After the Rate Spike — Mortgage Operations Turmoil…Kick out the Dead Loans Now
Rates are all over the map as lenders assess the damage and price cautiously. Now, it is a mad dash to only focus upon the loans that are locked and have a chance of funding. If the locked loans are not funded quickly and the interest rate complex continues to experience this extreme of volatility, serious losses can occur.
The letter below was just sent by a national bank’s wholesale department this afternoon. This is the mortgage operations nightmare I highlighted in Thursday’s report. In a nutshell, they are kicking aside everything that is not locked or not a purchase in contract.
This is the desperation move that overworked, understaffed mortgage divisions have to make in order to salvage what can be salvaged and fund the loans that can fund in the shortest amount of time possible — preferably before the end of the rate lock.
Kicked aside could be at least half of their past two month’s of unlocked, unfunded originations that may ultimately parish if rates don’t come back quickly…or if the borrower can’t be coaxed into an 3/1 or 5/1 intermediate-term hybrid ARM, which are now at about the same interest rate level as a 30-year fixed was at the beginning of the week. Shortening duration is now an option where two months ago it was not.
GSE Jumbo Loans Were Totally Blown Out – Try 6% – 7%. Not Good for Mid-to-Upper end Market Already on the Ropes
GSE Jumbo fixed rate loans were decimated on Wednesday. This market is highly volatile to begin with — a move like this blows rates out until conditions settle down quite a bit. Anyone with an unlocked GSE Jumbo loan that was hoping for the 5% rate available when the application was taken is out of luck. Jumbo fixed wholesale rates are now 6% to 7% depending upon which lender the loan is with. Even if bond yields and rates don’t come back down, but volatility settles down a bit, GSE Jumbo rates will tighten up to conforming loan rates over the next month offering some relief.
Levering Up on Bubble-Year’s Favorite — the 3/1 & 5/1 Hybrid Intermediate-term Interest Only ARM
Some borrowers with an unlocked purchase or refi that want to go through with the deal — but either find 5.5% unacceptable or can’t qualify at that high of a rate — will migrate to the 3/1 and 5/1 loan products. These are long-term fixed rate alternatives offering much lower pricing than today’s 30-year fixed rates. I highlighted how these programs have made a comeback in my 5-15 report:
5-15 Bringing Back a Bubble-Year, High-Leverage Loan Favorite
Over the past few weeks as 30-year fixed rates have soared, some application volume has moved to a few lenders offering hybrid intermediate-term 3/1 and 5/1 interest only ARMs because of their preferred rates and low monthly payments. Just like during the bubble years, a 5/1 interest only is about 100bps lower in rate than a 30-year fixed. With a spread that large and the benefit of interest only payments, volume will continue to move to this program line if rates stay up. These are the loans that got the housing bubble really going in 2003. From here, the housing bubble was born.
5-15 GSE’s — Re-levering Borrowers Through Exotic Loans as Fixed Rates Rise
Rates this aggressive on this program line are something brand new and not offered by all lenders. The 5/1 ARM was first made mainstream by Wells Fargo in 2003. It quickly became the top high-leverage loan choice and stayed that way until late 2005-2006 when short rates took its pricing to levels that made it cost-prohibitive. From there, the Pay Option ARM took over but that is for a different report.
Although the 3/1 and 5/1 interest only loans of 2003-2006 were on a different level of exoticness than today’s 5/1’s, they didn’t start that way. This re-introduction of ultra-low rates on a favorite ‘bubble-years’ loan program may be the first sign of re-inflating the mortgage bubble by these means.
It is obvious the Fed can’t keep rates down making higher leverage loan programs is easiest way of countering negative affordability from rising rates.
Aggressive 3/1 and 5/1 conforming interest-only hybrid intermediate-term ARM rates are being offered from a variety of lenders…that long of a name just sounds exotic, no? That is because they are. At present the mid-to-high 4% is still available – about the same rate as a 30-year fixed a month ago.
With 30-year fixed rates loans the top choice this time around, these bubble-year’s favorites have been avoided like the plague. However, some that were caught off guard and that must fund a purchase or refi will opt for these. If short rates stay down and long up, these just may get real popular again as they were in 2003-2005. However, if long rates keep moving higher or the market gets even more volatile, I would not expect these to hang around these levels for too long.
For borrower’s that can deal with an ARM, CITI was leading the pack yesterday. If 30-year rates stay up, ARM rates down and the refi-boom shifts to short duration 3/1 and 5/1 financing, what are we setting ourselves up for in three to five years.
Best Regards,
May 29th, 2009 at 7:51 am
I’ve paid close to 8% interest for two years!
… no sympathy here… raising rates is a must! Want a house a cheaper price pay more interest … I hope they go to 12%!!!!!
May 29th, 2009 at 8:59 am
I’d like to take a Poll: How likely does everyone think it is that the RE bubble will be successfully re-inflated by a return to “exotic” loans? How long could that bubble last? It seems to me that, in light of the much-lower pricing of today, the scale of the negative-equity problems that this new batch of IO clowns will have is going to be much less burdensome and lead to a softer and slower “bursting” once (if?) that bubble bursts. I agree with ex-renter, with all the IO gimmicks, FHA gimmicks, the shitty employment, the Alt-A avalanche, the baby boomer retirement bomb and the walk-away phenomenon – which I just can’t see “not” happening (and soon) – how can a TRUE housing “recovery” begin anytime before 2012? even 2012 seems like a hard chart to draw.
