Bringing Money To The Table
The Bozeman Daily Chronicle reports from Montana. “With housing prices going down in Montana, Bozeman real estate agents say it’s time to buy, and researchers are agreeing with them. ‘It’s a buyer’s market because buyers have a lot to choose from and have more leverage in negotiating a sale,’ said Rich Mayo, president of Gallatin County Association of Realtors. ‘If you’re trying to sell a house that you bought in 2002 or 2003, you’ll be in decent shape. But if you bought your house in 2005 or 2006, you might end up bringing money to the table to sell the house.’”
“The more affordable housing doesn’t mean everyone should buy now, Mayo said. Instead, he recommends to people who are just starting to look into the housing market to first visit a mortgage consultant to see how big of a loan they qualify for. ‘One of the things that got us into this mess was people buying more than they could afford,’ Mayo said. ‘You should only look to spend 30 percent of your income on your housing. That’s just good sense.’”
The Great Falls Tribune in Montana. “Housing foreclosure rates in Cascade County are higher than a year ago, according to CoreLogic. Great Falls real estate brokers who sell foreclosed homes for national companies and government-related entities say Cascade County, and other locales in Montana and the nation, soon could see a brief but strong upturn in foreclosure actions during the next few months.”
“ERA American Horizon Realty agent Amber Corrow specializes in foreclosure sales. Corrow agreed that a lot of large lenders, including Bank of America, imposed temporary moratoriums on foreclosures last year. She thinks government related lenders such as HUD, Fannie Mae and Freddie Mac, have begun to release foreclosed home now. ‘But it seems to me a lot of private lenders still are holding back the release of foreclosed homes, creating what’s called ‘ghost inventories,’ Corrow said. ‘I think they’re trying to avoid flooding the housing market in some places and harming the recovery.’”
“‘It’s a godsend for the housing market that a lot of foreclosed homes aren’t being released,’ she added.”
The Yakima Herald in Washington. “Local agents say they’ve been busy answering more phone calls and showing more homes to potential buyers in the past few months. But all the activity doesn’t seem to be yielding results. In fact, it leads to a different set of numbers, affirming that sales are soft in the real estate market.”
“For the first four months of 2011, the dollar sales volume for all residential real estate sales in Yakima County dropped by 22.1 percent from last year, according to Headwaters-The Source. And prices are an issue, too. According to data from Headwaters-The Source, the average home price for the first four months of 2011 is down 6.6 percent from last year. So why the poor stats?”
‘While much attention has been on interest rates and the economy, emotion and circumstance still very much play into whether a person wants to — or can — buy a home. ‘I’ve got people who are well qualified, but they’re unsure (about buying),’ said Tom Biehl, broker and owner for RE/MAX First Advantage. ‘I’ve got people who are willing, but the ability (to buy) is not there.’”
“Several months after her divorce in 1994, Ellen LaViolette’s home in Grandview went into foreclosure. For the next 15 years, she would rent. But she grew weary of only staying in a place for a year or two or being at the mercy of her landlord. After spending a year living with her parents, she was ready to buy again.”
“‘I wanted something of my own,’ said LaViolette. ‘I don’t like to move. I want security. I want to be able to stay in one place.’”
“When she started looking at places early in 2009, she qualified for a federal first-time home buyer credit. (Under current laws, a first-time buyer is anyone who has not owned in three years.) She planed to use the tax credit to pay back a relative who offered to lend money for a down payment. But she never purchased. LaViolette never found a home she liked in her price range.”
“And despite working two jobs she fell behind on one of her bills and her credit score dropped, making her ineligible for a home loan she was preapproved for. LaViolette, who dealt with a foreclosure 17 years ago, said that fear of repeating her mistakes may have kept her from buying. ‘I didn’t want to get into something and fail,’ she said.”
“Today, LaViolette, along with her son and her grandson, still lives with her parents in Grandview. She still wants to buy, but has decided she’s better off finding a rental. ‘There’s too many things holding me back now,’ she said about buying a home.”
