I hope you are enjoying the Masters. I am.

This weekends featured property is owned by 100% financing HELOC abusers on their way to foreclosure. We'll see how they did it.

Irvine Home Address … 24 APRILLA Irvine, CA 92614

Resale Home Price …… $679,000

{book1}

Love Unlimited Orchestra – Love's Theme (Scenes From Augusta National)

IHB News

We had great traffic again this week. Patrick.net picked us up with Foreclosures Will Drive the National Economic Recovery and Desire for Mortgage Equity Withdrawal Inflated the Housing Bubble. Calculated Risk and I exchanged more information about the comments at the meeting, and he put up a post the revived the story of Report: BofA to increase Foreclosures significantly in 2010.

Housing Wire also picked up the story, "a spokesman for BofA told HousingWire, he could not confirm the numbers and they do not reflect a public position of the bank." Is that a denial? I guess that kind of information isn't something they want to put in a press release. I don't blame them. It is still true. Has the world forgotten that real news doesn't come in a press release?

Leading in Times of Scarcity and Uncertainty

A reader emailed me about the inagural conference for Leadership Center at Cal State Fullerton.

Pull up a chair in Cal State Fullerton’s magnificent Mihaylo Hall, and take advantage of this rare opportunity to glean knowledge from the leadership experts. Topics include: “unboxing” your brain to solve problems unique to this time of economic turmoil; inspirational leadership that motivates employees in uncertain times, and applying mental skills and resilience training to develop key leadership capabilities. Your day will be filled with information, useful strategies and networking opportunities!

REGISTER — Fee is $125 for the one-day conference, including lunch and networking reception.

I may attend. There is a media panel where many newspaper people will be discussing their problems, one of which is people like me. I suspect my viewpoint will be out of the mainstream at the event, which is a good reason to attend.

Writer's Corner

I have been working with the period as a stylistic breakpoint. Everyone knows how to end a sentence with a period, except realtors who use asterisks and multiple exclamation points. Short sentences are often considered too simple and lacking substance. Short sentences are the hallmark of a novice writer, so many writers (me included) strive for complex punctuation and many ideas ornately adorning these behemoth structures.

For several weeks, I was seeing how long and complex I could make my sentences before they fell apart. Lately, I have been writing shorter sentences with simple rhythms. I used very few colons or semi-colons last week. I wrote more complex sentence structures when I saw a need, but I have focused attention on simplicity with more periods. My style will likely gravitate back toward the more complex as I find the balance I desire.

Cartooning

I spent much energy with cartooning this week, more energy than went into the writing. The results were good, not great, but good. They make me laugh which tells me there is something about the underlying message that resonates. If I improve the communication, the message becomes clearer and louder.

I enjoy cartooning because it injects humor into what can be a serious issue that really angers people. Good art finds the tension between half-truths and the absurdities of life's compromises. I like how images and just a few words can say more and speak directly to intuition — you immediately know it is right, and you know it completely.

The post The Debt Star Has Cleared the Planet had these two cartoons. I liked Soylent Green Is People's idea for the Jedi Mind trick. The simple commands that sum up the situation works.

The Debt Star image of the new space station from Episode VI: The Return of the Jedi stands out because of the incomplete facade. In that image, I see the veneer covering the flimsy financial infrastructure of Ponzi debt. The Bank of America logo in the gun turret is eye catching, and it alludes to the B of A post from earlier. I didn't quite get the image distortion right, so my Photoshop skills need work.

I also experimented with dialogue cartoons. This one conceptually also came from Soylent Green Is People. What I really liked about this cartoon was the introduction of both dialogue and internal thought.

The basis was the dialogue from the movie. If you didn't know that, I am not sure how effective the graphic is. That is a big limitation to this art form. However, the scene is widely known, and I suspect most readers knew the dialogue.

The abrupt change in tone in the Darth Vadar speech is unsettling. I really needed a brief video to capture the moment after Darth Vadar releases this guy to feel the abrupt change. The dialogue above doesn't work because the image is frozen in time.

I really liked the look inside Moff Tarkin's head. His little one-liner was probably my best effort of the week. It really captures reason why the banks are bringing out the big guns.

I was exploring the concept of both internal and external dialogue in the cartoon above. The juxtaposition of what people say with what they really think and do is fascinating to me. When I can find characters (or learn to draw them) some of whom are talking and some of whom are listening, this dynamic can be created.

