28 thoughts on “IHB News 10-9-2010”

1. MbinRI October 9, 2010 at 5:30 pm

   And he wants to have a carry profit since his note from 2008 is likely less than 6%. And he wants his current taxes refunded to him as part of the transaction. And he wants the buyer to pay nothing toward principal so when the 5 year term is up he can simply take back the property unless the “buyer” can pay $460000 in cash. And he wants 1% to compensate himself for recording the note etc.

   All this for a house that “looks larger than it is” I assume the illiterate author of the description is the owner?
   1. OrangeRenter October 9, 2010 at 8:21 pm

      Assuming the owner has a mortgage, my guess is he pockets the $140,000, tries to cover HIS mortgage with your payments, then you get evicted in 18 months when the existing 1st lien holder forecloses.

      And, $500/sqft for a tiny 1972 home?

      Even if my first assumption is wrong, you’re correct that 5 years from now if you can’t finance the $460,000 to pay the balloon, you’re screwed.

      And, that description!!! Wow… Unreadable!
   2. Chris October 10, 2010 at 7:32 pm

      This is a perfect house for PR. We’re being priced out…..oh damn, need to get that down payment quickly for this one………..
2. awgee October 9, 2010 at 7:00 pm

   Of course what Chevy is saying is correct regarding the borrowers, but just as important is only allowing the lender to foreclose. There seems to be concern that some, many, or a heck of a lot of the foreclosures have been filed by entities which do not own the mortgage they are filing on.

   Hopefully we will find out if there are one or two circumstances of grievous error and some minor technical flaws, or gross error and large numbers of illegal foreclosures. Neither signifies that the defaulting owners should be allowed to squat, but a mortgage default does not open foreclosure to anybody who claims they own the paper.

   We are a nation of law, not convenience.
   1. Honcho October 9, 2010 at 10:30 pm

      This is a bogus argument. Read the mortgage. Servicers are authorized to conduct the foreclosure on behalf of the owner of the note. Virtually every mortgage has been securitized and sold off. The only way this system makes any sense is if you have one central point of contact to accept payment and conduct a foreclosure in the event of default.

      The argument that only the holder of the note can foreclose flies in the face of the debt obligation that was signed.
   2. Honcho October 9, 2010 at 10:54 pm

      Let me be a little more clear.

      When these mortgages were securitized they were put into a trust so a large number of mortgages could be pooled and then sold as investment instrumnets to others who own a right to receive payments as they are received. As part of the originall pooling, servicers retain servicing right and are the point of contact for the borrower. As payments are collected by the servicer they are paid into the pool and investors are paid. The trust “holds” the note or is the owner of the note. The servicer acts on behalf of the trust to collect payments or foreclose when necessary.

      Mortgages make it clear that an entity other than the original lender or owner (acting on behalf of the owner of the note) is authorized to foreclose if necessary.

      There isn’t a question of who owns or holds the note in this. There is a fringe group out there claiming that individual investors are fractionalized owners of the note. Wrong. The investors are merely entitled to payments received and are not owners. If anything, they own a right to receive payments, but are not owners or holders of the indivuals notes.

      The slowdown right now is based on a problem with the paperwork that has been filed. It appears as though some lenders/servicers were filing foreclosures without following proper legal procedures regarding the review of loans before filing and recording certain notarized documents. This is where the problem is. It is a paperwork problem, not problem based on the fact that the wrong entity is foreclosing.
      1. awgee October 11, 2010 at 1:07 pm

         You are 100% wrong. The ownership is in question.

         http://us1.institutionalriskanalytics.com/pub/IRAMain.asp
3. mike October 9, 2010 at 7:27 pm

   the reason banks give to limit foreclosures are all lies. during the last several years i’ve developed the utmost contempt for banks.

   they’re just making more excuses to limit housing supply to prevent prices from collapsing further.

   the banks can go f themselves.
   1. mike October 10, 2010 at 8:32 am

      interesting timing.

      the banks start restricting foreclosures during the slow winter months when prices should be crashing. coincidence? let’s see…

      1. government mandated foreclosure moratorium (restrict supply).
      date: nov 11 2008 – jan 2009
      http://www.bizjournals.com/sanfrancisco/stories/2008/11/17/daily83.html

      2. government home buyers credit (stimulate buying)
      date: jan 1, 2009 to nov 6, 2009

      3. extension of the credit (stimulate buying).
      date: November 7, 2009 and April 30, 2010.

