Sales rates are 25% below normal, and with low household formation and a lack of equity in potential move-up households, transaction volumes will remain low for the foreseeable future.

Irvine Home Address … 65 SAPPHIRE Irvine, CA 92602

Resale Home Price …… $429,900

Just move on up

and keep on wishing

Remember your dreams

are your only schemes

Curtis Mayfield — Move On Up

Everyone want to move up to better housing accommodations. Years ago I toured the Tijuana subdivisions of URBI. One of the homes was a 288 SF single family detached home. When I asked one of our guides who bought such a place, he beamed with pride and said they were generally people moving out of shanties. They were thankful to have working plumbing, solid walls, and climate control. That tiny home was a huge improvement over what they moved out of.

My wife recently had a conversation with a woman who was lamenting her plight. Her family was outgrowing their Shady Canyon home. With three children, their 4.000 SF 5 bedroom house no longer met their needs. She wasn't bragging or being pretentious, she was relaying the truth of her situation as she saw it.

No matter your station in life, it's human nature to want more. Thus, a move-up buyer is a large component of any healthy real estate market.

Move-up markets need equity and wage growth

A move-up market requires two things in order to function: equity and increasing incomes. Neither is present in today's housing market, and there are few glimmers of hope on the horizon.

In the real world, most first-time homebuyers use an FHA loan and buy a low-cost property. The reason for this is simple: it takes too long to save 20% for a down payment on a conventional loan. First-time homebuyers use FHA loans because the 3.5% down payment is within reach. Further, once these buyers are in a property, they simple wait five or ten years for the wage-based appreciation to magically give them 20% to 30% equity in a property to use on their move-up purchase.

Once the owner has enough equity to get a closing check large enough to fund a 20% down payment on a move-up property, they go shopping. Since this is usually quite some time after buying their FHA financed property, it's likely the household wage earners are making more money. They take their larger family income and their 20% down payment and buy a move up property. At least that's how it used to work.

Notice the scenario above requires both appreciation to create equity and increasing income to finance a larger loan balance. If either of those conditions is missing, the move-up market suffers because fewer buyers are active.

So think about today's market. We are creeping out of a deep and prolonged recession characterized by persistently high unemployment. Incomes are down, not up. Even if buyers had the equity, they don't have the income growth also necessary to push buyers up the property ladder. If not for historically low interest rates, loan balances would be contracting with the declining wages experienced by many during the recession, particularly those in real estate related fields.

Also, prices have crashed, particularly for low-end properties typically purchased by FHA buyers. Nobody purchasing low-end properties with FHA loans over the last decade has accumulated any move up equity, and prices are still going down. That problem alone explains much of the ongoing weakness in the move-up market. In fact, I argue that the lack of equity at the bottom of the housing ladder is largely responsible for the weakness in pricing and volume at higher price points.

The future of move-up markets

Many housing pundits believe the market will strengthen from the top down. This view is not correct. The high end of the market will bottom last because it will experience a persistent lack of available buyers. If there are fewer move-up buyers, there will be less buying pressure, and since we know there are plenty of distressed properties from the plethora of overextended borrowers struggling or squatting in high-end homes, there will be no shortage of supply.

Lenders have been successful so far at slowly releasing high end homes to the market to keep the decline orderly. Let's assume that practice will continue. Due to the low demand, there will be an ongoing imbalance with supply and demand, and prices will slowly creep downward as banks are forced to take slightly lower prices than recent comps in order to liquidate. Like slowly removing a band-aid, the pain gets stretched out over a much longer period of time — but it is still painful.

Banks will release product slowly because they need to get their cash back out of these properties. If a big bank like BofA gets really desperate, they might increase the pace of their liquidations and push prices lower quicker, but if they don't, prices will drift lower slowly as the inevitable liquidations run their course.

Lenders have this fantasy that they can slowly release product into a rising market and obtain a better recovery. It isn't going to happen because there is simply too much product. For example, the Irvine Company and other new home builders generally account for about 15% of sales. At that rate, they can obtain higher prices and not disrupt the market. Right now, distressed sales by lenders account for 30% to 40% of the monthly sales volumes, and they have a backlog which will take a decade to clear out. If they try to reduce their sales volumes to be only 15% of sales, they will be selling REO forever.

In my opinion, we will see the low end of the market bottom in the next year or two. There will be a multi-year gap between when the low end bottoms and when the high end bottoms due to the lack of a move up market. It isn't until those who bought near the bottom at the low end have enough equity to move up to the next rung on the property ladder that each subsequent rung will bottom out. In other words, the bottom process will take a long time, and the high end will be the last to experience it.

Home price index edges up

The 0.2% bump in August in the Standard & Poor's/Case-Shiller index of 20 metropolitan areas is the fifth straight monthly increase. But a sustained improvement in housing may be hard to achieve in the months to come.

By Alejandro Lazo, Los Angeles Times — October 25, 2011, 9:20 p.m.

Providing a ray of hope for the beleaguered housing market, a closely watched index of home prices in major U.S. cities nudged upward in August, marking the end of what is typically the busiest sales season of the year.

Home prices have risen for five months in a row, but whether the spring and summer gains will prove lasting is an open question. Sustained improvement in housing may be hard to achieve in the months to come, experts said, if the nation's foreclosure machinery picks up momentum and employers remain reluctant to hire.

“We will probably see a reemergence of the seasonal dip in most markets, quite frankly, including California,” said Thomas A. Lawler, founder of research firm Lawler Economic & Housing Consulting.

Yes, the seasonal pattern will spell then end of rising index prices. I have repeatedly predicted a welcome decline this fall and winter.

The Standard & Poor's/Case-Shiller index of 20 metropolitan areas rose a meager 0.2% from July to August, an uptick many analysts noted as probably seasonal in nature and influenced by the decline in foreclosed properties as a share of the total number of homes sold.

Comparing the August reading with the same month a year earlier, the index fell 3.8%, a drop economists viewed positively because it was one of the slowest rates of year-over-year decline registered by the index all year.

Prices falling 3.8% is a positive? Well, I think so, but not because I want to see prices go back up. It's positive because it's a sign houses are becoming more affordable to the average person.

Christopher Thornberg, principal of Beacon Economics, said other home price indicators point to two trends developing in the nation's housing market: Values are declining for homes in distress — those properties that are either foreclosures or cases where the homeowners are delinquent on their mortgages — but other homes are fetching higher prices.

These two divergent forces are flattening out overall market values, he said. The main source of sales sluggishness is the scarcity of potential move-up buyers with equity in their homes.

“The biggest problem is not credit, it is not confidence, it is equity,” Thornberg said. “No equity, no move-up buyer; no move-up buyer, you get a slow market.“

Chris Thornberg is correct. The lack of equity is weighing down the market by reducing the number of move-up transactions.

But David M. Blitzer, chairman of the index committee at S&P Indices, said he sees “a modest glimmer of hope” in improvements in some aspects of the data.

