The sun is shining, the bluebells are blooming, and prices are crashing back to 2003 levels.
Asking Price: $450,000
Address: 14 Bluebell, Irvine, CA 92618
{book7}
Irvine Homes has my profile on Deerwood in Irvine.
Bluebell Polka
Growing up, I used to listen to polka music at my grandparent’s house. There were lifelong fans of polka, and I have fond memories of them whenever I hear it. Days gone by…
Today, I want to show you just how long the foreclosure process takes in the real world. I have charted the theoretical foreclosure process for you before:
The time between filing an Notice of Default and the actual trustee sale can happen in as little as 111 days. However, with all the foreclosure moratoria and processing delays, the process actually takes much, much longer. Look at the records on today’s featured property; it took almost two years to move from Notice of Default to Notice of Trustee Sale, and apparently, the foreclosure has not happened yet.
If this is how long foreclosures are taking, think about how long the foreclosure debacle is going to stretch out. Moratoria and other delaying mechanisms do just that; they delay the process. Very few are “saved” during these delays, mostly people just get free rent for a few extra months. What a great system we have… not.
Foreclosure Record
Recording Date: 12/03/2008
Document Type: Notice of Sale (aka Notice of Trustee’s Sale)
Document #: 2008000557064
Foreclosure Record
Recording Date: 08/28/2008
Document Type: Notice of Default
Document #: 2008000408844
Foreclosure Record
Recording Date: 08/08/2007
Document Type: Notice of Rescission
Document #: 2007000493224
Foreclosure Record
Recording Date: 05/25/2007
Document Type: Notice of Sale (aka Notice of Trustee’s Sale)
Document #: 2007000338375
Foreclosure Record
Recording Date: 01/24/2007
Document Type: Notice of Default
Document #: 2007000048591
The owner of this property stopped making payments sometime in late 2006. It has been over two and one-half years since this owner stopped paying, and she is still listed as the property owner, so one can assume she still occupies the property. That is two and one-half years without a housing payment–a bill we will all pick up as taxpayers at some point. How does that make you feel? Did you pay for your housing since 2006? I did.
{book4}
Asking Price: $450,000
Income Requirement: $112,500
Downpayment Needed: $90,000
Monthly Equity Burn: $3,750
Purchase Price: $465,000
Purchase Date: 10/10/2003
Address: 14 Bluebell, Irvine, CA 92618
| Beds: | 2 |
| Baths: | 2 |
| Sq. Ft.: | 1,508 |
| $/Sq. Ft.: | $298 |
| Lot Size: | 1,508
Sq. Ft. |
| Property Type: | Condominium |
| Style: | Other |
| Stories: | 2 |
| Floor: | 1 |
| Year Built: | 2000 |
| Community: | Oak Creek |
| County: | Orange |
| MLS#: | S560119 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 119 days |
I can’t criticize that description, although I could point out that there isn’t one.
This property was purchased on 10/10/2003 for $465,000. The owner used a $372,000 first mortgage, a $93,000 second mortgage, and a $0 downpayment. On 12/30/2004 she refinanced with a $486,500 Option ARM, and on 2/3/2005 she got a HELOC for $67,000.
Within 16 months of taking ownership–something that required no money from her–she managed to withdrawal $88,500 from the housing ATM.
She made payments for about three years–tiny payments because she used an Option ARM–and then she defaulted. If you count her mortgage equity withdrawal toward her payments, and if you add up the time she spent living free in the house, she is approaching 6 years of living with no net housing payment. Sometimes I really feel like a fool paying rent for all these years…
I hope you have enjoyed this week at the Irvine Housing Blog. Be sure
to come back tomorrow as I explore HELOC Abuse San Clemente Style, and
come back next week as we
continue chronicling ‘the seventh circle of real estate hell.’ Have a great weekend.
🙂
And the owner is mad at the bank?
That wouldn’t surprise me. You know, I’ll bet she’s mad at her house. The house just sits around. It used to work and make her money. Why are so many homes on strike? It’s almost like they were some class of disadvantaged worker that decided not to take it anymore.
LMAO!
Our whole problem in California is that we made our houses work too hard, and now they’ve gone Galt on us.
Yet, the owner with thick skin can continue to play victim and live there free for a while.
It still beats the responsible ones.
whats a Notice of Rescission? does that mean they caught up?
