The Mortgage Bankers Association issued a new report projecting foreclosures will take three or four years to work through the system.

Irvine Home Address … 36 CALAIS Irvine, CA 92602

Resale Home Price …… $798,000

Get started

Get stupid

Let’s get it started ha!

Let’s get it started in here!

Black Eyed Peas — Let's Get It Started

The banks finally are getting serious about foreclosing on the delinquent mortgage squatters living in shadow inventory. Even though delinquencies are declining, they are still elevated well above historic norms, and they have been so high for so long that the banks have a huge backlog they must work through.

Fewer mortgages going bad but foreclosures expected to increase

The Mortgage Bankers Assn. says it could take three or four years to return to a normal pattern of delinquencies and foreclosures.

November 18, 2011 — By E. Scott Reckard, Los Angeles Times

Fewer home loans are in trouble these days, but despite some improvements, the nation is not even halfway through cleaning up the foreclosure mess, industry experts said.

It could take three or four years to return to a typical pattern of delinquencies and foreclosures, the Mortgage Bankers Assn. said in releasing its quarterly delinquency report Thursday.

A surprisingly candid and accurate assessment of the situation. Realistically, it will take much longer than four years as the foreclosure inventory will have a very long tail, but the bulk of the problems will be resolved in the next three to five years.

An economist for the trade group declined to estimate how many households had lost their homes since the mortgage meltdown four years ago, or how many more foreclosures were to come.

But the Center for Responsible Lending, a nonpartisan advocacy group that accurately predicted a foreclosure tidal wave in 2006, issued its own assessment Thursday: 2.7 million American households had lost their homes as of February, with an even greater number to come.

The advocacy group, which analyzed 27 million home loans made from 2004 through 2008, estimated that an additional 3.6 million mortgages were in foreclosure or likely to fail.

If we have already completed 2.7 million, and if we have 3.6 million to go, they are projecting a total 6.3 million foreclosures. That's a lot of houses.

“That means the nation is not yet midway through a foreclosure crisis that mires the economy,” the Durham, N.C., group said in releasing its study.

Lost Ground Exec Summary

The mortgage industry stopped funding high-interest subprime mortgages and other risky loans in 2007, when the meltdown made it impossible to sell them. But the backlog of soured mortgages from that era was enormous and has been compounded by lingering unemployment of about 9% nationally and about 12% in California.

Unemployment is clearly a problem, but the strategic default from the legions of underwater loan owners is the real problem.

Things are slowly improving, said Mike Fratantoni, the mortgage bankers' economist. The number of borrowers who had missed at least one payment but were not yet in foreclosure dropped below 8% for the first time since the fourth quarter of 2008. Just a year ago, it was 9.13%.

The percentage of home loans mired in the foreclosure process was up slightly from a year earlier at 4.43%, compared with the 1% that once had been considered normal, Fratantoni said.

The backlog remains high in part because lenders eased up on foreclosures for much of 2011 after revelations that they had mishandled legal paperwork and procedures when repossessing homes in the past.

The regulatory pressures on home lenders include a lengthy investigation by a task force of state and federal officials. California Atty. Gen. Kamala D. Harris is also pursuing a separate probe in hopes of forcing more write-downs of principal for troubled California borrowers.

Does she carry a gun while she robs the banks? If she is attempting to force lenders to write down principal, how is that not stealing?

Longtime industry observer Guy Cecala, publisher of Inside Mortgage Finance, said he believes it will take at least two more years to resolve the crisis.

“A lot depends on how fast banks … can clear out defaulted mortgages and foreclosed properties,” he said.

Fratantoni said that with the industry more confident that it has fixed its foreclosure procedures, “a couple of big servicers” he didn't identify had recently stepped up foreclosures. Many of those, he said, involved boom-era subprime loans that had been modified at least once but fell back into delinquency.

Reflecting this push, the percentage of loans on which foreclosure actions were started during the third quarter was 1.08%, up from 0.96% in the second quarter. California had the nation's fifth-highest rate of new foreclosures: nearly 1.5% in the latest quarter.

Banks are finally getting around to foreclosing on the squatters. This marks the beginning of the end of this crisis — assuming they complete what they start.

The statistics also reflected a much higher backlog of unresolved foreclosures in states where they are handled in the courts, compared with states like California that do not normally require court approval.

