Banks are giving up on alternate delinquency remedies and processing foreclosures in earnest.
Irvine Home Address … 17 BRILLANTEZ Irvine, CA 92620
Resale Home Price …… $798,800
Take me out tonight
Where there's music and there's people
Who are young and alive
Driving in your car
I never never want to go home
Because I haven't got one anymore
Oh please don't drop me home
Because it's not my home, it's their home
And I'm welcome no more
The Smiths — There Is a Light That Never Goes Out
Foreclosure is a painful but necessary part of the real estate cycle. Lenders have tried to delay this process as long as possible, but it is now going forward with renewed vigor.
US mortgage foreclosures rise sharply
By Suzanne Kapner in New York
Published: December 29 2010 20:33
US mortgage foreclosures jumped in the third quarter as fewer borrowers qualified for loan modifications that would have reduced their monthly payments, bank regulators have said.
The rise in repossessions and decline in loan modifications are further signs that problems in the US housing market are persisting, in spite of forecasts by some analysts of a recovery before the year-end.
The number of homes entering foreclosure rose 31 per cent compared with the second quarter and 3.7 per cent compared with the year-earlier period, according to the Office of the Comptroller of the Currency and the Office of Thrift Supervision.
2011: The Year of Foreclosure? Loan modifications failed. Short sale programs are proving ineffective, and cure rates are near zero. Foreclosure is the only remaining option to clean up this mess. 
These newly foreclosed homes will add to a growing backlog of 1.2m properties in some stage of repossession, a 4.5 per cent increase over the second quarter and 10 per cent more than the previous year.
As of the end of the third quarter, 187,000 homes completed the foreclosure process, a 14.7 per cent increase on the second quarter and a 57.5 per cent jump from the same period a year ago.
As these properties come on the market, they are expected to depress home prices by between 5 per cent and 10 per cent during the next year.
That is a widely held position among real estate market watchers.
The regulators also found that home retention actions, such as interest and principal reductions, had fallen 17 per cent from the year earlier, mainly because of a sharp drop in modifications run by the government’s home affordable modification programme (Hamp).
Hamp modifications totalled 504,648 as of November, well short of the government’s 3m target.
Failure. Unqualified, unmitigated failure. Loan modification programs were a bad idea from the start. The only served to give false hope to people for a while and get a few more payments from zombie borrowers.
Even when borrowers receive loan modifications, they are redefaulting at high rates. According to a report by the Congressional Oversight Panel, 40 per cent of borrowers who receive a Hamp modification are expected to redefault over the next five years.
Bruce Krueger, the OCC’s head mortgage expert, said the decline in Hamp modifications was partially caused by the smaller pool of loans eligible for change.
The real problem is that so many people simply don't qualify because they aren't willing to cut back on their entitlements to make a mortgage payment. Remember, for 5 years, the house paid you to live in it. Paid handsomely. People became adjusted to that level of spending and now they must adjust. No fun.
But Mark Zandi, chief economist of Moody’s Analytics, said that explanation told only part of the story. The problem, he said, was the “inadequacy of loan modification programmes”.
Hamp must compete with private modification programmes offered by banks, which tend to provide borrowers with smaller reductions in interest and principal, thus making them more attractive to lenders and less helpful to distressed homeowners.
Competing with private loan mods? Is he kidding? Banks don't want to modify loans. Banks want to get all their money back plus interest. They need to make enough on the good customers to pay off the bad debts of the others. The created many Ponzis who are by definition, bad customers.
Banks want the government to take responsibilty for these bad loans under the HAMP program. The entire program was developed to take the garbage off the lender's books. Lenders are not offering better deals than HAMP except perhaps for a few choice customers. The riff-raff in the MBS pools can fend for themselves.
Another problem, said Mr Zandi, were second-lien holders. Many first mortgage lenders will write down the loan principal only if the balance on the second mortgage is also reduced.
But borrowers continue to make payments on second mortgages, which tend to be smaller and therefore more affordable, even when they fall behind on the first. As a result, second-lien holders had been unwilling to take part in modifications, creating a “big impediment”, Mr Zandi said.
The Treasury Department recently increased cash payments to mortgage servicers and lenders to encourage them to complete more modifications. But analysts said the government had so far done little to address the problems presented by second liens.
So why are the banks finally starting to foreclose? Higher loss severities will force lenders to resolve bad loans and liquidate REO.