It generally means they caught up, but it can also mean they were given a loan modification or the process was otherwise aborted due to a moratorium. It is possible she caught up in August 2007 and paid through August 2008. It seems more likely to me that she was given a loan modification without catching up and then redefaulted. I think the loan modification is more likely because she would have had to catch up with a full year of missed payments. I doubt someone in default would have the means to do that–unless she used the earlier HELOC money, but it is more likely that she spent that money.
In most states, the lender can put the FC on “hold”, in some states a “hold” can be lifted any time, while in others it has to “start over”. If we think we can modify the loan, we’ll put it on hold. Or, if you’re in the process of a short sale. Also, if you file BK.
I’ve already seen people game the system by applying for a loan mod, then refusing to accept the new terms and switching to a short sale attempt, and then file BK. And some even go back to square one and apply for the loan mod again. With the banks bring overloaded, each process can take months with the FC on hold or started over each time!
Some of these borrowers ultimatley accept a loan mod, but in the meantime, they’ve been living for free for 12-36 months… Another reason it’s iratating when they are “unhappy” with the final terms – which are probably better than the rate YOU have 🙂
Just saw IRs post above, and he’s right. I forgot to mention, some people accept the loan mod, make a few payments, redefault, and apply again. Rinse and repeat.
We’re getting closer
That is a great example of lender capitulation. These are the properties that will crush the high end.
That’s right … and everyday that goes by, these lenders have a greater incentive to drop the asking price.
We’re in the process of recalibrating Orange County. Who wa’da thought?
Who “bought” it in January ’09 at 1.6 and then listed it two weeks later at 1.4, the bank?
Yes, the Bank of New York is the listed owner.
Recent comps show as:
739 NYES PL LAGUNA BEACH, CA 92651-4140 04/30/2009 $2,365,000 2,400 SF
2670 VICTORIA DR LAGUNA BEACH, CA 2651-3949 04/07/2009 $1,550,000 $1,127 1375 5/3/2 1956 2,814 SF
They can’t be too happy.
Purchased June 5, 2001 for $675,000. Foreclosed on January 13, 2009 for $1,611,329. That sound like some serious HELOC abuse. IR, what’s the story?
The old records have been purged from my database. The company I use does that to keep the database manageable. Believe me, I was going to tell all if I found the records to tell the story. You have noticed the obvious though; they abused their HELOC for about $1,000,000.
Do not show! A 5 foot snake might possibly be in the area!
Seriously?!?
I think it was a “5 foot snake run”. Like a dog run, that was 5 foot long. Looks like the neighbor decided the house was empty so long he took over part of the yard for his pet python.
Nope, you are right, I read it wrong. 😛
Some high-end capitulation from Mish’s blog:
Lifestyle Liquidation – Estates of the Fabulously Rich
“Fittingly, the auction was a spectacular failure. The WSJ article mentioned two other auction failures if I can take the liberty of calling the sale of a $13 million estate for $3.5 million a failure.”
You really need to make this a head-liner! It should be required reading for all those in search of the good life. Or perhaps I should say, the “sane life”?
Cheers!
From cited article:
“Mr. Peacock’s selloff is among the most unusual. A 60-year-old commercial real-estate developer with a mustache and a dark tan, he built his fortune building and owning retail space in Miami’s Coconut Grove area.”
Ah yes, where would our country be without the denizens of the overbloated FIRE economy!
“FIRE” stands for financials, insurance, and real estate. I believe the acronym was coined by the infamous poster “Black Swan” of referenced blog.
Every mature economy has a FIRE element. Unfortunately, America’s segment usurped power. We will soon learn the consequences of a society which rewarded the degree in finance over engineering for the past 30 years.
Watch out on that one – the magical clause of “sold as is” has been included in the listing. This one is likely going to need MAJOR repairs. (I’m surprised that the agent listed it like that!) That’s probably one reason for the lower price. Also note that only one interior picture was shown. Another bad sign. I bought a house under these circumstances in Texas. Buyer beware! It will need lots of work!
When this is all over with, many like us will criticize the government’s actions with regards to all the loan mod programs and moratoria that dragged out this process. Part of the justification will be that the government knows they hurt all these people through their failure to regulate and enforce properly, so the years of free rent, loan modifications, artificial interest rates and the like will be viewed as compensation from the government to the homeowner that was harmed by the government’s failure and thereby completely justified. It is guilt money.
I keep asking myself … how is Obama and the gov’t gonna bailout all these phony Orange County millionaires, as their home values collapse?
The US Treasury better order a special printing press, dedicated specifically to Laguna Beach and Newport Beach/Coast.
:bug:
Trust me, they aren’t.