      4. california home buyers tax credit (stimulate buying).
      date: may 2010 – august 2010

      5. now some sad bullsh*t documentation excuse. another foreclosure moratorium (restrict housing supply)
      date: nov 2010 – ?

      notice the -consecutive- market props from nov 2008 to today. as soon one ends, another is immediately started. there’s no overlap, there’s no gap. did they coincidentally come up with these dates where as soon as one program ends another is started for the past two years? only a fool would think so.

      no doubt, once this latest foreclosure moratorium ends, the banks and government will find some new devious way to keep prices higher. scheme after scheme after scheme, one right after the other, to keep prices higher.

      the housing market is so rigged it’s unbelievable, most people don’t even realize it. it’s sad how easy it is to fleece the public.
      1. SanJoseRenter October 10, 2010 at 1:34 pm

         mike wrote:

         > the banks start restricting foreclosures during the slow winter months when prices should be crashing. coincidence? let’s see…

         mike, you’re devious. I like that! 🙂

         Also, is that timeline construction original work?

         If so, you’re devious enough to be a bankster or policy wonk. 🙂
4. hojin101 October 9, 2010 at 10:51 pm

   uh wow.
   I bet there is some monkey poo that will agree to this. When the poo hits the fan, this monkey poo will sue anybody and everybody claiming he did not know what he was getting into so he should not be fulfill his side of the deal.
5. Shevy October 10, 2010 at 2:27 am

   No doubt, the American people need someone standing up for them against the banks. Moreover, anyone being unfairly foreclosed upon by the banks needs protection and recourse. In addition, halting foreclosures in areas that this is happening and if it’s that widespread all over the country may have been necessary. But what’s the point of announcing it? What good does that do? Those that are being unfairly foreclosed upon know it. Those that are being fairly foreclosed upon know it. Those that aren’t paying and are squatting know it. They will also figure out pretty quickly when the foreclosure stops or starts again.

   I have a client that found a lease on craigslist. The property was being leased by an escrow lady that bought the property at trustee sale when the 2nd lien foreclosed. The property was still subject to a 1.2 million dollar first which she has not paid a penny on. Yet, she collects rent every month from my client. It has now been over 2.5 years that Bank of America has not collected a Penny on the first and the lady that purchased the second made up a bogus law suit to slow down the foreclosure further, which finally got thrown out. They sent a broker out to complete a BPO and he came back with a value of $750,000. The first is now foreclosing and was scheduled for trustee sale a month ago, yet it was postponed and they also refuse to short sell it to my client.

   There are 10’s of thousands if not hundreds of thousands of properties out there in similar situations. Landlords collecting rent, not making a payment, and banks not wanting to take the loss letting them do it, this is a bigger travesty than an occasional random paperwork error or even a consistant innocent paperwork error, on a property that has not been paid on for 6 months that is sitting vacant, a landlord that is essentially rent skimming and getting foreclosed on now, or someone that went on a HELOC binge and does not want to pay for it. Bottom line is, right now, Banks don’t have to take losses and are keeping properties off of the market and artificially keeping prices high, making new buyers in many areas the next victims. In many areas the injustice for those have been prudent, save, pay their taxes and just want a home for their family but can’t find one or end up over paying is worse than it is for the HELOC abuser, landlord, or vacant property. This seems to be a convenient excuse to hold thousands of properties off the market, likely at the expense of the responsible American tax payer. I just don’t believe that B of A’s attorney’s can’t figure out the foreclosure process in all 50 states, nor that announcing it serves any good purpose beyond what they think may be a political one.
   1. darms October 11, 2010 at 4:28 am

      No doubt, the American people need someone standing up for them against the banks

      Ding ding ding! That’s exactly the reason for government regulation of business, a reason that seems to be seldom mentioned these days. Who else will defend a citizen/customer like me against a multi-billion dollar bank let alone a financial industry whose valuation is measured in trillions? It’s why the idea that “Government is the problem, not the solution” is a huge, bald-faced LIE and those screaming it are either bald-faced liars or hopelessly confused. It’s a major reason things are so screwed up today.

