Paul Jackson from HousingWire persuasively argues that private property rights are being trampled.
Irvine Home Address … 4152 HOMESTEAD Irvine, CA 92604
Resale Home Price …… $640,000
And all the clouds come in day by day
No one stop it in anyway
And all the peacemaker third war officer
Hear what I say
Police and thieves in the streets
Scaring the nation with their guns and ammunition
Police and thieves in the street
Fighting the nation with their guns and ammunition
The Clash — Police and Thieves
What do you do when the people who are supposed to protect you and serve your interests steal from you? Protest? To whom? What do you do when the government that is supposed to look out for us steals our money and gives it to greedy and corrupt corporations and bankers? It's happening to you right now.
The greatest heist in our country’s history
by PAUL JACKSON — Tuesday, October 5th, 2010, 5:29 pm
Our economy is being stolen from us, and our nation’s real estate crisis is providing cover for what will — if it goes unchallenged — go down as one of the greatest heists in our country’s history.
Yes, a mortgage crisis of historic proportions has now suddenly become a foreclosure crisis of historic proportions. And it’s front page news, too, bringing the market pundits out of the woodwork to exclaim as loudly as they possibly can that the entire U.S. mortgage system is a fraud.
Those three links are great supporting materials. If you are inclined to explore them, they are worthy of your time to read.
Banks are admitting to having taken shortcuts with their paperwork, or not having notarized documents properly, or delegated signing authority when they should not have. Yes, procedures haven’t been followed. And, yes, banks are going to pay for it, some far more than others.
Paul is referring to this tempest in a teapot: Paperwork storm hits nation's biggest bank. This news story isn't really news, but it serves to stoke the false hopes among debtors that mortgage relief is forthcoming. It isn't.
I’m even sure all of these procedural errors — and some that have yet to come to light — are on varying levels endemic and common throughout the mortgage servicing industry.
But in the end, am I the only one asking: who really cares? Does any of this make it more likely that a borrower will suddenly be able to afford their mortgage? Isn't that what really matters?
The Fallacy of Financial Innovation.
What really should matter is this: as a nation, we have lost at least $2 trillion in wealth thanks to the economic downturn, led by an absolute collapse of our housing and mortgage markets. It’s a collapse we have all yet to recover from, as a host of well-intentioned but ill-fated policies have done nothing except prolong pain — not only for banks, who are still playing hide-and-seek with bad assets on their balance sheets, but also for borrowers, who are being lied to by our government and by the very consumer advocates who claim to wish to help them.
The results emerging here threaten our nation’s very system of private property rights — a fundamental aspect of our democracy. But not because the banks have abused procedure, as so many pundits have conveniently alleged; instead, it’s because the very procedures designed to protect our nation’s property rights are now being used as a weapon against us.
And most of America doesn’t even know it’s happening.
An economy of lies
Just how much hide-and-seek is still out there, playing games within balance sheets of major financial institutions? Plenty. In March, I highlighted analysis from Laurie Goodman at Amherst Securities, who found that of more than $1 trillion in second mortgages outstanding, $963 billion remained on the balance sheets of commercial banks, thrifts and credit unions. As another way of slicing it, a look at Federal Reserve data shows that as of Sept. 22, U.S. commercial banks held $592.1 billion in revolving home equity loans — essentially unchanged from August of 2009, when banks held $605.2 billion.
Banks Refuse to Recognize HELOC and Second Mortgage Losses.
If you believe that the second liens and home equity loans banks are holding on their balance sheets are worth anything close to what they’re being booked at, you haven’t looked at what second liens tend to bid at on the secondary market: anywhere from 5 to 7 cents. And that’s for performing second liens.
Let that sink in a moment. Our banks are holding a trillion dollars of worthless second mortgages on their balance sheets. Do you see why short sales take forever? Banks don't want to recognize these losses, so they use the short-sale process as a means of facilitating negotiations with delinquent borrowers to get some recovery on their second mortgage loan debt.
Most properties that go to foreclosure quickly are those where the first mortgage is held by one bank and the second is held by another. Rarely do banks go to foreclosure if they hold both mortgages. Instead they endlessly amend-extend-pretend in hopes that these second mortgages will come back in-the-money from their currently worthless position. Banks live in a state of perpetual denial concerning these bad second mortgages. The horror of the reality of their situation is too terrible to be accepted.