May 29th, 2009 at 9:25 am
I would agree that the exotics are coming back, but I don’t put FHA in the same category as IO, POA, or 80/20 loans.
May 29th, 2009 at 11:40 am
housingrealist, the FHA is worse (without a bigger demand..than supply)
3.5% down.. 9200 FHA loans never made a single payment (do the research),after getting the loan.. and the gov (tax payer) garantees them!
May 29th, 2009 at 11:50 am
Not sure how those are worst than POA. Balance actually going up when loan was originated in 2004-2007 at higher price range is about as ugly as I can imagine. At least FHA is lower price points, and no neg. am.
May 29th, 2009 at 12:18 pm
IO, amortized, FHA or not. Most homes bought this month will be underwater next year. So perhaps the rate spike is a blessing, as it has just sent thousands back to their rentals in waiting.
And, Housingrealist – I’d say an FHA 3% down is just as shitty as a 20% down IO. Just look at ex-owner’s situation. From one product to the next. They both serve the same purpose, that is to get people infatuated with owning a home through the back door.
May 29th, 2009 at 12:19 pm
Another great post. It’s revealing to see how widespread desperation is.
“We expect this to be a temporary solution…” In times of distress “temporary solution” means “permanent” for all practical purposes.
May 29th, 2009 at 12:23 pm
POA and Massive FHA are both evil to me because there’s so little “skin in the game” as is now popular to say. POA’s will go sour again (maybe a little slower?), but so can these new batch of FHA’s, due to slimy methods of meeting that unthinkably high (lol) 3.5% threshold. I wish all Americans would grasp the added “bonus” of the Taxpayer getting to pay directly for every FHA default (and indirectly for the others). I can’t stand Obama, but I do wish he would outlaw at least the POA’s. They represent the exact opposite of the “affordable housing” that politicians lie about supporting. As we saw, those very loans made it possible to bid up housing to ridiculous levels.
May 29th, 2009 at 12:38 pm
Benzi,
I’ve not got another loan nor was it an FHA, nor do I plan anytime soon. I might use FHA in 2012, or might have enough down payment.. to get any other loan.. if I decide to..
Feel free to look at my situation, and many others.. but don’t tell me loosing a job, gas at 4.50, and buying at the peak, it’s all my fault.. and I’m ready to jump on another loan already.. I’m not! I’ll wait for 2012+
HOWEVER, what I’m saying.. If masses (ex owners) were to come back buying (through FHA.. or other type of loans).. would stabilize the “supply and demand”.. this will not happen anytime soon, as you know 3 year is minimum wait after a forclosure..
May 29th, 2009 at 12:51 pm
So in the arm-wrestling match of downward foreclosure oversupply distress vs. upward exotic loan bid-up momentum, who wins? (when observed over the next say 5 years) Do we see actual upticks? or is there just a resulting loooong plateau in prices? or does the downward slide continue unabated, spitting in the face of exotic financing on the way down? Does the chart end up looking like a step-ladder, or a seismograph, before the true bottom is in? I’m curious to hear people’s predictions.
May 29th, 2009 at 12:59 pm
Help!
Locked in 4.5% c. 1point up front to refi into 30yr FNMA conforming. Locked on April 3, 60 day lock. All documents I had to send (insurance, pay stubs etc) sent to bank within 5 days from lock.
Spoke with Bank Tuesday of this week with one week to go, was advised they hadn’t assigned to processor yet, they had all the docs, and that I had the rate don’t worry about the lock period.
In short can my lender (which is one of top 4 TARP recipients) walk away from the rate lock on June 3 even though they ackowledge they have all the docs but simply haven’t got to it by their own admission? Or if they were too busy am I simply out of luck after the rate lock period expires?
May 29th, 2009 at 3:42 pm
This may sound crazy but is it possible the body that sets the interest rate knew that this would force the mortgage industry to priortize the locked mortgages and therefore the numbers when reported a month or two from now might show that applications are up, implying a return of a housing market. I don’t want to sound like a conspiracy nut but how will these numbers look like two/three months from now? BTW we paid 12% back when. Got rid of that anchor as fast as possible.
May 29th, 2009 at 3:42 pm
“how can a TRUE housing “recovery” begin anytime before 2012? even 2012 seems like a hard chart to draw.”
—————————–
it really doesn’t seem possible, does it? the bubble markets like SoCal are seeing activity in the low end, with foreclosures/distress sales dominating the market and fueled by low rates and investor interest. it just does not feel like a recovery is underway, even in the low end, despite the activity. the mid to high end in the bubble markets have not even seen the worst of it yet, and we are halfway through ‘09. I see dark days ahead in the mid to high end. By 2012 it will be bad. Maybe we will see a bottom around that time, but certainly no recovery will be underway. It’s going to get much much worse for alot of people in the mid to high end – values are going to come way down from todays’ values.
May 29th, 2009 at 3:55 pm
“Feel free to look at my situation, and many others.. but don’t tell me loosing a job, gas at 4.50, and buying at the peak, it’s all my fault.. and I’m ready to jump on another loan already..”
