In order to prevent another public relations nightmare, lenders are holding off on some foreclosures or evictions during the holiday season.

Irvine Home Address … 134 ECHO Run Irvine, CA 92614

Resale Home Price …… $215,000

I'll be home for Christmas

You can count on me

Please have snow and mistletoe

and presents on the tree

Christmas Eve will find me

Where the love light gleams

I'll be home for Christmas

If only in my

dreams

Frank Sinatra — I'll Be Home For Christmas

Each year during the holidays, lenders are faced with the unenviable choice to allow more squatting or take away the family home at Christmas. With the bad public relations that go along with holiday foreclosures, most lenders hold off until the new year.

Banks will hold off on some holiday foreclosures

Andrew S. Ross, Chronicle Columnist

Friday, November 25, 2011

Season of sharing, take 1.

Got an e-mail from Wells Fargo responding to my column this week suggesting that banks consider a moratorium on home foreclosure activities, at least during the holiday season.

“Wells Fargo is suspending eviction actions from Nov. 23 to Nov. 25, and again from Dec. 19 to Jan. 2, 2012. We will not physically evict or conduct lockouts on the foreclosed properties in our owned portfolio during these times,” said a Wells Fargo spokeswoman.

“For loans we service for others, foreclosure-related actions may still occur, but Wells Fargo will not evict tenants during these periods.”

So Wells Fargo will foreclose, they just won't evict. I guess the people had already been there for years squatting already, what's another couple of weeks, right?

I checked with the other major banks, and with the government-run Fannie Mae and Freddie Mac, the nation's two largest home loan originators.

JPMorgan Chase said it “will not complete foreclosure sales or evictions from Dec. 22 through Jan. 2, though this does not apply to Fannie and Freddie loans.”

Fannie Mae said it “will be announcing a suspension of evictions for the holiday period. Details should be available next week.”

Bank of America said, “For loans we own and those we service for investors who do not provide other guidance, we have a policy and procedures to avoid foreclosure sales or displacement of homeowners or tenants around the Thanksgiving and Christmas holidays. In addition to internal notifications of the policy, the contracted foreclosure attorneys and trustees have been instructed that they are not to schedule foreclosure sales, evictions or lockouts on covered loans during those periods.”

So some will foreclose but not evict, and some will not foreclose or evict. None of them said they were going to forgive the loan balance and let people keep the houses — in case anyone was holding out hope for that….

Ally Financial, which owns GMAC Mortgage, said, “Should a suspension of foreclosure activities be issued, GMAC Mortgage will follow the applicable investor requirements.”

Citigroup and Freddie Mac had not responded by Wednesday afternoon.

Blogging: www.sfgate.com/columns/bottomline. Facebook page: sfg.ly/doACKM. Tweeting: @andrewsross. E-mail: bottomline@sfchronicle.com.

My first holdover owner tenant

Whenever I buy an occupied property at auction, I always try to keep an existing occupants in place. I will renovate around people if I can get immediate cashflow from the property. You would think such an arrangement would be a no-brainer for a squatting former owner, but that generally isn't the case.

What I have found is that most people who strategically default do not wait until someone comes to evict them. Many properties I have purchased have been empty, or the occupants vacated just before I bought it at auction. Most holdover tenants are renters or unemployed former owners who have nowhere else to go.

Last month I bought a property which was occupied by the former owner. Before they quit paying, their mortgage payment was $2,200 per month. When Jacki approached them and asked if they would stay on for $1,000 per month, they didn't think we were serious. When we offered to fix up some lingering maintenance items, they asked us if they had to pay for it. They couldn't believe their good fortune that came from their foreclosure.

Now these people are very happy tenants. They didn't have to move, and their housing costs are less than half of what they were when they were making payments. Of course, they have to pay rent now, so the deal isn't as good as squatting, but this new arrangement is stable. It's a win-win as far as I can tell.

An Irvine Flop

Today's featured property was sold as REO on Halloween. In less than a month, it is on the market with a 25% markup. It certainly doesn't look like the listing agent for the REO got the best possible price for Fannie Mae.

What could this flipper have done in 30 days to increase the value 25%, particularly at this time of year when demand is weak and prices are falling?

Do you think the realtor might have represented to Fannie Mae that the value was less than the true fair market value? Do you think this investment was steered toward a favored client?

Or is it possible that this flipper is merely delusional and this property is really worth only $167,500? Perhaps it a bit of both. What do you think?

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

This property is available for sale via the MLS.

