The Nut That Has To Be Cracked
It’s Friday desk clearing time for this blogger. “San Antonio real estate was on fire in 2006. Builders started a record 19,000 homes and California investors swooped into the market to snatch up rental homes. But in retrospect, the hottest point of the housing boom might not have been the greatest year to take out a mortgage loan. Even in July 2007, loans from 2006 made up 17.4 percent of the foreclosure postings. That means many of those homeowners made just a handful of payments before landing in foreclosure.”
“Thomas Thomson, professor of finance and real estate at the University of Texas at San Antonio, said 2006 was ‘probably the height of a few things going on. You had bad mortgages and house prices starting to decline soon after that.’”
“A settlement between Bank of America and several states is in jeopardy as Nevada decides to sue over what they call ‘fraudulent home loan practices.’ Harry Richard, a Bank of America home loan customer claims he’s getting the run-around. ‘At one point, they did offer me a new loan but the payment turned out to be $500 or $600 more than what I couldn’t make to begin with,’ he said.”
“Bassett resident Rose Gudiel rejected a $4,000 cash offer to leave her home without a fight late Monday afternoon at a meeting with OneWest Bank officials. ‘It was a pretty short meeting and it was basically cash for keys,’ she said. ‘They were very adamant about not being able to do anything beyond that.’”
“The meeting came just four days after Gudiel received her evection notice and 11 days after 50 protestors invaded the lobby of the Pasadena bank. Gudiel insisted she’s not budging from her home. A court date on the eviction notice has been set for Sept. 6 in Los Angeles Municipal Court. ‘I’m going to keep fighting for my home and I told them that,’ Gudiel said. ‘If they bring the police to arrest me, I’m not leaving.’”
“Q: My cousin got a loan modification in two weeks. Can I? My neighbor told me that if you send your bank a short sale application on legal-size paper, it gets done in half the time. And I read on the Internet that if the bank loses my mortgage note, I will get the house for free. Is this true? – A number of readers.”
“A: Your cousin’s loan mod probably took six weeks or longer. A short sale application on legal-size paper has no bearing on how fast the bank may approve it. And if your lender loses the note, you do not get your house for free. The bank just has to go through a simple legal process of having a copy of it recognized by the court so that the bank can move forward with the foreclosure.”
“I hear so many of these stories at my office that I have adopted a name for it: The Neighbor Syndrome. People want to believe that there is some magic trick or secret sauce that will make all of their problems go away with minimal effort. If you hear the stories often enough, you may actually start believing them and make bad decisions that greatly affect your life.”
‘I have spoken to dozens of people who have stopped making their mortgage payments in order to get loan modifications when a little research from widely available sources would have quickly shown them that they earn way too much money to ever qualify for the modifications. Now they are in foreclosure, they have to pay attorneys to clean up the mess, they’ve ruined their credit scores and they have to pay large penalties to the banks to get caught up.”
“Massachusetts will need more than six years to clear out all homes currently in the foreclosure ‘pipeline’ if present trends continue, new figures show. And that doesn’t include houses that fall into delinquency between now and 2017, nor properties where banks have seized deeds but haven’t evicted the residents or resold the homes.”
“As bad as things are here, the Bay State’s backlog pales in comparison to New York’s, where LPS estimates clearing the pipeline will take almost 58 years at current levels. Herb Blecher of market tracker LPS Applied Analytics, which studied public records to make its estimates, believes things won’t really take that long, arguing that the U.S. economy and housing market will eventually improve and help some people avoid foreclosure. He also thinks politicians who’ve previously pressured banks to work with troubled homeowners will eventually tell the industry to speed things up and break the logjam.”
“‘Efforts to keep borrowers in their homes are valiant, but we eventually need to move to a resolution stage and clean the pipeline out,’ he said.”
“In response to the Aug. 21 article ‘Foreclosure rescue’ bill must move forward,’ the measure will ultimately hurt the very people the bill purports to help. One problem with the bill is the ‘82 percent’ rule. The buyer of a distressed property must pay at least 82 percent of the ‘appraised value.’”
“Why would buyers pay 82 percent when they can simply wait for the bank to take back the property and purchase it from the lender at 50 to 60 percent of the market value?”
“Jeffery Brown: Amid anger over the banks’ handling of foreclosures, 36 state attorneys general and the Obama administration have been trying to negotiate a settlement with the five largest mortgage servicers. Guy Cecala, publisher of ‘Inside Mortgage Finance’: You know, the foreclosure situation is the real nut that has to be cracked. And that’s going to take time to do it. And we’re not making any progress on it. In fact, we’re delaying it.”