The dialogue from the forgiving lenders is intentionally soft, but then the final sentence is a subtle slap, and the punishment is over. The contrite borrower is dutifully saying what must be said. Meanwhile those borrowers standing in line for forgiveness are preparing for their turn to lie, and in their quiet moments, we learn their thoughts. Their inner world, devoid of delusion, contains the Truth hidden beneath the surface lies.

The dialogue here is a bit flat, but it makes the point. Borrowers will take advantage and go right back to their old ways. The dialogue in the last bubble is difficult to read because of poor line breaks. The final sentence would have been far more effective isolated on the last line.

When I see typical suburban women as sole owner in the property records and she extracted hundreds of thousands of dollars in HELOC money and blew it, I picture the woman at left. Three simple statements and the image have impact. I tried several versions of text, but less was always more.

My favorite evolution of that idea is the Patty Hearst cartoon to the right. I really like how the story of Patty Hearst and its undercurrent of Stockholm Syndrome. Her story is parallel to the transition debtors make psychologically as their debt dependency turns to theft. Once people knowingly take on debt that they personally will never pay off — most California borrowers assume someone else will come along and assume their debts — then borrowing is theft. It is taking money that will not be repaid or it will only be repaid if the Ponzi Scheme grows larger and someone else pays it off.

Of course, the problem with this image is that if you didn't recognize Patty Hearst or know her life story, the allusion was lost. The graphic does stand alone as a random picture of an armed robbery being committed by a woman, but the Patty Hearst reference makes the cartoon.

I used Photoshop to place the text on the photo, but the background comes through in a distracting way. It would have been more effective if I had completely covered over the background.

The Scarface cartoons turned out well. Al Pacino's character Tony Montoya covered in cocaine captures the indulgent nature of HELOC addiction and the insatiable desire for more. I also like the brazen, screw-you attitude of the image on the right. The dialogue is from the movie, but I chose to edit out the expletive. It was not needed to create the effect. The look on Al Pacino's face does that.

I am looking forward to next week.

The Masters

I have been playing golf since I was nine years old, and I have watched golf on TV since the late 1970s. I am one of those guys who can diagram of Augusta National on a napkin. Some years I catch more golf than in others, but this year, I have seen much Masters coverage. Like many others, I wanted to see if Tiger brought his game to match the media circus, and over the first two rounds, he certainly did.

Tiger's story is certainly interesting, and some of the jokes I had emailed to me since the scandal broke have been hilarious. He deserves all the ridicule he receives for his behavior. However, Americans love stories of redemption. If Tiger Woods can raise his standards — not just in his words but in his actions — people will admire him again. I will admire him again. Of course, it can't be just another poster image of a fake life of pretence and indulgence. He really has to walk the walk. I hope he does; I and many others will be cheering for him.

Tiger Woods is still a hero to many who love to see great golf played by great competitors. His mistakes make him interesting to many who will forget about him when the next scandal breaks out. His golf makes him interesting to people who enjoy good golf and could care less about how many women he had in his harem.

Housing Bubble News from Patrick.net

Big House Price Declines Still to Come in SF Bay Area (oaklandlocal.com)

SF Bay Area Rent Distribution vs Price Distribution (patrick.net)

Southern California apartment rents are expected to keep falling (latimes.com)

Foreclosures Surge in CA's Central Valley (centralvalleybusinesstimes.com)

Mountain of foreclosures in Colorado resort communities (denverpost.com)

Nearly 17 percent of Tampa houseowners three months behind on mortgage (tampabay.com)

Your house value hasn't changed (invisiblerenters.com)

Mortgage Rates Spike (Mish)

Fed's Hoenig Urges Raising Fed Funds Rate "soon" (calculatedriskblog.com)

Only Story Is Deflation; Consumer Spending Up Due To Mortgage Walkaways (businessinsider.com)

Bank's real estate equity horror (blogs.reuters.com)

Canadian Housing Boom-Boom Around The Corner (market-ticker.denninger.net)

China on Treadmill to Hell Amid Bubble (bloomberg.com)

Yet China Has High Speed Rail Which The US Does Not (nytimes.com)

Gold Fraud Bombshell: Canada's Only Bullion Bank Gold Vault Practically Empty (zerohedge.com)

Owners demand lower tax valuations (but higher selling prices) (abcnews.go.com)