Please contact Shevy Akason, #01836707

949.769.1599

sales@idealhomebrokers.com

Irvine House Address … 134 ECHO Run Irvine, CA 92614

Resale House Price …… $215,000

Beds: 1

Baths: 1

Sq. Ft.: 750

$287/SF

Property Type: Residential, Condominium

Style: One Level, Contemporary

View: Faces South

Year Built: 1980

Community: Woodbridge

County: Orange

MLS#: S680358

Source: CRMLS

On Redfin: 4 days

——————————————————————————

Must See! Great Condo in a Great Irvine Community, within the boundaries to attend Woodbridge High School. Beautiful 1 Bedroom, 1 Bath condo. Recently remodeled with major upgraded finishes. Travertine countertops in kitchen and bath, upgraded cabinets, recessed lighting in kitchen, upgraded kohler kitchen sink, designer selected paint, travertine flooring in kitchen and dining area, upgraded carpet in living room and bedroom and upgraded lighing. Woodbridge Community Associations has two lakes, pools, tennis courts and beautiful parks. All that is left is for you to move in!

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Proprietary IHB commentary and analysis

Resale Home Price …… $215,000

House Purchase Price … $167,500

House Purchase Date …. 10/31/2011

Net Gain (Loss) ………. $34,600

Percent Change ………. 20.7%

Annual Appreciation … 340.3%

Cost of Home Ownership

————————————————-

$215,000 ………. Asking Price

$7,525 ………. 3.5% Down FHA Financing

4.02% …………… Mortgage Interest Rate

$207,475 ………. 30-Year Mortgage

$70,979 ………. Income Requirement

$0,993 ………. Monthly Mortgage Payment

$186 ………. Property Tax (@1.04%)

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

$45 ………. Homeowners Insurance (@ 0.25%)

$239 ………. Private Mortgage Insurance

$371 ………. Homeowners Association Fees

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

$1,834 ………. Monthly Cash Outlays

-$154 ………. Tax Savings (% of Interest and Property Tax)

-$298 ………. Equity Hidden in Payment (Amortization)

$11 ………. Lost Income to Down Payment (net of taxes)

$47 ………. Maintenance and Replacement Reserves

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

$1,439 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$2,150 ………. Furnishing and Move In @1%

$2,150 ………. Closing Costs @1%

$2,075 ………. Interest Points

$7,525 ………. Down Payment

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

$13,900 ………. Total Cash Costs

$22,000 ………… Emergency Cash Reserves

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

$35,900 ………. Total Savings Needed

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

Despite California's withdrawal from the foreclosure settlement talks, the negotiations are continuing with other states.

Irvine Home Address … 3 ABETO Irvine, CA 92620

Resale Home Price …… $699,900

As usual, I'm in a tricky predicament

Weather in my thoughts, on the roof sneaking a cigarette

Dear California, it's been nice to know ya

Tell me, will you miss me when I'm gone?

Vanessa Carlton — Dear California

California recently pulled out of the settlement talks with the major banks. Does anyone miss California?

Foreclosure Talks Push Ahead Absent California

NOVEMBER 23, 2011 — By RUTH SIMON And NICK TIMIRAOS

Bank representatives and government officials are working on a broad settlement of most state and federal foreclosure-practices investigations that could move forward without the participation of California, long considered a key to any deal, people familiar with the negotiations said.

The terms of the deal remain fluid. Banks have proposed a deal excluding California that would carry a value of $18.5 billion, though the final outcome remains uncertain, people familiar with the discussion said.

Negotiators are continuing to make a push to persuade California to join a settlement valued at $25 billion among federal officials, state attorneys general and the nation's five largest mortgage servicers: Ally Financial Inc., Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co. and Wells Fargo & Co. The talks center on the banks' use of “robo-signing,” in which employees approved legal documents without proper review, and other questionable foreclosure practices.

The only reason the California Attorney General is not signing on is because she wants to extort more money out of the banks. The robo-signing issue was not a problem here because we don't have a judicial foreclosure system. By and large, there have been no questionable foreclosure practices. Nobody who was making their payments was foreclosed on. What we do have is a lot of squatters in shadow inventory gaming the system and hoping the California AG will bail them out with principal reduction in order to secure re-election.

The dollar value would include the value of principal write-downs, interest-rate reductions and other benefits to homeowners as well as cash penalties.