      Please note, however that I’m speaking in the abstract and not in the concrete as it’s an easily confirmed fact that the regulating bodies in the US government today are controlled and staffed by the industries they are supposed to regulate. For example it’s the financial industry that writes the laws & regulations & it’s the financial industry that decides what laws will be enforced & against whom. And yes, from that viewpoint an industry-controlled government is no solution at all.
6. Laura Louzader October 10, 2010 at 4:49 am

   One recent article “The Aftermath of the Housing Bubble” (July 2010) at http://housingstory.net/2010/07/28/the-aftermath-of-the-global-housing-bubble-chokes-the-world-banking-system/ published some very interesting charts, that showed that the repo’d properties visible on the market was 5% to 10% of the actual inventory.

   In Cook County, IL (Chicago), there are over 28,000 repossessed homes, while only 1,200 repossessed homes are on the market. That is less than 5%.

   In Orange County, CA, over 6200 repo’d homes, with only 228 repo’d homes on the market. That’s about 3.5% roughly.

   In St. Louis, MO, slightly over 10% of the repo’d inventory is on the market.

   Miami-Dade. rather less than 10% of all repos are on the market.

   So, for every foreclosed home you see available, about 20 more lurk in the “shadow” inventory. It seems to me that there is quite enough “market overhang” to cause another 50% drop in prices.

   How much longer can banks hold on to all this?
   1. Chris October 10, 2010 at 7:47 pm

      You can thank FASB for that one.

      For all the bitching about Bernokio, Geithner, Obama and Congress, I’m surprised nobody has been pissed off at the FASB board members for approving new FASB 157 rule governing mark-to-market guidance.

      FASB

      Frankly, with this change, “pretend and extend” can go on forever.
      1. SanJoseRenter October 10, 2010 at 8:36 pm

         The FASB link is from April 2, 2009.

         Also, not clear if that’s about mortgages or other financial instruments.
      2. Shevy October 10, 2010 at 9:46 pm

         Not having to mark to market is ridiculous. I believe that a lot of people feel this way, however, it’s not clear what can be done to change it. When I heard a guy on CNN trying to rationalize not having to mark to market I thought he was joking. No such luck. If banks had to mark to market and a 3rd party company was determining real market value, there would be less incentive for banks to keep shadow inventory. This definately seems to be part of the problem.
         1. South County October 11, 2010 at 3:12 am

            I saw the interview this weekend on Bloomberg with Tom Barreck of Colony Capital, and he said the same thing. There is no mark to market with the banks and if they had to they would be insolvent.

            At least in the early 1990’s the Resolution Trust Corp. sold off the bad assets of 800 failed S&L institutions and by 1995 most of the problems were cleaned up. This time we have a whole new world of banking.
         2. Planet Reality October 11, 2010 at 7:25 am

            It is what it is, you can complain about it now or you could have seen it 2 years ago and profited from it.

            There is no denying that Irvine price per sq ft was $320 when the world was ending in early 2009. Now it’s trending to $360 per sq ft and those that bought when the world was ending refinanced down over 100 basis points in mortgage rate.

            Mark to fantasy will be with us indefinitely. It is our form of socialism to allow people to take on debt of any kind and let 90% of society pay for the defaults. Inflation will eventually take hold further punishing those that don’t join the party.
7. alan October 10, 2010 at 6:33 am

   As usual, I was listening to NPR today. First I heard a bunch of Keynesian rubbish from our nobel laureat economist Mr Paul Krugman going on about the need for a massive goverment stimulus. Then they had a rational sounding economist from Australia say that is the exact wrong thing to do. He went on about how the US now resembles Japan of the 90’s and how US economists are blinded by the “Great Depression”. In Japan, real estate in Tokyo dropped 86% from peak to trough. Other than goverment props which can’t last forever, what’s to really stop that from happening here?
8. Laura Louzader October 10, 2010 at 6:53 am

   I fear that there might be worse in store for us than a Japan-type economy, which is really probably the BEST outcome we could expect.