Layer on top of that millions of borrowers who aren’t deleveraging yet, because Uncle Sam is telling them not to, and consumer advocates have swooped in to help. We’ve sold the American populace on the idea that their home truly is the American Dream, and that saving that dream is worth wallowing in bad debt and insolvency for years — rather than simply leaving it behind, deleveraging and moving on with their lives.
Foreclosure Is a Superior Form of Principal Reduction.
Toward this end, the HAMP program is an outright and unmitigated disaster: Consider that through August 2010, 468,000 of the 1.4 million homeowners offered trial mods had received "permanent" modifications. Even if only 40% of these “permanent” modifications redefault — an incredibly low redefault rate — that’s 280,800 borrowers that get to stay in their homes. Assume that number triples between now and 2012, when HAMP is slated to expire: that means 842,400 borrowers will be assisted by HAMP when all is said and done.
HAMP's program cost? $50 billion. The final price tag? $60,000 per success. We might as well have just given the whole lot of our nation’s delinquent borrowers a year’s worth of mortgage payments as a cash advance — it would have been just as effective.
But HAMP’s real crime isn’t its inefficiency and cost to the taxpayer. It’s the culture of ‘indentured servitude’ that it has spawned upon an unwitting American public. Our government has convinced millions that it is better for them to wait to resolve their bad debt, to wallow in insolvency — that they should attempt to see that debt restructured into some other bad debt, with much of this new, still-bad debt now guaranteed and backed directly by the U.S. government.
The Mechanism For Diverting Bank Losses to the US Taxpayer.
The result is that bad debt lurches along in our financial system, never really cleaning itself out; and borrowers are left with horrible credit for years as they work through attempting to restructure their debt again and again, damaging their future hopes of ever really contributing to GDP growth again.
It’s a crime upon our nation, financially and socially, yet it’s one that the American people have allowed themselves to be subject to. We are, after all, a government by the people and for the people.
But the real reason we aren’t seeing the sort of economic growth most have expected is precisely because we haven’t allowed the consumer to repair their balance sheets, a necessary and positive thing for the economy in general: we’ve encouraged them to do the exact opposite.
Eliminating Government Housing Subsidies Will Improve the Economy.
It’s somewhat convenient for the nation’s banks, too, that consumers decided to hold onto all of this debt, too — because doing so allows our financial institutions to continue to play hide-and-seek with their bad assets. Which avoids the need for messy additional government bailouts, politically untenable as they are these days.
So everyone plays along with the ruse.
Regardless, the inconvenient truth here is that until we allow this billions of dollars worth of bad mortgage debt to truly course through our economic veins, to work itself out, we won’t see an economic recovery. Deleveraging privately — and now, through transfer of debt, publicly — is a necessary prerequisite to future economic growth in our country.
Foreclosures Will Drive the National Economic Recovery.
Love me tender
Foreclosures, then, aren’t really the enemy at our gates; they’re instead a necessary and healthy indicator of market correction. They are proof that our nation’s well-developed system of private property rights is, indeed, actually working as it should.
Foreclosure is not the problem; foreclosure is the cure.
But our government has instead made foreclosures into a “last stop” measure instead, something to be avoided at all costs as well as something that probably rates just below Big Tobacco on most American’s scale of corporate loathing — this is a huge mistake, as NYU law professor Richard Epstein notes in a brilliant column published in Forbes magazine.
By giving in to sensationalism over robo-signers and who notarized what, we’ve allowed procedural gaffes to substitute for true substance. And we’ve forgotten why those procedures really exist in the first place — not to protect the hapless borrower, who has already defaulted, but to instead protect our nation’s sacred system of land rights. To protect the foundations of our very democracy.
Money Rentership: Housing and the New American Dream
“Foreclosure should be understood as a healthy form of market correction of prior transactions. It should not be regarded as a form of original sin, to be tolerated only under the most extreme circumstances,” writes Epstein. “The older rules were designed to allow strict foreclosures in order to clear title. The new rules will result in short-term victories for some besieged landowners — and fresh losses for everyone else.”