But negotiators now are discussing how to structure an agreement if California remains on the sidelines. Until recently, it seemed unlikely that a settlement would be possible without the participation of California Attorney General Kamala D. Harris. She left the discussions in late September, calling the deal then on the table inadequate. The state accounted for 13.1% of all mortgages outstanding at the end of September and 10.8% of all loans in foreclosure, according to the Mortgage Bankers Association.

“Our position remains the same. We are focused on securing maximum relief and lasting reform for California homeowners,” said Shum Preston, a representative for Ms. Harris.

Her position is the same. She is still posturing for more extortion money.

Attorneys general in several other states, including Delaware, Massachusetts, Nevada and New York, also have raised questions about the potential settlement.

Participants on both sides are eager to reach a resolution after months of discussion. Administration officials have viewed the foreclosure settlement as a chance to break the foreclosure logjam, increase the number of reductions in loan principal and provide other assistance to homeowners. Banks, meanwhile, would like to reassure investors and put questions related to foreclosure practices behind them.

It's the banks who desperately want to make this deal to limit their future liability. They are right that investors will not buy banking stocks while there is a giant black hole eating everything on their balance sheet.

Any deal would require banks to use a portion of the penalties to modify mortgages by writing down loan balances, among other actions. In exchange, banks would be released from legal claims tied to servicing delinquent mortgages as well as certain mortgage-origination practices. Government officials still would be able to move forward with other legal claims, including those stemming from the packaging of loans into securities.

The discussions have turned in recent days to crafting a formula to determine how any settlement is scaled depending on which states opt out of the deal. Officials have discussed limiting the amount of loans that could be written down or refinanced in states that don't join the settlement, people familiar with the matter said, in order to provide a stronger incentive for states to join. States that don't join the settlement wouldn't receive any of the funds that will go directly to the states, nor will borrowers in those states receive cash payments for which they might otherwise be eligible, these people said. If California doesn't sign on, the state would lose billions of dollars in potential benefits, the people said.

Nice try, but California will extort even more money out of the banks with a separate agreement. It's wishful thinking to believe they can limit California's recovery from the banks if California refuses to participate in the deal.

The participation of California isn't the only item still on the negotiating table. The two sides still must agree on the choice of a monitor, who will be charged with ensuring that banks comply with the settlement, people familiar with the discussions said.

Following the departure of Ms. Harris from the talks, the price tag of a settlement rose by at least $5 billion and negotiators came up with a plan to help certain “underwater” borrowers, those who owe more on their mortgage than their home is worth, to get refinancing assistance.

California has more than two million underwater borrowers, more than any other state, according to CoreLogic.

That's a lot of houses. How many of them will survive to have equity again? Not many, I imagine.

The refinancing plan will remain in the deal even if California doesn't because it is attractive to other states that have seen large home-price declines, the people said.

Ms. Harris has come under pressure from labor and progressive groups seeking to extract greater penalties from banks for alleged mortgage-related wrongdoing.

Now we see the real reason she pulled out of the talks. The extreme left who want to give away free houses to loan owners are pressuring her. The extreme left is wrong on this issue. Is fiscal responsibility completely out of favor on the left?

Last week, her office issued subpoenas to Fannie Mae and Freddie Mac, the government-controlled mortgage companies, according to people familiar with the matter.

The subpoenas asked the firms to provide responses to about 50 different inquiries, according to these people, including demographic information about borrowers who have missed payments and who have received loan modifications, among other items.

The state also requested information on foreclosed properties owned by the firms, including any evidence of unpaid taxes or drug abuse on vacant properties.

If she really wanted to do something useful, she could request information on unpaid HOA dues by the banks. HOAs are getting killed by lenders who don't foreclose because when they finally get around to it, the HOA lien gets wiped out. Many HOAs are grossly underfunded.

Representatives of Fannie, Freddie, and the Federal Housing Finance Agency, which regulates the firms, declined to comment.

Ms. Harris has a limited ability to bring legal claims related to originations and servicing practices if she decides not to agree to the foreclosure deal, people familiar with the negotiations said.

How can she be bound by an agreement she doesn't sign? Her failing to sign the agreement does not limit her in any way.

The statute for filing cases related to loan originations is four years in California, meaning any legal action could cover mortgages originated only in 2007 and after. California allows foreclosures to proceed through a nonjudicial process, limiting the state's ability to argue that banks lied to the courts, these people said.

Separately, the Office of Comptroller of the Currency on Tuesday released a broad summary of the actions financial firms have taken this year to overhaul foreclosure practices. Bank regulators also posted copies of the agreements between banks and thrifts and the consulting firms, which include Clayton Services LLC, Ernst & Young LLP, PriceWaterhouseCoopers LLP and Promontory Financial Group LLC, that have been hired to review millions of foreclosure files for potential defects.

