other elected officials took a 10 percent pay cut last year. ‘I knew that meant I had to sell the house,’ she said, noting that she’s not complaining about her pay.”
The very nature of a county DA job is a “sensitive” and a supposedly very responsible position within the law enforcement and the eyes of a local community. If she can’t even handle her own personal and financial life decisions without resorting to a bankruptcy, she doesn’t appear to be responsible enough to be a county DA to me.
She’s facing 2 challengers in her bid for re-election, both of whom have raised more $ than she has. She was first elected, apparently, in 2007, when she ran against the incumbent, who died 7 wks. before the general election. The incumbent, BTW, filed for bankruptcy 3x per the articles I read. Also gleaned from the articles:
She made $140,168 last year, her spouse $64,095. The house she defaulted on is valued @ around 325,000, she owed 407,000 on it. She’d listed it for 450,000, dropped the price to 398,000, then defaulted when it didn’t sell and the renters moved out. Note, apparently the house she lives in is not in default.
She owes Citi Mortgage 725,000 and unsecured creditors 290,000+, including $39,000 in college loans for her kids.
“She owes Citi Mortgage 725,000 and unsecured creditors 290,000+, including $39,000 in college loans for her kids.” Holy. Crap.
A bankruptcy is a terrible black mark to the State Bar of California.
To be admitted to the bar in California, not only do you have to pass the bar exam but you also have to pass an investigation for “moral character”. The two hottest spots are being behind in child-support payments and having a recent bankruptcy. Both are an ABSOLUTE BAR to being admitted to practice in California.
A friend of mine had a bankruptcy (for an excuseable reason) before going to law school. He passed the bar exam but the bar made him wait FOUR YEARS to get admitted. It took a lot of begging and pleading for him to get admitted even after 4 years.
“a terrible black mark to the State Bar of California”
But obviously it’s not an impediment in the slightest to the likes of Laura Richardson who wears short sales, defaults and walk-aways like a Badge of Honor before her constituents?
( It really helps her to “identify” w/ their stuggles you see )
Hey Dennis! Loved the cartoon yesterday btw, good thing they explained in English below.
It doesn’t help you get a security clearance either. And hey, people SHOULD be suspicious. Somebody who has trouble managing their finances is somebody who might be in a desprate enough postion in the future that they’d be willing to break the law for money.
Prosecutors have ethical obligations unlike any other lawyer, as Justice Sutherland opined in 1935, their duty is not just to win a case but to do justice. To do that you have to suck it up and when you drop the ball, you step up to the plate and say so.
But, do prosecutors have this heightened responsibility in their personal lives? And can we expect elected DAs to behave differently than any other politician in pursuit of the ultimate aphrodisiac - power?
gotta bear in mind this Mendocino Co. and thus another world…her predecessor (Vroman) was an ex-con so a bankruptcy is relatively minor….lived up there for 10 years and it is REALLY different
The Central Coast is improving. Many Houses from Santa Maria to Cambria appear to be 1/3 off their highs. North Morrow Bay shows SFR’s breaking under 300k, these are great areas.
Likewise Eureka is heading down. Lots of older bungalows that SF equity locusts bid up are now returning to earth. South of me I see improvement in San Clemente.
Outside my window I see no improvement here in Culver City.
“North Morrow Bay shows SFR’s breaking under 300k,…”
Gravity happens.
it is wonderful to see the central coast properties going down so fast….i used to live in pismo beach in 2006 my dream beach homes were 800k now those homes are at 550 k and still going down.,no more equity rich people from bakersfield or fresno buying vacation homes…..there is still a long way down to go in the central coast…and i am enjoying watching it fall……
NOrth MB is built out of 2×4’s for temporary summer housing on 3500 sq ft lots. $300k is a joke for 1200 sq ft. MB has no jobs, everything rusts in the summer and white trash runs wild. It was cheap forever, then the bubble hit. Retirees from Fresno still love it though.
North Morrow Bay shows SFR’s breaking under 300k
Sounds like a surf report.
Or “serf” report.
Your comment makes me feel OK about the fact that I was actually LOOKING at houses in North Morro Bay this winter. I wondered if I was going crazy, and I hesitated to admit here on HBB that I was tempted by some of these “deals.” When I started to think more seriously though, I saw that prices in NMB are STILL out of line with rents…even if I rented something all year at the short-term-furnished-with-all-utilities rate, I would be getting a bargain relative to buying the same place. Weird. So I just rent in NMB mid-Nov through mid-April, then go to Maine.