California, at least, seems to have had its priorities straight. Under California law, borrowers looking to challenge a foreclosure sale on grounds of any irregular procedure (like affidavit signing, notarization, and the like) must first make a “valid and viable” tender offer to the lender for the amount due on the loan. In other words: a procedural error doesn’t matter, if the borrower still can’t pay the debt.
After all, as I noted before and will say again: our nation’s detailed and paperwork-heavy procedural requirements don’t exist for the protection of the borrower in default. They exist to protect our nation’s very system of property rights.
I wasn't aware of this law prior to reading this article. It is a good law, IMO.
California’s "tender rule" has helped the courts in the Golden State avoid much of the same fate as those in Florida, which have quite literally been besieged by claims of procedural irregularities. It’s why California is more able to work through foreclosures, and the single largest reason why the state is closer to finding an equilibrium in housing than Florida is.
Actually, we are only at an equilibrium because we aren't foreclosing and putting supply on the market, but I don't want to take away from Paul's larger point.
But California attorneys I speak with now say that the “tender rule” in California is under heated attack from consumer attorneys that would see the rule turned around, allowing California’s courts to resemble the mess that is Florida’s.
Rather than fighting California’s “tender rule,” what we really ought to be doing is considering a national, federal law that makes something like the “tender rule” a national requirement. In other words, if you can’t make good on your debts anyway, procedural missteps in a foreclosure are immaterial and something for attorneys and their bar to worry about.
By subverting our nation’s real estate law to favor borrowers who have no intention of fulfilling their debts, we risk undermining everything that establishes private property rights in our country — and perhaps the coup de grâce of it all is that the American public will be cheering when it happens.
How very eerily Orwellian of it all.
The enemy at our gates threatening our very republic isn’t Wall Street, isn’t banks, isn’t foreclosure mills, isn’t botched paperwork, isn’t loan officers making empty promises, isn’t investment banks rolling loans into CDOs and other esoteric investments, isn’t rating agencies. Instead, we've met the enemy, and it’s us.
Paul Jackson is the publisher of HousingWire Magazine and HousingWire.com. Follow him on Twitter: @pjackson
Obviously, I think Paul Jackson really gets it.
$300,000 in HELOC abuse
Nearly every day I profile a house where someone extracted hundreds of thousands of dollars in HELOC money. Since these are almost always short sale and foreclosures, you know that these people have nothing to show for all that spending. They couldn't have buried it in the yard because they are losing the yard too.
- Today's featured property was purchased for $475,000 on 10/15/2003. The owners used a $380,000 first mortgage and a $95,000 down payment.
- On 11/5/2004 they refinanced with a $530,000 first mortgage.
- On 5/3/2006 the obtained a HELOC for $150,000. We know they spent it because this property is listed as a short sale.
- Total property debt is $680,000.
- Total mortgage equity withdrawal is $300,000.
Do you want to pay off their debts? The bank is willing to loan you money at 4.3% to do it.
Irvine Home Address … 4152 HOMESTEAD Irvine, CA 92604 
Resale Home Price … $640,000
Home Purchase Price … $475,000
Home Purchase Date …. 10/15/2003
Net Gain (Loss) ………. $126,600
Percent Change ………. 26.7%
Annual Appreciation … 4.3%
Cost of Ownership
————————————————-
$640,000 ………. Asking Price
$128,000 ………. 20% Down Conventional
4.74% …………… Mortgage Interest Rate
$512,000 ………. 30-Year Mortgage
$128,624 ………. Income Requirement
$2,668 ………. Monthly Mortgage Payment
$555 ………. Property Tax
$0 ………. Special Taxes and Levies (Mello Roos)
$53 ………. Homeowners Insurance
$45 ………. Homeowners Association Fees
============================================
$3,321 ………. Monthly Cash Outlays
-$451 ………. Tax Savings (% of Interest and Property Tax)
-$645 ………. Equity Hidden in Payment
$230 ………. Lost Income to Down Payment (net of taxes)
$80 ………. Maintenance and Replacement Reserves
============================================
$2,535 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$6,400 ………. Furnishing and Move In @1%
$6,400 ………. Closing Costs @1%
$5,120 ………… Interest Points @1% of Loan
$128,000 ………. Down Payment
============================================
$145,920 ………. Total Cash Costs
$38,800 ………… Emergency Cash Reserves
============================================
$184,720 ………. Total Savings Needed
Property Details for 4152 HOMESTEAD Irvine, CA 92604
——————————————————————————
Beds: 5
Baths: 3 baths
Home size: 2,100 sq ft
($305 / sq ft)
Lot Size: 5,000 sq ft
Year Built: 1972
Days on Market: 77
Listing Updated: 40448
MLS Number: S625484
Property Type: Single Family, Residential
Community: El Camino Real
Tract: Gt
——————————————————————————
According to the listing agent, this listing may be a pre-foreclosure or short sale.