I do get tired of every comment by every person in every news story being slanted to the point of view of loan owners. I find more than a modest glimmer of hope that prices will get even more affordable when I see how far prices have already come down, the downward price momentum, and the lack of demand at current price points.

Prices rose in August for 10 of the index's 20 metro areas compared with July, and prices fell in the other 10 cities.

California cities stumbled. Home prices in Los Angeles fell 0.4% over the previous month, San Diego prices declined 0.2% and San Francisco saw a 0.1% drop.

Atlanta experienced the biggest decline, down 2.4%. Las Vegas fell 0.3% and Phoenix was down 0.1%.

Prices fell more in Las Angeles than they did in Las Vegas last month. Which market do you think is closer to the bottom?

The Midwest has made gains in home prices in recent months, and Chicago and Detroit were both up 1.4% over July. Washington has fared better than other regions and gained 1.6%.

Earlier this year, the 20-city index dropped below its previous bottom, hit in April 2009, confirming a double dip in prices, but has come up above that level since. Some economists predict a renewed decline in prices in fall and winter, typically slower periods for the market.

Economists have had trouble pinpointing the source of the recent rise in prices.

Home values often rise in the spring and summer months because families more actively shop for houses so they can complete moves before the start of the new school year. But the number of foreclosed homes for sale also has been dwindling because foreclosure processing by the big banks has slowed down as a result of investigations into their practices.

“Prices just stabilized earlier in the year because of foreclosure-gate last year, where the lenders stopped foreclosing on so many homes to get their books back in order,” said Patrick Newport, an economist with IHS Global Insight. “Now they are ramping up.”

Yes, lenders are ramping up. Reports about the declines in foreclosures usually omit the reason foreclosures declined. The implication is that lenders must have run out of people to foreclose on, so the foreclosure cleansing must be nearly over. That was never the case. The price pressure from distressed properties will not be relieved until delinquency rates are back down to historic norms and the shadow inventory is cleaned out. That process will take years.

But Lawler disagreed, saying that the recent increase in the number of notices of default, the first formal stage of the foreclosure process, was mostly due to activity by Bank of America. There has yet to be a significant uptick in home repossessions by banks.

“We have seen that a few banks have started to accelerate the foreclosure process somewhat, but we haven't really seen it translate into actual repossession of homes,” he said. “I don't think we have seen immense signs that banks have re-accelerated the process.”

What does Mr. Lawler think BofA is doing then? Are they issuing all these NODs just for giggles? Just because the NODs have not been seasoned for 90 days so they can become Notices of trustee sale (NOTs) and ultimately foreclosure does not mean that they won't. BofA and other banks are clearly setting out to liquidate their shadow inventory. Once these properties are REO, they may have second thoughts about how quickly they dispose of these properties, but their recent actions show they are intent on repossessing these properties.

20% down the drain

In any market crash, the weakest hands give up their positions first, and the strongest hands give up last. During 2007 and 2008, many of my property profiles were borrowers who used 100% financing, Option ARMs, or were dependant upon Ponzi borrowing to survive. When conditions became even slightly adverse, they walked away. Over time, we saw fewer and fewer of those borrowers, and we started to see the people who put 5% or 10% down.

Now that the decline has dragged on for 5 years and prices are over 30% down from the peak and still falling, we are starting to see the people who put 20% down give up and walk away. The former owner of today's featured property paid $598,000, and he put $119,400 down. It went back to the bank on 3/11/2011. The former owner's substantial down payment is lost.

Larry Roberts and Shevy Akason are hosting an OC housing market presentation at JT Schmids at the District on November 9, 2011. Please RSVP at sales@idealhomebrokers.com. Register online here: OC Housing Market – JT Schmid's.

——————————————————————————————————————————————-

This property is available for sale via the MLS.

Please contact Shevy Akason, #01836707

949.769.1599

sales@idealhomebrokers.com

Irvine House Address … 65 SAPPHIRE Irvine, CA 92602

Resale House Price …… $429,900

Beds: 3

Baths: 2

Sq. Ft.: 1500

$287/SF

Property Type: Residential, Condominium

Style: Two Level

Year Built: 2001

Community: West Irvine

County: Orange

MLS#: P789463

Source: SoCalMLS

Status: Active

On Redfin: 95 days

—————————————————————————-

Quiet Two Story Town Home ~~ 3 bedrooms, 2.5 bathrooms, with a 2 car attached garage with direct access. Property features Harwood Laminate flooring throughout, oversize gas burning fireplace, open kitchen with custom cabinets and solid granite countertops, large master suite with room for seating area/office and walk~in closet, upstair laundry room, walk~in pantry, and patio. Property has been rehabbed to include new interior neutral color paint throughout. Property is located near multiple shopping and entertainment opportunites.

——————————————————————————————————————————————-

Proprietary IHB commentary and analysis

Resale Home Price …… $429,900

House Purchase Price … $598,000

House Purchase Date …. 12/8/2005

Net Gain (Loss) ………. ($193,894)

Percent Change ………. -32.4%

Annual Appreciation … -5.5%

Cost of Home Ownership

————————————————-

$429,900 ………. Asking Price

$15,047 ………. 3.5% Down FHA Financing

4.18% …………… Mortgage Interest Rate

$414,854 ………. 30-Year Mortgage

$127,616 ………. Income Requirement

$2,024 ………. Monthly Mortgage Payment

$373 ………. Property Tax (@1.04%)

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

$90 ………. Homeowners Insurance (@ 0.25%)

$477 ………. Private Mortgage Insurance

$267 ………. Homeowners Association Fees

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

$3,297 ………. Monthly Cash Outlays

-$318 ………. Tax Savings (% of Interest and Property Tax)

-$579 ………. Equity Hidden in Payment (Amortization)

$22 ………. Lost Income to Down Payment (net of taxes)

$74 ………. Maintenance and Replacement Reserves

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

$2,496 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$4,299 ………. Furnishing and Move In @1%

$4,299 ………. Closing Costs @1%

$4,149 ………… Interest Points @1% of Loan

$15,047 ………. Down Payment

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

$27,793 ………. Total Cash Costs

$38,200 ………… Emergency Cash Reserves

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

$65,993 ………. Total Savings Needed

——————————————————————————————————————————————————-

Larry Roberts is hosting a Las Vegas cashflow properties presentation at JT Schmids at the District on November 9, 2011. Please RSVP at sales@idealhomebrokers.com. Register online here: Las Vegas cashflow property – JT Schmid's.

Mitt Romney is the first presidential candidate to demonstrate the courage to endorse the right policy for housing.

Irvine Home Address … 67 HAVENWOOD Irvine, CA 92614

Resale Home Price …… $444,900

antichrist vanguard advance

spilling the blood of matyrs abd slaves

credo decimatus

machinery of the cleansing

decay and degradation dwell amongst us

machinery of the cleansing

sepsism swells the flock obscene

machinery of the cleansing…

Angelcorpse — Machinery of the Cleansing

Foreclosure is the machinery of the cleansing. Unfortunately, both lenders and loan owners are loath to take a bath, and politicians are too busy pandering for votes to do the right thing. Perhaps that is about to change.