Foreclosures jump 31% in third quarter: OCC
by JON PRIOR — Wednesday, December 29th, 2010, 3:34 pm
Large banks and thrifts foreclosed on 382,000 homes in the third quarter, a 31.2% spike from the previous quarter, according to the Office of the Comptroller of the Currency.
Foreclosures increased 3.7% from a year ago, and more are coming. There are 1.2 million homes in the foreclosure process as of the end of the third quarter, up 4.5% from the previous quarter and an increase of 10.1% from a year ago.
The OCC, which oversees the largest banks and absorbs the Office of Thrift Supervision in 2011, said lenders have picked up the pace of foreclosures to get through their backlogs.
The banks are finally picking up the pace to clear their books via foreclosure. Two thousand eleven will be the year of the foreclosure.
Still, 87.4% of the 33.3 million loans in the banks' portfolios were current and performing at the end of the quarter, which held unchanged from the previous quarter. While the amount of borrowers in 60-plus day delinquency dropped 6.4% from the previous quarter, mortgages between 30- and 60-days delinquent increased 4.3%.
The 60-day plus delinquency rate can go down as properties enter foreclosure. This is the backlog. The increase and new 30-day and 60-day delinquencies is troubling. The pipeline is getting larger.
But servicers reported more home retention actions than foreclosures in the third quarter. More than 470,000 borrowers received either a trial modification, permanent modification or shorter-term payment plans.
Of the modifications completed in the third quarter, 88% included a principal reduction to go with the interest-rate decrease, and more than 54% reduced monthly payments by at least 20%.
More recent modifications are performing better than earlier ones, too. For those completed in the fourth quarter of 2009, 20.2% were seriously delinquent after six months. For those made in the second quarter of 2009, 33.5% were seriously delinquent after the same amount of time.
Hurry! Sign up for your loan modification while they are giving away free money! Does is seem plausible to you that 88% of loan modifications had principal reductions?
Appreciation provides mobility
Housing market participants will endure long-term mobility problems as a direct result of the policies enacted in Washington to save the housing market. Rather than letting prices fall to their natural level and then begin to rise, government policy has engineered a false bottom that will delay sustained appreciation for 1 to 3 years trapping every debtor in their properties for an additional one to three years.
Today's featured property was purchased at the false bottom in early 2009. This owner has marked up the property to cover the commissions and pay for a renovation. Do you think they will get it?
Irvine Home Address … 17 BRILLANTEZ Irvine, CA 92620 
Resale Home Price … $798,800
Home Purchase Price … $685,000
Home Purchase Date …. 2/13/2009
Net Gain (Loss) ………. $65,872
Percent Change ………. 9.6%
Annual Appreciation … 8.0%
Cost of Ownership
————————————————-
$798,800 ………. Asking Price
$159,760 ………. 20% Down Conventional
4.86% …………… Mortgage Interest Rate
$639,040 ………. 30-Year Mortgage
$162,773 ………. Income Requirement
$3,376 ………. Monthly Mortgage Payment
$692 ………. Property Tax
$0 ………. Special Taxes and Levies (Mello Roos)
$133 ………. Homeowners Insurance
$97 ………. Homeowners Association Fees
============================================
$4,298 ………. Monthly Cash Outlays
-$820 ………. Tax Savings (% of Interest and Property Tax)
-$788 ………. Equity Hidden in Payment
$298 ………. Lost Income to Down Payment (net of taxes)
$100 ………. Maintenance and Replacement Reserves
============================================
$3,089 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$7,988 ………. Furnishing and Move In @1%
$7,988 ………. Closing Costs @1%
$6,390 ………… Interest Points @1% of Loan
$159,760 ………. Down Payment
============================================
$182,126 ………. Total Cash Costs
$47,300 ………… Emergency Cash Reserves
============================================
$229,426 ………. Total Savings Needed
Property Details for 17 BRILLANTEZ Irvine, CA 92620
——————————————————————————
Beds: 4
Baths: 3 baths
Home size: 2,178 sq ft
($367 / sq ft)
Lot Size: 5,000 sq ft
Year Built: 1978
Days on Market: 5
Listing Updated: 40549
MLS Number: S642876
Property Type: Single Family, Residential
Community: Northwood
Tract: Ws1
——————————————————————————
Opportunity knocks, better than a brand new model home. Owners just spent $160,000.00 upgrading this gorgeous home and have to relocate. Cul-de-sac location with four bedrooms and 3 bathrooms. Main floor bedroom and bathroom. Private backyard next to the greenbelt. Brand new kitchen with thermador stainless steel appliances, Ceasarstone countertops, custom cabinetry. Brand new millwork windows and sliding doors with custom plantation shutters. New tile roof. Gorgeous hardwood floors. Crown moldings and built in office closet on the main floor bedroom. Brand new custom bathrooms. New Drywalls with bull nosed corners. Brand new water heater. And the list goes on. Just a short walk to shopping and restaurants, close to Northwood high school. No mello roos tax and low monthly association fee.