Ex_owner, hmmmm:
“loosing a job” – May or may not be your fault, only your boss knows the truth.
“gas at 4.50″ – huh? You’re blaming gas prices for losing your home?
“buying at the peak” – Whose fault is that?
You also said, “HOWEVER, what I’m saying.. If masses (ex owners) were to come back buying (through FHA.. or other type of loans).. would stabilize the “supply and demand”.”
You’re disingenuous at best!! You think by letting ex_owners come back, we can negate all the negative points you’ve listed about the economy and save the market? I think Benzy got your number, for being infatuated with owning a home. Just lost one and can’t wait to get back in again.
May 29th, 2009 at 4:15 pm
Flion: It feels like so many sellers/banks (and their delusional realtors) in the SoCal mid-to-high end are nervously holding their breath, hoping against hope that if they just wait one…more…day their bubble price sale will come to fruition. How blue can/will their faces get before they accept the actual value of what they’re selling? How long can they hold out? A majority of people are simply NOT going to (can’t?) pay those high end bubble prices anymore, the “always-up” psychology has been exposed for the fraud it was. When the high end finally capitulates, JUST IMAGINE the hit that the low end garbage that today passes for “hot real estate” will take.
May 29th, 2009 at 4:20 pm
Benzy.ex renter – FHA originated in 2009 has nowhere near the risk that an IO/POA/80-20 originated in 04/05/06/07 had.
May 29th, 2009 at 4:27 pm
The Washington Post entitled “Zero Payment Defaults Are on the Rise at FHA,” it read, “Over 9,200 loans insured by the agency have gone delinquent in the last two years having one or no payments being made. Instant defaults have tripled in the last year and more than two dozen loans are defaulting in this manner every week.”
May 29th, 2009 at 4:28 pm
Wonton.. you got me.. you better go buy before I do!
May 29th, 2009 at 4:35 pm
Wonton, what planet do you really live on??
Are you saying high gas prices .. had nothing to do with this downturn?.. do you want me to start itemizing to you again.. so you can understand?
May 29th, 2009 at 5:02 pm
rate lock expires soon help
From my experience, the lender can do whatever they wish, after the lock. A 60 day lock is a 60 day lock. The lock refers a set rate provided the loan funds during the lock.
Now, that said, if the delay was out of the ordinary and the fault of the lender AND THEY HAVE A CONCIENCE, they could very well make good. On the other hand if the delay was ordinary in nature and or they are just greedy, you have a right to worry.
Now, I don’t know the specifics of course and perhaps you have a legal case if they don’t give you the rate (due to some fact you did not mention). The problem with that is, what happens if you sue? How much could you get? What would the damages be? What if you sue, you lose and you have to pay all the court costs? In other words, from my own experience, unless its a guaranteed win, suing is useless.
If I were you and they didn’t fund at the lock, I think the best hope is an appeal to the Manager and if that doesnt work, a threat (you say the received TARP funds?) to call your Congressmen or Senator along with the Newspaper. Just remember, being nice is always plan A.
May 29th, 2009 at 9:57 pm
anyone know how OBAMADUMMY & THE TAX CHEAT Making Homes Affordable Program is working…..LOL
May 29th, 2009 at 11:06 pm
“Are you saying high gas prices .. had nothing to do with this downturn?”
I’m not talking about THE downturn, but YOUR downturn. What does gas prices have to do with YOUR downturn? You couldn’t pay the mortgage any longer because you had to spend an extra $50 a month on gas?
May 30th, 2009 at 8:19 pm
After reading the comment section of this blog,I would say that if you are worried about the rate on a loan or IO or any other affordabilty product,then the price of the home is much too high.Intrest rates are going to rise so just hold out ie.. go on a buyers strike,I would much rather pay 7% on 100,000 than 4.5% on 350,000.The math does not add.Paying over 200,000 for a house is silly.Better idea would be to move to Arkansas and rent or buy for 400.00 to 750.00 a month,it would leave plenty of money to invest in worth while projects.
May 30th, 2009 at 8:49 pm
“Paying over 200,000 for a house is silly.Better idea would be to move to Arkansas”
Sound financial advice.
May 31st, 2009 at 4:44 pm
The only problem is, you have to live in Arkansas!
May 31st, 2009 at 9:00 pm
wonton…
I realize that you’re fascinated with MY situation, (add a 0, if you must know..) but this is much bigger than 1 person… you could go ask around how higher gas prices affected THE REST OF THE ECONOMY! I’m sure other people’s decisions were made/or affected based on gas price (like employment/unemployment, driving to/for work.. )
Also I see you read my posts, but you take one item.. like the gas..pay attention to my posts.. gas (yes GAS at 4.50 was ONE of the reasons.. BUT it wasn’t the only one!)
May 31st, 2009 at 9:15 pm
Wonton… (soup)
Let’s see, you’ve looked at MY situation (somewhat) .. and you ASSUMED I lost the job (not my wife), and I spend 50 extra per month on gas.. ok..
You’ve also implied that is all my fault for ““buying at the peak”
I never said it’s not my fault, but not all! Government encouraged buying a home.. the american dream! heck.. look at it now, they’ll give 8000 tax credit + 10000 buying a new home today in cali..