I am neither left nor right in my political leanings. I am one of the moderate swing voters who votes for either party. I was annoyed by McCain's pandering to loan owners in the 2008 election, so he blew his slim chance at getting my vote (I was probably still too pissed at Bush to vote Republican.) So far, I have seen nothing by clueless pandering or outright avoidance of housing issues by any of the presidential hopefuls. Nothing Obama has done has impressed me so far either.

When I read today's featured article on Mitt Romney's comments, I was pleasantly surprised. He actually seems to display a grasp of the issue and is endorsing a politically unpopular policy. He wants to let markets work which means letting home prices fall.

Foreclosures: Don't slow them, Romney says

Foreclosures need to go forward so the housing market can begin to recovery, GOP presidential hopeful Romney says in Nevada. Nevada leads the nation with the highest rate of foreclosures.

By Kasie Hunt, Associated Press / October 20, 2011

Las Vegas: Mitt Romney came to the state with the highest foreclosure rate in the nation and said he wants to allow home foreclosures to “hit the bottom” to help the housing industry recover.

He picked the right place to make those statements. There are no successful market props working in Las Vegas. Prices have crashed, transaction volumes are high, and the market is bottoming as cashflow investors are moving in to clean up the debris. That's how markets are supposed to work.

In an interview published Tuesday ahead of presidential debate, Romney told Las Vegas Review Journal's editorial board that solving the foreclosure crisis would require letting banks proceed against homeowners who have defaulted on their mortgages. New investors could then rent out the homes until markets adjusted.

“As to what to do for the housing industry specifically and are there things that you can do to encourage housing: One is, don't try to stop the foreclosure process. Let it run its course and hit the bottom,” Romney said.

Wow! Romney is right — completely and totally right. I imagine the “give away free houses” movement on the left will freak out over these comments. Apparently, Mitt Romney either isn't listening to his advisors who want him to pander to loan owners, or he actually has the courage to say what needs to be done. I thought Ron Paul was the only politician with the bravery to do that.

Romney elaborated during the presidential debate Tuesday night. “The idea of the federal government running around and saying, 'We're going to give you some money for trading in your old car…or we're going to keep banks from foreclosing if you can't make your payments,” Romney said, “The right course is to let markets work.“

This is the first utterance from this campaign that got my attention. He is right on with his comments.

Nevada, where seven of the presidential candidates are debating, has the country's highest foreclosure rate and the nation's highest unemployment rate.

Democrats immediately criticized Romney as out of touch with middle class Americans, many of whom are struggling to hold on to their homes amid high unemployment.

I suppose Romney is out of touch with loan owners who are trying to hold on to the bank's home.

“Mitt Romney's message to Nevada homeowners struggling to pay their mortgage bills is simple: You're on your own, so step aside,” President Barack Obama's reelection campaign spokesman, Ben LaBolt, said in a statement.

Yes, that's exactly what he's saying, and it's about time someone did.

“This is just one more indication that while he will bend over backwards to preserve tax breaks for large corporations and tax cuts for millionaires and billionaires, Mitt Romney won't lift a finger to restore economic security for the middle class.”

No, it's an indication Romney doesn't want to give free houses to people who aren't making their payments.

Senate Majority Leader Harry Reid of Nevada also went after Romney. “Nevada has the highest foreclosure rate in America, and it has for almost three years. And here's what Mitt Romney said: He would just let them hit rock bottom,” Reid said during a press conference in the U.S. Capitol. “I don't know what's more graphic than that, in how we have different views of what the world should be like than our Republican friends.”

These bozos may cause me to vote Republican in the next election. I haven't done that for a federal office since 2002. The bottom line is that Democrats are wrong, and they are endorsing the wrong populist pandering policies.

But the home foreclosure issue has been almost entirely absent from the GOP presidential race. While it was mentioned during the presidential debate Tuesday, and Romney addressed it as part of a larger answer, the candidates quickly started talking about bank bailouts instead.

Romney has just scored points with me. My personal view is that he will likely win the nomination but lose the election. Too bad, if he keeps making economic sense, I may vote for him.

Apparently, I am not the only one impressed with what Mitt Romney said:

Romney's Finest Hour

He speaks the truth about housing and foreclosures.

A friend of ours quipped recently that Mitt Romney could do his Presidential candidacy a lot of good if he took even a single position that is unpopular in the polls. Well, we can report that he has done that on housing policy, that he's being pummeled for it, and that it may be his finest campaign hour.

They just couldn't afford it

Today's featured property was sold on 7/30/2004 for the ridiculous price of $619,000. The loaners used a 433,300 first mortgage, a $123,800 second mortgage, and a $61,900 down payment. On 8/22/2006 they obtained a $125,000 HELOC and got access to their down payment plus a little spending money. There is no way to tell if they took out the money.

With no further mortgage equity withdrawals, they still couldn't make the payments on the first mortgage, and the property was foreclosed on in early September. Perhaps it was unemployment, or perhaps they just couldn't afford it to begin with.

——————————————————————————————————————————————-

This property is available for sale via the MLS.

Please contact Shevy Akason, #01836707

949.769.1599

sales@idealhomebrokers.com

Irvine House Address … 67 HAVENWOOD Irvine, CA 92614

Resale House Price …… $444,900

Beds: 3

Baths: 2

Sq. Ft.: 1578

$282/SF

Property Type: Residential, Condominium

Style: Two Level

Year Built: 1980

Community: Woodbridge

County: Orange

MLS#: U11004456

Source: SoCalMLS

Status: Active

On Redfin: 2 days

——————————————————————————

This home offers three bedrooms, two and a half bathrooms, two car garage and rear patio area with brick accents. Living room boasts wood-type flooring, conversation-area with a cozy fireplace. Kitchen has plenty of storage, ceramic tile flooring, granite countertop and stainless steel appliances. The property requires some cosmetic touches such as new carpet and fresh paint, perfect opportunity to put your personal touch on your new home.