The rate of homes in foreclosure was highest in Eastern and Midwestern states that route all home repossessions through the courts, with Florida at more than 14% and New Jersey at 8%.

California, which for years had one of the highest rates of loans in foreclosure, fell to 19th on the list at a bit over 4%. Of states that handle foreclosures without court procedures, Nevada was the only one high on the total foreclosure-rate list, with nearly 8% of its mortgages in foreclosure.

In a separate report Thursday, mortgage finance giant Freddie Mac said the typical rate on a 30-year fixed-rate home loan this week was an even 4%, a statistically insignificant rise from 3.99% a week earlier. The 15-year fixed loan rates rose to 3.31% from 3.30%.

Expressing some optimism about the business, Frank Nothaft, a Freddie Mac economist, said the economy “is showing potential for further gains in the near term” as the near-record-low mortgage rates persist.

Retail sales rose for the fifth straight month in October, consumer confidence rose for the third straight month in early November, and home builder confidence rose this month to the strongest level since May 2010, Nothaft noted.

scott.reckard@latimes.com

Is the economy getting any better?

I had lunch yesterday with a close friend who is a mergers and acquisitions attorney. He said the deal flow over the last several months has been almost non-existent. With all the debt problems around the world, and including the US, lenders are only willing to loan money to those who don't need it. There is plenty of capital available, but very few who qualify to get it. This lack of capital flows is causing ongoing weakness in our economy.

In my own industry, I have seen some signs of improvement as developers who are looking to deliver houses in 2015 are beginning to work on projects. Nobody is in a hurry, and few in the building industry are going back to work, but at least the phones are ringing, and proposals are going out the door.

Interestingly enough, my friend told me he believed part of the weakness in the mergers and acquisitions area is due to the low interest rates that are supposed to restart the economy. People who own companies who might want to sell out are hesitant to give up steady income for a large lump sum because they don't have any place to put it. There are few investments which can earn a decent return, and since the values of the businesses they would be selling are also depressed, most business owners are content to keep doing what they were doing.

Further, few businesses have much need to expand as there is so little demand. Unless the low interest rates cause the deployment of capital and increased production, the economy will continue to go nowhere. I have long maintained that housing will not lead us out of this recession as it will take a catalyst from another industry to set the economy in motion. So far, no other industry has stepped up, and my friend and I don't see the light at the end of the tunnel.

5 bedroom, 2,900 SF house from 2001 for $2,850 per month

I am always astonished when I see the impact 4% interest rates has on the cost of ownership. Today's featured property would rent for over $3,000 per month. This is one of the nicest properties I have seen trading at or below rental parity in Irvine.

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

This property is available for sale via the MLS.

Please contact Shevy Akason, #01836707

949.769.1599

sales@idealhomebrokers.com

Irvine House Address … 36 CALAIS Irvine, CA 92602

Resale House Price …… $798,000

Beds: 5

Baths: 2

Sq. Ft.: 2900

$275/SF

Property Type: Residential, Single Family

Style: Two Level, Traditional

Year Built: 2001

Community: West Irvine

County: Orange

MLS#: P803630

Source: CRMLS

Status: Active

On Redfin: 6 days

——————————————————————————

One of the distinguishing characteristics of this quality Fieldstone home is its vast open space downstairs. Graced with rich distressed walnut and diagonally-laid tile floors, other beautiful appointments include crown molding and heavy-guage baseboards, and easy-care plantation shutters. Perfectly set up for entertaining lots of friends, the huge family room opens into the kitchen with dining island, lustrous granite counters and walk-in pantry. There's a huge master bath with double sinks, walk-in closet and gleaming travertine floors, and dual air conditioning units help conserve energy throughout. Located in a superb school district, this elegant home with rose-lined entry is just a short walk to the association pool, spa, kiddy pool and public tennis courts, and close to Tustin Sportspark and the upscale Tustin Marketplace. VERY low association dues and low Mello-Roos make this newer home a great value!