The ZIRP that the Fed has adopted, IMHO, sucks big time. It penalizes savers, period (hope your “artificial interest rates” meant the ZIRP….but if not, oh well).
Sure it might help people refinance but what does it do for folks who are honest about their savings and don’t gamble….uh….I meant invest?
This kind of stuff really annoys me.
I am actually going to write a letter to this person and her neighbors; at the very least make this cow feel some shame to walk outside and be seen.
Maybe we should pay a kid in the neighborhood to post a “FREELOADER” sign in her front yard every morning after she leaves for work.
Freeloading? Sure, but I like to call it a smart tactical move. If you’re going to inevitably have your property foreclosed, might as well wring it for what it’s worth.
I mean, that’s what I would do in this situation. If it’s between a) drain my bank accounts and get kicked out of my house anyway or b) screw it, save my cash and get kicked out of my house anyway…I’ll gladly pick option B, taxpayers and banks be dammed.
but I like to call it a smart tactical move
Maybe if you are a weasel.
It’s smart tactically because there are no social consequences for this pig.
taxpayers and banks be dammed.
There is some patriotism if I have ever seen it. Seriously, I give up on this country.
You wouldn’t even consider doing it if you feared that your neighbors would gather in your yard carrying pitch-forks and torches.
That is the problem with this country. We have lost our moral bearing.
We deserve to rot in a depression.
It is interesting how the incentives of the individual are at odds with the greater good. Despite any moral objections, I suspect 98% of people would choose option B, and they will when it is their turn to face foreclosure.
Debtor’s prison, anyone?
I would throw this prick into a debtors prison so deep that she and her kid’s kid’s kid’s kid’s would be in it until every last nickle got paid back.
Why should the banks be made whole for problem they helped create?
The banks are no less culpable than the borrowers…in fact, in some cases they are directly responsible.
Fine, but at the very least mail the keys back. Don’t sit in the place like a sponge.
I would be all for picketing this house, but with all the stupid residential picketing laws brought about because of the abortion lunatics – it has become a risky proposition legally.
It seems like the thing to do is find out where a person works (does business) and then picket them there.
Of course nobody is going to do that because they are lazy and doesn’t want to be involved in anything controversial. WTF do I care for? Let her keep squatting.
Just roll over again and again.
Hopefully, sooner or later, enough will be enough and we’ll see some real civil unrest start to shake things up and get some real results.
Put my name down too AZ.
hopefully this listing gets oak creek started on its journey to real pricing – so far it has not been capitulating at all it seems.
The listing agent should be familiar with foreclosure process seeing as he has (or had) at least one himself in Ladera-Covenant Hills.
That is one horrendous picture. The realtard couldn’t have taken it 15 minutes sooner/later, to avoid that glare?
Or maybe move five feet forward?
And are there 2 buildings in that picture? The description says 2 floors, but I count three. WTF?
I was wondering if they were going for some kind of artistic sunburst effect.
Morning in America!
Always a bright future in Irvine!
The picture says it all.
Who needs a property description or for that matter the cost of the HOA fees for the Condo and for the Oak Creek Master association when we have those steaks of sunshine coming down from that blue sky with the storybook clouds?
Once again IHB brilliantly manages to convey the absurdity and tragedy of an unprecedented phenomenon, and add a detailed wonky analysis.
Real Estate agents would do themselves a big favor by simply investing in an inexpensive d-SLR camera (Nikon D40), one wide lens & one 50mm lens, and a few photo classes.
Question regarding loan recast: when an adjustable rate loan whose payment has included both principal and interest has an initial interest rate reset, say at 5 yrs, does the loan also recast to amortize fully over the remaining 25 years at the new rate? Tx
If the loan was already an amortizing loan, there is no recast. A recast by definition is a change from either an interst-only or negatively amortizing to a fully-amortized loan. Those ARMs that are fully amortizing will make up the third wave of foreclosures when interest rates rise at some point in the future (nobody knows when).
If you look at the mortgage reset chart, the presence of fully-amortized ARMs simply extends the crisis because these loans continually reset for the life of the loan. It isn’t a case of once and done. As long as there are ARMs in the system, there will be a reset chart. Until we completely convert back to fixed-rate mortgages, the timebomb of ARM resets will be with us. The only difference is that nobody knows when they will explode because nobody knows when interest rates will go up.
I asked because I know of at least one bank which will allow a recast of a fixed rate loan (no more than) every 6 months provided the principal is reduced by at least 20% at the time of the recast – which is for the remaining months of the original loan.