——————————————————————————————————————————————-

Proprietary IHB commentary and analysis

Resale Home Price …… $444,900

House Purchase Price … $619,000

House Purchase Date …. 7/30/2004

Net Gain (Loss) ………. ($200,794)

Percent Change ………. -32.4%

Annual Appreciation … -4.5%

Cost of Home Ownership

————————————————-

$444,900 ………. Asking Price

$15,572 ………. 3.5% Down FHA Financing

4.18% …………… Mortgage Interest Rate

$429,328 ………. 30-Year Mortgage

$132,425 ………. Income Requirement

$2,094 ………. Monthly Mortgage Payment

$386 ………. Property Tax (@1.04%)

$0 ………. Special Taxes and Levies (Mello Roos)

$93 ………. Homeowners Insurance (@ 0.25%)

$494 ………. Private Mortgage Insurance

$354 ………. Homeowners Association Fees

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

$3,421 ………. Monthly Cash Outlays

-$329 ………. Tax Savings (% of Interest and Property Tax)

-$599 ………. Equity Hidden in Payment (Amortization)

$23 ………. Lost Income to Down Payment (net of taxes)

$76 ………. Maintenance and Replacement Reserves

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

$2,592 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$4,449 ………. Furnishing and Move In @1%

$4,449 ………. Closing Costs @1%

$4,293 ………… Interest Points @1% of Loan

$15,572 ………. Down Payment

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

$28,763 ………. Total Cash Costs

$39,700 ………… Emergency Cash Reserves

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

$68,463 ………. Total Savings Needed

——————————————————————————————————————————————————-

By directing the GSEs to relax their eligibility requirements for refinancing, the Obama administration will increase the losses on the GSE portfolio and add to the final cost of the bailout.

Irvine Home Address … 54 CITY STROLL Irvine, CA 92620

Resale Home Price …… $537,375

I've been caught stealing;

once when I was 5…

I enjoy stealing.

It's just as simple as that.

Well, it's just a simple fact.

When I want something, and

I don't want to pay for it.

Jane's Addiction — Been Caught Stealing

Attention renters: the government is stealing from you and giving the money to the loan owners who occupy the houses they can't afford that you are waiting to buy.

Obama has succumb to the pressure from the extreme left that wants to give people free houses. Rather than take a courageous stand and say no to more bailouts and loan owner assistance, the Obama administration has decided to give loan owners a break, increase the taxpayer losses at the GSEs, and ask renters, prudent borrowers, and no-debt homeowners to pay the bill.

I think this policy really sucks.

The $85 billion in savings they are touting will be added to the billions of losses the government has already covered since taking over the GSEs. This is not a low-cost program. That $85 billion in revenue would have helped offset losses at the GSEs. Instead it will go to benefit banks and loan owners. That isn't the way I want my tax dollars squandered.

FHFA removes barriers to refinance more borrowers

by JON PRIOR — Monday, October 24th, 2011, 8:45 am

The Federal Housing Finance Agency removed several key barriers to the Home Affordable Refinance Program Monday to allow more underwater borrowers to move into lower-rate mortgages.

HARP, which launched in March 2009, helped 838,000 Fannie Mae and Freddie Mac borrowers with loan-to-value ratios between 80% and 125% refinance. But roughly 7% of those held LTVs above 105%.

In order to assist more of the estimated 11 million borrowers who owe more on their mortgage than their home is worth, the FHFA removed the 125% LTV ceiling on the program.

I got an email from an appraiser right after this was announced. By removing the LTV restriction, the government is taking appraisers entirely out of the refinance transaction. Further, it basically says the value of the collateral doesn't matter. No matter how far underwater the owner is, they are eligible for the refinance. That doesn't sound like a good banking practice to me.

Of course, the servicing banks are happy, particularly BofA which will get a nice revenue boost from all the refinances.

The FHFA also eliminated certain risk-based fees borrowers had to pay and waived certain representation and warranty risk for lenders of the new, refinanced mortgage. An appraisal would also no longer be required if an automated valuation model estimate was already provided by the government-sponsored enterprise.

HARP was already extended earlier in the year, but the FHFA committed to pushing the program end date out even further to Dec. 31, 2013 for loans originally sold to the GSEs on or before May 31, 2009.

The borrower must be current on the mortgage at the time of the refinance, with no late payment in the past six months and no more than one late payment in the past 12 months, the FHFA said.

At least they are limiting this program to the people who have been paying their bills. I think most of these people should have strategically defaulted, but if they didn't, they are being rewarded for their actions. If this program had been opened up to delinquent mortgage squatters, it would have been outrageous.

Realistically, for the deeply underwater, this merely delays the inevitable. If you are living in Las Vegas, and you have a $300,000 mortgage on a $120,000 house, a refinance at a lower rate isn't going to help you much.

Mortgage insurers agreed to automatically transfer coverage from the old loan to the new loan, and servicers agreed to resubordinate second liens into the new refinanced mortgage.

Fannie and Freddie will release more specific operational details for servicers and lenders by Nov. 15.

The FHFA could not give a specific number of borrowers the revamped program could reach, but in its published frequently asked questions, the agency said the “the best estimate is that by the end of 2013 HARP refinances may roughly double or more from their current amount but such forward-looking projections are inherently uncertain.”

Considering all previous projections have been completely wrong, it is likely this won't reach that many people. And those it does reach will likely strategically default or short sell eventually.

“We know that there are many homeowners who are eligible to refinance under HARP and those are the borrowers we want to reach,” said FHFA Acting Director Edward DeMarco. “Our goal in pursuing these changes is to create refinancing opportunities for these borrowers, while reducing risk for Fannie Mae and Freddie Mac and bringing a measure of stability to housing markets.”

The CEOs for Fannie Mae or Freddie Mac both said the program would definitely reach more borrowers.

“By removing some of the impediments to refinance, lenders can more easily participate in the program allowing more eligible homeowners to take advantage of the low interest rates,” Fannie chief Michael Williams said. “While HARP is only one refinancing program, it is a critical one for those homeowners who may be underwater on their mortgage and facing difficult decisions during these tough economic times.”

It's only critical to the banks who are trying to fend off more strategic default.

“These changes mark another step on the road to recovery for the nation's housing market and underscore Freddie Mac's vital role in making affordable mortgage financing available to America's homeowners and future homebuyers,” said Freddie CEO Charles “Ed” Haldeman.

No, this marks another impediment to the recovery of the housing market and guarantees the inventory from the crash will be metered out over a longer period of time.

In a conference call with investors Monday morning, JPMorgan Chase analysts said the representation and warranty waivers would come through two key areas. Lenders would not be responsible for the original loan file and would also not will be held to new appraisal mistakes because of the AVM.

“We believe this is the most material of all the things they are doing,” analysts said.

It's hard not to become jaundiced with the way our government steals from us and gives money to those who are not deserving (if someone can make a compelling argument why loan owners should be bailed out, I am open to hear it). It really feels like the government is out to make sure anyone who avoided the housing bubble is being punished while those who foolishly participated are being rewarded. Loan owners are given the house while renters are given the bill.

Governments have been redistributing wealth since ancient times. Perhaps I should just accept this and fade quietly into the night. But I can't do that. I find so much of this irritating and outrageous, and I don't read many others who are pointing out the injustices. It's as if loan owners have control of the media and only their point of view matters. Perhaps someday I will feel differently. I guess I haven't picked up enough houses in Las Vegas yet.

New homes in Woodbury under $260/SF

One of the reasons Columbus Grove prices fell so far so fast was because the builder kept building and selling while mortgage financing dried up. It takes active and motivated sellers to push prices down quickly. Without their activities, prices drift down slowly and transaction volumes remain low.