Nah.. it’s the still the buyers fault.. no blame in politics? affecting your average “Joe the home buyer”??? You must be too naive.. to blame it all on me! or the buyers.. GET A LIFE BRO
May 31st, 2009 at 10:13 pm
ex_owner_now_renter,
You made a point. The government is giving people a lot of incentive to purchase a house, like what you mentioned, $8K tax credit and what not. However, if you can not afford to buy a house, no matter what kind of incentive the government gives you, you still can not afford to buy!
I agree with Wanton, you got yourself in this mess, boo hoo. Suck it up and be a man and quit whining about all your problems.
June 1st, 2009 at 7:06 am
So mortgage lending is seizing up while the banks in the bubble states are ready to unleash the moritoria pent-up foreclosures? That sounds like cash purchases at 80-90% off peak will become the new standard, no?
The US/Fed can’t borrow and print money furiously without creating a fear factor that pushes up borrowing costs thru the pipeline. All they can accomplish is continuing punishment of savers.
June 1st, 2009 at 7:51 am
Looks like I brought down the whole economy… by my mistake .. single handed! wow I didn’t know I had this power..
talking about reality ~~ whining
NewHomeOwner..my whole point is.. this incentives.. looks like a DEPERATE move.. it’s a like a poker game… I’m ALL IN! (72 OFF SUIT)..and hope not to get called!
Ok… I might just call it.. I’ve got pocket AA
June 1st, 2009 at 8:05 am
pushed (perceived) inflation (by gov+investors)+ without buyers + incomes not going up + lots of empty homes + high uneploymnet + many other factors = STAGFLATION => LOST DECADE
June 1st, 2009 at 8:08 am
MAYBE WE’LL SEE GAS AT 9$ A GALLON.. BREAD AT $5 LOAF.. MIN WAGE AT 22$.. HMM, I’m going to make 500K a year.. while home they’re still 500K.. ok then I’ll BUY! CASH!
June 1st, 2009 at 8:46 am
ex_owner, you’re blaming the government for your screw up??
Man, that’s just pathetic.
June 1st, 2009 at 9:16 am
Wonton.. You’re taking everything out of context
I’m not blaiming the gov (only). We’re all (banks, gov, buyers) at fault, me included. I just refuse to believe that the fault is all mine! get it?
June 1st, 2009 at 10:46 am
Since we can all agree that FHA is the new Subprime, causing another housing bubble is not going to work and will be very short lived as the economy tanks which cannot support the bubble and there is enough blame to go around; it seems that the only answer is to bring back 125%’s, Smile…Click, ah remember the days when all you needed was a pic (worth a thousand words) to underwrite a loan? Hell, why not make a 150’s, who’s counting?
June 1st, 2009 at 1:28 pm
Why are people still overpriced houses? I live in OC and a house next door just sold for 865,000K and its 1,450sq ft. It amazes me that people will pay $600 per sq. ft. these days after what has gone on.
June 1st, 2009 at 1:29 pm
should say buying
June 1st, 2009 at 1:46 pm
My refi’s 60 day rate lock was set to expire today, 6/1. My supporting paperwork was sent to the bank long ago but no loan processor has yet been assigned.
When I checked the status online today, the bank, (a large Bank in America), had automatically extended my lock for another month, so now it expires 7/1.
June 1st, 2009 at 2:00 pm
NewHomeOwner…you just bought a home..congrats! but what the heck r u doing reading this blog?? a little paranoid of where prices are going?? a little late for that .. you suck it up!
June 1st, 2009 at 4:57 pm
ex_owner_now_renter,
Thank you. Actually, I am very secure with my recent purchase. I stumbled upon this site and conversation via another blog that I follow which tracks housing prices in SoCal. Fortunately, unlike most people, I bough a home, not a house. I intend on living in it and not try and flip it for a quick gain.
Your particular comments throughout these pages are reminiscent of someone with buyer’s remorse. You were caught up in the hype and failed to live within your means, over extended, and ended up in what ever situation you are in today.
Thank you, I have sucked it up. This is precisely why I am a homeowner and you are a renter. Happy renting.
June 1st, 2009 at 5:30 pm
lost track of you
glad to see that you are still in action
June 1st, 2009 at 5:44 pm
NewHomeOwner.. once again… I repeat.. what the heck r u STIL doing going from one real estate blog to another.. after you ALREDY bought the home?? sure you’re secured.. NOT!
June 1st, 2009 at 7:40 pm
ex_owner_now_renter
Does your mind think as disjointedly as your posts? Please pause a minute, compose your thoughts, and then type your post. You seem to be really rambling here.
If you and Wonton want to go at it, great. Just try and keep your thoughts grouped together, instead of wandering thru 3, 4 , 5 posts at a time.
It gets kind of old, real quick, to have to navigate thru all of your diatribes.
June 1st, 2009 at 7:56 pm
ex_owner_now_renter,
The reason I’m here in this blog is to seek reassurance through your ramblings. They make me feel very secure! Thanks!
Happy renting.
June 1st, 2009 at 8:49 pm
WOW..I rather ramble on, and speak my mind, that stay quiet liket you! nothing better to contribute with? come on…what’s the solution this crisis??