   I’m afraid we’re on the verge of becoming another Weimar Germany, and I’m sure you’ll agree that we’d be much better off being like Japan of recent years. If our economists and politicians want to recreate the hyperinflation and extreme desperation and misery of the population during the worst years of the Weimar Republic, they’re on the right track by creating ever more government debt and driving the creation of more private debt. We might already have reached the Tipping Point at which we can no longer support existing levels of government debt.

   So I doubt we will be so well off as Japan. We will not be so fortunate. We are already in much worse condition than Japan. Japan has a fully functional manufacturing sector, with manufacturing behemoths dedicated to remaining cutting-edge, while we have almost completely dismantled our manufacturing. Most of all, Japan has an extremely resilient population, made so by a high savings rate, while most of us here in the U.S. are literally one paycheck away from living on the streets, and lastly, Japan has a very high degree of social cohesion and cooperation, while we are rather “atomized” and at each other’s throats.
   1. Freetrader2 October 10, 2010 at 10:26 am

      That’s a little extreme, and, I think, wrong. Overall debt levels are gradually declining in the US, as private debt is being reduced, even while government debt is increased, as you note. So the situation isn’t as desperate as all that. The long term issues – entitlements and medicare – are going to be major problems in the future but there is no indication we are headed toward Weimar Germany or even a Japanese outcome. Our demographics are much better, for one thing. Provided we don’t listen to Mr. Krugman and his ilk, things aren’t going to be all that bad, even if we don’t ever recapture the economic euphoria of the ’90s.
      1. Chris October 10, 2010 at 7:51 pm

         “Overall debt levels are gradually declining in the US, as private debt is being reduced,…”

         Private debt is being reduced because people are DEFAULTING on the debt, NOT because they’re being paid off.
         1. SanJoseRenter October 10, 2010 at 8:30 pm

            Yup, defaulting on the debts they have, and unable to get HELOC and small business loans overall.

            Sad to watch the USA heading back to a barter economy. Make sure you have a plot of land to farm so you can participate too.
         2. alan October 10, 2010 at 9:58 pm

            While individuals are defaulting on their debt, I don’t think that is the debt most economists are looking at. Major corporations took on a lot of debt too and now are hording cash to pay down this debt instead of expanding (GM & Chrysler are exceptions… they went thru BK) which is why unemployment is not coming down. That OK when a few of the corps does this but when all the corps pay debt instead of expand at the same time then the economy frezes up.
         3. Freetrader October 11, 2010 at 12:25 pm

            Alan’s correct, and in any case, while certainly some of the debt reduction is due to defaults – who cares? Also, I didn’t bother to point out two other hopeful factors: #1 an increased household savings rate (up to around 6%) and #2 an increase household net worth (driven by a combination of of debt reduction and increased asset values). Overall these are moderately good signs for the long run (if not necessarily in the short run).
9. Freetrader2 October 10, 2010 at 10:32 am

   I don’t think I can get over how completely brilliant (if laughable) this ‘owner’s’ idea is. Rather than defaulting on his underwater mortgage, he offers it to someone else – IF they hand him $140,000+ in cash for his trouble. It’s HELOC abuse in reverse! It’s like he built a time machine to 2006.

   Truly, a moronically brilliant idea.
10. John October 11, 2010 at 8:50 pm

    It is obvious from the postings on this property that the authors do not know what they are talking about. Based on my understanding, this is an equity sale. A bank does not have a loan on the property. The owner bought the property in 2009 for under 500K and is trying to make a profit. The price is higher than the market but that is normal when the Seller wants to carry financing. I do not understand why the author thinks the Seller is underwater. If I had the option to get a house and pay a little more (if I did not qualify for financing), I would definetly look at seller financing. I know it costs more…plus everything is negotiatable. The listing price is just an ask price. I am constantly looking for Seller financed properties. This property is too small for me…if anybody else out there has a Seller Financed property, please let me know. As long as the property is an equity sale, I might be interested.

    Thanks

Comments are closed.