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Proprietary IHB commentary and analysis

Resale Home Price …… $798,000

House Purchase Price … $489,000

House Purchase Date …. 9/20/2001

Net Gain (Loss) ………. $261,120

Percent Change ………. 53.4%

Annual Appreciation … 4.8%

Cost of Home Ownership

————————————————-

$798,000 ………. Asking Price

$159,600 ………. 20% Down Conventional

4.02% …………… Mortgage Interest Rate

$638,400 ………. 30-Year Mortgage

$160,053 ………. Income Requirement

$3,055 ………. Monthly Mortgage Payment

$692 ………. Property Tax (@1.04%)

$167 ………. Special Taxes and Levies (Mello Roos)

$166 ………. Homeowners Insurance (@ 0.25%)

$0 ………. Private Mortgage Insurance

$55 ………. Homeowners Association Fees

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

$4,135 ………. Monthly Cash Outlays

-$708 ………. Tax Savings (% of Interest and Property Tax)

-$917 ………. Equity Hidden in Payment (Amortization)

$223 ………. Lost Income to Down Payment (net of taxes)

$120 ………. Maintenance and Replacement Reserves

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

$2,854 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$7,980 ………. Furnishing and Move In @1%

$7,980 ………. Closing Costs @1%

$6,384 ………. Interest Points

$159,600 ………. Down Payment

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

$181,944 ………. Total Cash Costs

$43,700 ………… Emergency Cash Reserves

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

$225,644 ………. Total Savings Needed

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

In what can only be described as buying votes, Democrats in the House of Representatives are lobbying to forgive principal on GSE held mortgages.

Irvine Home Address … 27 SHEARWATER Irvine, CA 92604

Resale Home Price …… $725,000

I never saw the end in sight;

fools are kind of blind.

Thought everything was going alright,

but I was running out of time.

Take my words, read 'em every day,

keep 'em close by, don't you let 'em fade away,

So you'll remember what I forgot to say,

write this down.

Write this Down — George Strait

The legions of hopelessly underwater loan owners are all praying for a write down on their mortgage. It's a false hope, but with falling prices and little prospect of a recovery any time soon, false hope is all many of these borrowers has left.

US House Democrats press for mortgage write-downs

Reuters — WASHINGTON | Tue Nov 22, 2011 4:33pm EST

Nov 22 (Reuters) – More than 20 Democrats in the U.S. House of Representatives on Tuesday called on the regulator of Fannie Mae and Freddie Mac to help underwater borrowers by allowing their loan principal to be reduced.

The regulator has faced increasing pressure to permit the write-down of principal by the two government-controlled mortgage finance providers as a way to help some of the millions of Americans who owe more than their homes are worth. The Federal Housing Finance Agency, however, has stood fast out of concern such a change would undercut finances of Fannie and Freddie.

“We strongly urge that you reconsider your refusal to allow principal reductions to achieve better-performing (loan) modifications and avoid the extreme losses of unnecessary foreclosures,” the 21 lawmakers wrote in a letter to the FHFA.

Nobody is discussing the bigger issue of moral hazard. If you give away free money, it will encourage imprudent borrowing because the borrowers know they can petition for a bailout and get it. That's the real reason we shouldn't consider principal reductions.

I am relieved the FHFA is resisting increasing the losses on the government's GSE portfolio. Giving away free money will certainly do that.

As for the congressmen, their argument is specious. How does giving away free money avoid extreme losses? Doesn't that guarantee losses? Are the congressmen really arguing that by giving away some now taxpayers will lose less later? Does anyone else see the insanity in that?

Fannie Mae and Freddie Mac provide guarantees to investors against the possible default of loans, which encourages banks to make new loans. The two companies are the biggest sources of U.S. mortgage financing, and regulations on their activities have a widespread effect on the mortgage market.

Fannie Mae and Freddie Mac, which were taken over by the government in 2008, have together received more than $145 billion in taxpayer-funded support.

Given an expanding gap between U.S. home values and mortgage balances, many Democrats and housing industry representatives have argued for comprehensive anti-foreclosure efforts that include principal write-downs.

They are arguing against the cure to the problem. If they really wanted to bring down the gap between home values and mortgage balances, they would foreclose on underwater borrowers and put them out of their misery. These congressmen are correct that the gap between what the houses are worth and what is owed needs to be reduced, but their method of doing so is all wrong. Principal forgiveness will not deter irresponsible borrowing in the future. Foreclosure has consequences, principal forgiveness does not.

Mortgage modifications usually involve a reduction in the interest rate but not the principal balance of the loan.

In the letter, Democrats estimated principal reductions for troubled borrowers would lead to lower defaults and reduce the risk of default for about 20 percent of Fannie and Freddie's portfolio.

So they want to give away the money because the GSE might lose it? How stupid is that?