“During a swing through Southern Oregon this week, Fred Dickson, chief market strategist for Northwest financial firm D.A. Davidson & Co, said questions coming from investors center around a possible return to recession. Right now the easiest question to answer is about interest rates, because the Federal Reserve is adamant that it intends to keep interest rates ultra-low for a long time, most likely about two years.”
“He said the Fed’s quest is to provide a floor for the housing market. But there has been no rush to buy. ‘There are individuals who could make a marginal dent in the supply of houses,’ Dickson said. ‘But there seems to be reluctance by potential buyers because there might be lower prices six months from now.’”
“Despite a $9.5 million state housing grant for the Encanto project, and tax credits, federal stimulus bonus and $650,000 from the city of Ventura for what was once called Soho Lofts, a market-rate condominium project purchased at the very height of the real estate cycle by the Housing Authority, the costs per apartment unit for Encanto are $460,000 and an unheard-of $634,000 per unit for Soho.”
“Compare these taxpayer-subsidized costs with the median price of a single-family home in Ventura (in the same ZIP code) of $320,000. With even the luxurious Bacara Resort & Spa in Santa Barbara recently selling for $290,000 per room, less than one-half what it cost to build in 2000, and brand-new apartment and condo projects throughout Southern California currently being sold at between $200,000-$300,000 per unit, the development and construction costs of both Encanto and Soho are twice the development costs of similar projects, regardless of city grants, state funding and federal tax credits.”
“The Housing Authority could provide twice the number of affordable housing units currently under development for low-income residents at the same costs, by purchasing apartments and homes in foreclosure, renovating existing apartment buildings, acquiring unsold condominiums, and avoid buying private development projects at the top of the market.”
“My questions are for the state and federal government and to the banks. Whatever happened to good old common sense? What the heck is going on? Where is the bail-out money and what happened to our economy? Why don’t the elected officials and their staff understand the basic idea that when you don’t have the money you can’t spend it?”
‘Last Thursday at the Farmers’ Market, I asked my 7-year-old nephew what would happen if you had 20 cents and a soda was a quarter. He said, ‘I won’t have a soda today!’”
This mess continues to be fueled by the banks and feds who know darn well that markets like Cal are being propped up as to keeping forclosures off the market to keep prices inflated.
Many people are on the sideline ready to buy and this inventory will go quickly when it clears then this country can get back to a resale market of buying and selling. It is not good business for the banks to do this so they again control the situation like they did when they created this boondoggle, the whole thing is a scam.
‘the Federal Reserve is adamant that it intends to keep interest rates ultra-low for a long time, most likely about two years…He said the Fed’s quest is to provide a floor for the housing market’
Where does is say anywhere the Feds “job” is to put a floor under housing? This in spite of all the problems caused by keeping rates too low in the first place!
I often wonder, why does the Fed do this sort of thing? I’m sure the answer is complex, but it can be boiled down to what in is their best interest. Here’s a few things to consider for us mere citizens who can’t print money; these people don’t work for us. They don’t represent us. They aren’t accountable to us. Their interests aren’t ours. Indeed, their interests may likely be in conflict with ours. IMO, as long as we keep these things in mind, understanding what they do and what we should be doing, is much clearer.
I like it Ben. Clarity.
As I’ve taught my daughter since she was 3 about sales people, “they’re not your friends” and “their job is to separate you from your money…a don’t let them do it”.
She now recites back to me.
‘Despite a still fragile economy and the country’s blemished credit rating, many experts have faith the housing market is still moving in a positive direction. ‘Anything that’s priced right, I’m getting offers on them, sometimes even multiple offers,’ Maitland Re/Max real estate agent Mike Rance said. ‘It’s a great time for a buyer to buy, but you have to be ready to pounce when you find the right property.’
“…many experts have faith the housing market is still moving in a positive direction…”
Stupid is what stupid sez…
When my kids were little and asked what a tv comercials was for, I told them “To sell you something you dont’t need.”
Hmm…depending on how young the kids were, I might go with “to make you want something you don’t really want.” Buying/selling something (vs having or not having it) actually takes them a while to figure out. When my nephew recently wanted something he didn’t ask someone to buy it for him. He pointed at it and said, “my [toy name].” He didn’t get it.
Auntie Polly heard about the incident, found something similar (really cheap) and sent an assortment. They were a hit.
“my” [toy name]
Looks like he’s been well trained by the newest trend in marketing. It used to be that I “wanted” A thing, and then I “earned” the money for THE thing, so I could go “buy” THE thing. Only then would it be MY thing.