“Even those who have decent credit scores are still being cautious. Home buyers are taking more time to examine their short- and long-term finances with real estate agents to make sure they can afford to pay for a home now and into the future, said Doug Rich, broker and owner of Prestige Realty. ‘I don’t believe there’s an incentive’ to buy, he said. ‘I believe the attitude of the buyer has become much more conservative.’”
From KMVT in Idaho. “Idaho’s commercial and residential real estate has seen its ups and downs over the years. And now, foreclosures and a mass of unsold homes keep driving values lower. ‘We see some difficult real estate environment with devaluing commercial real estate, devaluing home values’, said Zions Bank Regional President Kelly Anderson.”
“Officials with Zions Bank say the current real estate situation is causing many people to be pretty cautious. On average, home prices are now down 33% from the 2006 peak. As more and more homes go into foreclosure, lending requirements have tightened. ‘It’s a lot tougher for people to get into homes, its with a sizable down payments required and tougher underriding,’ said Zions Bank Executive VP Michael Morris.”
“‘We’ve gone back into what - in our lending parameters, in our lending guidelines back to where we were several years ago, before the subprime lending and all of that came into the scene,’ said Anderson.”
The Associated Press on Oregon. “Consumer protection legislation is needed to provide oversight of foreclosures and help people navigate the system as the numbers increase in Oregon, state and federal lawmakers say. U.S. Sen. Jeff Merkley, D-Ore., shared the story of Oregon contractor Tim Collette of Bend on the Senate floor Thursday, saying it was typical of the stories he has heard about people facing foreclosure, The Bulletin reported.”
“Merkley said it starts with the lender telling the homeowner to stop making payments so they can enter the loan modification program. They stop making payments, which then harms their credit and they are no longer worthy of a modification. ‘So many homeowners are going through a program meant to assist them that is instead turning their life upside down,’ Merkley said.”
“Collette recently told state lawmakers about his struggle with foreclosure in hopes of helping others avoid losing their homes. Collette says he got contradictory advice and the bank lost his files. He said he drew down his savings, thinking he was on track to keep his home, only to find out he would likely lose it and be left with an empty bank account.”
“‘It’s frustrating,’ Collette said. ‘You think you know the rules, and then they change them. I feel like we’re working with an entity that doesn’t have any rules.’”
The Oregonian. “When Pfc. Aaron Collette is eligible in August for a two-week break from the dull, murderous routine in Iraq…Collette, however, is ticketed for Bend. Bend is home. Yet thanks to JPMorgan Chase, that reprieve might not be available. If this one goes through, Tim Collette — Aaron’s father — said, his son might end up on a couch at a friend’s place: ‘I don’t want that to happen. Aaron deserves better than that.’”
“When Tim Collette bought the house in Courtyard Acres in 2006, he said he put $125,000 down and began making monthly payments on his $253,000 mortgage. He made those payments for about 15 months before the Deschutes County real estate market crashed, taking Collette’s job — he specializes in counter tops and floor coverings — with it.”
“Collette began negotiating with Chase to modify his mortgage. He was first told he had too much money to merit one. After the process dragged on for two years, and Collette drained that savings account making payments while looking for work, he was told he didn’t have enough funds to make payments. But Collette thought he was still on the modification track until last fall when the bank moved to foreclose: ‘They waited until I owed $9,000 to call me and tell me I’m not making the right payment.’”
“Sen. Jeff Merkley, D-Ore, is championing Collette’s case because the Bend contractor brings a face — and an Operation New Dawn veteran — to Merkley’s campaign to end the worst in mortgage abuse. ‘This is not an accident,’ Merkley added. Many of the worst mortgages are pooled in trusts. The banks are selling securities that bet against those trusts. All too often, everyone but the homeowner gains ‘if the mortgage is dysfunctional.’”
“Back in Bend, Tim Collette is working again and hoping for the best: ‘This isn’t about me. This is about all of us being treated fairly by the banks. Whether I save my house or not is immaterial.’”
he said he put $125,000 down and began making monthly payments on his $253,000 mortgage. He made those payments for about 15 months
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Assuming he’s telling the truth (he said???), people still have a lot to learn about the managment of their finances. He had $125k (50%) downpayment on a $250k house. He then managed the payments ($1500 a month or so at the max) for only 15 months - $22,500.