False 2009 bottom????
According to you, prices in Irvine were still going down, and down and down for 2 whole years. Oh how we change our tune. It only took 2 years to acknowledge.
I’ve posted here many times that the bottom in most markets happened in spring or summer of 2009 (especially in detached properties-condos have performed worse and have continued to fall in many locations). However, prices are now falling again.
This homeowner gives a good example the following statement:
If there is a significant likelyhood you will move within ten years, and monthly rents are lower than the total monthly costs of owning (including repairs and insurance and taxes and HOA fees as well as payments), you should rent.
This seller was not secure enough in his job to make a purchase. He should have rented.
This seller won’t get the asking price. They will probably get about what they paid for it, maybe a little more. So, after commissions, closing costs, the renovation cost, and the difference between Irvine rents and total monthly costs of owning in Irvine, they will probably lose a quarter million dollars or more by owning instead of renting. Or, they will lose a little less than that plus get their credit trashed (they might owe more on their loans than the property is worth and not have the cash to make up the difference, requiring a short sale).
Now you sound like IR, speculating what this seller did.
Who knows what happened, it’s a waste of time speculating, whatever happened it’s an outlier. This type of behavior is not typical, why analyze it.
All that matter are the facts. The fact is the market value of this house now is still higher than the 2009 price even if nothing was done to the house. Everything else is speculation.
I’m assuming the listing is telling the truth.
“Owners just spent $160,000.00 upgrading this gorgeous home and have to relocate.”
They have to relocate. That almost certainly means a job loss, followed by finding another elsewhere, or a job transfer. (Could be a sick relative or other issue, but my point stands-if there is a moderate or higher likelyhood of you needing to move within a decade, you shouldn’t buy a house in a city where rents are cheaper than owning.)
As for the loan info, that is speculation. Usually IrvineRenter posts that data; he didn’t that time.
As for it’s current market value, it is slightly higher than the 2009 purchase price. The best quickie comp value IMHO is Redfin’s sold comp value, which is $704,757, or $19,757 more than the purchase price but $94,043 less than the current asking price. As for the value of the upgrades, that’s very hard to say but unless they expanded the square footage, they probably didn’t increase the value of the house much if at all.
“As for the value of the upgrades, that’s very hard to say but unless they expanded the square footage, they probably didn’t increase the value of the house much if at all.”
That is a truth no home owner wants to accept.
PR’s getting owned by Geotpf.
“I’ve posted here many times that the bottom in most markets happened in spring or summer of 2009”
and you were wrong as we told you you were
“(especially in detached properties-condos have performed worse and have continued to fall in many locations). However, prices are now falling again.”
Yes, prices are falling again, and will continue to fall for some time, exactly as were told you they would. We are not using a crystal ball. There are some people who can forecast based on fundamental analysis and probabilities, not foresee based on their feeling.
Las Vegas does not make money based on it’s ability to predict the future, but rather it’s ability to calculate odds.
You will continue to be wrong as long as you look at the possibilities through the lens of desire rather than the harshness of reality.
Wow … very true and very smart!
Planet Realty, Although some pockets do show that we hit bottom in OC in early 2009, the facts are quite different. When you reduce inventory you get price inflation. Recently since the expiration of tax credit, there is sense of urgency to sell homes again and its evident whereever there are listings dating back 3-6 months. Heck, even new homes in Portola Springs (KB Homes) lowered their Primrose biggest plan by $30K and is offering $10K towards closing in addition.
Prices will head down and in a big way, wait to see when we get Dec/Jan prices for OC, big drop. Only catch for Irvine is that no many homes sold so its hard to compare, but you can compare it to the trend around OC, specially South OC.