**** REMODELED TWO STORY FABULOS HOME IN A GREAT AREA. A BEDROOM AND BATH ON FIRST FLOOR.HARD WOOD FLOOR GRANITE KITCHEN AND MORE. NEAR SHOPPING, SCHOOLS AND PARKS . SHORT SALE, SEE REMARKS FOR SHOWINGS.
FABULOS?
The real hard truths
1) There will never be a economic recovery until home prices are back close to peak price.
People cannot upgrade, downgrade or relocate, until then (in essence the
economy is stuck until home price are back to near peak).
2) Foreclosure are the best way to ensure that there will be yet more foreclosures.
3) This was all cause by the income decoupling caused by “Owners equivalent rent”.
Huh? I would like to think you are being facetious, but I fear you are serious. I don’t even know how to respond to points #2 and #3, but point #1 implies that the entire economy is simply an offshoot of the home refi market. I don’t think so.
There will certainly be a recovery, once home prices fall to a sensible multiple of incomes, which will free up consumer spending for things other than mortgage payments, and direct investment to productive ends, in lieu of a real estate market based on ever-greater fools with ever more leverage.
In the medium term this is correct. It is also a good thing, because people who cannot afford their homes should lose them. In the long term, there is a limit to the number of foreclosures: responsible borrowers, together with those who own outright and those who bought property at rental parity, will not suffer foreclosure.
What?
Rents have never been high enough to justify the purchase prices we have seen in most areas. The prices were based on successive waves of buyers with unlimited access to credit.
Perhaps I misunderstand your point #3.
I think this point about “Owner’s Equivalent Rent” (OER) is that the Consumer Price Index (CPI) uses OER instead of home prices (or something else). By doing this, the CPI is misleading and that has an effect on things like Social Security payments.
But I don’t really understand any of the points, honestly. Just making a stab at trying to rationalize point #3.
The point I think JiJi is trying to make is that the OER understated inflation, and when the housing bubble inflated, rather than getting a price signal that would have caused interest rates to go up and prevent the housing bubble from inflating, the inflation signal was ignored and the housing bubble was unabated. During the 1970s, change in house prices was measured as part of inflation, and when house prices bubbled then, it was accurately identified, and interest rates were raised properly to combat this inflation. When the OER was used instead of actual changes in house price during the last bubble, it was allowed to over inflate.
Amen, water goat!
Why do you and so many other people still believe that the only way to drive our economy is through the same means that created this debacle, which are debt creation and asset inflation?
Our economy is in the tank because we have lived far beyond our means for decades, and could only pay our debt by creating more debt, until we finally hit the wall- more debt than anybody can ever hope to repay in our lifetimes.
We do not need houses back a peak prices affordable only by means of trickbag loans with DTI rations of 5:1.
The only way we will recover economically is to stop throwing what little wealth we have left at obsolete, unsustainable industries, such as housing, sprawl building, and the pathetic domestic auto industry, and instead invest in the industries and resources that will maintain our standard of living and give us a productive economy in the future… things like more power generation (at least 4X what we currently have), more advanced technologies for electricity generation, rapid railroads, and new technologies that help us become more efficient and that countries like China and India are pursuing full bore, just as they are locking up contracts for future supplies of essential and depleting resources, while we keep shoveling our collective wealth at the dead housing industry.
Housing never was supposed to be this country’s principal economic driver. Many of you posting here are much too young to remember when it was manufacturing that drove the economy in this country, and we were the world’s largest CREDITOR nation. Hard to believe, I know.