Lesson: Don’t put all of your money in one basket. Diversify your assets. Whatever you want to call it. There is such a thing as cash poor. He could have made a standard 20% down $60k, and had payments about $500 higher, and had $60k to weather a job loss, instead of basically nothing. having a low mortagage payment is a good thing, but it shouldn’t be the be-all end-all.
If he put 125k down and had a 253k mortgage, wasn’t the total price $378k?
You might be right. I may have read that wrong. Running the numbers as $378 * .20% = $75k. He has $125k so that’s $50k leftover. The mortgage payment would be $3000 per month.
$3000 * 15 months of payments = $45000. He’d still be in the black.
Looks to me he just tried to buy as much house as he could. Max profit!
I agree that you need a cash buffer, but his downpayment was 33%, not 50%. The house price was $125k + $253k = $378k. (Which sounds insanely high for Bend, Oregon.)
Not only did this guy have no savings cushion, but he also invested all his money in the same sector that he depended on for his income. That’s just as foolhardy as the Bear Sterns and Lehman Brothers employees who had all their net worth in company stock.
(Which sounds insanely high for Bend, Oregon.)
jb, have you ever been to Bend? Yes it’s over priced like everywhere else and has almost zero industry besides home building/selling but there are some really high end homes there.
Yes, Bend is way over-priced, but it also has modern amenities like a lap swimming pool, golfing, shopping, etc., that many fly-over places lack. I’m almost 500-miles north of Bend in eastern Washington, and I know our winters are longer too. Bend is certainly pretty country, but the kool-aid served there was very strong.
It is hard to understand this case. The reason is that he put 125,000, this alone gives bank a lot incentive to foreclose, because this will stop the bank taking loss. And the bank did not foreclose, what is the reason behind this.
For those people who put close to nothing down, it is easy to understand why the bank do not foreclose, because the bank want their book looks good for not taking the loss realized on their book.
See my comments below. Tim Aaron Collette is still ~$25K underwater. I suspect that the bank wanted Aaron’s savings account before they foreclosed or short sold. B*st*rds.
(not that an ARMY PFC was that smart in buying a $375K house at the height of the bubble…)
Um… they are two different people - Tim the homeowner, and his son Pfc Aaron.
Lots of interesting things here:
‘Tim Collette bought the house in Courtyard Acres in 2006, he said he put $125,000 down and began making monthly payments on his $253,000 mortgage’
If you have that much equity in the house, why not sell it since you can no longer afford it?
‘This is not an accident,’ Merkley added. Many of the worst mortgages are pooled in trusts’
Why doesn’t this politician suggest the people behind these trusts give this guy a house? Could it be because these are everyday people who have tied up their retirements in these trusts? Come on senator, just tell everybody they should pony up and hand their money to this guy who got in over his head?
Then there is this:
‘Several months after her divorce in 1994, Ellen LaViolette’s home in Grandview went into foreclosure. For the next 15 years, she would rent…LaViolette, who dealt with a foreclosure 17 years ago, said that fear of repeating her mistakes may have kept her from buying. ‘I didn’t want to get into something and fail,’ she said.’
This lady went through a foreclosure, and is making the choice to not get in over her head, and is (gasp!) renting instead. One reason is, prices are still too high. Where is the boo-hooing in political circles for her?
Again, foreclosures/distressed sales are the functions that set house prices after a boom. Owners won’t do it voluntarily, even if they are the trusts holding foreclosures.
I found the public notice for the Collette house:
http://eznotice.com/notices/2680700
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“Trust deed made by Tim A. Collette… 20565 Boyd Court, Bend, OR 97701… the foreclosure is made is grantor’s failure to pay when due the following sums: Monthly payments in the sum of $1,027.44, from October 1, 2009, monthly payments in the sum of $1,001.35, from February 1, 2010, monthly payments in the sum of $1,057.21, from August 1, 2010, and monthly payments in the sum of $1,457.80, from September 1, 2010,… trust deed secures immediately due and payable, said sum being the following, to-wit: $254,880.01…”
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So his mortgage was $255K. The payments were pretty low, so porbably no HELOC…$125K down sounds about right.