In 2005 my wife and I bought a home for over 300 thousand. She wanted it, I didn’t.
Knowing what I know now, I should’ve just got a divorce when she made it seem like such a deal breaker. Now a 3 year old son later, IMO divorce is out of the option for now.
But every time I read this blog, I feel stupid, knowing that I paid too much.
It is disappointing when no less than 3 neighbors bought for less than 50% of what I paid.
To make it so bad, I am pissed because when I met the one guy, he told me how much he paid. He even made a comment about the ‘suckers’ who overpaid.
When I talk to my wife about us being underwater, she gives me a blank stare. I guess her masters degree was money well spent. All she says is, “I love this house”. Women….
Meanwhile my property taxes are almost triple the ones he will be paying.
There are at least 2 homes nearby that I could rent for 1200 per month.
I like the area, and my neighbors are OK, but it’s getting hard writing those 3 grand checks every month when the guy across the street is not even paying half that!
Ironically, when I applied for a loan mod, I was turned down twice. The second time they told me if I missed 3 payments the bank would contact me.
I asked the lady at the other end of the phone if she was kidding, and telling me to default. She said she wasn’t kidding, and she was not telling me to default, but she could not work with me unless I missed 3 payments.
I was raised to honor my word and pay my bills, and my wife loves this home but I don’t care how she feels right now, as I am seriously ready to walk!
I think I am about to take the lady up on her avice ,if the bank won’t do anything to keep me in this house, why should I stay?
You have shown an ability to make your current payments. Therefore, the bank will not work with you-why would they? Those programs are really only for people who can’t afford the house they live in. Now, since you have shown an ability to make your payments, you will not qualify for any payment reduction plans (unless your financial situation takes a turn for the worse). You will get a year’s free rent before they get around to kicking you out, though, but you will eventually lose your house. If you stop paying, there is a 100% chance you will lose your house. You probably wouldn’t be able to get current again, since the banks charges significant fees and interest on the missed payments.
So, the question is, is the damage to your credit and marriage worth a year’s free rent plus the ability to rent another house for less? Only you can make that decision.
Geotpf:
The statistician in me requires that I point out there is no such thing as a 100% chance (probability of 1). That is an event that has already happened 😉 99.9999999% chance, yup, that’s a valid statement!
True. I was rounding up. 🙂
Thanks, Geoptf, I know that you’re right.
It’s just that deadbeats are getting modifications, and I feel stupid paying on a home that is worth half of its value.
My BIL makes 40k more than I do, but got a modification after missing 3 payments. According to him, their payments dropped almost half.
I guess having the mortgage in his wife’s name only has it’s benefits.
Now he and his wife are spending like ghetto/hillbilly rats. They bought 4 IPads for the whole family for Christmas.
I know if I default, staying without paying means some people will call me a jerk.
The damage to my credit will be great and the rent free living is about 35 thousand. I definitely can rent for less.
I don’t really care about my credit, or the house.
Look likes I’m walking…
Default > foreclosure > separation > child custody dispute $$$ > divorce > court-ordered spousal support $$$ > court-ordered child support $$$ > even lower FICO which will negatively impact auto insurance rate > low FICO > lessened ability to obtain a quality rental = at mercy of scumbag apartment managers and low-level landlords.
Welcome to poverty.
~Misstrial
Misstrial is a shill working…a working for a bankster.
They would like you to think the bank actually has the note to your house. The truth is they most likely don’t. MERS does…
There are two ways to find out if you have MERS on your mortgage. The easiest way is to look in your copy of your closing documents to find a piece of paper which says you allow MERS or Mortgage Electronic Registry Service to be listed on the mortgage or deed of trust. If you have that, there is a pretty darned good chance you have MERS on your Mortgage.
Ultimately, you will have to take a short trip to the recorder’s office at the county courthouse and do your own title search. If you find MERS on your mortgage, get a stamped copy of it from the recorder, thank them nicely and leave. Don’t flip out on them, if anything, educate them, let them know about MERS. Odds are, they haven’t a clue.
You can go to MERS’s own website and look it up for yourself, but experience has shown this information isn’t reliable. The only thing that matters is what is listed at the courthouse.
If you have been reading this website & blog, you know MERS on your mortgage and doing nothing about it is not a good thing. The system of MERS & securitized mortgages has so shattered ownership, there is every reason to believe you will not receive clear title once your obligation is complete unless you take action. So what do you do?