“If there’s a pocket booming over here, for whatever reason, even if it doesn’t make sense, then let’s take advantage of it”
Folks, I think that says it all! Here we are agonizing over the possible motivations… and whatnot, and there it is. Plain & Simple.
It’s just like a bunch of people in a looting frenzy. If you arrive late to the party and all the TV’s and stereos are gone, you still grab the flea collars, squirt guns, or whatever’s left on the shelves.
“‘We know this all started because of what happened on Wall Street; it’s clear, you can just track it, the whole entire thing,’ she said.”
I know this is coming from the mouth of a politician, but.. “the whole entire thing” was Wall Street’s fault? Really? Were there guns to the heads of every buyer? What about all that cocktail chatter about how much equity they had? Were used house salesfolk just pretending to be interested in those fat commissions? Was the local broker working on commission really taking direct orders from “Wall Street”. Come on, America - especially you FBs out there… look in the mirror!
Kim,
After a fashion, I kind of understand where BB is coming from, especially given her home state, which I happen to think was the worst offender and largest contributor.
Can she get on the podium and tell the God’s honest truth here? NFW. I think she realizes exactly what you’ve described, after all, I’ve no doubt CAR was flooding her office w/ calls and “helpful suggestions” to get the ball rolling again!
Yep. I’m sure that Boxer, DeVore and Fiorina will all bend over backwards for CAR. And everybody knows that Fannie and Freddie bear sole responsibility for the bubble/bust. Oh wait, everybody knows that Wall Street bears sole responsibility for the bubble/bust. I hate all of these people.
Barbara Boxer is an effing idiot. Saw her as chair in some king of transportation hearing on C-SPAN 10-15 years ago, when she was a US Representative.
Had a couple of low-level railroad guys testifying that, for about a million different reasons, Federal laws/rules aren’t neccesarily followed with absolute nit-picking precision, especially when they conflict with each other.
She was having none of that………by God, how dare these chumps not follow Federal commands from on-high with less than military-type precision.
Which is another reason why jobs are moving overseas, to avoid the draconian penalties handed out by various Federal organizations for running afoul of their rulebooks.
Ever try to ship Hazmat overnight? The only people who will do it anymore is Fedex. And only if you’ve been to their training.
So, the reality is that people are shipping Hazmat undeclared. Which means that nobody has any idea how it’s packed, or if it’s on a passenger aircraft or not. And they won’t know, until something happens.
Were there guns to the heads of every buyer?
In a manner of speaking, yes. The Wall Street Witches cast an evil spell over the nation. Only those in league with the devil would attempt to deny this.
Donna Moe is helping friends who bought a home at the height of the market. Moe says her friends are taking the loss and moving to Texas where they see a lot more potential in the housing market.
More “potential” in the housing market? Can I take that to mean that they’re STILL trying to use real estate and greater fools to fund their retirement? I never realized this would have to go on so long to get people to capitulate and give up on that dream.
Carl Morris,
Right, and it doesn’t even have to “make sense” necessarily ( just as long as it’s appreciating! ) The wife and I were actually considering a move to Fairbanks if we thought we could milk some upside out of it?
Sheesh, nevermind your family, friends ( you can always make more faux “friends” ) and worry about that ‘job’ thing later.
I wonder what Donna is doing to “help” them. Shoulder to cry on? Giving them money? Bad real estate advice?
REhobbyist,
You are on a roll… today my friend! Yeah, it never ceases to amaze that people who don’t know who their neighbors are ‘now’ and who’s husband has (1)otherwise identical/interchangeable “friend” think they can just pick up and move halfway across the country?
Somewhere there’ll be a completely lost half a person! You know the guy, bought identical Harley’s ‘together’ have the same opinions on everything from bigscreens to well, bigscreens?
“I wonder what Donna is doing to “help” them. Shoulder to cry on? Giving them money? Bad real estate advice?”
Maybe selling their house and giving them $500 back because they’re her “friends”?
“If farmworkers are one face of the Census preview, Elizabeth Hartung is another. She’s a sociology professor who moved from Fresno County to Camarillo five years ago. She and her husband bought a house for twice what it would have cost in the Central Valley. The housing crash has flipped them. ‘I am, like so many other people, an upside-down homeowner,’ she said.”