- reduce people balances?
- let ex owners come back
- hyper inflate
- do nothing
- do them all?
SPEAK YOUR MIND AND CONTRIBUTE FOOL! We’re already in depression.. and that’s all you got to say.. ????????????????????
June 1st, 2009 at 8:51 pm
1 IN 8 HOMES WITH A MORTGAGE ARE IN SOME PROCESS OF FORCLOSURE!
June 1st, 2009 at 9:15 pm
ex_owner_now_renter
Like I said… Wait more than 2 minutes before you spout more dribble. You could have combined your last two thoughts as one. SEE BELOW:
But no, the poor white trashman has cometh, as indicated in all of your spelling and grammatical mistakes.
Keep on with your rants. I don’t log in to see your posts anyway. I look at this site to study Mr. Mortgage’s charts and research. The only research you would be able to help me with are the benefits of a double-wide, compared to a single.
I don’t need to ramble on and on about how the end of the world is coming. But do what you must. I am sure your intelligence will now dictate that you must post at least 6 posts in a row now.
WOW..I rather ramble on, and speak my mind, that stay quiet liket you! nothing better to contribute with? come on…what’s the solution this crisis??
- reduce people balances?
- let ex owners come back
- hyper inflate
- do nothing
- do them all?
SPEAK YOUR MIND AND CONTRIBUTE FOOL! We’re already in depression.. and that’s all you got to say.. ????????????????????
1 IN 8 HOMES WITH A MORTGAGE ARE IN SOME PROCESS OF FORCLOSURE!
June 1st, 2009 at 9:35 pm
I’ll keep saving, and stop rambling … nothing wrong with our economy..nothing to fix.. I must be imagining things..ok
I’ll keep renting in HB! (and get a 20% discount year after year.. I guess that is happy renting after all)
GOOD LUCK TO ALL YOU HOME BUYERS! You’ll need it..as 1990 prices are coming back!
June 1st, 2009 at 9:56 pm
“Thank you, I have sucked it up. This is precisely why I am a homeowner and you are a renter. Happy renting. ”
Ouch!! Damn, that’s a knee in the nuts.
June 1st, 2009 at 11:51 pm
suck it some more
June 2nd, 2009 at 8:31 am
Let’s all chill out and have a mojito.
June 2nd, 2009 at 11:34 pm
NEWHOMEOWNER:
While ex-owner’s comments aren’t exactly coherent, going around boasting about you being an owner and someone else being a renter is rather retarded.
Frankly as far owning is concerned, you don’t own a damned thing..the bank does. Even then, after you pay off your house, you’ll still be paying property tax.
It’s great that you “own” a home….but let’s not make it into a fantasy that it’s not. It’s a liability at best.
June 3rd, 2009 at 1:21 am
just rent no hassel keep it simple and watch the people beat them selfs up over this bullshit its not worth it just chill .
June 3rd, 2009 at 9:58 am
Noz, you need to read the thread carefully before posting. Newhomeowner wasn’t bragging, he was just giving ex_owner a taste of his own medicine.
Look at this ex_owner guy:
1) He bought a home and lost it. Blames it on the bank, the government, and freakin gas prices for his lost.
2) He wants to be able to buy now. He is indeed infatuated with owning a home.
3) But since he can’t buy now, he wants the market to crash.
4) He criticizes anyone who’s looking or just bought a home.
5) He also criticizes anyone looking to buy but may postpone their purchase until a much later time. Saying they’re easily “manipulated”.
Guys like ex_owner is the reason why people have little sympathy for those that have lost their homes (may not be fair to group them all together). Ex_owner needed a good kick in the nuts. I’m a renter and I wasn’t offended by Newhomeowner’s comment at all.
June 3rd, 2009 at 10:12 am
The tax implications can be substantial. For the many that choose to remain renters, it is likely that their income is not of the level to take sufficient advantage of the itemized deductions.
Also given the trillions that Feds have been printing, inflation is round the corner. And inflation is good for debt holders.
If you can afford it, now is a good time to buy a home to live in. Banks with huge backlog of homes to be foreclosed on are even more reluctant to lend. And even if they lend you can be sure that their valuations and down payment requirements reflect the foreclosed homes that they have in their inventory.
This pretty much reduces affordability on homes. As such home sellers must adjust prices to reflect the credit situation.
June 3rd, 2009 at 11:23 am
Noz and all the other renters on this blog,
I would like to go on the record and say that my comments here were not directed at you. I apologize if you were offended. My comments were solely directed at ex_owner_now_renter, and no one else.
June 3rd, 2009 at 12:07 pm
the new scam will be/is that landlords will not be paying their mortgages while collecting the rent/cash and eventually the renter will be kicked out of their house due to foreclosure and then they will be left scrambling to come up with security/down payment on a new place to rent……its always better to “own” your own home and be in control of your own destiny and if times get rough you can now take out your own personal TARP
June 3rd, 2009 at 1:34 pm
NewHomeOwner:
No need to apologize…this is a forum where debates happen!
I’m not offended in any way at all. Some renters get very sensitive…I couldn’t care less. I just wanted to make sure that buying OR renting are not all that they are cut out to be….they both have positive points and negative points.
