The ever-increasing delinquency rate broke its stride with the first statistical blip this month.
Irvine Home Address … 74 LINHAVEN Irvine, CA 92602
Resale Home Price …… $710,000
Here is a little song I wrote
You might want to sing it note for note
Don't worry be happy
In every life we have some trouble
When you worry you make it double
Don't worry, be happy……
Ain't got no place to lay your head
Somebody came and took your bed
Don't worry, be happy
The land lord say your rent is late
He may have to litigate
Don't worry, be happy
Look at me I am happy
Don't worry, be happy
Bobby McFerrin — Don't Worry, Be Happy
Modifications rise sharply on some mortgage loans
60-day-delinquent loans fall for first time in two years, Fannie and Freddie say
By Amy Hoak, MarketWatch
CHICAGO (MarketWatch) — Loan modifications through the government's Home Affordable Modification Program tripled in the first quarter compared to the fourth quarter, according to data that covers loans held by Fannie Mae and Freddie Mac, the Federal Housing Finance Agency said Tuesday.
Also, loans 60 or more days past due fell for the first time in two years, dropping by nearly 23,800 to about 1.7 million in the first quarter, according to the FHFA's latest quarterly Foreclosure Prevention & Refinance report.
Overall, the FHFA said various efforts to keep homeowners out of foreclosure, including loan modifications, short sales and deeds-in-lieu, rose 75% in the first quarter compared with the previous quarter, to a total of 239,000 completed "foreclosure prevention activity" efforts.
Permanent mortgage modifications through the government's Home Affordable Modification Program rose to 136,000 at the end of the first quarter, up from 43,000 in the fourth quarter. Homeowners must successfully complete a trial modification period in order to make their modification permanent.
About 66% of modifications completed in the fourth quarter reduced borrowers' monthly payments by more than 20%.
Meanwhile, cumulative refinance volume through the Home Affordable Refinance Program rose 53% to nearly 291,600 at the end of the first quarter, up from 190,180 in the fourth quarter. The program allows existing Freddie and Fannie borrowers who are current on their mortgage payments to refinance and reduce their monthly mortgage payments at loan-to-value ratios up to 125%.
The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 federal home loan banks; the numbers in the report don't reflect the Federal Housing Administration's efforts to prevent foreclosures.
A broader view
Overall, the total number of homeowners receiving restructured mortgages since April 2009 increased to 2.8 million; also, half of homeowners unable to enter a permanent HAMP modification get an alternate modification with their servicer, according to a separate report Monday from the Department of Housing and Urban Development and the Treasury Department.
The 2.8 million figure "includes more than 1.2 million homeowners who have started HAMP trial modifications and nearly 400,000 who have benefitted from FHA loss- mitigation activities," the report said. "Of those in the HAMP program, 346,000 have entered a permanent modification, saving a median of more than $500 per month," See HUD and Treasury's monthly housing scorecard.
"The good news is the industry is doing more than the government modifications," said Faith Schwartz, senior adviser for HOPE NOW, a private-sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors. "They start with the government mods to see if they fit."
Treasury Secretary Tim Geithner said in a news release Monday: "The Administration's housing policies, combined with actions of the Fed, have lowered mortgage interest rates, helped stabilize home prices and reduced the rate of foreclosures, repairing some of the damage caused by the financial crisis to the financial security of millions and millions of American families."
Separately, the percentage of loans in foreclosure or with at least one payment past due was a non-seasonally-adjusted 14% in the first quarter, down from 15% in the fourth quarter of 2009, according to a Mortgage Bankers Association report in May. That works out to about 6.2 million loans somewhere in the delinquency or foreclosure process. See story on 14% of mortgages delinquent or in foreclosure.
Amy Hoak is a MarketWatch reporter based in Chicago.
Typical Irvine Ponzi
Atrocious borrower behavior is the norm here in Irvine. We were the home of subprime lending, and apparently many of our residents experimented with a variety of toxic financing.
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Today's featured Ponzi bought this property on 11/13/2001 for $485,000. The property records show a $502,000 first mortgage, but I suspect that was a $402,000 first instead.
- On 5/19/2003 they obtained a $63,400 HELOC.
- On 1/26/2004 they got a $100,000 HELOC.
- On 2/1/2005 they refinanced the first mortgage with a $634,500 Option ARM with a 1% teaser rate.
- On 3/23/2005 they obtained a $80,000 HELOC.
- On 8/10/2005 they opened a $100,000 HELOC.
- On 11/3/2006 they refinanced the first mortgage for $688,000 and obtained a $85,000 HELOC.