I guess you could say Elizabeth got flipped by flippers.
But the Democratic chair of the banking committee warns if it were to cut the government backing to Fannie and Freddie credit would dry up and housing prices would plummet.
Dodd says that like it’s a BAD thing. Since when is affordable housing a BAD thing? It’s like he doesn’t realize that he’s basically saying we have to waste taxpayer money to support institutions that are supposed to help provide “affordable housing” in order to prevent affordable housing.
The man is a moron.
sfbb,
No particular friend of Dodd’s but what they ‘may’ be referring to is a Detroit-like contagion where basically every home’s value becomes based on the copper wire you can yard out of the conduit?
Just a thought!
Really only the unoccupied ones. If it rents it will have a sale price based on the interest rate and the rental yield. That may well be lower than the cost of construction, but is unlikely to be less than the salvage value. Because most modern homes have very little salvage value.
Jim A,
Uh… you’ve kind of got a point there? I mean if you ripped a McChateaux down to it’s foundation ( what would you really have of any value? )
No, I was being more flippant than anything and contrary to what a lot of people think, having “affordable” $18,000 homes in Los Angeles isn’t going to help anyone. Rather it would be too little too late.
I’ve watched the ‘ghettos’ of San Fran do this exact thing. The prices dropped down to cash-flow positive for renting and started selling at a pretty quick pace. People who saw that quick sales pace and tried selling their house above comps malingered until they were willing to drop down to cash-flow positive areas.
The nicer areas aren’t there yet, but they will probably have similar support.
The exurbs, however, have been brutalized. Those areas have houses that have become effectively worthless. Bulldozed to avoid becoming nuisances or left to rot for years, these houses aren’t worth a dime.
And of course we say that without malice towards lowly renters! Talk about ‘brutalized’? They’ve been ( sensibly ) pricing themselves… out of the market. Patiently waiting for a sober correction and got the Apocalypse instead?
Now, ‘this’ is what’s For Rent. I blame Barabara Boxer!
Well yes, there certainly ARE places where the oversupply is such that prices will fall not just below replacement cost, but down to salvage value becuase THEY BUILT MORE HOUSES THAN THERE ARE PEOPLE WHO WANT TO LIVE THERE. Now rather than Detroit where the problem is that there isn’t as much demand as there once was, in some exurbs there NEVER was anywhere near enough demand for housing (as opposed to speculative investment) as was built. But I think that those situations are actually fairly rare exceptions. Even in the IE, I think that there’s a price that will get people to move in, it’s just MUCH lower than the people who bought a few years ago will be happy with, and they’re not likely to want to live next to people attracted to those sorts of clearance sale prices.
“and they’re not likely to want to live next to people attracted to those sorts of clearance sale prices”
Watch it Jim. Just… watch it! You mean, people like ‘us’ that have been waiting for this for nigh on a decade? I wouldn’t mind having ANY of the HBB Crowd for neighbors! Just think of all the wild parties we could throw w/ those Non-REIC Designated dollars?
No I get your meaning. Robert Cote` one of the original Patrick.net regulars told us all… about how Moreno Valley, CA turned into a war zone.
I wouldn’t mind having ANY of the HBB Crowd for neighbors!
And I wouldn’t mind having you as a neighbor, DinOR.
I’ve long said that I hate the idea of HOAs because I’m going to piss off the neighbors LONG before anything they do pisses me off. I can’t concieve of caring what color they paint the trim of their house. Or whether they have an RV in their driveway. While my motto is “brown grass don’t NEED mowin’.” So you’re welcome to move into MY hood DinOR. ‘Cause the REAL prices (as opposed to the Zillow fictions) have come down ALOT.
The prices dropped down to cash-flow positive for renting and started selling at a pretty quick pace.
The nicer areas aren’t there yet, but they will probably have similar support.
If and when SF (and Silicon Valley) houses drop in price to cash-flow positive levels, it is going to be a pretty massive drop from today’s prices.
E.g., the house I am currently renting in San Jose is “worth” $923k at the median price per square foot, but the rent I pay would only support a mortgage of about $500k. That sort of disparity seems still to be the norm in much of the Bay Area. Something’s gotta give, but when?
Jim A,
Speaking of brown lawns, I’m willing to bet they become the standard in more than just CA? Even here in OR, yes, prices have come way down.