Efforts to reduce principal debt are rare, often voluntary. Fannie and Freddie are also concerned that writing down loan balances would create a moral hazard — the concept that rescue efforts breed further behavior that exacerbates the existing problem — prompting other borrowers to stop making timely loan payments.

They shouldn't just be concerned, they should be quite certain principal forgiveness will lead to moral hazard. No borrower will ever be prudent again. If borrowers believe they have no risk in the transaction, they will take all the money they can get under any terms available because they know they will get bailed out if things go wrong.

“The performance of the enterprises' mortgage modifications leaves much to be desired for homeowners, for the housing market, and for taxpayers,” Representative Brad Miller, a Democrat and a member of the House Financial Services Committee, said in a statement. Miller, who has proposed legislation to reform housing finance, led the Democrats in writing the letter.

Some economists see principal reductions as central to cleaning up the housing mess and preventing foreclosures.

Some economists are really stupid.

Settlement talks between the government and some of the biggest mortgage servicers to clean up alleged foreclosure abuses include widespread principle reductions in their agreement.

There's the money shot — the false hope to keep more loan owners paying. Widespread principal reductions are coming, right?

If there is principal reduction in the agreement, it will be targeted to the most severely underwater borrowers who are most likely to strategically default anyway. By reducing the principal a little, they will get a few more payments out of the borrowers before they implode. Perhaps this is what the Democrats had in mind when the proposed principal reduction, but I rather doubt it.

A house I know

When I first began writing for the IHB back in February of 2007, I had just moved into a property in University Park. While I was looking for that property, I made an offer to rent this property. At the time, the asking rent was $2,700, and with the prevailing 6.3% interest rate, the house was well over rental parity. It's amazing what a difference a 4% interest rate makes.

At the time, one of the main reasons I didn't rent this property was because I knew the owner was a speculator who just bought the property, fixed it up, and was using an Option ARM with a 1.5% teaser rate to keep his monthly cost down. In other words, I knew he was going to blow up.

He did. Despite putting $142,000 down on this property, the negative amortization and declining value prompted him to give up. He quit paying sometime this year, probably when his payment recasted to fully amortizing and the cost of ownership started burning a hole in his wallet.

Foreclosure Record

Recording Date: 09/23/2011

Document Type: Notice of Default

The description says it's an equity sale, but I rather doubt he has much flexibility to lower the price and still pay off the loan. This will probably die on the MLS and either become a short sale or an REO.

With 4% interest rates, this house costs less to own than to rent. The price is still ridiculous, but the cost of ownership is what it is. The buyer of this property will be saving money versus renting, and for a single-story home in Woodbridge, that's not all bad.

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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 … 27 SHEARWATER Irvine, CA 92604

Resale House Price …… $725,000

Beds: 3

Baths: 2

Sq. Ft.: 1538

$471/SF

Property Type: Residential, Single Family

Style: One Level, Contemporary

Year Built: 1979

Community: Woodbridge

County: Orange

MLS#: S679826

Source: CRMLS

Status: Active

On Redfin: 10 days

——————————————————————————

Equity sale in North Lake, Woodbridge! Move-in ready. Upgraded maple kitchen cabinets, granite countertops, stainless steel appliances. Neutral ceramic tile, carpet, paint and decor. This highly-desireable floorplan boasts private Atrium off master bedroom. Nice open floor plan, great for entertaining. Walking distance to Eastshore, Lakeside & Woodbridge High.

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Proprietary IHB commentary and analysis

Resale Home Price …… $725,000

House Purchase Price … $740,000

House Purchase Date …. 11/17/2006

Net Gain (Loss) ………. ($58,500)

Percent Change ………. -7.9%

Annual Appreciation … -0.4%

Cost of Home Ownership

————————————————-

$725,000 ………. Asking Price

$145,000 ………. 20% Down Conventional

4.02% …………… Mortgage Interest Rate

$580,000 ………. 30-Year Mortgage

$140,790 ………. Income Requirement

$2,776 ………. Monthly Mortgage Payment

$628 ………. Property Tax (@1.04%)

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

$151 ………. Homeowners Insurance (@ 0.25%)

$0 ………. Private Mortgage Insurance

$82 ………. Homeowners Association Fees

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

$3,637 ………. Monthly Cash Outlays

-$643 ………. Tax Savings (% of Interest and Property Tax)

-$833 ………. Equity Hidden in Payment (Amortization)

$203 ………. Lost Income to Down Payment (net of taxes)

$111 ………. Maintenance and Replacement Reserves

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

$2,475 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$7,250 ………. Furnishing and Move In @1%

$7,250 ………. Closing Costs @1%

$5,800 ………. Interest Points

$145,000 ………. Down Payment

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

$165,300 ………. Total Cash Costs

$37,900 ………… Emergency Cash Reserves

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

$203,200 ………. Total Savings Needed

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

In an effort to support prices of expensive homes, Congress has voted to increase the FHA loan limit to $729,750 through the end of 2013.