The steps I am about to outline are the view from 50,000 feet. What happens at ground level is not discernable until you, yourself, go through it. What I am saying here is that while it may seem simple, it isn’t. You need legal representation.
As in everything which involves the courts, process is everything and if you don’t proceed with the process correctly, or if you are challenged in any way and you don’t proceed with the challenge correctly, you can damage your case irreparably. Do not try this at home. Find competent legal assistance.
Here’s what you do and here is a reasonable expectation of what could happen:
1. Mail a form letter in accordance with 15 USC sec. 1641(f)(2) (which is part of the Truth in Lending Act(TILA)) requesting the chain of title information to the note and Deed of Trust which, by Federal law, the lender or servicer must give you. The loan servicer will probably blow you off. The filing is free and even though you can do this part yourself, it is better you have an attorney do this for you. Two reasons: first, and most importantly, the lender or loan servicer is less likely to blow off a letter from an attorney requesting this chain of title information than he is a letter from you and second, the attorney can craft a series of interrogatories in a discovery request which you probably cannot. These two letters should cost you between $250 & $500. For all those DIY types who want to get in there and roll up your sleeves, this is the only step in this process you can possibly think about attempting yourself. It does not involve the courts but it is a big step towards the courts.
2. When you are blown off, have your attorney sue the servicing agent & lender to prove this chain of title.
3. Send your monthly mortgage payment to the court in an interpleader arrangement. That way, the other side cannot move for default or foreclosure during the process you are all about to endure.
4. At trial, if the defendants prove to the court’s satisfaction they are indeed able to prove chain of title information, the court will release all back payments to the other side and you should continue with your obligation as before.
5. If, at trial, the defendants are unable to prove chain of title, have your lawyer move for quiet title in your name and ask the judge to order all the money you have set aside be returned to you.
6. If you are really ballsy, request the return of every mortgage payment made during the period where the title is clouded.
7. Assuming all of the above and you are granted your order, you will end up with clear title to your house, no more mortgage payments and and windfall of cash you can do with as you please.
This is a highly technical legal process based upon the legal precedent outlined elsewhere on this site. Do not try this yourself. This is complicated securities law and even if you study it, you aren’t qualified to present it in court. There is a history on the net of several spectacular crash and burns of the DIY set. You need a litigator. Open the yellow pages and look under attorney specialization for a real estate attorney, a bankruptcy attorney, or a general business attorney. These areas of specialization are more likely to understand the nuances of these ideas and principles than other specializations.
Get on it!
Great post. Thank for taking the time to write it.
About2Walk,
Just as Alan has said, there is no morality issue involved. IR even has emphasized that defaulting on loans are done all the time in the commercial world with no regrets. So, don’t let personal integrity to affect your sound decision.
Giving you a little of bit my background before I tell you what I would have done in your situation.
I am a savor, but my wife is a spender. I don’t give a damn about what anyone thinks of me, but image is everything to her. Naturally, I also do not give a damn about my credit score. She, her family, and my family also tortured me into buying a house in the past decade, but I have remained adamant of not committing. On top of that, we also have small children.
So, I would just walk in your situation. Doing that does not mean the end of marriage. Even a divorce is not the end of everything. That one-year-plus of free rent is certainly very appealing, and defaulted loans are forgiven by the government (I think it is still in effect). After walking, a declaration of bankruptcy is also desirable as per IR’s advice.
I would have walked a least a couple of years ago. Making that decision would certainly feel like losing a few pounds. I would certainly sleep much, much better at night. So, good luck and hope for the best.
Oh, and property taxes (in the state of California, at least) should be adjusted downwards to match the current value of your house. File a complaint with the county tax people.
Geotpf is of course wrong. the only question is not is
“is the damage to your credit and marriage worth a year’s free rent plus the ability to rent another house for less?”
If you are me, then the most important question is what is your integrity worth? From your post, it sounds like you keep your word because you are a man of your word, not because of the consequence that may befall you or others.
And I totally get that vey few people understand that position. It is expensive.
Au contraire awgee, the opposite is true.
Stupidity and dishonesty are far more expensive (in the long run).
But you knew that already….