The main negative point that most bitter owners like to use is the “well you’re an idiot because you are paying for someone else’s mortgage” excuse. That is true….but that also comes with a lot benefits that owning a home negates.
Anyway, I was simply making a point in a general way.
Ex-owner is a different story altogether.
June 3rd, 2009 at 1:37 pm
TOMH:
My wife and I make well over six figures. The tax implications are overdone.
It makes no sense whatsoever to purchase a home based solely on a tax break….especially in an overpriced market. I don’t find it logical to spend a dollar to get 30cents back.
I’d rather have no tax break and live in a nice, affordable home rather than have a tax break and bury myself in debt.
June 3rd, 2009 at 1:42 pm
Another thing I need to add is this. I don’t know where everyone lives but we live the Los Angeles basin (unfortunately).
We’ve looked for homes on and off for a while now. Frankly, I can’t really think a particular place that is appealing to me in LA to want to settle down and buy and put myself in so much debt.
The “desirable” areas are way overpriced still. And most areas of LA look beaten down, scruffy, and mismanaged. This ain’t no Vancouver or San Francisco that’s for sure.
So even though banks have all these foreclosures, I honestly don’t have the patience and time to filter through all the crap they are selling off…most of which are absolute garbage. And even this market, bidding wars are still going on…of which I want no part of.
If people want to kill themselves over housing, best of luck to them. It’s a hassle that I don’t want nor need to go through. If the time is right, and we find a home we can purchase without a bunch of greedy, desperate idiots wanting to buy the same thing, then, so be it.
June 3rd, 2009 at 4:27 pm
Noz, I’m the same way. I would like to buy a house one day but if I remain a renter all my life, that would be ok too.
June 3rd, 2009 at 6:45 pm
NewHomeOwner..Wonton..
There are lots and lots of people like me.. you’re insulting all of us! That’s ok, karma goes around!
We all know it’s our fault too, but to blame just the buyers that bought during the bubble years..for our economical problems.. it’s wishfull thinking!
Are you going to insult prime borowers too, after they loose their home???
When are you going to insult yourself, when you’re gonna walk in 2 years, from your bad investment in 2009? or because you’ll loose a job, or your wife does looses hers?
or maybe I should have said .. I WALKED AWAY CAUSE I WAS UNDER WATER.. like PARTYBOY.. would that have been better for you? YOU GUYS ARE PATHETIC! uh .. that must hurt your NUTS.. suck it some more bro!!
June 3rd, 2009 at 7:04 pm
Don’t blame the securitization of loans, where mortgage brokers cared about their comission only………and anyone with a pulse got a loan.. no we can’t do that!
Don’t blame the government over relaxed regulation.. for the repealing Glass-Steagall, in 1999… no we can’t do that!
Don’t blame Greenspan, for keeping the rates too low after 911.. no, can’t do that!
Don’t blame specuvestors, for buying multiple homes, and now walking away in masses… no we can’t do that!
Don’t blame the fliper, that sold 56 homes in a year.. no we can’t do that!
Don’t blame home owners that bought prior to buble years, but used their home as an ATM machine… no we can’t do that!
Don’t blame an economy that’s based 70% on consumer… no we can’t do that!
Don’t blame FHA loans now.. for being the new subprime.. with 3.5% downpayment, and LOTS of skin in the game… no we can’t do that!
Don’t blame ARM loans being available with little interest/bait, being available.. other countries only have the 20% down payment loans available… no we can’t do that!
Don’t blame FRAUD, REAL ESTATE AGENTS, OR APRAISERS.. cause their so onest… no we can’t do that!
YES WE CAN! YES WE CAN!
DON’T BLAME ME BRO!.. actually you did, and I don’t mind.. I’ve partially at fault for buying a home during the peak, without being more educated back then…but what’s your reason for you still renting?
ANOTHER ONE IN YOUR NUTS! KEEP SUCKING!
June 3rd, 2009 at 8:31 pm
Noz,
We like your income, and you can definitely string a word or two together. Let’s say you spend some time building your sophistication cred and we’ll welcome you up in the SF Bay Area. Just ditch that blue hat with the “LA” embroidered on the front.
June 3rd, 2009 at 9:30 pm
How’s the rents there Benzi? Cause home prices (not to scare Wonton.. then I need to get my violin..or Wonton/ or the chinese) has only dropped 16%..while others in Bay area droped 44% (like Solano)
Are we still deflating? or inflating? of flat lining…someone may want to know who’s looking to buy a home, not an investment *wink
June 3rd, 2009 at 9:34 pm
I want to add to drop in Bay area in price post, I mean ramble (just to piss off Wow in California) .. all in 1 year! how much further Benzi? are the chinese snatching there too?
June 3rd, 2009 at 9:38 pm
damn.. i’m stim rambling there… any ex owners there that bought at the peak?
note to self: don’t piss off Wow in California, he adds so much insight
June 3rd, 2009 at 9:48 pm
ex_owner, I’m tempted to tell you the obvious… but hell, if you don’t know it by now, you won’t get it.
June 3rd, 2009 at 10:22 pm
Wonton, I think you already stated that there is nothing wrong with 450K home in Diamnond Bar, the chinese are snatching everything, I’m arrogant, I’m the reason for everyone hating people like me, I ramble, but wished me happy renting, I ramble and yes..it’s all my fault! but we can also have a beer when you buy a home to live in..kick my ass back to my place, but you changed your mind cause rates went up .4%
What did I miss?