Woodbury has fallen more since the crash than other neighborhoods that are not as nice. I live in Woodbury, and I really like it. I think it is one of the best Villages in Irvine. The only explanation I have for its weak price performance is the plethora of overextended borrowers from the bubble (most of Woodbury was built out during the peak of the housing bubble), and the ongoing activity of the Irvine Company as they try to build out the community.

The new product in Woodbury is selling for considerably less than most people realize. (Median US New Home Price Has Biggest 3 Month Drop Ever) Today's featured property is $259/SF. Remember when most of Woodbury was selling for north of $400/SF?

At this price, today's featured property has a reasonable cost of ownership (the Mello Roos is a guess). I have long maintained the problem with the new product offerings has largely been price. If prices on the new product remains this affordable, sales volumes ought to pick up. We will see.

——————————————————————————————————————————————-

This property is available for sale via the MLS.

Please contact Shevy Akason, #01836707

949.769.1599

sales@idealhomebrokers.com

Irvine House Address … 54 CITY STROLL Irvine, CA 92620

Resale House Price …… $537,375

Beds: 3

Baths: 3

Sq. Ft.: 2074

$259/SF

Property Type: Residential, Condominium

Style: Two Level, Spanish

Year Built: 2011

Community: Woodbury

County: Orange

MLS#: S677619

Source: SoCalMLS

Status: Active

On Redfin: 3 days

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This two story masterpiece lives like a single family residence! Downstairs, enjoy the attached two car garage, tech center, main floor bedroom and open living room, family room, kitchen combo. Upstairs, enjoy the large loft that be easily be a playroom or entertainment area, huge master retreat with walk in closet, dual sink bathroom and generous sized secondary bedroom. Fixtures include gourmet kitchen with granite countertops, stainless steel appliances and more! Design credit available to customize your flooring! Located in the desirable Village of Woodbury, just outside your door is shopping, parks, pools and more. One of the last opportunities to own a brand-new home in Wodbury. Charming motor courts provide access to oversized 2 car attached garages. Within walking distance to stores, restaurants, entertainment at Woodbury Town Center. Less than two miles from the I-5 and the 133 Toll Road.

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Proprietary IHB commentary and analysis

Resale Home Price …… $537,375

Cost of Home Ownership

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$537,375 ………. Asking Price

$107,475 ………. 20% Down Conventional

4.18% …………… Mortgage Interest Rate

$429,900 ………. 30-Year Mortgage

$122,824 ………. Income Requirement

$2,097 ………. Monthly Mortgage Payment

$466 ………. Property Tax (@1.04%)

$200 ………. Special Taxes and Levies (Mello Roos)

$112 ………. Homeowners Insurance (@ 0.25%)

$0 ………. Private Mortgage Insurance

$298 ………. Homeowners Association Fees

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

$3,173 ………. Monthly Cash Outlays

-$344 ………. Tax Savings (% of Interest and Property Tax)

-$600 ………. Equity Hidden in Payment (Amortization)

$160 ………. Lost Income to Down Payment (net of taxes)

$87 ………. Maintenance and Replacement Reserves

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

$2,477 ………. Monthly Cost of Ownership

Cash Acquisition Demands

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$5,374 ………. Furnishing and Move In @1%

$5,374 ………. Closing Costs @1%

$4,299 ………… Interest Points @1% of Loan

$107,475 ………. Down Payment

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$122,522 ………. Total Cash Costs

$37,900 ………… Emergency Cash Reserves

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

$160,422 ………. Total Savings Needed

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Economists from the California Association of realtors are projecting increasing prices in Orange County next year. What a surprise… not.

Irvine Home Address … 10 LAKEVIEW #79 Irvine, CA 92604

Resale Home Price …… $465,000

Any way you want it

That's the way you need it

Any way you want it

She said, Any way you want it

That's the way you need it

Any way you want it

Journey — Any Way You Want It

Any way you want it, that's the way they'll say it, any way you want it. realtor associations exist to tell buyers what realtors believe buyers want to hear. realtors cannot conceive reasons buyers may want to buy if prices are drifting lower, so realtors continually tell people prices have bottomed. realtors are unconcerned whether or not this is the truth, they only care that their statements motivate people to buy.

Will O.C. home prices go up in 2012?

September 24th, 2011, 1:00 am — Jeff Collins

If things go as expected, the typical California house will see its value rise $5,000 next year. In Orange County, the price at the midpoint of all sales could go up by $10,000 to $15,000.

That’s the forecast unveiled this month by California Association of Realtors economists Leslie Appleton-Young and Robert Kleinhenz, who forecast that home sales and prices will go up in 2012, but not by much.

Appleton-Young and Kleinhenz took reporters’ questions during a conference call about their forecast, as well as some direct questions from us. Here’s what they said …

Us: What’s the outlook for the Orange County housing market in 2012?

Robert: Right now, Orange County is behind last year’s sales by 6.7% on a year-to-date basis (through August), but the market will reduce or eliminate that deficit by year end.

Why? What would make sales volumes increase at the end of the year. There is one possible answer: falling prices. Realistically, the only way volume goes up is if prices go down.

The local economy is doing somewhat better than elsewhere in the state and this should carry into next year, and the share of distressed sales is among the lowest in the state at 32% in July compared to 35% a year earlier, so county home sales should improve by a bigger margin than the 1% gain for the state.

Are they joking? Lenders manage the percentage of distressed sales to within a few percentage points as they liquidate their inventory. If 32% is the lowest in the state, then we are nowhere near the end of problems with distressed inventory. The percentage distressed will remain between 32% and 35% for the next several years. I am shocked they even mentioned this.

The county median price should do better than the projected 1.7% increase for the state.

Us: If I’m a homeowner who’s been waiting for a recovery to sell, should I continue to wait or list my home now?

Robert: At this point, we are near the end of the peak market season for 2011, so the best chance of selling before the end of 2011 is probably in the next few weeks.

If our forecast is correct, selling in 2012 may mean that the home will fetch a slightly higher selling price.

Their forecast is not correct. With BofA and other banks increasing their foreclosure filings, the 2012 selling season will be greeted with an abundance of bank-owned inventory. If prices go up, it will only be because banks managed to limit their release of product. Given their pressures to raise cash, it's more likely lender liquidations will push prices down 2% to 5%.

The fact that mortgage rates are likely to stay low into 2012 makes it less urgent for would-be buyers.

I am surprised they admit that.

Beyond that, it depends on the individual homeowner’s circumstances (reason for selling, amount of equity in home or not, whether the individual will sell this home and buy another, etc.).

Us: Lenders recently ramped up the filing of default notices. Do you expect them to really ramp up the number of foreclosures now? And how much longer until foreclosures drop to more moderate levels?

Leslie: Let me take your second question first. It depends on the area, but I would say three to five years.