I used the address to look up on Zillow. Small side yard, no backyard. Looks like a McHome.
06/30/2006 Sold $373,765
Zestimate: $228,700
Wow, even with the $125K down, the guy is STILL underwater. Wouldn’t the bank want to short sale this and take the $125K and run? But look: and Collette drained that savings account making payments while looking for work.
I sense Massive Combo Theory: The banks wanted to drain him down before taking the house anyway.
And by the way, why is a PFC buying a $373K house in the first place.
I thought it was his father’s house.
You’re right — I had to read closely. Tim, 59, is the buyer of the house and he is foreclosing. Aaron is the son in the Army who will return from Iraq to find the family home gone.
Patriotic imagery aside, I can see why the Senator is involved. We at HBB can argue about Tim buying more house than he can afford, but these FB’s are being yanked around by the banks. The best thing for the FB would be a clean-break foreclosure, but of course that’s no fun for the banks. Banks would rather string along the FB’s, for example, long enough to discover the cash account that Tim had. Banks are acting like common thieves now, casing the joint before looting it.
Poor Tim, he should have put the house on the market the day he got his pink slip. He would have at least broken even, and not have touched his savings account.
Very true, oxide.
Based on what a friend of mine went through, I would also agree with Combo’s theory — the banks are trying to wring every last dollar out of the FBs before foreclosing.
Yes, most FBs would be much better off if they simply stopped making their payments (which is what I told my friend to do, though she didn’t listen) and let the bank foreclose.
All the “modification programs” simply delayed the foreclosures so the banks could get even more money from the hapless and hopeless FBs.
“Could it be because these are everyday people who have tied up their retirements in these trusts?”
This is the most troubling aspect of the ’save our homes’ mortgage mod measures: Nobody talks about the rights or interests of those who loaned the money.
Picking winners and losers in private contracts does not strike me as a proper role for the federal government.
“Today, LaViolette, along with her son and her grandson, still lives with her parents in Grandview. ”
Four generations under one roof. Coming to a neighbourhood near you.
Four generations under one roof. Coming to a neighbourhood near you.
Truth be told, my father grew up in a three-generation household. (His dad’s mother lived with them.)
When I came on the scene, we’d make trips up to suburban NYC to visit my grandparents. My great-grandmother (mentioned in the previous graf) was still alive, and I thought it was kind of a thrill to get to know someone who went that far back in the family. She was the only surviving family member who’d emigrated from County Cornwall, and, oh, did she have some stories to tell.
“… he recommends to people who are just starting to look into the housing market to first visit a mortgage consultant to see how big of a loan they qualify for. … ‘You should only look to spend 30 percent of your income on your housing. That’s just good sense.’”
If you need to visit a “mortgage consultant” to figure out what 30% of your income is, you shouldn’t be buying a house -period.
Layoffs abound, inflated prices of everything everywhere…….wtf.
Stagflation baby!
So much propaganda, so little time to address it. Ben, you noodlehead! I was going to do other things today. But then you dangled this bait in front of my nose!
“‘It’s a godsend for the housing market that a lot of foreclosed homes aren’t being released,’ she added.”
Godsend for whom? THE GOVERNMENT. THE BANKS. THE MBS INVESTORS. No one else. Shytte, this is a blatant exposure of collusion and price controls, and nobody out there in the mainstream media is batting an eye. Of course, the MSM has long been compromised and are part of the Great Conspiracy to defraud and destroy the middle class.
That was a blatant admission that they are illegally keeping the prices higher than what the real, legal market would set.
(Under current laws, a first-time buyer is anyone who has not owned in three years.)