That’s four steps to possession! And it sounds suspiciously like work. Well that’s no good. So now, you just skip to the end, say “my” thing, and possession is complete in one easy, optimistic, everybody’s-a-winner step. What could be easier!
Um…He’s 2. Just turned 2. He hasn’t been trained in anything. If my niece (4 1/2) tried something like that, she would be manipulating for someone to buy it for her. But when she was just under 2 years and found herself in an aisle full of dolls, she just wandered from box to box saying, “baby” and reaching for them.
They understand having stuff at that age. Having stuff means you get to hold it and you can take it with you and you don’t have to give it back. They really don’t get the whole concept of buying stuff. It just doesn’t register.
As I’ve taught my daughter since she was 3 about sales people, “they’re not your friends” and “their job is to separate you from your money…a don’t let them do it”.
She now recites back to me.
And, RAL, this is the gist of what happened when I recently caught up with that former coworker who’s now selling life insurance. Oh, did he turn on the charm and treat me like I was his BFF.
As mentioned previously, I went ahead and purchased a useless whole life insurance policy.
But I had second, third, and fourth thoughts almost immediately. To the point where I consulted with my attorney nine days after I’d purchased said policy.
I wanted to cancel it, and my attorney’s advice was simple: Call the company, tell them to cancel the policy. And call the bank so that the company doesn’t start auto-withdrawing money from my account. I’ve done both things.
Looks like I’ll be getting all of my money back except for the lawyer’s fee and the money spent on sending official cancellation documents to the insurance company.
Then there’s the time factor: I spent a lot of time meeting with BFF, and then with my attorney. Not to mention the transit time to and from the meetings. Then there was the time spent on actually cancelling the policy, which included preparing and sending documents. I won’t be getting any of this time back.
BTW, interesting development on the BFF front. Once I started voicing regrets about this little deal, oh, did he cool off in a hurry.
Something tells me that I won’t be at all welcome at his 50th birthday bash on Sunday. But I’ll betcha that once the party-goers catch wind of what he’s doing now (selling life insurance), the room will empty in a hurry.
“As I’ve taught my daughter since she was 3 about sales people, “they’re not your friends” and ‘their job is to separate you from your money…a don’t let them do it’. ” She now recites back to me.
The irony is that due to your parenting, in the end she might make an excellent salesperson.
Bernanke is hoping against hope that there won’t be another depression in this country, and that he won’t be one of the people history blames for it. His attitude is “f*** the people who played by the rules; I need to save my own a**.”
The Federal Reserve System consists of 12 regional Federal Reserve Banks, which are owned by somewhere south of 10,000 privately and publicly owned banks and savings institutions.
While it may not be written anywhere that the Fed’s job is to “put a floor under housing” it will continue to act in the best interest of their owners - the banks that own shares in the 12 regional Federal Reserve Banks.
High home prices = no loan losses = no capital problems = the bankers get to keep their jobs and bonuses
Pretty simple really……….
This. The Fed always represents The Banks.
A rolling loan gathers no loss.
“The meeting came just four days after Gudiel received her evection notice and 11 days after 50 protestors invaded the lobby of the Pasadena bank. Gudiel insisted she’s not budging from her home. A court date on the eviction notice has been set for Sept. 6 in Los Angeles Municipal Court. ‘I’m going to keep fighting for my home and I told them that,’ Gudiel said. ‘If they bring the police to arrest me, I’m not leaving.’”
How exactly do you “fight for your home” when you have not made a mortgage payment in years and took out home equity loans out the wazoo?
The clowns who bought a house post-2001 or drew out “equity” need to drown a 1000 times and then some. I’m hearing the voices getting louder for principal forgiveness and essentially a free house.
Dream on you fawkin deadbeats. You’re not getting a free house.
Dream on you fawkin deadbeats. You’re not getting a free house.
I’m not so sure about that.
A free house - probably not, a reduction in principal to FMV with the FHA holding the bag if the value doesn’t increase, much more likely - probably a done deal behind the scenes.
The problem is, we (the ones that have saved and didn’t participate in the housing madness) are way in the minority and the one’s that overpaid and over-borrowed have more votes than we do.
I, for one, am resigned to the fact that loan forgiveness (whatever they call it or whatever acronym they use) is a foregone conclusion.
We know what would happen to prices if lenders foreclosed like they should - so do the folks in Washington. And they know what that would do to the banks. So if foreclosures (in any meaningful amounts) are off the table then the only other remedy (as the powers that be see it) is principal forgiveness - in whatever form.