That's a surprisingly candid and accurate assessment.

Three (years) in areas where (foreclosures) haven’t been the majority of the market, closer to five in the inland areas, where I don’t think we’ve seen a lot of the supply that’s going to come through (yet) come through because you’ve got shadow inventory/negative equity homeowners that are still kind of in a holding pattern.

In terms of banks, Bank of America has switched gears a little bit,

A little bit? LOL! Bank of America foreclosure notices increase 116%.

and we saw a big increase in properties that are starting the process and we’ll likely see those coming through the pipeline – what is it? Six to nine months from now, something like that. Over 300 days. In terms of the other lenders, it’s kind of hard to say.

Robert: It is noteworthy that we’ve heard in the news that BofA was a major contributor to that uptick in the foreclosure filings for the month of August. Even with that uptick, compared to recent history, it’s still below last year’s level for August last year and well below the level for default filings (and) foreclosure filings that took place back in 2009 when California was clearly at the front end of this whole cycle.

The one and only reason foreclosure filings are below 2009 or 2010 levels is because lenders learned the level of foreclosure activity they believe the market can absorb. It certainly is not because they are out of people to foreclose on.

CAR’s 2012 Forecast for Calif. / Numbers are in the thousands; f=forecast

	2005	2006	2007	2008	2009	2010	2011f	2012f
Existing houses	625.0	477.5	346.9	441.8	546.9	491.5	491.1	496.2
% Change	0.03%	-23.6%	-27.3%	27.3%	23.8%	-10.1%	-0.1%	1.0
Median Price	$522.7	$556.4	$560.3	$348.5	$275.0	$303.1	$291.0	$296.0
% Change	16.0%	6.5%	0.7%	-37.8%	-21.1%	10.2%	-4.0%	1.7
30-Yr Fixed	5.9%	6.4%	6.3%	6.0%	5.1%	4.7%	4.5%	4.7
1-Yr ARM	4.5%	5.5%	5.6%	5.2%	4.7%	3.5%	3.0%	3.1

Us: You said there are wildcards out there that could change your forecast for California in 2012. Which ones do you fear the most? What’s the Perfect Storm that would sink the economy and the housing market next year?

Robert: Wild cards are, by definition, unexpected events. That said, my biggest concerns are another recurrence of the European sovereign debt problem that creates uncertainty and economic paralysis, even though it also leads to a flight to safety in the form of U.S. Treasuries.

The election in 2012 is also a big wild card, and the lead up to November could also add to uncertainty and result in another lost year in terms of economic progress.

I am less concerned by a Perfect Storm per se, but more concerned that more mixed signals on the economy and politically will prompt both consumers and businesses to sit on their hands until they sense that the direction of the economy has become clearer.

Again, they miss the obvious. The wildcard out there is the desperation of banks for capital. If BofA feels they need to liquidate more than the market can handle to get their cash, then prices could really crater. If the desperation of BofA prompts other lenders to escalate their foreclosures as well, the cartel could collapse, and we could have a race to the bottom. That's the wildcard, just as it has been for the last several years.

Us: What’s the outlook for areas that got really hammered by the boom and bust cycle, such as the Inland Empire and the High Desert region?

Robert: The thing about the Inland Empire markets, and to some extent the Central Valley markets, you continue to have a lot of distressed properties in those markets. But the supply is constrained by the rate at which the lenders are processing these properties and moving them through the foreclosure pipeline.

Consequently, the amount of inventory in those markets tends to be lean. Prices may be down on a year-over-year basis, but I think as we move through this year, you’re probably going to see more price stability in those areas than in some of the other markets where you might have a higher concentration of equity sales. We still see some prices adjusting down with the equity sales, so you might be pleasantly surprised.

I fully expect to be pleasantly surprised as prices continue to drift lower. I would be shocked if they didn't.

The flip side, though, on the demand side is that you need some economic activity, and huge numbers of jobs were lost in the Inland Empire that were construction and real estate-related jobs, and those aren’t coming back anytime soon.

That's true enough. I still keep a toe in the water of the land development industry, and many developers are starting to prepare to deliver product again. Many of these developers are anticipating a resurgent new home market… in 2015.

So I think to Leslie’s point, we’re to continue to see distressed properties as significant part of the (market).

Us: The limit on loans that qualify for purchase by Fannie Mae and Freddie Mac is due to drop from $729,750 in Orange County to $625,500 on Oct. 1. In some counties, it will drop as low as $417,000. Above those amounts, borrowers will have to use higher-cost “jumbo” loans. Any chance Congress will act to extend the higher limits for lower-cost “conforming loans?”

Leslie: We’ve pretty much accepted the (Oct. 1) expiration as we looked at our forecast. Politically, over the last couple months it’s become clear that there just isn’t any consensus of action possible that would make an extension possible.

Obviously, we’ve been working quite hard to see if we could delay it in some way and it just doesn’t seem to be possible.

Hallelujah! Cool heads do prevail sometimes.

In cities and in counties where you’re looking at median home prices between $400,000 and $500,000, this is going to hit the market. I think that we will likely see evidence of people in that category rushing to get transactions closed by the end of September. There are reports that some of the lenders have already stopped lending at those categories already.

I think that we will definitely see it when we look at our data on closings in September and October. Clearly for that kind of jumbo and jumbo-light categories, it’s going to make financing more expensive. So the aggregate impact, I don’t know. But the marginal impact, it’s going to raise the cost of financing … and put a dent in those markets.

They got that one right too. Lenders stop conforming loans above $625,000 in July, home sale fall. Prices will fall, particularly at the price points where the conforming limit will impact the cost of financing.

She withdrew too much

The owner of today's featured property was not a routine HELOC abuser, but she did make a financially fatal mistake. She purchased the property for $265,000 on 5/12/2000 using a $225,200 first mortgage and a $40,000 down payment. She refinanced on 5/12/2000 with a $265,000 first mortgage and “liberated” her down payment. On 8/31/2006 she refinanced with a $487,500 first mortgage taking out $222,500 in the process. I guess she needed some money.

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This property is available for sale via the MLS.

Please contact Shevy Akason, #01836707

949.769.1599

sales@idealhomebrokers.com

Irvine House Address … 10 LAKEVIEW #79 Irvine, CA 92604

Resale House Price …… $465,000

Beds: 3

Baths: 2

Sq. Ft.: 1659

$280/SF

Property Type: Residential, Condominium

Style: One Level

View: Peek-A-Boo

Year Built: 1977

Community: Woodbridge

County: Orange

MLS#: P800421

Source: SoCalMLS

On Redfin: 1 day

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Perfect opportunity for the patient buyer. Live in the wonderful private, gated community of Arborlake. Enjoy the amenities of a gorgeous sand beach, clubhouse and recreational facilities. You'll feel like you're on vacation walking or boating around the lake. Inside your home, you'll love the remodeled, kitchen, engineered wood floors, dual pane windows, cam lighting, large patio yard and open floor plan.