—Alan Zibel and Maya Jackson Randall contributed to this article.

Write to Ruth Simon at ruth.simon@wsj.com and Nick Timiraos at nick.timiraos@wsj.com

I am torn on this issue.

I want to see the banks pay a very heavy price for inflating the housing bubble, but I don't want to see them get punished for their proper foreclosure practices.

I want to see the banks lose a lot of money, but I don't want to see these losses occur because some politician wanted to buy some votes by giving free money to a loan owner.

The punishments being inflicted on the banks are warranted, but not for the reasons being given. Two wrongs don't make a right.

Half a million dollar Ponzis

My data source for today's featured property doesn't tell me exactly when the previous owners bought the house, but the assesed value is $280,838 which suggests they paid about $265,000, probably sometime in the 1990s.

My records pick up with a $438,750 first mortgage on 3/21/2003. By this time, the owners were committed Ponzis.

Over the next four years, they proceeded to borrow and refinance many times culminating in a $744,000 Option ARM on 7/31/2007. The also managed a $29,900 HELOC on 10/11/2007.

They racked up $773,900 debt on a house they paid less than $300,000 for.

They quit paying, and got to squat for at least 15 months.

Foreclosure Record

Recording Date: 09/09/2010

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 06/07/2010

Document Type: Notice of Default

I'm out of unique ways to describe this behavior. I hope they enjoyed the money because they will likely never live that well again.

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

This property is available for sale via the MLS.

Please contact Shevy Akason, #01836707

949.769.1599

sales@idealhomebrokers.com

Irvine House Address … 3 ABETO Irvine, CA 92620

Resale House Price …… $699,900

Beds: 5

Baths: 3

Sq. Ft.: 2864

$244/SF

Property Type: Residential, Single Family

Style: Two Level, Traditional

Year Built: 1978

Community: Westpark

County: Orange

MLS#: P803969

Source: CRMLS

Status: Active

On Redfin: 2 days

——————————————————————————

FANTASTIC BUY ON THIS SPACIOUS 5 BEDROOM 3 BATH EXECUTIVE HOME WITH TILE ROOF LOCATED IN AN INTERIOR TRACT LOCATION VALUE PRICED FOR QUICK SALE! TILE ROOF, FORMAL LIVING ROOM, DINING ROOM, SEPARATE FAMILY ROOM WITH FIREPLACE AND WETBAR, ONE BEDROOM AND BATH DOWNSTAIRS, SPACIOUS MASTER SUITE, HUGE BONUS ROOM UPSTAIRS, BRIGHT KITCHEN WITH GRANITE COUNTERTOPS, SPARKILING POOL AND SPA, FORCED AIR HEATING AND CENTRAL AIR CONDITIONING. FRESH INTERIOR TWO TONE PAINT AND NEW CARPET. SUPER MOTIVATED SELLER. SUBMIT!!!

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

Proprietary IHB commentary and analysis

Resale Home Price …… $699,900

House Purchase Price … $664,114

House Purchase Date …. 6/24/2011

Net Gain (Loss) ………. ($6,208)

Percent Change ………. -0.9%

Annual Appreciation … 10.5%

Cost of Home Ownership

————————————————-

$699,900 ………. Asking Price

$139,980 ………. 20% Down Conventional

4.02% …………… Mortgage Interest Rate

$559,920 ………. 30-Year Mortgage

$136,606 ………. Income Requirement

$2,680 ………. Monthly Mortgage Payment

$607 ………. Property Tax (@1.04%)

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

$146 ………. Homeowners Insurance (@ 0.25%)

$0 ………. Private Mortgage Insurance

$97 ………. Homeowners Association Fees

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

$3,529 ………. Monthly Cash Outlays

-$434 ………. Tax Savings (% of Interest and Property Tax)

-$804 ………. Equity Hidden in Payment (Amortization)

$196 ………. Lost Income to Down Payment (net of taxes)

$107 ………. Maintenance and Replacement Reserves

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

$2,594 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$6,999 ………. Furnishing and Move In @1%

$6,999 ………. Closing Costs @1%

$5,599 ………. Interest Points

$139,980 ………. Down Payment

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

$159,577 ………. Total Cash Costs

$39,700 ………… Emergency Cash Reserves

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

$199,277 ………. Total Savings Needed

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

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!

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

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

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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

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$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

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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.

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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 … 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

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