I, for one, am resigned to the fact that loan forgiveness (whatever they call it or whatever acronym they use) is a foregone conclusion.
I’m of two minds on this particular issue.
Like many HBB-ers, I’ve been of the “saving up and avoiding bubble participation” mindset for many years.
On the other hand, I’m in a town where the amount of vacant housing is on the rise. And, like it or not, houses need people to live in them and take care of them. All of this vacancy does not bode well for our community.
Then why not go out and buy a house and wait for your principle reduction?
In case you’ve missed it, the holders of the notes are foreclosing in numbers never seen before. I was in Phoenix last week, and I saw 3 auctioneers working continuously for 6 hours. I understand that happens every weekday. Even more are held at trustee offices away from the courthouse.
Again, the “banks” hold a very small percentage of the loans, and really only service a small number. The actual owners of the mortgages have the right to foreclose and are doing so. In addition, private mortgage insurers are now stepping in and foreclosing. What you read and see on TV is largely for public consumption, IMO.
Can’t speak for all of San Diego, but just one zip code (Poway — 92064) for which we receive the local paper has posted 10+ foreclosures a week, for every week in recent memory. That is a rate of 52*10+ = 520+ foreclosures a year, just for one zip code. Many of these homes have defaulted loans valued in excess of $1m, and the average is well north of $500K per loan.
There are something like 234 San Diego County zip codes. If foreclosures in all of them average out to 10+ per week, we might have a real problem, as this would pencil out to
234*10*52+ = 121,680+ a year — a real problem given that homes sell on the order of 3K a month here (36,000 or so a year).
“You’re not getting a free house.”
Doesn’t that really depend?
For instance, if you relocated from California to Detroit, you might not be able to buy a house for free, but relatively speaking, the price tag woulds seem like pocket change compared to California homes which are still ‘a bit frothy.’
“Gudiel, a state employee, has been attempting to get the bank to modify her loan, which requires a $2,456 monthly payment, for almost two years. The request came after her brother was gunned down in La Puente in 2009, causing the household income to drop, she said.
Although the income has long since recovered, the bank has consistently refused to give her a loan modification, she said.
“They came into the meeting and basically said, ‘we reviewed your paperwork and this is the best we can do,”‘ Gudiel recounted. “Which is nothing.”
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And the reporter didn’t ask to see this paperwork? And I don’t get the “income has long since recovered.” Did she find another roomie? If the income has recovered, why can’t she afford the mortgage?
If I stop paying my rent, can I get 50 people to protest for me against “agressive” eviction practices?
Notice how the “protestor” shown is wearing a government-labor-union SEIU shirt. Did she take “sick time” to attend the protest?
“My questions are for the state and federal government and to the banks. Whatever happened to good old common sense? What the heck is going on? Where is the bail-out money and what happened to our economy? Why don’t the elected officials and their staff understand the basic idea that when you don’t have the money you can’t spend it?”
‘Last Thursday at the Farmers’ Market, I asked my 7-year-old nephew what would happen if you had 20 cents and a soda was a quarter. He said, ‘I won’t have a soda today!’”
It is OBVIOUS sir - you are a evil-racist-Christian-militia-Neanderthal-tea party conservative.
How DARE you even MENTION that government must live within means?
Why - you must just HATE blacks, women, the disabled, workers, hispanics, the old and children…
Can we hire that 7 year old to replace Bernanke?
I thought we learned from the first Depression the gov must keep spending to get out of it??
Cuts now seem to throw us into Armageddon. Worse than Greece.
If we say the federal government must balance the budget, do we go with 50% across the board cuts?
Or do we attack globalization to bring back manufacturing jobs, and attack wage defaltion, while reversing the changes we’ve made to the tax code over the last 60 years?
We can’t federal budget cut our way out of international trade deficits or $3 an hour wage in Chindia.
50% cuts? then we get zombies and chaos in the streets as crime goes wild. What will that cost us?
Exactly, Darrell!!!
“A settlement between Bank of America and several states is in jeopardy as Nevada decides to sue over what they call ‘fraudulent home loan practices.’”
I most sincerely hope the settlement falls apart and individual lawsuits keep coming out of the woodwork to endlessly gnaw on Megabank, Inc for years to come.
“As bad as things are here, the Bay State’s backlog pales in comparison to New York’s, where LPS estimates clearing the pipeline will take almost 58 years at current levels.”
Heh heh…my kids will all be geezers before the New York state foreclosure backlog finally clears the cloaca…