- Total property debt is $773,000.
- Total mortgage equity withdrawal is $288,000 based on their purchase price.
- Total squatting time is only 6 months.
Foreclosure Record
Recording Date: 04/15/2010
Document Type: Notice of Default
Irvine Home Address … 74 LINHAVEN Irvine, CA 92602 
Resale Home Price … $710,000
Home Purchase Price … $485,000
Home Purchase Date …. 11/13/2001
Net Gain (Loss) ………. $182,400
Percent Change ………. 37.6%
Annual Appreciation … 4.3%
Cost of Ownership
————————————————-
$710,000 ………. Asking Price
$142,000 ………. 20% Down Conventional
4.80% …………… Mortgage Interest Rate
$568,000 ………. 30-Year Mortgage
$143,683 ………. Income Requirement
$2,980 ………. Monthly Mortgage Payment
$615 ………. Property Tax
$267 ………. Special Taxes and Levies (Mello Roos)
$59 ………. Homeowners Insurance
$145 ………. Homeowners Association Fees
============================================
$4,066 ………. Monthly Cash Outlays
-$722 ………. Tax Savings (% of Interest and Property Tax)
-$708 ………. Equity Hidden in Payment
$260 ………. Lost Income to Down Payment (net of taxes)
$89 ………. Maintenance and Replacement Reserves
============================================
$2,985 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$7,100 ………. Furnishing and Move In @1%
$7,100 ………. Closing Costs @1%
$5,680 ………… Interest Points @1% of Loan
$142,000 ………. Down Payment
============================================
$161,880 ………. Total Cash Costs
$45,700 ………… Emergency Cash Reserves
============================================
$207,580 ………. Total Savings Needed
Property Details for 74 LINHAVEN Irvine, CA 92602
——————————————————————————
Beds: 4
Baths: 2 full 1 part baths
Home size: 2,478 sq ft
($287 / sq ft)
Lot Size: 6,937 sq ft
Year Built: 1999
Days on Market: 43
Listing Updated: 40315
MLS Number: S616662
Property Type: Single Family, Residential
Community: West Irvine
Tract: Othr
——————————————————————————
This property is in backup or contingent offer status.
Highly upgraded home in West Irvine! Very private yard, extra long driveway, Granite countertops.
RBS tells clients to prepare for ‘monster’ money-printing by the Federal Reserve
Time to buy some real estate at today’s still-inflated prices, so we can pay it back with even higher-inflated dollars!
What are the financial repercussions to these people? You have many excellent profiles of massive abuse but it would be interesting to know if the people are in financial ruin or if they still have hundreds of thousands in the bank.
These people took $300,000 out. That buys a lot of Mercedes and Range Rovers, vacations and home upgrades. Then they squat for 6 months and save all of the mortgage payment and property tax money. You can save up a lot of money by not paying your mortgage or property taxes for a year.
If you do this with two or three houses you become a mini mogul. $300K x 3 = A million bucks. Not too shabby.
I do know after a foreclosure you can’t get any loans for two years. Maybe they’re on the hook for the taxes. I know second mortgage defaults count as income. Or maybe not.
I feel your frustration. Everybody in my neighborhood has nice things. Beautiful cars. 50K kitchen upgrades. Trips everywhere. At least three are in Trustee Sale phase now. They haven’t paid their property taxes for two years yet their kids attend the same schools as our kids.
We’re the fools because we didn’t take advantage of the situation. There are no repurcussions.
CitizenIrvine ———- I feel your pain. I too, am the fool —- far too smart, as it turns out, for my own good. Should have drank the Kool-Aid.
Can you imagine what would have happened if in every case after two months you received a NOD and exactly three months after that you had a NOS and were EVICTED. Then all of your delinquent HELOC and second mortgages were counted as income and you were immediately on the hook for the taxes.
There would be so many people living in apartments, declaring bankruptcy, moving out of state to survive, etc.
But you can sure as hell bet neighbors would get wind of that crap and start doing everything they could to make ends meet.
There is no impetus for doing ANYTHING about their situations today. Who cares? 5K a month mortgage payment + 1K a month property taxes means you save $72K a year – CASH. You drive on the same roads (in nicer cars), kids go to the same schools, you shop at the same stores, go to the same parks. What have you got to lose? Do it for 18 months and you’ve got $108K cash. Now all you have to do is wait it out for 6 more months and now you can buy whatever you want with that 100K downpayment and tons of inventory at lower prices. SCORE!
What makes you think these people are saving the money? They spent their houses because they needed money to spend on cars, vacations, clothes etc.