Irvine Home Address … 3531 PECAN St Irvine, CA 92606

Resale Home Price …… $639,900

Cheap is small and not too steep

But best of all cheap is cheap

Circumstance has forced my hand

To be a cut price person in a low budget land

Times are hard but we'll all survive

I just got to learn to economize

I'm on a low budget

I'm on a low budget

The Kinks — Low Budget

When the conforming limit for GSE and FHA loans went down in October, borrower spending power went down with it. In response to the dramatic drop off in demand, Congress has voted to increase the FHA loan limit back to $729,750 through 2013.

Congress votes to raise FHA loan limits

By Margaret Chadbourn

WASHINGTON | Fri Nov 18, 2011 2:43pm EST

(Reuters) – The U.S. Congress on Thursday approved a bill to raise the maximum size of mortgages the Federal Housing Administration can insure and sent it to President Barack Obama to sign into law.

The measure would push the so-called FHA conforming loan limit in the highest-priced real estate markets back up to $729,750 through 2013, from $625,500, a sign of lawmaker concern over the still-depressed state of the housing sector.

It's far more than a sign of concern, it's an acknowledgement of the weakness in the market for high wage earners, a market that didn't used to get government support.

The FHA has been perverted. It used to provide home ownership opportunities for low and middle income Americans. It was never intended for supporting overpriced markets dominated by high wage earners like here in Irvine. Markets with prices requiring loans over $417,000 are supposed to be supported by savings and equity from previous sales. Since most Americans have no savings, and since home equity has been largely wiped out in the crash, the markets for high wage earners are looking for the government to bail them out.

This policy will undoubtedly cause more FHA losses because prices will continue to decline, and with the tiny down payments on FHA loans, borrowers will go underwater and many will strategically default. In short, this policy will shift losses from the private lenders and investors to the taxpayer — to you.

The limits, which vary from market to market, were temporarily raised for FHA and Fannie Mae and Freddie Mac during the financial crisis when banks became reluctant to lend. They automatically dropped back on October 1.

Lawmakers decided not to raise the loan level for Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB), which have soaked up about $169 billion in taxpayer aid, as they sought to strike a balance between supporting the market and starting to shrink the government's housing footprint.

The only silver lining to this policy is that it does not apply to GSE loans. It creates an unusual situation where FHA loans will proliferate despite their higher costs due to the FHA insurance.

Many buyers who don't have a 20% down payment (or who aren't willing to put that much down) can now bid up prices using FHA loans assuming they have the qualifying income. This will be an advantage to high wage earners who haven't saved much.

Of course, it is another government prop, and when it is removed, the artificial demand it creates will disappear with it, so buyers thinking of using this financing should beware.

Seeking to avoid a polarizing debate, members of the House and Senate decided to link the mortgage measure to must-pass legislation that includes funding for a large swath of federal programs, from food inspection to law enforcement.

The bill passed the Republican-controlled House of Representatives on a 298 to 121 vote, and passed the Senate by a vote of 70 to 30.

This was “must pass” legislation, so that washes their hands of responsibility, right? Political posturing is bullshit. These idiots just passed a measure which will certainly result in major losses to the FHA — the same FHA facing a government bailout soon. This is a stealth bank bailout nobody has the courage to take responsibility for.

FHA, which does not make loans, provides mortgage insurance to borrowers without enough of a down payment to qualify for prime loans. With an FHA loan, home buyers can put down as little as 3.5 percent.

The agency, which is mainly funded through insurance premiums it brings in, backed about one-third of loans used to purchase homes last year.

FHA, Fannie Mae and Freddie Mac have seen their share of the mortgage market swell as private lenders retrenched; they now back about 90 percent of all new residential loans.