If I understand you correctly, your statement
“If you look at the mortgage reset chart, the presence of fully-amortized ARMs simply extends the crisis because these loans continually reset for the life of the loan…” simply means that if rates reset upwards, more ARMs may default – but their final payoff date will remain the same.
Yes, that is correct.
The Fed knows. My bet is not for a very long time. Low interest rates are here to stay for a while. The low rates has probably been the single most effective tool the fed has used to soften the blow.
“The low rates has probably been the single most effective tool the fed has used to soften the blow.”
It is the only tool the Fed has.
Oh wait, I forgot the other tool: Have the government screw the taxpayers!
“The low rates has probably been the single most effective tool the fed has used to soften the blow.”
I would argue that low rates have been a very ineffective tool. In response to the tremendous numbers of distressed homeowners, the Fed engineered, at great expense, below market mortgage interest rates. And although this has led to a significant increase in refi’s, most of the distressed homowners are unable to refinance at any interest rate. So this massive intervention by the Fed has benefited mostly middle class (and above) homeowners who can qualify for a refi (adequate income, positive LTV). Meanwhile, the distressed homeowners are still distressed, and their ranks grow by the day.
“So this massive intervention by the Fed has benefited mostly middle class (and above) homeowners who can qualify for a refi (adequate income, positive LTV). Meanwhile, the distressed homeowners are still distressed”
Maybe the Fed is not so stupid after all? The people who qualify are taxpayers, who were at least somewhat responsible in their purchase and finance choices. They are getting screwed by the bailout debt that they will be paying back through higher taxes, but get a bone thrown their way via lower mortgage payments.
And the speculators and HELOC abusers don’t qualify and are still going to lose their bets. The only problem I have with that is that equally or even more fiscally responsible renters do not get the same lower housing payments benefits. Or am I missing something in this? (As a renter, I don’t get to see the numbers first hand.)
Alan…
My point is that the Fed’s “help” is not being effectively targeted. If they wanted to assist distressed homeowners, they should have done so in a more direct manner. Most of the money spent in pushing down mortgage rates was “wasted” on affluent homeowners who did not need the help, even though they welcomed it. And when the Fed’s bill comes due, we will all be paying higher interest rates.
Well, at least we got to do a very nice refi…
When a listing says “house shows well” is that code for “this house is a piece of crap, but we threw some paint on it to cover up all the damaged walls”?
Man, this reminds me how foolish I was to NOT buy a house when I was pre-approved in 2007 for a loan I couldn’t afford. I might still be living in that house, and maybe never even had to make a payment. I could have lived with a king if I could have avoided paying my $2k/month rent for the last 2 years.
$2,000.00 + 24 = $48,000.00
That is the price you pay for being responsible, and therefore “foolish”!
Lesson One: It does NOT pay, being responsible!
Sorry…do not mean to rub it on. 🙂
If you went into it with a plan, you could go a long way to saving up a real downpayment, just from the zero housing costs. If you were saving something from your salary on top of that, the phrase “making out like a bandit” takes on a whole new meaning. Then a couple of years of bad credit rating, no doubt shortened because so many people are getting foreclosed that it becomes normal and the desperation to find buyers with significant downpayment money. Then buy another place as good or better at a sane price. This time around doing it straight with a big downpayment and an affordable fixed rate conventional loan. Transformation complete: model citizen!
I doubt though that many, perhaps none, actually planned a move like that out. Just spent the money on toys and lifestyle.
IR wrote”…Part of the justification will be that the government knows they hurt all these people through their failure to regulate and enforce properly, so the years of free rent, loan modifications, artificial interest rates and the like will be viewed as compensation from the government to the homeowner that was harmed by the government’s failure and thereby completely justified. It is guilt money.”
I see the regulations as bad regulation, which might be worse than no regulation. With the bad regulation, it exposed the taxpayers and people to accepting undo risk and liability through agency packaged loans, CDO, etc. The bad agency package subjunk loans as AAA grade.
IMHO
I think the major intent of the government’s loan modifications is to restore confidence in the worth of the properties on which the billions (trillions?) of CMOs are based. Apparently substantial portions of this debt is owned by foreign entities thereby spreading the risk worldwide. Maintaining that confidence (justified or not) is critical to maintaining credit markets worldwide. This tenuous position is further complicated by the trillions in Credit Default Swaps insuring these CMOs and the financial catastrophe that would occur if these were widely and simultaneously exercised.
While the govt may feel guilty about not having “protected” the little guy, following the money will likely yield a more practical reason.