Mortgage rates jump, forcing house prices down (google.com)

Housing Won't Heal Until the Renters Come Back (blogs.wsj.com)

Landlords: How Long Before You Lower Asking Rent? (patrick.net)

Chase Allegedly Told Houseowner To Stop Payments, Then Foreclosed (huffingtonpost.com)

Foreclosures Will Drive the National Economic Recovery (irvinehousingblog.com)

Greenspan says goal of housing trumped all (upi.com)

Destitute and desperate, Icelanders opt for exile (news.yahoo.com)

Mayo property prices worst hit in Ireland since bubble burst (westernpeople.com)

The Canada bubble (blogs.reuters.com)

Steep Increase in Personal Bankruptcies in March (nytimes.com)

Consumer Credit Drops $11.5 Billion, 5.6% annualized (Mish)

Bernanke Says Joblessness, Foreclosures Pose Hurdles (bloomberg.com)

FOMC Minutes on Housing (calculatedriskblog.com)

Panel: Ex-Fed Chief Fueled Meltdown With Low Rates (kfwb.com)

Greenspan: Don't Blame Me (motherjones.com)

Thanks to Greenspan and Bernanke next crisis could be "even scarier" (finance.yahoo.com)

Citigroup executives: "we warned about mortgage risk" (video – cspan.org)

Subprime warnings ignored, ex-Citi executive says (marketwatch.com)

Faith in houseownership drops, Fannie Mae poll shows (washingtonpost.com)

Americans still naive about housing (seekingalpha.com)

Foreclosures Are Rising (cnbc.com)

Hold Your Breath: Borrowers Could Stay Underwater For Years (blogs.wsj.com)

California Housing: Years of Problems (doctorhousingbubble.com)

A grim assessment of L.A.'s finances (latimes.com)

Las Vegas Apartment market said to need decade to recover (lvbusinesspress.com)

U.S. Apartment Rents Decline as Vacancies at Record (bloomberg.com)

Gov't financial crisis panel pretends to investigate risky mortgages (google.com)

Australia Raises Key Interest Rate to 4.25% (bloomberg.com)

No Question U.S. Dollar to Weaken in Long Run, Yu Says (bloomberg.com)

Is Gold A House Of Cards? (fool.com)

Metals Market Manipulation Update (marketoracle.co.uk)

What Makes a House Valuable? (globalguerrillas.typepad.com)

Foreclosure Update: Let the Short Sales Begin (finance.yahoo.com)

Feds try to boost short sales (builderonline.com)

Are Strategic Defaults Fueling Consumer Spending? (seekingalpha.com)

Prudent bidding on real estate at a foreclosure sale (localtechwire.com)

Housing protest leads to takeover of SF duplex (sfgate.com)

Anatomy of a housing crash: high-end Berkeley house heads to auction (sfgate.com)

Fortunes rise and fall for one North Las Vegas neighborhood (lvrj.com)

A Few Miami Beach Properties Selling Above Market Value (eyeonmiami.blogspot.com)

Desire for Mortgage Equity Withdrawal Inflated the Housing Bubble (irvinehousingblog.com)

Underwater borrowers in America: A splash of good news? (economist.com)

120-Year Property Series Shows 22% Nationwide Fall Ahead (newobservations.net)

Economic Racism is Alive and Well at the New York Times (reallyf'dhomeowner.com)

Real estate agent group spent $5.6M lobbying against buyers in 4Q (google.com)

Retail money funds decline at record pace (csmonitor.com)

How to Corner the Gold Market (huffingtonpost.com)

Ordos, China: A Modern Ghost Town (time.com)

Certificates of confiscation: Of bonds and bondage (theautomaticearth.blogspot.com)

Greenspan Should Have Seen Housing Crisis, Burry Says in Times (bloomberg.com)

The Housing Blowup: Did You See It Coming? (blogs.wsj.com)

Trash Collecting Entrepreneur Squashed In San Francisco (Mish)

January's housing prices indicate end of real estate bounce (csmonitor.com)

Oakland condo prices fall to 2002 levels (sfgate.com)

Bay Area jobs market won't recover until 2015 (contracostatimes.com)

How Texas escaped the real estate crisis (washingtonpost.com)

Lauderdale officials want to tear down abandoned new riverfront condos (sun-sentinel.com)

Houseowners balk as property tax bills stay high (usatoday.com)