More collusion. They are changing every little rule they can, to help keep the Buying Circus going. I lost track of all the rule changes they were sneakily implementing back in 2009. That hardly matters now, however. I was trying to predict the year of the recovery from those tracks. Now it’s pointless. We’re in another Great Depression and the recovery will happen in generational time, not just years. Japan engaged in the same institutional deceit, and has paid the same generational deflation price.
And despite working two jobs she fell behind on one of her bills and her credit score dropped, making her ineligible for a home loan she was preapproved for.
Put her picture on a poster. She is the prime example of a person who should never buy a house. First she never has enough capital, and that was always her choice in life. Second she can’t even remain stable long enough to be a good credit risk, hence no lender should endow her with a mortgage, and that’s entirely as it should be.
Some people just can’t capitalize themselves. Or be a credit to themselves. So they should remain renters and family cohabitants. And there’s nothing wrong with that. Sure, I may laugh that a person who cohabitates (hence paying little to no rent) and works two jobs can’t pay her freekin’ bills, but again, that’s my liberty and there’s nothing wrong with that, either. We have a lot of liberty, from the liberty to be stupid and irresponsible, to the liberty to be precise and judgmental. LaViolette is indulging in the former liberties, and myself in the latter.
“It’s a godsend….”
We live in a “free market economy”…..Yeah, sure, right.
That’s why I think 20% down won’t help. They’ll just withhold even more supply, bulldoze it if the have to, to keep prices from falling.
That’s what I’m starting to think. I can’t say I love the trailer park, but I’ll live here a LONG time before I capitulate to their plan for me.
Unfortunately for people like me in denser populations, there’s another plan — that of apartment landlords to raise rents up to what the market will bear. And in areas with stable jobs and lots of immigrants, the market will bear very high rents. Rents go up, casting about for for takers. Section 8 allotments follow and/or everybody shacks up with relatives or roomies.
Singles are squeezed from both sides, and my only choice is which plan to capitulate to.
Even living with her parents (no rent payment?) and two jobs, she’s still behind on her bills. This is the life of the under $500/week crowd.
And this also disturbs me: there are no more family homesteads to fall back on. The last generation who had career stability and locational stability enough to pay off a house were the Greatest Generation and early boomers, and generations after are using the house as a fallback position.* Late boomers and Generation X-Y-Millenials are constantly job-hunting and moving.
It reminds me very much of the third-world underbelly that was exposed right after Hurricane Katrina. Thousands of poor were still living in grand-dad’s shotgun because it’s either that or the street. They were so dependent on the government check that they were penniless because Katrina had the gall to strike on the 30th of the month.
We could argue that those people in the 9th Ward were lazy and stupid. But that’s neither here nor there. The way things are going now, chances are high that even responsible people under the age of, say, 45, will ever be in a position to pay off a house. What will be the fallback position for them or their children?
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*and only if the old widow was kind enough to die in her sleep with no debt. What if the kids had to sell the house to pay for the nursing home before Medicaid kicked in?
And this also disturbs me: there are no more family homesteads to fall back on.
That’s one way that I’m really lucky compared to most, thanks to my grandparents on my mom’s side whose land is still in the family. If all else fails I can always go back to Wyoming and I won’t starve. For a lot of other people that option has been long gone for at least a couple of generations.
They were so dependent on the government check that they were penniless because Katrina had the gall to strike on the 30th of the month.
Correction: Hurricane Katrina made landfall on August 29, 2005.
Oxide said: And this also disturbs me: there are no more family homesteads to fall back on.
Oxide, I’ve read your posting for years, and I luv ya as much as a bro can without going full gaytard, but that’s a wrong statement. We have people living too apart from their families, as long as they had their own houses. This has been advancing for decades. And wouldn’t you know? The average size of the U.S house has doubled since 1980s (i.e. those same decades). So we have too many houses, and those we do have are too big. So the family homesteads can re-assert themselves by the millions in the space of maybe 2 years, as people ditch their alligator housing and reform their legacy large family units in the largest house that the new family unit can afford. The cost? Maybe a few hundred bucks per house, for various adaptations. You wouldn’t even need stuff like a larger fridge, since we tend to have enormous fridges to begin with.