IR, You should write a narative on how one gets trustee sale quickly and who one drags it out for years without paying. Is it a craft deadbeat and/or just lazy banks?
Stupid me, I’ve been paying rent for 8 years while I could have owned for free or been paid to own.
IR…
If the house was bought in 10/2003, refi in 12/2004, and HELOC in 2/05, that adds up to 16 months from purchase, not 4 months. Is there a wrong year there somewhere?
Oops, you are correct. I read it as 4 months when it is in fact 16. I will update the post.
I’ve been reading and enjoying this blog almost daily for about 2 years now, but I’ve never actually posted before. I’ve certainly appreciated the insight and commentary, and IR’s dedication to this free site is outstanding. It seems to me there has been a marked increase in the level of disdain towards individual homeowners spending and the (lack of) consequences. Curiosity has gotten the best of me – what is the reason for the recent uptick?
I guess the way I look at it is that these people are just playing the game the way it’s setup. One could certainly argue that housing shouldn’t be a game (I would probably agree), but let’s face it – it is. The banks control most everything – they have the cash, they have the resources, they (should) have the risk management in place and they set the terms of the deal. In California, the deal is that the buyer agrees to pay back the note and if he/she can’t (or won’t) then the foreclosure process takes back the property. If the process is now taking 18 or 24 months, shouldn’t that blame be placed on the lender? I would agree that it’s certainly irritating to hear individuals receiving loan mods or short selling who are complaining about anything. That’s ridiculous on their part. But, for all the idiocy of some homeowners, they aren’t the ones who’ve dictated any of this, right?
Is it just easier to place blame on individuals? Is there something I’m missing? I’m not trolling at all, these are honest questions I’ve been curious about lately.
I think the reason that it is easy to get irritated with the fauxowner is because they are the ones who signed the contract and borrowed the money.
This is not to say that the lending practices were outrageous – but these fauxowners signed a contract promising to pay back all this money that they borrowed.
The reason that people such as myself are renting is because I am not willing to borrow more than I can afford. So it really pisses me off to see these people getting to have their cake and eat it too.
They over-borrowed and kept people like me out of the market while driving up rent prices at the same time. They then default on their loans and live for free while people like me are still priced out and paying for their rent.
Furthermore, our tax money will now be used to pay back the money that they borrowed and stopped paying back. We have been totally F’d by these people so I interpret these squatters as giving people like me a big one-finger salute with a sh*t-eating grin all over their faces.
The fact that it takes the lenders so long to drag these mother-fers out of their homes is just icing on the cake as far as I am concerned – the damage has already been done either way.
I think much of the anger is because in effect these people stole the money, and now that the US taxpayer is fully liable for these losses through the lenders, these people stole money from all of us. Everyone who didn’t buy during the bubble, tired to live responsibly and did not live off their HELOCs are now paying for the foolish irresponsibility of those who did. It is particularly irritating when these same people looked down on us for renting and living within our means as fools for not enjoying the party. The worse this crisis gets, and the more money that comes out of everyone’s pockets, the more angry people will get. Also, the lack of consequences for this behavior almost guarantees it will happen again in the future.
Also, the lack of consequences for this behavior almost guarantees it will happen again in the future.
And that is the real testament to how far our society has “progressed”. Like a bunch of damned lemmings running around thieving and pillaging whatever spoils can be had at the expense of anyone or anything. Everyone else “be damned“!
Yes, we can be so proud of how our big experiment with economic “individualism” worked out.
This comment reminds me of Bastiat (roughly): Government is that great fictitious entity by which everyone attempts to live at the expense of everyone else.
I like that.
It wasn’t just the home “owners” who stole the money from us, the banks & mortgage brokers got hefty fees for their ‘services’ and the realtors got their their 6% as well…
I am calling out fauxowners who are squatting after defaulting on their mortgages.
It is (and should be to you) just as offensive as AIG throwing parties after getting bailout cash.
These pigs on the other side of the spectrum don’t get a free pass. These mother-fers were part of a two-person tango.
If this pig mailed back the keys after defaulting then I would chalk it up to another gambler biting the dust. But no, she sat in the place stuffing herself and taking a dump at everyone else’s expense for two years.
This is B.S. You should be outraged. But hey, if you want to go the “all’s fair ho ho ho hah hah hah” and take to morals down a notch then who am I to stand in the way. What do I care? Let’s all get naked and go streaking through the local elementary school everyone – who are THEY to JUDGE US!
It’s not just renters who are getting screwed, it’s also responsible homeowners who did not drink the Kool Aid.
We’re all paying taxes for those idiots.