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Proprietary IHB commentary and analysis

Resale Home Price …… $465,000

House Purchase Price … $265,000

House Purchase Date …. 5/12/2000

Net Gain (Loss) ………. $172,100

Percent Change ………. 64.9%

Annual Appreciation … 4.9%

Cost of Home Ownership

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$465,000 ………. Asking Price

$16,275 ………. 3.5% Down FHA Financing

4.18% …………… Mortgage Interest Rate

$448,725 ………. 30-Year Mortgage

$142,917 ………. Income Requirement

$2,189 ………. Monthly Mortgage Payment

$403 ………. Property Tax (@1.04%)

$0 ………. Special Taxes and Levies (Mello Roos)

$97 ………. Homeowners Insurance (@ 0.25%)

$516 ………. Private Mortgage Insurance

$487 ………. Homeowners Association Fees

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

$3,692 ………. Monthly Cash Outlays

-$492 ………. Tax Savings (% of Interest and Property Tax)

-$626 ………. Equity Hidden in Payment (Amortization)

$24 ………. Lost Income to Down Payment (net of taxes)

$78 ………. Maintenance and Replacement Reserves

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

$2,677 ………. Monthly Cost of Ownership

Cash Acquisition Demands

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$4,650 ………. Furnishing and Move In @1%

$4,650 ………. Closing Costs @1%

$4,487 ………… Interest Points @1% of Loan

$16,275 ………. Down Payment

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$30,062 ………. Total Cash Costs

$41,000 ………… Emergency Cash Reserves

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$71,062 ………. Total Savings Needed

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Peter Schiff is predicting the OC housing market will get much worse.

Irvine Home Address … 30 JACKSON Irvine, CA 92620

Resale Home Price …… $675,000

We think we climb so high

Up all the backs we've condemned

We face our consequence

This is the beginning of the end

You wait your turn, you'll be last in line

This is the beginning

Get out the way, cause I'm getting mine

This is the beginning

Nine Inch Nails — The Beginning of the End

Back at the peak of the housing bubble, it was obvious (at least to me) that prices were too high and were going to crash. Some bears lost their conviction when the false rally of 2009 began, but prices were still too high, affordability was too low, inventory was artificially constricted, and the entire rally was dependent upon government props. With those headwinds plus an enormous shadow inventory to liquidate, there was little or no chance the 2009-2010 rally would be sustained.

Now, with the elimination of many government props, prices at rental parity, and affordability at decade-long highs, the direction of prices is much less certain. I still believe prices will decline for at least a year or two due to the liquidation of shadow inventory and the continuing weak economy. But I could be wrong.

What was most interesting to me when reading the comments on the recent post on Irvine affordability was the difference in opinions among the various astute observers. Most were still bearish, but some were bullish — not stupidly bullish like many commenters over the last 5 years — but thoughtfully bullish based on the improvement in conditions we are seeing now.

I selected today's featured article because Peter Schiff has been right about many of the conditions which contributed to the collapse of the housing bubble and the economy. Further, he knows quite a bit about the Orange County housing market, and is he is thoughtfully and unapologetically bearish.

Housing market will get much worse

October 22nd, 2011, 12:02 am

Before Peter Schiff had a national reputation for calling the economic crash of last decade, he was a highly opinionated money manager from Orange County. (Recall his interview with us when he predicted home prices would fall 50%?) He’s returning to Orange County on Nov. 7 for an investment chat and Q&A at 6 p.m. at the Irvine Barclay Theatre. (Details here!) We asked Peter for his real estate outlook in advance fo his local appearance …

Us: Is real estate pain over yet in O.C. and/or SoCal?

Peter: No, it’s going to get worse. The current market is still being propped up by government-subsidized mortgages, artificially low interest rates, and a backlog in the foreclosure process. Prices will not bottom out until these props are removed and true market forces are allowed to clear the market.

IHB: Yes, I agree. In particular the backlog of foreclosures must be cleared out before we can be certain the market has bottomed.

In addition, the California economy is going to get a lot worse. More business will leave the state and more workers will lose their jobs. More people will chose to rent, and many that do will have to have roommates. The vast majority of new home construction is currently taking place in the multi-unit building category, which confirms this trend.

In addition, many unemployed homeowners may take in borders. College grads loaded up with debt and unable to find jobs will likely move back home with their parents. The elderly, stripped of interest income as a result of rock bottom interest rates and thereby unable to cope with rising costs of living will move in with their grown children. All of these factors will continue to put downward pressure on real estate prices for years to come.

IHB: If his macroeconomic call is correct, the housing market will continue to decline. New household formation is essential to a strong housing market. All the conditions Schiff describes above will hinder household formation and keep prices down until conditions improve.

Us: How bad could it get … again?

Peter: Ultimately it will get very bad. The market is already on life support, even with mortgage rates at the lowest levels in nearly 70 years. But imagine if rates rose to the levels they were at just five years ago, to say six or seven per cent? What will that do to property values? I think ultimately mortgage rates will rise farther, maybe even above 10%.

IHB: I have maintained that higher interest rates will work to pummel prices — when rates finally move higher. Unless higher interest rates are compensated for by wage inflation, the higher interest rates will reduce loan balances, and in areas like ours which are inflated to the limit of income affordability, smaller loan balances will force prices lower.

At the same time, I think the California unemployment rate will continue to rise and taxes in California, will continue to go up. I also think there is a distinct possibility that the ability to deduct mortgage interest from personal income taxes will, at some point in the not too distant future, be curtailed or eliminated, especially for wealthy individuals. What do you think would happen to real estate prices under that scenario? Pretty soon you will not have to imagine this, you will be living it.

IHB: As we discussed yesterday, if the home mortgage interest deduction is curtailed or eliminated, prices locally will likely come down to adjust for the increased cost of ownership.

Us: Do you think the presidential political discourse will be a factor in the 2012 housing market? Why?

Peter: No, housing prices will decline no matter what happens in the election. There is still a large overhang of excess inventory. However, I expect housing and foreclosures will certainly be issues in the campaign. I would imagine that candidates will be looking to outdo one another on ways to bail out overstretched homeowners. Of course, anything the government does to interfere with the foreclosure process, to keep people in homes they can’t afford, and in which they have no equity, only worsens the overall crisis.

IHB: I totally agree with his assessment. The politicians will pander, and if they actually do anything, it will do more harm than good.

Us: Do any political proposals being floated right now stand out as extremely helpful or harmful to real estate?

Peter: Many are harmful. Even those that would help clear the market would mean that housing prices would go a lot lower. The solution to the housing problem can only occur with lower prices. High home prices relative to income are part of the problem, and keeping them artificially propped up only makes that problem worse.