Financialization, debt accumulation, and asset inflation are the roads to mass poverty. We’ve gone way too far down that road, and need to reverse direction no matter how much pain that means in the near term.
I remember that…. wish more people did.
Not saying that the bubble was good, or that prices going back to peak will be A) easy B) fun, it’s just that the economy is stuck and will not get unstuck until then.
An yea check the housing bubble in the 80’s and the bank bail out in the 90’s and yes it was the same cause, and will be in the future as well it seems.
I think you are right partially. And this is what Mr. Bernanke and the other policy makers are trying to engineer: Inflation which will float everything including housing prices. Whether that’s a good thing depends on whether you already own a house, if you have a job, savings…etc.
Historically, inflation is a bad thing and it’s hard to control it without much pain once it leaves the station. The current pain is mainly do to housing run-away inflation.
Sometimes I wonder why now? If the sloppy paperwork has been going on for years, why is that suddenly an emergency? If one were more cynical, you could think of it as a timely coincidence kicking in to hold up/slow down foreclosures just as the home user credit/peak summer homebuying season is over and we head into elections …
“Only when the tide goes out do you discover who’s been swimming naked.” — Warren Buffett
hmm in the 70’s if home prices when up 15% in a year, you got about a 15% raise.
That did not happen after 1981 (enter OER)
And you can talk about free up cash, but that won’t convince your neighbor to sell you his home for less than what he paid nor will it make him want to spend until he feels house rich again. Sorry that just the way things work.
Frankly, I’m just tired of waiting. I’ve been sitting on the sidelines since 2005. I’d like to buy a home. Can we get to the bottom already?
With 0% interest rates and 4.25% mortgage rate, recently a lot of my rich friends (but not that rich) start buying REO/short sale as investment property. Along with dollar devaluation and expectation of inflation, the RE prices in Irvine does not have too much rooms to move down, maybe 10% at most.
Since it needs a lot of cash to able outbid other buys for foreclosed or short sell house, maybe you can wait a couple of months, you should able to get better bargain. Also 6 months later, the 30 yr mortgage rates maybe go down to 3.75%.
When he is old and gray, do you think he will really care that he saved 10% on his first home? I think not.
Don’t forget compound interest over thirty years on that 10%.
FCB money is not patient.
There’s still plenty of it swirling around Irvine.
I’m not sure what your hourly rate is, but try adding up all the time you have spent over the past 2 years pondering the home buying decision. Then estimate the time you will spend going forward before your purchase. Calculate the value and then compound interest over 30 years.
It’s the same type of BS calculation, but while your at it give it a try.
Now pretend you had the money to buy 3 Irvine houses with cash and figure out what you should do.
Do you figure you could rent three houses in Irvine with a rate of return better than that of a government bond? Now calculate the value of liquidity.
“Now pretend you had the money to buy 3 Irvine houses with cash and figure out what you should do.”
I would buy 12 in Las Vegas….
Most people here only want to own one Irvine home, and it’s to live in. They have better places to put their investments than Las Vegas real estate.
We’re talking about two types of buyers — people who want to get into a profitable REIT and people who are looking to buy a house to live in. Yes, from all accounts in recent months, buying up cashflow properties in LV seems like a good idea for the former, but the latter are trying to figure out if and when to pull the trigger on buying a home.
I’m sitting on $110K of savings that’s taken years to accumulate, trying to decide between smallish houses in east Torrance and small condos in Brookside Village (south Redondo condos). But I’m also aware of the unemployment rate and the FUBAR California budget, and for me (at age 48), renting until I retire & moving to another state is an option. As someone who’s played by the rules for a very long time, I’m getting very confused by the number and magnitude of the rules they seem to be changing.
I’m probably a canary in the coal mine for the housing recovery. People like me are going to continue to frustrate the real estate industry for quite some time, as holding onto my savings and attendant life options seems like the most rational course until I can start to see the dust settling. I’m not holding out for a nice bungalow in south Redondo — I just see no logic in any part of our economy, and the chaos still seems to be on the rise.
Mofa, excellent point. A number of people including myself are in a similar position. As long as the government keeps allowing banks to run interference and continues to create programs that interfere with the market many people will wait due to the many unknowns.