Now they don’t have access to HELOC money and they stop paying their mortgage so they have enough money to spend on the same things as before. Just go to the malls and you’ll see them.
These people are not saving all that money, they spend it.
HELOC money drove the economy in the run up phase, squatting money is keeping the economy alive in this phase.
Will this phase last forever, or will there be a true payback some day. Oh ya, I almost forgot, good taxpayers like me are paying it back as we speak.
Cran,
You’re probable right, they spenting it, but enjoyed the spending and the vacations, cars …. It part of the stimulus package. Too bad I don’t qualify.
Not all HELOC/HEW abusers get the multi-year free rent. I saw one Irvine black bankster get the boot with only 8 months of free rent (but $600,000 profit for less than “1 year investment.” The $600,000 can still buy a nice house on other areas or years of rent. But who needs the credit RATING when there’s half million in the bank. One can still get loans and credit cards with a bad credit rating, just pay a higher interest. Years past, banks offered larger credit lines to people who have defaulted.
I took was too stupid to drink the kool-aid, but would likely be vomiting over the foul taste of ill gotten gains.
Yes, I tend to doubt the calculations that just add up money not being paid (mortgage plus taxes) and conclude that is cash to save or spend, at least in some significant percentage of the cases. How many were using HELOCs or credit cards to cover the teaser rates and are now cut off from that so can’t come up with the payments? Or they’re out of one or both the incomes they needed to barely keep up?
I don’t have any hard numbers one way or the other, but it is more reasonable to estimate that not all of the HELOCs were completely tapped out, and not all of the money not being paid out actually exists and could be saved.
Then again I don’t see how unemployment checks are financial stimulus – a couple of hundred bucks every 2 weeks may cover basic food and some gas, but not restaurants, sports, electronics, cars, etc.
The stimulus money is the free rent/taxes which is $1500 to $16,000 per month. No typo on the $16,000 is for the NPB $3.2 million HEW that was featured in IHB. I think that the lower amounts are for folks that are hard up on the job situation, and the higher amounts are strategic defaults that have used the CA single action rule to milk the system (purchased house in FL that are shielded from judgements if the leader tries for a judical FC). I think the NPB was getting more than 2 years of free rent and no end in sight.
The extended unemployment is a cheap way to buy votes. Just think if the bailout money was used just as to give a one time gift to every citizen or a make work project : All unemployed workers to kept their neighborhood clean, fix and clean the schools and parks.
I think it’s interesting that many comments here are attributing “what we would do” in these people’s shoes. Apparently we would sock away our mortgage payment and property taxes.
The truth is that most of these distressed borrowers had no idea the housing market and economy would take the face plant that it did, and they had even less an idea that they would be bailed out by federal and state legislation. They did not behave as they did knowing they’d be saved. They were reckless. Why do we think they would change?
They were not savers then and they are definitely not savers now. At some stage we need to all acknowledge that financial restraint never enters their thought processes.
Like Gator in the movie “Jungle Fever”:
Momma: “You’re out of your mind. I’m not giving you a red cent!……And what happened to
your father’s color TV??”
Gator: “Mama, I smoked the TV.”
Momma: “Lawwd have mercy on your twisted soul!”
Gator: “I ain’t goin’ nowhere till you give me some money!”
I do not care much of what all these people have done and why, beyond the fact it did impact the market.
Problem right now is really when to buy. I think like a lot of people (on this blog), I have save a lot of money, and also make enough to get a 6-800k$ house with only a 15y mortgage of 50%.
But, I’m still not convince we are even close to the end of the drop. Irvine has been protected to a sharp drop, and it takes really a while to get something which I would agree to pay more than rental parity, but not twice !
People just expected housing to keep going up after all it did for ten years. So the heloc loans kept coming and so did their spending they felt totally entitled to it because housing always goes up.
This was the main error in thinking. The gravy train simply stopped and now without appreciation there is no extra money except by stop paying the mortgage and wait for someone to kick you out.
Meanwhile life goes on.
Price to income ratio is 27:1
http://www.businessinsider.com/the-chinese-real-estate-bubble-is-the-most-obvious-bubble-ever-2010-1#prices-are-way-out-of-whack-compared-to-global-standards-3
IMHO: PRC market is vastly different from the US market on who rents and buys. The buyers have money, large downpayments and large incomes, while most of the masses have small incomes and don’t own the houses. Down payments needed are 20 to 30% on the primary home and 50% on the second house, all with high documentation. The overall cost to income is very high. The bankers in PRC are liable for bad loans — who wants a bullet or prison time for making bad loans or having your family stuck with making good on the bad loans?