As my son used to comment on his friends that moved from TR up to TRidge and suddenly had fancy cars.
If those idiots (not the kids, the parents) are allowed to stay in TRidge -and the like- then the rest of us are being fu#$d….
As noted before, there is plenty of blame to go around: the Fed, r.e. sales and brokers, loan brokers, banks, loan servicers, investment brokerages creating CMOs and CDSs, buyers of those instruments. Every single one of them had not only a financial responsibility but an ethical obligation in their part of the transaction. All abdicated to some extent or used remarkably poor judgment. The home buyer is just one facet. While they may benefit short term, their credit will be virtually non-existent for years – ever try traveling, buying online, paying for gas at the pump, groceries, etc – how many people in checkout lines at big box retailers do you see paying in cash? And if you can only use cash, you’ll pay every time you use an ATM that isn’t your bank. And I suspect the majority of underwater homeowners with mortgages resetting/recasting or in foreclosure/short sale situations aren’t sleeping well; I wouldn’t be. This isn’t meant as a defense; I’m chagrined that I managed wisely and may have to pay for their irresponsible behavior. But I sure wouldn’t want to trade places with them. Besides, who said life was fair 🙂
That sounds like the attitude of someone who is rolling over.
These people still have credit cards just like everyone else. They have rationalized their situation as “I am awesome, the bank screwed me. I am milking it for what I can now.”
They are sleeping just fine.
NIce to have a mind reader in our midst! Good ones are hard to find.
You missed the intent of my post. Why not go after the other enablers as well as the homeowner who is abusing the system?
The problem is systemic.
I would agree with your original post – there is quite a bit of blame to go around, which is why I was curious about the attitude towards homeowners. And what struck me about it was how recent the tone change was. Except for maybe AZDavidPhx, but that’s the beauty of his comments – I can’t always even tell if he’s serious!
Why not go after the other enablers as well as the homeowner who is abusing the system?
The problem is systemic.
Agreed – I say that we hang them all. Every last one of these skunks.
I can understand a person going under water and giving up. In that situation, you mail back the keys to the bank and call it a day. You don’t turn it into your opportunity to go have a free lunch at the expense of the village.
To sit in the damn place like a sponge for 2 years and “work the system”, bleed it dry is dishonorable and worthy of public scorn.
The honorable person would say, “Yes, I screwed up. My bad – here are the keys. I am going to go rent someplace affordable now”.
The weasel says, “Yes, I screwed up, but it’s not my fault. I am going to milk it for all I can now.”
This fauxowner is a weasel; worthy of a debtor’s prison and daily socioeconomic-waterboarding.
“This fauxowner is a weasel; worthy of a debtor’s prison and daily socioeconomic-waterboarding.”
Agreed.
These egregious abusers need to have their finances monitored. No more fancy vacations or eating out every other night or new cars every other year. No more $100 hair cuts or expensive flat screens or trips to the nail salon. Get a court-appointed officer, preferably some one of similar disposition to the financially responsible who post here, to keep them on a short leash.
I can understand some folks just made a mistake regarding their house purchase. However, to capitalize on the situation, take out money via the HELOC and/or live rent-free is unacceptable.
Patrick,
I see the same resentment you’re seeing. Though I don’t necessarily share the feelings of resentment, I understand where some people are coming from. People are angry because some are “freeloading” on the system. Staying in the property without paying a dime. The feeling seems to be a sense of unfairness about the whole thing. I pay my mortgage/rent, why shouldn’t they? They get to stay for free!
There are consequences to these borrowers defaulting on their loans…credit hits, interest payments, late fees, foreclosures, etc. Not all loans are non-recourse loans, so they could have that anchor around their neck forever.
I tend to get angry at the tax dollars we are wasting on this problem. The public is already losing out because of the overall drop in housing prices and the loss of jobs. Why should we also be taxed to prop up what was basically a bad agreement between two private parties (the borrowers and the lenders). Both parties knew, or should have known, the risk of loss. Now that the risk is being realized, they don’t want to take the hit.
Stop the government bailout of the banks, and let the chips fall where they may.
Dan,
You and I appear to have the same perspective. I also get angry at the tax dollars being spent to “solve” this, but I’m not necessarily angry at individual homeowners. There were bad choices made all along the way, but in the end the federal government made the decision to bailout. I’m not sure I know if that was a good or bad decision at this point, but that’s who ultimately made the decision to spend our tax dollars. The homeowner might be an idiot, but he/she did not make the final call.