Will they keep driving rates down? Will they come out with another tax incentive? Will they release more inventory? If they would stop messing with it and let prices come down to where they should we would reach a bottom and be able to recover. As long as them mess with it many people will wait for them to stop.
Moreover, some will give in or others will hang in there with a loan mod and drag this out longer and limit their mobility for many years to come. Anything to help the banks I guess, regardless if it is hurting everyone else in the country. When one looks at what’s being done, it’s clear who is in control.
A few of my friends have gone down the REO/short
sale investment road in Irvine. I can’t say
that I understand their logic. The cap rates
for the REO/short sales recast as rentals that
I have personal knowledge of pencil out to a
cap rate of around 5%.
I can hardly call that a good investment.
Even if inflation takes off (debatable) how
much wiggle room will landlords have to raise
rents? In order to raise rents you must have
wage growth. I just don’t see that one
happening any time soon. Even amongst
professional salaries.
Asset price appreciation? You have got to be
kidding me. If you can’t raise rents and the
cost of taxes, insurance and maintenance
rise (which they will), cap rates will
drop even below the current pathetic 5%.
If anyone can present some actual arthimetic
to contradict these notions, I am more than
willing to listen.
It’s nearly 2011. Life is passing you by while you rent. Good luck.
The trolls are back! They are still alive!
According to your logic, only owners live life?
What a moron.
FCB…did you buy an Irvine property?
Buy now, and get priced in FOREVER.
And dont forget DEBT = WEALTH!
If it’s the wife that’s egging you into buying
a home NOW, dump her, and rent/lease your next gf.
What’s the rush, Brock? You can keep renting, and stashing any additional cash under your mattress.
Of if you have some job security and you know you’re going to stay put for a long time, you can find something at or below rental parity even in the beloved city of Irvine.
It’s a buyers market for those with a big down payment, stable jobs, and a plan to stay in the same house for 20+ years.
Unfortunately I don’t have any of that.
We are past a bottom. I dunno if it was the bottom, but prices are up significantly in almost every market from their absolute lows.
So, we start to play a question and answer game…
1. Are rents in your city higher than typical total monthly costs (monthly payments plus a prorated chunk of the downpayment plus property taxes plus insurance plus maintenance plus HOA fees minus any tax benefits) for the same type/size/location of house?
If the answer is yes, buying now probably makes sense in almost all situations (except in cases where one is sticking around for a very short period or is unable to buy (can’t come up with miminal down payment, have horrible credit, etc.)). This is the case in many areas in “the sticks” (for example, the Inland Empire). This is not the case in “prime” areas like Irvine.
2. Are you planning on living in the house until you die, or at least living there for a decade or more?
If the answer is no to both questions, keep renting. If the answers are no to the first but yes to the second, bargin shop. Take your time, find the best place, but don’t get into stupid bidding wars.
Bottom ? Geotpf. I just dont think so.
http://www.housingtracker.net/
Maybe slowed a little. And thats with the Government putting its hands in the pot with Tax Incentives. With all the Forclosures backing up in the system now. Its great if your a squatter.
But if your dreaming of a V shaped recovery you should put the Kool Aid back in the fridge. Its just not going to happen. Like I told IR the other day. Since he started this blog we are down about 30% locally. Like 50% plus in his Vegas investment market. How can anybody call a bottom right now ? You got to substantiate these predictions with some facts.
Unemployment getting better. Nope.
Jumbo Loans getting easier. Nope.
Incomes going up. Nope.
Inventory of homes going down. Nope.
Foreclosure numbers getting lower. Hell no.
Population growth. Nope. Its going down.
We are coming into a perfect storm scenario for housing prices.
All its going to take is some inflation or Interest Rate Hike. A big hit in the equity market and all hell will hit the housing market.
Or whats left of it. Then when there is some serious “Blood in the Streets” then and only then put some hope in a slow recovery over a decade long.
Geotpf,
It’s good to hear from you again. I noticed you comment the other day for the first time in months. You have been missed.
Thanks for noticing.
Bankster lobbyists almost get away with their flawed documents legally valid. Makes you wonder
just how many elected representatives they have in
their pocket to let the legislation get so far along.
http://www.msnbc.msn.com/id/39556377/ns/business-real_estate/deck/msn
Not sure that the bill would have had the effect you claim. If a notarization was “illegal,” it wouldn’t all of a sudden become valid under the language of the statute. It would require states to recognize only legal notarizations.