The measure to raise the FHA loan limits still has to pass the Senate before becoming law; Senate approval could come as early as Thursday night with lawmakers laboring against a November 18 deadline, when current government funding expires.

The Obama administration and many lawmakers of both parties want to reduce the government's role in supporting the housing finance system, and the White House sees expiration of the higher loans limits as a first step.

Some Republicans splintered from their party's general consensus that the government should no longer risk the cost of subsidizing home loans on a grand scale. Lawmakers from states with pricey real estate markets, such as California and New York, argued that withdrawing support could hurt the market.

California Republicans should hide their faces in shame. This is appalling. These Republicans call for reducing the footprint of government and simultaneously vote to keep the house prices inflated in their districts with more government largess.

The housing industry and consumer advocates mounted an intense lobbying effort to convince officials the time was not yet ripe to reduce government support.

The NAr will always argue for more government support. The mistake was made by the congressmen who listened to them.

Some conservative groups fought raising the loan limits, with the influential Club for Growth warning that the government was distorting the market and impeding a recovery.

Yes, it is distorting the market and impeding the recovery. This is a mistake.

FHA, which traditionally has supported low-to-moderate income households, said on Tuesday that its capital reserves had dwindled over the past year. But it rebutted the contention of some analysts that it will likely need to turn to the U.S. Treasury for a bailout.

(Additional reporting by Andy Sullivan; Editing by Dan Grebler)

The FHA will likely need a bailout despite their assurances to the contrary. As I reported recently, the only way they will avoid a bailout is if the market bottoms shortly and their legions of underwater loan owners do not strategically default. When their market prognostications prove to be wishful thinking, they will go back to congress for a bailout and claim no one could have foreseen the continuing fall in prices. Idiots.

Countrywide encouraged a peak-buying Ponzi

This house illustrates how fortunes are made and lost during a Ponzi scheme. Two owners ago, this property was purchased on 12/13/2004 for $695,000. Only 15 months later on 3/3/2006, the owner sold the property for $853,000 pocketing over $100,000 after commissions for his one year of ownership. That's the fun part.

The owner that followed was the bagholder… or was he. He paid $853,000 but he did it with Countrywide's money. He put nothing down. In fact, Countrywide didn't think that deal was good enough, so five months later, they gave him a new $748,000 first mortgage and a $93,500 HELOC. Then a few weeks later, they increased his HELOC to $187,000 enabling him to pull nearly $100,000 out himself — after only owning the house less than six months.

It isn't hard to see why houses were so popular and why Countrywide went out of business.

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

This property is available for sale via the MLS.

Please contact Shevy Akason, #01836707

949.769.1599

sales@idealhomebrokers.com

Irvine House Address … 3531 PECAN St Irvine, CA 92606

Resale House Price …… $639,900

Beds: 4

Baths: 3

Sq. Ft.: 2505

$255/SF

Property Type: Residential, Single Family

Style: Two Level, Traditional

Year Built: 1974

Community: Walnut

County: Orange

MLS#: S679920

Source: CRMLS

Status: Active

On Redfin: 9 days

——————————————————————————

Rare highly upgraded, Turnkey REO in College Park. Double family rooms with fireplace. New Carpet and Paint, Newer cabinets with granite counters in kitchen and baths, Newer dual-pane windows, crown molding and much more. This home has a large open floor plan and has beautiful flooring throughout. This home sits on a large lot with a spa in the back yard. Low HOA dues and no Mello Roos. Hurry with your highest and best offers because this gem will not last long.

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Proprietary IHB commentary and analysis

Resale Home Price …… $639,900

House Purchase Price … $489,000

House Purchase Date …. 9/20/2001

Net Gain (Loss) ………. $112,506

Percent Change ………. 23.0%

Annual Appreciation … 2.6%

Cost of Home Ownership

————————————————-

$639,900 ………. Asking Price

$127,980 ………. 20% Down Conventional

4.02% …………… Mortgage Interest Rate

$511,920 ………. 30-Year Mortgage

$123,592 ………. Income Requirement

$2,450 ………. Monthly Mortgage Payment

$555 ………. Property Tax (@1.04%)

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

$133 ………. Homeowners Insurance (@ 0.25%)

$0 ………. Private Mortgage Insurance

$55 ………. Homeowners Association Fees

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

$3,193 ………. Monthly Cash Outlays

-$397 ………. Tax Savings (% of Interest and Property Tax)

-$735 ………. Equity Hidden in Payment (Amortization)

$179 ………. Lost Income to Down Payment (net of taxes)

$100 ………. Maintenance and Replacement Reserves

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

$2,340 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$6,399 ………. Furnishing and Move In @1%

$6,399 ………. Closing Costs @1%

$5,119 ………. Interest Points

$127,980 ………. Down Payment

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

$145,897 ………. Total Cash Costs

$35,800 ………… Emergency Cash Reserves

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

$181,697 ………. Total Savings Needed

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

Mortgage delinquencies are on the rise again because of a faltering economy and strategic default from falling prices.