IHB: This describes Orange County, but not Las Vegas. Prices are just now reaching the limit of affordability in Orange County whereas the cost of ownership is a fraction of rent in Las Vegas. In fact, Las Vegas is the example of what happens when prices are allowed to fall freely to reach their market clearing price. Prices there are very low, but the Las Vegas economy will not be near so burdened by mortgage debt in the future. This will have positive repercussions on the local economy.

The best solution would be a vibrant economy that creates productive jobs. We can only achieve that if we reduce government spending, repeal regulations, and lower taxes.

Us: If you had a magic wand and could do one thing overnight to help the housing market … what would it be?

Peter: Specifically for the housing market I would abolish Freddie Mac, Fannie Mae, and the FHA. Then I would reform the tax code to lower marginal rates and abolish the mortgage interest deduction.

IHB: All great ideas. This would eliminate all government subsidies in the housing market. It likely won't happen, but it would be the best thing for the housing market.

Actually, I would abolish the income tax completely, which would make the mortgage deduction moot anyway. If we do that we will have a free market in housing. That will lower prices, and produce a viable market. We will clear up the excess inventory, bring down housing costs, and remove the risk to taxpayers for future mortgage defaults.

IHB: It would also dramatically lower prices and cause the bankruptcy of most of America's banks. I love it.

The free market will make sure that only people who can afford houses buy them, and that there are adequate down payments product lenders in the event of default. At that point, prices will find a real and sustainable bottom. When that happens, the dynamics will change and homes will become a wiser purchase and home lending will become a profitable use of capital, even without government guarantees.

IHB: The housing market would survive the transition to a truly free market. Many loan owners wouldn't like the impact of prices during the transition, but the economy would be much better off without the various subsidies we currently have in place which only serve to inflate prices and shift the risk of loss to taxpayers.

Las Vegas Cashflow property workshop

Larry Roberts will be hosting a Las Vegas Cashflow property workshop at 8:00 PM Wednesday, October 26, 2011, at the offices of Intercap Lending (9401 Jeronimo, Suite 200, Irvine, CA 92618). Register by clicking here or email us a sales@idealhomebrokers.com. at the same location.

Screwing the FHA before the loan limit went down

The owners of today's featured property show why the FHA loan limits need to go down and why FHA insurance premiums are on the rise.

• This property was purchased on 5/8/1998 for $312,000. The owners used a $245,000 first mortgage and a $67,000 down payment.
• On 12/6/1999 they obtained a stand-alone second for $35,000.
• On 4/10/2001 they opened a $60,000 HELOC.
• On 8/3/2001 they refinanced with a $340,000 first mortgage.
• On 3/20/2002 they got a $40,000 stand-alone second.
• On 5/23/2002 they refinanced with a $400,000 first mortgage.
• On 6/13/2002 they obtained a $20,000 HELOC.
• On 5/5/2003 they got a $65,000 stand-alone second.
• On 12/10/2003 they refinanced with a $478,100 first mortgage.
• On 12/12/2003 they opened a $50,000 stand-alone second.
• On 7/26/2004 they obtained a $78,000 stand-alone second.
• On 3/17/2005 they got a $116,674 stand-alone second.
• On 12/15/2006 they raided the bank for a $234,000 stand-alone second.
• On 1/18/2008 they went back again for a $262,000 stand-alone second.

Their mortgage broker must love them. BTW, based on the behavior of these borrowers, do you think it would have been difficult for a lender to recognize these borrowers were Ponzis? Thirteen refinances in nine years! The total disregard of obvious red flags shows just how bad banking standards were during the bubble.

But it gets worse.

Despite the obvious signs of a Ponzi, the FHA approved a $677,407 loan to these people on 8/2/2011 — just a few months before the conforming limit dropped. So how did these borrowers behave after they got their debt-consolidation loan from the FHA?

They opted to sell the house short. They are screwing the FHA and ultimately the US taxpayer — you. I am forced to wonder if they even bothered to make a payment. The loan is only two months old. Given their obvious experience with mortgages, they probably made the first two payments to avoid being charged with mortgage fraud, so now after making the September and October payments, they are selling short.

The started with a $245,000 first mortgage, and now they have a $677,407 first mortgage. That's 432,407 in mortgage equity withdrawal. I wonder how they will adjust to life without a home ATM machine?

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This property is available for sale via the MLS.

Please contact Shevy Akason, #01836707

949.769.1599

sales@idealhomebrokers.com

Irvine House Address … 30 JACKSON Irvine, CA 92620

Resale House Price …… $675,000

Beds: 4

Baths: 2

Sq. Ft.: 2453

$275/SF

Property Type: Residential, Single Family

Style: Two Level, Cape Cod

View: Faces East

Year Built: 1978

Community: Northwood

County: Orange

MLS#: S677010

Source: SoCalMLS

On Redfin: 4 days

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This will be a DEAL for someone! Inviting curb appeal and a GREAT 4 bedroom floorplan with bonus room. Granite in kitchen, all baths and bar area. Kitchen features sunny breakfast nook, gas cooking and loads of cabinets. Low maintenance ceramic tile floors throughout downstairs living areas. Family room with cozy fireplace. 3 car garage and full driveway. Extra large backyard with room for pool. Slumpstone fence and over 10 fruit trees. One block to elementary school. Don't miss out on this bargain!

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Proprietary IHB commentary and analysis

Resale Home Price …… $675,000

House Purchase Price … $312,000

House Purchase Date …. 5/8/1998

Net Gain (Loss) ………. $322,500

Percent Change ………. 103.4%

Annual Appreciation … 5.7%

Cost of Home Ownership

————————————————-

$675,000 ………. Asking Price

$135,000 ………. 20% Down Conventional

4.18% …………… Mortgage Interest Rate

$540,000 ………. 30-Year Mortgage

$130,065 ………. Income Requirement

$2,634 ………. Monthly Mortgage Payment

$585 ………. Property Tax (@1.04%)

$0 ………. Special Taxes and Levies (Mello Roos)

$141 ………. Homeowners Insurance (@ 0.25%)

$0 ………. Private Mortgage Insurance

$0 ………. Homeowners Association Fees

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

$3,360 ………. Monthly Cash Outlays

-$432 ………. Tax Savings (% of Interest and Property Tax)

-$753 ………. Equity Hidden in Payment (Amortization)

$201 ………. Lost Income to Down Payment (net of taxes)

$189 ………. Maintenance and Replacement Reserves

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

$2,565 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$6,750 ………. Furnishing and Move In @1%

$6,750 ………. Closing Costs @1%

$5,400 ………… Interest Points @1% of Loan

$135,000 ………. Down Payment

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

$153,900 ………. Total Cash Costs

$39,300 ………… Emergency Cash Reserves

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

$193,200 ………. Total Savings Needed

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Larry Roberts and Shevy Akason will host a first-time homebuyer workshop at 6:30 PM Wednesday, October 26, 2011, at the offices of Intercap Lending (9401 Jeronimo, Suite 200, Irvine, CA 92618). Register by clicking here or email us a sales@idealhomebrokers.com.