My point is that the potential for family homesteads is always there and is fairly easily to achieve in “the real”. We have to just reach out and do it. Since Americans are the most delusional people to have ever existed this side of the Incans, naturally that ‘doing’ ain’t gonna ‘do’ until they are forced by economics to do it. But it’s coming. Wages must fall, jobs must vanish; so families must cohabitate again.
You don’t have to go gaytard if you’re a bro, cuz I’m a ho.*
By family homestead, I was referring to a paid off SFH built in the 50’s. But I guess you’re right — we’ll go back to the older version of a family homestead. The FB’s of the family reunion will foreclose and declare BK, pick the most prosperous family member, and move in en masse. (Thus annoying the heck out of the prosperous member. ) Pool their monies into the mortgage payment, and voila, new paid-off family homestead.
The real problem for all these extended families is going to be jobs for all the various members in one place. Isn’t that why families split up the first place? Kids went to college and then moved away to careers of their own. Well–p, I guess they could work at McD’s…
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*I’m not a real ho, only a female. I just couldn’t resist that rhyme.
I’ve read ya all these years
Afraid the likin’ was makin’ me queer
Always thought you were a bro
Now I find that you’re a ‘ho?
Well, knock me down on my side
Good to finally meetcha, Oxide.
Seriously, I know there are real barriers to the reformation of the family homesteads. People do like living apart, and living with your family is still widely perceived as being socially inept, even POOR. But economics is a powerful force, and eventually it will overcome all that.
I had to sell my family home purchased 2 generations ago to pay for Mom’s care. I had no choice as she requires round the clock care which costs dearly. I tried keeping her home and she fractured first her arm and then her hip. No choice but place her. It is 2 years and 150k later and I am going broke. My security of a family home is gone, the economy has killed our family business and my own health insurance is now 1200 a month and pays only half of my husband’s medication for diabetes.
“She thinks government related lenders such as HUD, Fannie Mae and Freddie Mac, have begun to release foreclosed home now. ‘But it seems to me a lot of private lenders still are holding back the release of foreclosed homes, creating what’s called ‘ghost inventories,’…”
If true, it is good news the foreclosure homes with federally guaranteed mortgages are hitting the market before the private lender foreclosure homes, as the sooner these homes are sold, the less U.S. taxpayers stand to lose.
“Even those who have decent credit scores are still being cautious.”
It could well be that caution explains why they have decent credit scores.
Yeah, when even the financially prudent types won’t be reckless with their money any longer, you know something’s got to give here real soon!
Amen, PB.
“Collette says he got contradictory advice and the bank lost his files.”
Lots of that going around lately, banks losing files. This usually happens when it benifits the banks. Very strange.
“He said he drew down his savings, thinking he was on track to keep his home, only to find out he would likely lose it and be left with an empty bank account.”
A couple of things:
1. He stayed and he paid.
2. He kept the house occupied.
Both 1 and 2 are of great benifit to the bank.
Another couple of things:
1. The unstated but implied policy of “No FB dollar shall be allowed to escape” was active and in full force. And this policy was successful because:
2. Hope was kept alive. This living hope has kept and will keep the F firmly attached to the B until the FB is entirely bled of all the cash he has and all the cash he can get ahold of. After all the cash is gone the FB will be tossed into the street and the bank will take possession of the house - of which it has been the true owner of
all along.
What amazes me most about articles such as this is the FBs do not seem to have a clue as to what is happening to them, of how they are systematically being done in.
Lots of that going around lately, banks losing files. This usually happens when it benifits the banks. Very strange.
I saw this personally when a friend went through the mortgage-adjustment process through ACORN. Lots of faxes and files were lost. Ultimately, the bank contrived a single lost fax into a missed deadline, which spawned a single court appearance, for which they charged about $3000 for “legal fees”. So I picked up the cluephone to see that that’s what they really wanted in the first place. And that makes sense, since banks always want a fat fee for any sort of re-fi, which is all mortgage adjustments really are.
Bombing banks and assassinating bank executives are just about the only practical ways to fix what’s happening now. Illegality and deceit are now the real practices of our banks.