Irvine Home Address … 63 LEMON Grv #279 Irvine, CA 92618

Resale Home Price …… $149,000

That was just you

Now who's telling who

With every step you take

Do you feel yourself falling?

Grasping for that handrail

That's leading you nowhere

Parental guidance gone

Well, it's just another delinquent song

Voodoo Glow Skulls — Delinquent Song

Borrowers who quit paying thier mortgages is nothing new. Historically, delinquency rates on mortgages have hovered between 3.5% and 5.5% in good times and in bad.

What is new and unprecedented is the 11% delinquency rate we saw during the collapse of the housing bubble. For the last two years, this rate has been slowly declining, but it is still elevated well above historic norms.

Personally, I was not surprised to see the delinquency rate go back up as prices resumed their downward spiral. The weak economy was bound to cause an increase in delinquency, and coupled with strategic default from falling prices, higher delinquency rates are to be expected. Apparently, other economists completely missed these obvious signs.

Mortgage payments show surprising rise in delinquencies

By Eileen AJ Connelly, Associated Press — November 9, 2011

NEW YORK – While lawmakers in Washington debated the debt ceiling and consumer confidence dropped, more homeowners were having a harder time making their mortgage payments.

The rate at which mortgage holders were late with their payments by 60 days or more rose in the June-to-September period for the first time since the last three months of 2009, according to TransUnion.

The credit reporting agency said 5.88% of homeowners missed two or more payments, an early sign of possible foreclosure. That was up from 5.82% in the second quarter.

It isn't a big increase, but any increase goes against the downward trend in place for the last two years.

The increase surprised TransUnion researchers, who had expected late payments, or delinquencies, to fall for the quarter.

“It's much different than we've been talking about the last few quarters,” said Tim Martin, group vice president of U.S. Housing in TransUnion's financial services business unit.

In other words, they blew it. They put on the happy-days-are-here-again goggles and saw what they wanted to see. They probably told all their clients things were getting better when in fact they weren't.

The problems were widespread. Between the second and third quarters, all but 10 states and the District of Columbia saw delinquency rates increase.

TransUnion's data is culled from 27 million credit reports, about 10% of U.S. consumers who actively use some form of credit.

Martin could not pinpoint one particular reason for the jump. Normally, for instance, housing prices and unemployment have a big influence on delinquency.

“Those are both still important, but neither has noticeably deteriorated,” he said. In fact, unemployment was steady during the summer and the Standard & Poor's/Case-Shiller index showed small improvements in housing prices in most major cities during July and August.

Prices didn't rise when they should have risen, and this fall and winter, they are plummeting. He missed the obvious.

That leaves wider economic issues having a larger role, Martin said. He pointed to the U.S. credit rating downgrade, the U.S. and European debt crises and the tanking U.S. stock markets during this period. And he noted that two different measures of consumer confidence — the Conference Board and the University of Michigan— both showed those issues hurt consumer attitudes.

That atmosphere “could make folks question paying their mortgage,” he observed, especially if they are under water, that is, they owe more than the house is now worth.

That's nonsense. Does he really think someone, somewhere decided to stop paying their mortgage because the Greeks weren't paying their bills? Give me a break. This is the kind of crap economists come out with when they don't have a clue what they are talking about. It sounds plausible at first, but when you examine it closer, you realize it makes no sense at all.

Martin said there's no real way to tell if some of the delinquency increase was driven by those under water. On the contrary, three of the 10 states that saw declines in late payments were among the hardest hit by the foreclosure crisis: Arizona, California and Nevada.

The decline in delinquency rates in those states is largely because the delinquent got foreclosed on. The rate of foreclosure exceeded the rate of fresh delinquencies. All of those states are non-judicial foreclosure states which weren't impacted by robo-signer delays.