Even though I’d love nothing more than to have a place where “the band” could practice without having Officer Friendly stop by.., the truth is the REIC has hacked me off so BAD I’m really indifferent about it any more?
At this point I’m more inclined to rent a space or even a garage for the boyz to jam out it in, but we’ve plenty of room left to the downside. In the meantime, we’ll have to settle for torquing off my SIL’s neighbors?
Hey, if you live in a state where it actually RAINS once in awhile, you don’t HAVE to water the lawn. Most years I never water the lawn, and I STILL have to cut the grass regularly.
California ought to pick up the Arizona habit of doing the yard in gravel instead of in grass. Oops, I forgot, CA is boycotting AZ.
Back in the late 40’s & early 50’s in southern
California, there were a lot of abandoned homes that hadn’t been occupied in years.
As kids, we used to go up to Sierra Madre and
go skulking through some of these old homes.
Dust everywhere, old wine bottles, cracked walls, and yet underneath all the debris, you
could see quality construction.
I think we’re about to see the second wave,
without the quality.
Squeaked out of jury duty this morning.
From the original post:
“Home prices are rising in the county, especially in some lower-priced pockets like Lemon Grove or parts of Chula Vista. Prices there are going up, making them especially attractive on the courthouse steps. Many investors are buying with the intent to rehab and sell the homes on the regular retail market as soon as possible. Not that the rising prices actually make sense to many of these long-term investors, who think the market still has a ways to fall.”
“‘They look at it and look at each other and we’re shaking our heads, but you just deal with what it is,’ said Ward Hannigan, a mainstay in the local foreclosure scene since 1982 . ‘If there’s a pocket over here that’s booming, for whatever reason, even if it doesn’t make sense, then let’s take advantage of it.’”
To which I say:
If the rising prices don’t make sense, then these aren’t long-term investors. They’re speculators.
Yep. All these people think that they can get out quickly, before the sanity sets in. Are memories really that short? Yes.
“‘If you’ve got a mortgage that’s $400,000 and the homes around you are selling for $150,000 … it doesn’t take a rocket scientist to figure out there’s a compelling reason to walk,’ said Robin Kane of RCK Organization, a Fresno property broker. ‘Especially when you find out the guy across the street is renting for $1,200 a month and your mortgage payment is $3,600 a month.’”
Two families… same income $$$$$$:
$1,200.00 month to month +$25,000 cash per year
$3,600.00 for 28+ years + Insurance + Taxes + “Yes, we’re homemoaners”
Decisions, decisions…
“Donna Moe is helping friends who bought a home at the height of the market. Moe says her friends are taking the loss and moving to Texas where they see a lot more potential in the housing market.”
Potential, seriously, how’s that? It’s not really that desirable a place to live. It’s hot and humid, not pretty and wages are low.There is endless land to build on and property taxes are high. Except for housing and eating out (because waiters and waitresses only make a little over $2 an hour) everything else is just as expensive.
As General Sherman said about the choice of living in hell or Texas: “I’d live in hell and rent Texas.”
I always liked that quote.
There are some nice areas of Texas. And moving to a place with a lower overall cost of living isn’t a terrible thing if you’re thinking of retiring anytime soon.
As far as I could see the only things that were cheaper were housing and eating out. Utilities( water, gas & electricity, cable, phone) food, clothing, etc, were just as high. Gasoline was a hair cheaper, about 10 cents a gallon. Car insurance is more expensive and so was health insurance.
Where are the nice areas? The gulf is ugly, yuk. Not that San Diego has the nicest beaches but at least our water isn’t brown.
If I were going to retire to a cheaper state I’d rather go with Nevada, the northern part. It’s cheaper, prettier, the weather is better( not humid), property taxes are reasonable and it’s close to lots of nice camping areas.
Also my point was their expectation of the “potential” in the Texas RE market. It sounds like they are looking at Texas RE as an investment. I don’t think they have learned their lesson yet.
it angers me that these homeowners pulled all this equity out used it for fun stuff and now are whining for loan mods or restructuring of the loan…LET THEM LOSE THEIR HOMES, this is america we have always played by the same rules pay your mtge our lose your home,they cannot change this in the 8th inning..it is not fair to most americans who have played my the rules..if i knew they would change the rules i would have bought a home w/ no money down and pulled out all the equity too….
sold in 05,
Well to be honest, the BB’ing community as a whole has been predicting these very responses since at least early ‘06. So no revelation there. But agreed, it doesn’t make it any less frustrating.