~Misstrial
abouttowalk – Back in 1995, 1996, I was upside down on my mortgage after having bought at the top of the market in 1990 with 20% down. It was upsetting to owe more than my house was worth, very upsetting. Yeah, we had a place to live, but the truth is that being upside down sucks. And I kept making the payments, not because it was financially positive. It wasn’t. But rather because my parents taught me that I am my word. Everything else changes. Nothing is completely in my control, except my word, and anyone who knows me will know me by my word.
It took a few years before my home was above water again, but I learned from that experience. I learned that all those folks who said you can’t time the real estate market were wrong. I just had to look honestly at myself and see what had influenced me to buy and what I could do different. It is difficult to be honest with oneself is one is dishonest with the world.
In 1999, I saw the next boom cycle getting ready to occur. We sold our home, bought a much more expensive home and leveraged the heck out of it. We bought more than we could afford. We struggled like heck and made the payments for 5 years and then sold in the summer of 05.
We timed the market, and I truly doubt that we could have timed the market had we not had the previous experience and learned from it. My guess is that it is impossible to see the truth through all the crap if one is not honest and holds to one’s word, and in order to time the market, you have to be able to see what is BS and what is real. I have heard that the easiest people to sell are other salespeople.
Good luck.
I have to disagree on the basis of the very well worn argument we’ve seen discussed here 1000 times. Paying your mortgage isn’t about your word, it’s a business deal. There are prescribed penalties for failure to pay. Your word was important when you did the deal. If you strip the place on the way out, then I’d say you’ve done something wrong.
You’d just be envoking a portion of the contract. This isn’t about morality.
Honcho – When you sign a purchase mortgage agreement in California, do you promise to pay? Or do you only agree to pay as long as you want and the bank agrees to take the house back if you no longer pay? Or something else?
For some people, their word in business is no different than their word anyplace else. How can it be?
It’s a contract. Just like any contract, it’s a bargained for exchange.
I don’t know of a business that would stay operational for long if they continually breached their contractual obligations, but sometimes, the consequences of breaching a contract are less severe than actually fulfilling the obligation.
Personally, I think that the “rational” decision for many underwater homeowners is to walk right now, but I certainly understand why someone would continue to make payments and feel uncomfortable breaking their promise to pay.
At the end of the day, we aren’t all always rational decision makers creating predictable efficient markets.
So let me get this straight –
You bought a house with the specific purpose of making as much money as possible by holding it as prices rose during a real estate bubble. Then, you did your best to time the peak, selling it off with the expectation that the next buyer would lose a significant amount of money. And the unfortunate sap duped into buying your bubble inflated home is immoral if he doesn’t pay his mortgage?
You knowingly sold an overpriced home with the expectation that it would end up worse less and he would end up holding the bag. Can you not see that under your system of applying morality to business decisions that you are essentially a con man, defrauding the buyer?
“The unfortunate sap duped into buying your bubble inflated home”?
“it would end up worse less and he would end up holding the bag.”?
“essentially a con man, defrauding the buyer?”
Do you live your life blaming others for your bad decisions? And castigating others for making good decisions?
When I bought at the top of the market in 1990 it was no one’s responsibility but mine. No one duped me. And if I had the attitude that I was duped rather than having made a decision without considering all the possibilites or probabilities, then I would end up living my life as a victim and a fool.
I read you comment and it becomes obvious why our country is in the financial mess and moral vacumn it currently finds itself.
My comment must have really touched a nerve for you to respond with an attack on my character.
Were you duped into buying? Were you coerced into taking out a toxic mortgage?
The funny thing is that in 2005 a few people asked why we were selling and renting instead. I do not remember one person giving credence to my answer. I can not help buy wonder if you were one of those people.
“My comment must have really touched a nerve for you to respond with an attack on my character.”
It did touch a nerve. I hate hypocrisy. To believe that exercising an option to not pay on an asset and forfeit it is somehow dishonest while selling someone an asset that you believe will depreciate significantly, leaving them in likely dire financial straights isn’t is hypocritical.
“Were you duped into buying? Were you coerced into taking out a toxic mortgage?”
I had the opportunity to purchase back in 2003. I made the decision not to because I felt homes in Orange County were overvalued. I encouraged several friends to continue renting rather than buying. I’m still renting, because I don’t think house prices have bottomed. In the intervening years I have lived in a beach community, paying far less in rent than had I bought. I used the same basic thinking to use that saved money for investment purposes, and did a pretty good job of timing the collapse and rebound of the DOW, so I’ve done much better for myself than most people around me.