In fact, Arizona had the best rate of improvement in the nation, and now has a delinquency rate of 7.46%. That still places it fourth worst in the country, but the rate is vastly improved from where it stood. In the fourth quarter 2009, Arizona's delinquency rate hit 16%, highest for any state since the foreclosure crisis began.

Arizona does, however, still have the highest foreclosure rate in the nation — one in every 44 housing units with a foreclosure filing in the third quarter, according to Realtytrac.

Another possibility for the bump in the delinquency rate is that a new crop of adjustable mortgages written toward the end of the housing bubble is resetting. Even if their interest rates remain low after the adjustment, payments might have increased, said Darren Blomquist, a Realtytrac spokesman. “We still have the bad loans mixed in that are resetting.”

Remember, it's the recast to a fully amortized payment that causes the real payment shock. Even if interest rates are low, the conversion from interest-only to fully amortized is going to be a problem. The only reason this problem is not worse is because many of these people have already defaulted.

Although TransUnion still expects the delinquency rate to continue to fall in 2012, the company is now forecasting a few quarters of elevated nonpayment rates due to the uncertain economic outlook. The company doesn't predict a return to the national peak rate of 6.9%, but said some increase is expected.

“More and more homeowners are likely to struggle,” Martin said. “I'm not sure this is a one-quarter blip.“

That echoes predictions from other sources, like RealtyTrac.

“This isn't just about bad loans anymore,” said Blomquist. “It's about a bad economy that's pushing people into foreclosure.“

1% appreciation since 1990

$369,000 debt on a $149,000 condo

I didn't know how to headline this property as both stories were interesting.

The condo was purchased at the peak of the 1990s housing bubble, and the bottom of this trough is nearly wiping out all appreciation since then. Buying at the peak of a housing bubble has yielded this property 1% annual appreciation over the last 20 years. The owner would have done better in CDs without all the volatility.

Of course, the owner actually did do better because they managed to borrow $369,000 against the inflated value of this property back in late 2006. Can you believe an 819 SF 1/1 condo appraised for $369,000?

And people say the bubble wasn't obvious to see… bullshit.

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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 … 63 LEMON Grv #279 Irvine, CA 92618

Resale House Price …… $149,000

Beds: 1

Baths: 1

Sq. Ft.: 819

$182/SF

Property Type: Residential, Condominium

Style: Two Level, Contemporary

Year Built: 1977

Community: Orangetree

County: Orange

MLS#: P801590

Source: CRMLS

Status: Active

On Redfin: 11 days

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Second level 1 bedroom with a loft floorplan, bright and light condo, spacious living room with vaulted ceiling open to a balcony off the living room tile flooring through out. ONE OF THE LEAST EXPENSIVE CONDOS IN ALL OF IRVINE. Hoa includes pools, spa, tennis courts, gym, clubhouse, water and trash Close to colleage/freeways and toll way for easy commute.

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Proprietary IHB commentary and analysis

House Purchase Price … $121,000

House Purchase Date …. 10/4/1991

Net Gain (Loss) ………. $19,060

Percent Change ………. 15.8%

Annual Appreciation … 1.0%

Cost of Home Ownership

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$149,000 ………. Asking Price

$5,215 ………. 3.5% Down FHA Financing

4.06% …………… Mortgage Interest Rate

$143,785 ………. 30-Year Mortgage

$50,011 ………. Income Requirement

$691 ………. Monthly Mortgage Payment

$129 ………. Property Tax (@1.04%)

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

$31 ………. Homeowners Insurance (@ 0.25%)

$165 ………. Private Mortgage Insurance

$275 ………. Homeowners Association Fees

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$1292 ………. Monthly Cash Outlays

-$62 ………. Tax Savings (% of Interest and Property Tax)

-$205 ………. Equity Hidden in Payment (Amortization)

$7 ………. Lost Income to Down Payment (net of taxes)

$39 ………. Maintenance and Replacement Reserves

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$1,071 ………. Monthly Cost of Ownership

Cash Acquisition Demands

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$1,490 ………. Furnishing and Move In @1%

$1,490 ………. Closing Costs @1%

$1,438 ………. Interest Points

$5,215 ………. Down Payment

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$9,633 ………. Total Cash Costs

$16,400 ………… Emergency Cash Reserves

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$26,033 ………. Total Savings Needed

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