People just don’t learn, a friend of a friend told me he wants a new home. Of course I ask him how much is his price range he tells me 600k to 800k.
I’m told this couple combine earn 110k a year so tell me, why the heck are they looking at 800k homes?
Another short sale in two years.
people sure do have expensive taste.I would not spend more than 275k on a house.
Bingo ! They are going to buy a $ 275k house only they are going to pay $600k-$800k for it.
There’s nothing illegal about hand picking a basket of toxic MBS and selling them to gullible greater fools, is there?
Now bend over, boyz, and spread them cheeks wide, because it’s time to stick a probe up your… ask me no more questions, and I’ll tell no more lies.
* LAW
* MAY 12, 2010
Wall Street Probe Widens
J.P. Morgan, Citigroup, Deutsche Bank and UBS Also Face Prosecutors’ Scrutiny
By SUSAN PULLIAM, KARA SCANNELL, AARON LUCCHETTI and SERENA NG
Federal prosecutors, working with securities regulators, are conducting a preliminary criminal probe into whether several major Wall Street banks misled investors about their roles in mortgage-bond deals, according to a person familiar with the matter.
The banks under early-stage criminal scrutiny—J.P. Morgan Chase & Co., Citigroup Inc., Deutsche Bank AG and UBS AG—have also received civil subpoenas from the Securities and Exchange Commission as part of a sweeping investigation of banks’ selling and trading of mortgage-related deals, the person says. Under similar preliminary criminal scrutiny are Goldman Sachs Group Inc. and Morgan Stanley, as previously reported by The Wall Street Journal.
The Manhattan U.S. Attorney’s office and SEC are working hand-in-hand. At issue is whether the Wall Street firms made proper representations to investors in marketing, selling and trading pools of mortgage bonds called collateralized debt obligations, or CDOs.
Many major Wall Street banks created CDOs at the behest of players that made bets against the deals—and banks themselves sometimes bet against the deals. Bearish bets paid off when the mortgage market crashed.
The SEC has asked for documents such as final and draft prospectuses from some of Wall Street’s biggest firms. Above, Morgan Stanley headquarters in New York.
Representatives of the Manhattan U.S. Attorney’s office, the SEC, Goldman, Citigroup, Deutsche Bank and UBS all declined to comment. Morgan Stanley said it hadn’t been contacted by prosecutors and has done nothing wrong. A J.P. Morgan spokesman said the bank “hasn’t been contacted” by federal prosecutors and isn’t aware of any criminal investigation.
The criminal probe marks an important juncture in the fallout from the financial crisis and highlights the severity of the scrutiny for Wall Street. Prosecutors have brought just one major criminal case stemming from the crisis, against two Bear Stearns Cos. traders, and lost it. Lawmakers are calling on prosecutors to do more.
Prosecutors so far are simply gathering evidence. They haven’t issued criminal subpoenas, nor have they homed in on the outlines of any potential case.
To win a criminal case, they would have to prove beyond a reasonable doubt that a firm or its employees intentionally misled investors. It’s possible the probe could end with no charges being brought against any of the firms. It is unclear whether any individuals are of particular interest to the authorities.
As part of the joint probe, the SEC has asked the banks for a range of documents, including final and draft prospectuses, final and draft offering documents and investor lists associated with mortgage-related deals, the people say.
…
Many U.S. rivals in the banking arena seem to be moving towards breaking up their Megabanks to make the sector more competitive. Will our banks turn out to be the dinosaurs that go extinct if we don’t follow suit and break up systemically risky banks to return them to efficient scale?
Swiss govt makes bank break-up proposal to parliament
Wed May 12, 2010 6:26am EDT
BERNE, May 12 (Reuters) - Switzerland’s government on Wednesday made a proposal to parliament for legislation to prevent large banks from dragging down the entire economy if they were to become insolvent.
Financials
“The risks of systemically important banks should be restricted, as more stringent capital, liquidity and risk diversification requirements will be set out in the Banking Act,” the government said in a statement.
“The proposal on these legislative measures should be put out for consultation in the form of a conference in October 2010, and be adopted by the Federal Council by the end of 2010,” it said. “In the event of swift consideration by parliament, the legislative amendments could come into force on 1 January 2012.”