I have no issue with people who bought low and sold high. That’s how good investing works. However, I also have no problem with people who choose to quit paying and allow the bank to foreclose. I do take issue with people who don’t pay and expect to keep their house, and I do take issue with people who pass moral judgment on people who choose to exercise an option spelled out in the contract. The whole concept of being true to your word is based on situations with no collateral. In that case, their is an agreement to repay because there is a one sided asset trade. This doesn’t occur in a mortgage contracts, so one’s word has nothing to do with any of it.
“is immoral if he doesn’t pay his mortgage?”
I was just thinking, where do you find that I called anybody immoral for anything? If I go back and read what I wrote, it appears that I told what my word meant to me and why I keep my word, especially when it costs me.
So what are you feeling so guilty about that you would interpret what I wrote as accusing someone else of being immoral for not paying their mortgage?
I so tire of the “holier than Thou” attitude that is expressed by certain members….like awgee.
You talk about your bullshit ethics and morals, and then turn around and accuse someone of “feeling guilty” because they called you out. More manipulation and mind F#$% games.
Your morals and “papa taught” crap is not mine. nor do I give a sh1t about them, I’m not preaching my morals and ethics or using words to manipulate others, you are. It’s crap, STFU, and to answer your accusation that is most assuredly coming, no I’m not feeling “guilty”, in fact, I’m a pretty good human being, just tired of judgmental pricks.
Same O same O for hypocritical OC. Let’s get more of a police fascist state by ENFORCING certain people’s morals, especially for non-existant crimes.
Without knowing anyone obviously, it seems like the wife looks at the house as a place to live (that she likes) while about2walk looks at the house as an investment (that loses). So from their own perspective, they can both be right. If everything in life is money and the value of the marriage does not bring the house investment back to break-even, then the calculation is clear enough.
about2walk- I think you need to stop beating yourself (and your wife) up over buying the house. Forget about how much less your neighbor paid, forget about what your brother in law bought the family for Christmas. At the end of the day, that’s just stuff. It’s not the measure of you.
Yeah, you made a financial mistake. So did lots of people. It doesn’t sound like you made the mistake for a terrible reason. You were trying to do the best for your family.
You’ve got a wife, a child, and a nice place to live. Lots of people can only dream of those things. Don’t be so hard on yourself. You’re not doing so badly in life.
Thank you. That basic truth is easily lost.
Talk to an attorney first. There are a lot of potential nasty gotchas that vary from state to state.
Your property tax should go down with the reassessed value, so that’s not really a valid point
Also, it is impossible to forecast the future. Who knows? Thirty years from now, it might turn out to be the best financial decision you ever made to stay put. Hard to tell these things.
Also, don’t be so jelous of the refi’ing iPad buying brother in law. I know some people who have upped their spending after refiing their 30-year fixed into an interest only ARM after an income drop. Seems like financial suicide given the Fed’s determination to print money.
The real test will be where he and you stand twenty years from now.
Those iPads will be obsolete in 6 months and pretty much worthless in 24 months. If wise financial decisions are the standard of comparison, I wouldn’t lose a lot of time being jealous of the brother in law.
Why would they become worthless in 2 years? They will still work fine. Sure, they will be replaced with newer, better, less expensive models, but that doesn’t cause them to explode into puffs of dust.
Who cares about the ‘material-girl’ wife. Take her to the Newport mall and leave her there… Move to Mexico and live for 1/4 of the price of OC. Move on with your life. OC is 10x over priced and ain’t coming back anytime soon.
I didn’t write “useless”, I wrote “pretty much worthless”. Try to sell one and see what you get. You may indeed be able to continue using it, though from what I have seen during many years, very few of the people buying them now will still be using them in 2 years. The coolness factor, latest and greatest, impress and one-up your family and colleagues possibilities will be long gone. The utility will also be much less, as the amount of data to handle keeps going up, formats change, speed requirements increase, etc., etc.
Grow a set and stand up to your wife! I had to encourage my husband to do that and after he got the hang of it, things have been better in our household.
I am glad that you have integrity, but you are blaming your wife for the fact that you can’t stand up to her. That is unfair to her.
@ about2walk, I’ve been there, done that. You need to educate yourself about the process of walking away, or trying to force a loan mod. Go to Loansafe.org and start reading posts from REAL people likeourselves who have to tackle this tough decision.