June 3rd, 2009 at 10:31 pm
btw..(damn this rambleing stuff..Wow must be fuming by now!)
I rather have wiskey with Benzi than a beer with you, he has granite!
June 3rd, 2009 at 11:30 pm
Benzy,
Thanks for the invite. I can’t stand LA. Never have. Stayed here because of family ties and obviously steady work. But as a city, this place is appalling in too many ways that would take days to explain.
I wouldn’t mind SF but it’s REALLY REALLY overpriced. And the work environment is a bit off for me. Too many stuffy characters there work-wise…all these Google types with highfalutin attitudes and latte-sipping issues.
I LOVE the city…it has character, it has age, it has charm. But I don’t know how people cut it up there with it being so expensive. Unless you work for places like Google or a startup or some fancy place that you need to sell your soul to work there.
Am I wrong in my assessment?
June 3rd, 2009 at 11:33 pm
EX OWNER:
Just because you’re underwater doesn’t give you the right to walk away. What sort of screwed up mentality is that? Do you do the same if you are upside down on your car?
Do you do the same if you owe money on your credit cards? Suddenly you feel like filing for bankruptcy?
People like you have damaged this market. They have set a norm for copping out when the going gets tough. You made a commitment when you purchased your property…you signed on the dotted line did you not?
So what makes you special in terms of walking away when the deal isn’t to your liking?
June 3rd, 2009 at 11:59 pm
Noz,
PEOPLE LIKE ME EXIST FOR A LONG TIME NOW.. WHY IS THE PROBLEM SO BIG NOW NOZ??????????
I didn’t walk away cause I was underwater.. I tried to explain that many times… I walked away because a monthly minus budget, loss of income, high gas prices, maxed out credit cards, savings spent.. HOW MANY TIMES DO I HAVE TO MENTION IT?
ALL THOSE REASONS DON’T MATTER TO WONTON..but it’s ok for PARTYBOY to move on… and WONTON can understands that, but not mine!..so that’s why I said, I should have said I’m walking away cause I’m underwater.. again..is that better WONTON??
I don’t expect everyone to remember all my posts over the last few months.. nor do the research.. It’s all good, I undertand..
btw, legally when someone walks away, bank takes the collateral/the house.. they took mine.. also when not paying the car note, they take it away… when not paying the credit card, it gets canceled..
NOTHING NEW NOZ… part of doing business, right? JUST LOOK AT THE NUMBERS… WHEN WAS IT THIS BAD BEFORE? what change in our economy to get this many people forclosed?? people like me?? are we certain age?are we so much different, or something else took place, that some of you narrow mind can’t understand??
June 4th, 2009 at 12:10 am
EX OWNER:
The point is there’s a difference between walking away because the deal doesn’t suit you and walking away because you had a misfortune (lost a job, illness, etc).
If someone cannot legitimately pay because of loss of income, then that is understandable. Even if you want the home, you’ll not be able to afford it.
But to put it mildly, the douche bags who walk away because they don’t feel like paying for a mistake they made…screw them. They should not only have everything taken away, they should not be allowed to step into another home ever again….ever.
Since you seem to be in the camp of loss of income, I can’t say that I can blame you for finally giving up. But I wouldn’t blame high fuel prices on you walking away.
IF you walked away because fuel prices doubled, then you have a serious budgeting problem and you probably purchased something WELL above what you should since a few hundred dollars tipped you over….is that the case? I doubt it.
There’s a great deal of inertia inherent with the failure of the housing market. People like have existed for a long time…people always lose income and have to give up their belongings. But NOW the difference is people who DON’T NEED TO give up their belongings are still deciding to walk away…that’s why the problem is so big.
It’s THESE people that seriously need to fry.
June 4th, 2009 at 7:03 am
and thats why Principal Reductions for EVERYONE is the only solution, otherwise people will continue to walkaway and hand the keys to a LIABILTY back to the scumbag banks who got us into this PONAZI SCHEME
June 4th, 2009 at 7:24 am
Another good article on you blog! I always come back for me. Thanks.
June 4th, 2009 at 8:29 am
Hi Mark, thank you for your continued market research!!
It appears from this post that our Government has learned nothing and by backing the lenders with tax payer money the lenders will never learn anything either. We will go through even more defaults as a result, but at a higher and higher cost to the tax payers in this country… UGH!!!
June 4th, 2009 at 12:47 pm
“ALL THOSE REASONS DON’T MATTER TO WONTON..but it’s ok for PARTYBOY to move on”
ex_owner, partyboy moved on but he didn’t blame others for his mistake like you are. You can’t seem to get that through your head.
In almost any situation, if you look hard enough, you will find enough blame to go around. But unless you are willing accept FULL responsibility for YOUR action, you will come across as a spoiled irresponsible jerk.
This is you:
1) I bought a home at the peak, because the government was pitching the “American Dream”.
2) I bought a home because the realtor told me to “buy now before it goes up”.
3) I qualified for a home because the bank didn’t verify my loan application.