Another Huge Worry: Harry Reid Backs Bank Breakup And Federal Reserve Audit
Joe Weisenthal | May. 6, 2010, 2:15 PM
As if there weren’t enough to worry about today, take a moment to focus on what’s going on in the halls of the US Congress.
According to HuffPo’s Ryan Grim, Democratic Senate leader Harry Reid is going to back both a breakup of the big banks, and the uber-controversial audit-the-Fed amendment. In other words, the Congress is veering dangerously close to pulling the kimono off of the gigantic coverup that’s been in place since the bailout.
Scary! Who knows what we’ll find under there!
Read more: http://www.businessinsider.com/another-huge-worry-harry-reid-backs-bank-breakup-and-federal-reserve-audit-2010-5#ixzz0nn0AKHyF
America’s anti-reform banking sector risks getting left in the dust by more competitive banks overseas. Where would these trust bustin’ proposals leave a sovereign central bank? Rather exposed, I would guess…
Coalition Government: British banks face break-up in just one year
Britain’s giant lenders are facing the threat of extinction after the new coalition Government pledged to establish an independent commission to decide whether to break up the banks.
By Philip Aldrick and Louise Armitstead
Published: 11:15PM BST 12 May 2010
Britain’s giant lenders are facing the threat of extinction after the new coalition Government pledged to establish an independent commission to decide whether to break up the banks.
The commission was the centrepiece of the Conservative and Liberal Democrat agreement on banking reform, which included a pledge to introduce an extra tax on the industry and “robust action to tackle unacceptable bonuses”. It has been given “an initial time frame of one year to report” on whether separating retail and investment banking will “reduce systemic risk”.
Both parties have argued for a break-up, but the Tories want to limit the split to the “casino” activities of proprietary trading while the Lib Dems wish to go further and “separate low-risk deposit taking banking from high-risk investment banking”.
…
The Plum Line
By Greg Sargent
Franken, Feingold sign on to big-bank-busting measure, bringing total to 11 Senators
Okay, I’ve got more signs for you that Senate liberals may be gaining momentum with their efforts to toughen up financial reg reform.
Senators Al Franken and Russ Feingold have signed on to an amendment to FinReg — being pushed hard by liberal Senators — to break up the country’s biggest banks by capping their desposits and limiting other liabilities.
That brings the total number of Senators backing this approach — which is not supported by the White House — to 11. It’s still unclear whether the amendment will get a vote, but the mounting support could up the pressure for one.
Senator Franken’s office confirms to me that he’s now on board with the proposal. Feingold gave a speech on the Senate floor moments ago coming out in support of it, too.
This approach, which is the handiwork of senators Sherrod Brown and Ted Kaufman, is a serious challenge to Wall Street and represents an ambitious effort to rein in the power of the biggest banks and limit their destructive potential.
As The Times reported today, it’s been gaining steam, and Dick Durbin, the number two in the Senate leadership, now backs it.
Ordinarily, this type of push from Senate liberals wouldn’t concern the White House and Dem leadership: Witness the fate of the public option. But the dynamics of the financial reg reform debate are different. Public anger at Wall Street and the big banks is running high. Liberals are insisting that Dems need to embrace this approach, lest they squander an opportunity to convert the unusual levels of populist rage into real and far-reaching reform.
Should be interesting to see where this goes next.
By Greg Sargent | May 6, 2010; 1:11 PM ET
“Republicans say the two mortgage giants drove the country into financial crisis. Democrats say it was Wall Street’s fault.”
and neither blame the actual villains: the deadbeat borrowers!
“Republicans say the two mortgage giants drove the country into financial crisis. Democrats say it was Wall Street’s fault.”
and neither blame the actual villains: the deadbeat borrowers!
All three arguments are the arguments of the uneducated and/or the biased because they don’t acknowledge the complicity of the other two parties in the debacle.
Agreed, but if I had to rank the “blame” it would be
1. Borrowers who borrowed money they couldn’t possibly pay back. Something like 80% of “stated income” mortgages were fraudulent. And they’re not being held accountable; in fact they’re being rewarded with windfall handouts and cash breaks.
2. The mortgage giants who promoted these products (in response to the Government’s encouragement of opening up loans to poor people under the CRA)
3. Wall street.
Democrats place the blame as 3-2-1 instead of 1-2-3