Renovation Nervosa in Vancouver (vreaa.wordpress.com)

Email from a Chinese on China's Real Estate Bubble (Mish)

Futile attempt to return to bubble that no longer exists (theautomaticearth.blogspot.com)

I Saw the Crisis Coming. Why Didn't the Fed? (nytimes.com)

Arcane, Secretive Organizations Like Fed Have No Place In Democracy (businessinsider.com)

Bond Company Pimco's Battling Brains (latimes.com)

Critical Juncture for U.S. Housing Market, Gold (marketoracle.co.uk)

It's Ponzimonium in the Gold Market (huffingtonpost.com)

More Foolish Borrowers Face Pay Garnishment (nytimes.com)

Mortgage Aid Elicits Anger, But May Help Banks and Debtors (nytimes.com)

Spiking CMBS Delinquencies May Collapse Mid-Sized Banks in 2010 (housingwire.com)

Banks Looting Main Street (rollingstone.com)

Lawmakers' income: Money woes reach Congress (reporternews.com)

Good comebacks for "we have multiple offers"? (patrick.net)

Featured Property

I have been profiling HELOC abuse for a couple of years now. I could profile one every day (I nearly do now), and I would never run out of them. What I have come to learn watching the foreclosure inventory is that few of those properties are on the MLS, and they break down into two categories: late buyers, and HELOC abusers. It is both sad and revealing.

• This property was purchased on 8/24/2004 for $630,000. The owners used a $504,000 first mortgage, a $126,000 second mortgage, and a $0 downpayment.
• On 5/17/2005 they obtained a $170,000 HELOC.
• On 10/5/2006 they refinanced with a $686,000 first mortgage.
• On 10/20/2006 they obtained a $87,500 HELOC.
• Total property debt is $773,500.
• Total mortgage equity withdrawal is $143,500.

Foreclosure Record

Recording Date: 10/19/2009

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 07/13/2009

Document Type: Notice of Default

Just another Irvine borrower.

Irvine Home Address … 24 APRILLA Irvine, CA 92614

Resale Home Price … $679,000

Home Purchase Price … $630,000

Home Purchase Date …. 8/24/2004

Net Gain (Loss) ………. $8,260

Percent Change ………. 7.8%

Annual Appreciation … 1.3%

Cost of Ownership

————————————————-

$679,000 ………. Asking Price

$135,800 ………. 20% Down Conventional

5.24% …………… Mortgage Interest Rate

$543,200 ………. 30-Year Mortgage

$144,460 ………. Income Requirement

$2,996 ………. Monthly Mortgage Payment

$588 ………. Property Tax

$67 ………. Special Taxes and Levies (Mello Roos)

$57 ………. Homeowners Insurance

$41 ………. Homeowners Association Fees

============================================

$3,749 ………. Monthly Cash Outlays

-$740 ………. Tax Savings (% of Interest and Property Tax)

-$624 ………. Equity Hidden in Payment

$282 ………. Lost Income to Down Payment (net of taxes)

$85 ………. Maintenance and Replacement Reserves

============================================

$2,752 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$6,790 ………. Furnishing and Move In @1%

$6,790 ………. Closing Costs @1%

$5,432 ………… Interest Points @1% of Loan

$135,800 ………. Down Payment

============================================

$154,812 ………. Total Cash Costs

$42,100 ………… Emergency Cash Reserves

============================================

$196,912 ………. Total Savings Needed

Property Details for 24 APRILLA Irvine, CA 92614

——————————————————————————

Beds: 3

Baths: 2 full 1 part baths

Home size: 1,803 sq ft

($377 / sq ft)

Lot Size: 4,050 sq ft

Year Built: 1988

Days on Market: 171

MLS Number: S593567

Property Type: Single Family, Residential

Community: Westpark

Tract: Tr

——————————————————————————

Based on our analysis of the description, this listing may be a short sale or in a stage of pre-foreclosure. The parts of the description that made our system think this are highlighted below.

Lovely home on tree lined street in private quiet location. Large kitchen with breakfast area, large oval tub in master bedroom with separate shower, good size walk in closet, professionally landscaped yard with large patio, inside laundry, driveway,close to association tennis, basketball court and 2 swimming pools. This home has a great open floor plan and a lot of potential. It just needs a little TLC. **SHORT SALE HAS BEEN APPROVED!**