Although, if I was in IR’s shoes and felt belittled by homeowners while responsibly renting, I would probably be more pissed at individuals now too. I just moved to CA from the midwest, so I never had the good fortune to experience that.
IAWTC
I think it’s criminal that people were allowed to borrow so much and use their homes as ATM’s. Even more so when they trash it when they finally get booted out.
And I’m an ex-homeowner in foreclosure! (I did buy during the bubble, 2005, but for my on-going divorce, we would have been fine.) Yes, I am still occupying my house, but secured another residence once the auction was scheduled, and I stayed on the advice of my attorney due to liability and tax implications.
As IrvineRenter has said, the only way out is to let the banks foreclose, re-sell and move on.
Yes, I did get 7 months rent free, but I’d trade that for my credit score and house back!
If we stop throwing tax dollars at the problem, the people who need to take the hit, the lenders (and the borrowers with the credit issues) will take the hit.
If they fail, we’ll deal with it and come up with new ways to do things. Isn’t that how mortgages came about in the first place, post-depression?
And to the poster who asked how forclosees sleep at night? At first, it was hard, it made me sick to the point where I couldn’t work and had to get treatment. After seven months and medical and psychological treatment, I’ve come to accept my circumstances and am trying to rebuild my life.
But I’m sure there are people out there who don’t really care, and don’t lose sleep over it.
Your story is sad. It reminds me that only those people with a conscious will feel any remorse or emotional pain for the foreclosure or the HELOC abuse. The people who most deserve to suffer are the ones who will probably suffer the least.
This headline seems appropriate to today’s post:
Fannie Program Sees 70% Recidivism
What would be really interesting is if in the flow chart showing the length of time the foreclosure process takes, we could see the COSTS to the bank during each of those phases.
Now THAT would be REALLY telling!!!
Follow-up to someone’s post yesterday about the NYtimes writer who fell victim to the crazy lending environment… he forgot to mention his new wife is a serial bankruptcy filer. She filed during the time pd documented in the story. I guess that part was too personal.
http://business.theatlantic.com/2009/05/the_road_to_bankruptcy.php
Wow. . . There always seems to be more to these hard-luck stories. This is why I don’t feel a whole lot of sympathy for most of these folks.
That’s kind of a big detail to leave out of the story. I wonder what the New York Times thinks of that?
Isn’t it amazing how every single one of these stories that comes out pitching us a good old fashioned recession-tragedy gets blasted out of the water within seconds; before the print has even dried?
Saw a legit one – small grocery store owner had RE developer knock down all the older apartments around him to make some shiny new condos that never materialized. He lost his old customers and never got new ones. Sad and genuine story.
As others have said in todays comments, there is a disconnect in the psychology of homedebtors in america today. The idea that since loans are non-recourse its really not a ding on your character… just your credit score. My uncle was explaining to me the other day how he is considering mailing in the keys to his San Diego home and simply buying the foreclosure across the street for half of what he owes on his. Its hard to argue that he shouldn’t. He sees it as a commodity. I think the good old days of pride of ownership are long gone and were gonna be dealing with people who have no remorse about sticking it to the man (taxpayers) from here on out. If your not gaming the system you are a sucker.
From today,s Wall St Journal – Online
He cut the price by 5% – Why isn’t it selling…!?
Fair Use Extract:
Best-Selling Medical Author Cuts California House Price
Unable to find a buyer since listing last October, psychiatrist and television personality Dr. Daniel G. Amen has cut the asking price of his Newport Beach, Calif., house by 5% to $3.79 million.
Dr. Amen bought the 6,000-square-foot home in 2005 year for $2.85 million, records show. He then spent $1 million renovating, according to listing agent Andrew Karigan of Prudential California Realty. Dr. Amen first listed the home for $3.99 million. The four-bedroom house has a deck with views of the Pacific Ocean and Catalina Island. There’s a pool, hot tub, elevator, eight-car garage and 1,200-square-foot indoor basketball court.
Dr. Amen is the author of 22 books including the best-selling “Change Your Brain, Change Your Life”; he uses functional brain scans to diagnose behavioral problems and diseases like Alzheimer’s. Dr. Amen is chief executive of Amen Clinics Inc., with branches in four cities across the country.
He then spent $1 million renovating
Poooor baby! Poooooor baby! It looks like you overpaid, sir!
Someone should have sent him over to AZDavidPhx’s school of common sense to help him change his brain:
http://www.urbandictionary.com/define.php?term=the+granite+counter+fallacy
I don’t even charge for my books.