Not sure what the unintended effets would be?
I just read in the Irvine World News that 169 luxury homes are planned for Irvine by “The New Home Co” (who are they?)for the land at Portola Pkwy and Sand Canyon Road. Grand opening slated for early 2012.
And another 5,800 new homes from the Irvine Company in Woodbury, Portola Springs, and Stonegate.
I have no opinion either way. We’ve lived in Irvine since 1982, owned since 1993 (OK, I’m a boomer, but a responsible boomer).
The whole sloppy paperwork and the homeowner suing, is the owner swinging for the fences.It is done with the false hope that the court will toss out the case and they will get a free home. It is the same idea as playing the lottery why not give it a go, the odds are against you but you may just hit a home run and get to live in your house for free forever.
If a mortgage holder cannot produce complete paperwork, why would a court allow a foreclosure (or 10,000) to proceed?
If a mortgage was splintered into 1,000 CDOs, who is the real owner with standing to foreclose?
If there’s any risk at all that a legit owner could be foreclosed upon in error by a lender, why allow that to happen? (There have been news reports of that occurring.)
The tragedy not yet mentioned by IR is the loss of confidence in the chain of title to homes now.
Who’s going to bid on a foreclosure when title companies stop offering title insurance on any property remotely tainted?
“… procedural mistakes in the handling of mortgage documents have clouded titles establishing ownership of the homes, a problem that could plague both buyers and sellers for years. “This is going to become a hydra, …”
http://www.msnbc.msn.com/id/39562824/ns/business-real_estate
I just got off the phone with a friend of mine that started working for a bank a couple of weeks ago as an asset manager. He said that the federal government is paying his salary because this bank took on a bunch of failed banks through the FDIC thus forming his department and creating his position. He further verified how bad the shadow inventory issue is and confirmed that the banks are holding properties and not realizing losses with the backing of our government that has created a no lose system for them and the banks will make a windfall for themselves at the expense of our economy as a whole.
Moreover, I just go this from CAR-
“MAKING SENSE OF THE STORY FOR CONSUMERS
•Following near record-high levels of year- over-year sales increases, home sales are expected to decline 10 percent in 2010 compared with 2009, according to the C.A.R. forecast. C.A.R.’s economists predict home sales will increase 2 percent in 2011 compared with 2010.
•Home sales are expected to end the year at 492,000 units, compared with 546,500 in 2009. C.A.R. forecasts sales will come in at 502,000 units in 2011.
•The median sales price is forecast to increase 11.5 percent to $306,500 for 2010, and an additional 2 percent in 2011 to $312,500, C.A.R. announced.
•According to C.A.R. Chief Economist Leslie Appleton-Young, the Association expects a net jobs increase of approximately 1.4 million jobs in California for 2011 and an improvement in unemployment figures, which many believe are key to the economic recovery.
•Ms. Appleton-Young also noted that a lean supply of available homes for sale will drive up prices at the low end ($500,000 and less), but larger inventories and limited, less-attractive financing will cause continued softness at the high end of the market ($1 million and more).”
Bankers are taking huge bonuses and they successfully restricted supply so much that the median sales price went up 11.5% in 2010! What a joke, “sales decline 10% in 2010”, price up 11.5%, magic! We have huge unemployment, and I doubt peoples incomes went up 11.5 percent in 2010. Do economists, legislators and other decision makers continuing this charade not see that there’s something wrong with this picture? I hate to say it but most of us are supporting this corrupt system in a way as customers of banks. Banks win everyone else loses in 2010.
Also note CAR writes, low end, $500,000 and less, “will drive up” what’s the average household income in CA again? At least they got it right about the high end, but then again they will probably continue to restrict supply there too.
I’m not sure why any of this is news to you.
This was easy to see and profit from 1 to 2 years ago.
Back when Irvine homes were selling for $320 per sq ft and rates were over 5.5%.
Now Irivne homes are trending to $360 per sq ft and rates are 4.27%.
It should also be easy to digest what you wrote above,, now that you understand and predict what will happen 1 to 2 years from now.