I heard the same thing, and I had to default to force a loan mod, but I knew sitting at the big table, that I was tossing my House into the gambling pile, I could of easily lost my home, but when you are underwater by $120,000, I’ve got nothing left to lose except my downpayment, but wait, that’s ALREADY gone.
Default, don’t let the “but I love this home” stop you. This is your financial future, and your emotional present, perhaps if that wife loved you more than the house, she would clearly see what this is doing to you on a daily basis.
Everyday I see people moving into homes for $269k or $299k and I paid $420k, leaves a bitter bile taste in my mouth and I know damn well the banksters will sell it to their cornies for that, but in no way would EVER re-finance me for that same amount. Fills one with bitterness and disappointment about how america is running.
It changed my viewpoint on pretty much everything. I defaulted for my children. My children being deferred compensation, IRA, and other investments. My children thank me for it everyday and I’ve assured my children no home will ever come between us again 🙂
Is the amount of time it takes from an initial default to foreclosure auction proportional to the rate of foreclosures in an area? Does a bank take longer to foreclose in a county with an 18% default rate compared to a county with a 3% default rate? That would make sense as I have not heard of banks dramatically stepping up their staffing in those departments. Those counties with the most foreclosures are also the ones that have seen the largest price drops, so the shadow inventory will be largest in the areas where it will have the most drag.
I’ve had two South County Realtors tell me a couple of things last week that convinces me the bottom is not yet in:
1) A well known Irvine area Realtor said “I’ve not had an Irvine area REO for over a year”, which as we all know means they don’t exist…
2) That Realtor and another selling an above market 2b 2ba 900sf Glorified Apartment both blurted out “Prices won’t fall because”… wait for it…”Orange County is different”.
Just as prices don’t climb forever into the sky, neither will they fall to the center of the earth. A stabilization of prices may be near for some areas, but to say we’re immune, that “we’re different” is simply burying your head in the sand.
What would be nice to see independently verified is some facts and evidence that banks are better off with Foreclosure/REO transactions than Short Sales and loan mods. The Realtor community is convinced that SS transactions are in the long run a lower risk, greater return proposal than going the REO route. Borrowers believe banks are better off modifying loans than foreclosing They may be absolutely correct but I’ve not seen anything of substance to confirm or deny these thought lines. Is there an independent comparison of each transaction format and it’s net benefit?
My .02c
Soylent Green Is People.
1) … could be that those were just short sales instead of REO
SGIP,
With servicing costs running 1.5% of equity each month, the short sale better sell a lot quicker than the foreclosure. I think these servicing costs make the slow moving short sale a loser.
And if there is a second from a different lender then the first, good luck with a short sale.
Would be interesting to know how much of the 60+ lates have seconds from a different lender then the first. Seems to me many, if not most, of these will end up in foreclosure. Someday… Government willing…
Had heard though also that REO’s have a geater tax benefit to the lienholder compared to a short sale. Hearing and seeing are two different things.
The canard that “the bank has to hire an attorney, get an eviction notice, pay back taxes, etc” when an REO is performed might be true when compared to the costs found in a short sale.
There just appears not to be a line to line expense comparison between a 6 month short sale and a 6 month REO process, ending up in a re-sale. Those are numbers I’d like to see.
SGIP
Got a question on loans/notes:
We know that currently foreclosures are in trouble due to lack of paperwork filing and banks inability to know/disclose who the note holder is as its been sold so many times, what about standard sale/bank REO’s? Most bank REO’s were properties that were acquired via foreclosure that may be invalid now. Also on standard sale homes, what is the guarantee that the note on it was not sold multiple times in the past?
It does put a lot of burden on those trying to buying a home as they may end up with home with note holder/owner being someone else. Can anyone shed some light on this issue and also advise on how to protect yourself in such instances, how to find out of there is a problem to begin with?
1) Any issues that you are worried about have no appliation in California. Once a foreclosure sale is completed and the deed of trust is delivered, there is no setting aside the foreclosure (except on very limited procedural grounds).
2) If you are worried, buy title insurance.
I know of two cancelled foreclosure sales, after the auction. I am not sure how this was done.
These are neighbors, both within about half a mile.
There’s a difference between a court setting aside a foreclosure and a 3rd party agreeing to unwind a foreclosure. It is virtually impossible to have a court order a foreclosure undone.