5% ain’t gonna cut it, DOC. Keep goin.
We’ve got a genuine shortage of homes for sale in San Diego right now. All the talk about a glut of foreclosure properties and the need for foreclosure moratoria… Does anyone else see the problem with making foreclosure moratorium decisions on a state and federal level? Real estate is a local business. We need some properties to sell here in San Diego, please!
There is actually a shortage of available homes right now in Irvine too. We are all waiting for the release of the shadow inventory and the next wave of resets to push prices even lower. I see that your prices in San Diego have already been pummeled in most areas. The high end will fall next.
IR,
You should go check out San Diego Housing Blog’s site. I submit:
“What San Diego Realtors have known for months is now being reported in the news. Our local real estate market has reached a bottom and prices have been heading back up. For three consecutive months, in February, March, and April 2009, the median home price in San Diego County has increased.”
They are ‘tards that have consumed more RE Koolaid than Rick James did cocaine. Giving bad investment advice. Again.
Shortage out here in Riverside. The number of houses on the market (on the low end), not counting short sales, is approximately one third it was when I started looking three months back. I’m glad I snagged something just as the bidding wars started to heat up.
Wanna buy my chateau in TR?
With five bedrooms you can easily fit five families and triple your income. ;-D
Me, hell, we’d be moving to our (own private) Idaho.
Great news (at least to me), there seems to have been an increase in foreclosure entries in foreclosureradar.com. Not an explosive increase but, nevertheless, quite a few.
If the rate continues to tick up, get ready for a flood of foreclosures 🙂
I call it like I see it Vaseline. You try buying a foreclosure home for under $400,000 in San Diego right now. Offer $410,000 and you won’t get the house… Guaranteed. Too many offers, too few properties.
I hesitate to say that SDHB is “completely wrong”, and I take his observations at face value. I would not, however, necessarily accept the hidden message that may (or may not) be intended by his comment, which is that THINGS ARE GETTING BETTER. First of all, I certainly hope they are getting better, and secondly I doubt it. For two reasons:
1.) The government and banks have conspired, through the use of government bailout money and the Congressionally-mandated manipulation of fair market value accounting, to keep foclosures down and then keep foreclosed houses off the market. The banks are not being forced to recognize the properties at their actual market values, but are now allowed to exercise their faulty judgment in assessing the value of properites both to be foreclosed on (and kept in loan format) and already foreclosed (and kept off the market completely). Of course, if the banks are motivated, like DeBeers with diamonds, to keep their properties off the market, the market is not free, and the few sales that are recorded are not what we would see in an open market. Only until all the junk has passed through the system will we see the real effect of the crash, and only THEN will things really begin to recover.
2.) San Diego is a stange place. Having lived there for four years, I think I can attest that San Diego may be even more property-driven than OC, and that the peaks may be higher and the lows lower. Anecdotally, the property market in San Diego pretty much peaked and was oversold by early 2004, and was started back down again, whereas the market in OC only gradually gained momentum until the craziness really begin around 2005. I assume that prices in SD spiked again in 2005 – 2006, but this was due to the generally low-interest rate craziness at the time; the ballon in SD was already deflating. All this is just a way of summarizing that SD is more isolated and subjected to some different vagaries than OC.
In conclusion, all we really know for sure is that we have a ways to go before the poison is pumped out of the system, and we should not confuse the symptoms of the disease (a frozen housing market) with a recovery, any more than a gangrene suffering should mistake the numbness in his arm with a return to health.
Nice post. I especially like the concluding metaphor!
The RE market, to me at least, is just as dysfunctional now as it was on the way up. Everybody clamoring for the best foreclosures. Just like when everyone was clamoring for the next available home. Frankly, I didn’t want to buy in the bubble market run up and I don’t want to buy now. I’ll wait until the clamoring ends and if it never does then I don’t want to live here anyway. I’ll move where it is sane. There has to be a better way to make what amounts to the most important financial decision of your life.
I see more and more people unemployed. I see vast commercial holdings sitting vacant. I see thousands and thousands of brand new condos hitting the market in Irvine. I see the wave of real estate disaster just beginning to penetrate the high end areas, maybe even Irvine. I see a double dip stock market plunge just waiting for the thin days of summer. The only ones left in the stock market are the shorts. Anybody seeing a bottom is seeing things.
I’m always amazed when I read stories like this that the option ARM made it as far as it did without someone stepping in and saying, “Hold on here. This can’t go on forever. We should fix this before we get in trouble.” And now that we are in trouble, we can’t seem to fix it. Shameful.