4) I lost my home because of ga…gas…of gas pri…hahahehe…nevermind. I can’t keep a straight face saying it. Gas prices, ok I said it. I lost my home because of gas prices.
5) I’m fat because of those damn McDonald’s commercials.
6) I’m an alcoholic because liquor stores are everywhere.
7) I’m a drug addict because my friend, the drug dealer gave me discounts.
So you see, I’m only PARTIALLY responsible for my problems.
June 4th, 2009 at 1:08 pm
Javagold keep smoking the pipe.. that WILL NEVER HAPEN! You just want a lower balance cause what you don’t blame anyone? or cause you’re treating to walk and trash the place in your way out? or cause you’ll get your TARP either way??
PLEEAAAAAAASSSSSSSSSEEEEEEEEEEE!
wonton, so no blame on cicumstances at all.. huh? Go tell your boss you want 200K sallary.. take control.. don’t blame it on your weak education… or you if you get LAID OFF.. it’s ALL YOUR FAULT! ok? MORAN!
GO GET BLASTERED AT THE BAR.. AND WHEN YOU’RE SUPER DRUNK..GO GET MORE DRINKS.. IT’S NOT LIKE THE BARTENDER WON’T SERV YOU.. they’re job is to give you drinks.. no limit right?
GO GET MONEY OUT OF AN ATM.. see how much you can get in one day.. no limit there right?
STRAWBERRY PICKER GETS A 700k LOAN.. ON 30k SALLARY.. NO LIMIT THERE RIGHT?
why were the brokers doing FRAUD, and DIDN’T refuse loans.. that had no way of making it! it’s the straweberry picker’s FAULT!
GO BACK TO SCHOOL! FOOL! WITH YOUR LONG FREAKING FACE!
June 4th, 2009 at 1:12 pm
Are you going to blame your wife when you get herpes cause she cheated on you.. but you didn’t know? TAKE RESPONSABILITY.. GO SEE A DOCTOR, don’t blame your wife!
KICK IN THE NUTS FOR YOU
June 4th, 2009 at 1:17 pm
?????????????????
3) I qualified for a home because the bank didn’t verify my loan application
????????????????????
WTF ???????? BANK GIVES MONEY WITHOUT VERIFYING??????
June 4th, 2009 at 1:19 pm
YOU’RE LAID OFF WONTON…AND IT’S ALL YOUR FREAKING FAULT OK!
JAVAGOLD AND THE REST OF BALANCE REDUCTIONS… IT’S ALL YOUR FAULT IT, DON’T BLAME ANYONE.. SUCK IT UP .. OR LOOSE THE HOSUE… WHY BLAME THE BANKS??????????
DOUBLE STANDARD HERE!!!!!
wonton… how much you want to bet.. I’ll buy before you do?
June 4th, 2009 at 1:22 pm
just to piss you off… I’ll snatch one from diamond bar before your chinese friends do!
June 4th, 2009 at 1:24 pm
Where’s Wow in California.. with all his input? I’M READY TO HEAR FROM THAT MORAN TOO
June 4th, 2009 at 1:34 pm
That would be spelled:
moron [mawr-on, mohr-]
–noun
1. a person who is notably stupid or lacking in good judgment.
2. Psychology. a person of borderline intelligence in a former classification of mental retardation, having an intelligence quotient of 50 to 69.
ex_owner_now_renter: I assume the intelligence quotient also is applicable to your credit score.
June 4th, 2009 at 2:29 pm
second useless comment from Wow! idiot!
June 4th, 2009 at 3:05 pm
EX OWNER:
You say you qualified for a home because the bank didn’t verify your income.
OK…so doesn’t that ring a bell in your mind at all? Do you not even concern yourself with the monthly payments and what will happen to them if variables change? Such as? Say interest rates? Losing a job? Losing your health? Etc?
I understand that some things are unforseen…actually a great many things are. But sitting in front of a loan document and about to sign it isn’t.
Should you not have run the numbers to see what you can and cannot afford….? Regardless of what the bank said you qualify for?
The bank also told us that we qualify for a 1.5 million dollar home…do you think I’m that stupid to buy one?
June 4th, 2009 at 7:34 pm
ex_owner_now_renter,
I just want to say Thank you! Thank you for your endless rants and the countless hours of entertainment it provides me. Keep it up “BRO”! Keep sucking it too!
with much love,
NHO
June 7th, 2009 at 9:57 am
I can defend the gas price deal, would you say paying $2,000/mo for gas is reasonable? I do not, you cannot do without it, cannot work without driving. We paid over $3500, in one month for gas last april(08)…. do you think that wouldn’t affect your personal life? Paying more for fuel than a mortgage payment is insane. If you don’t think fuel prices have anything to do with people(or business) overextending themselves your nuts. Then add the interest people pay for the unexpected cost in fuel etc., then you can see some of the things that lead to where we are now. I feel sorry for anyone who bought a house in the last 5 years. You will be sorry if you don’t buy for cash or have cash to escape in the event of an emergency, ANYONE that financed this year or last is going to be stuck fo a very loooong time. God forbid if you lose a job or need to move. I’m glad you bought a “home” but you may not be glad in the future(for your sake I hope it worksout) You are up-side-down NOW buddy, that is a fact! And will be worse in 1-2 years. So take your high horse and ignore where prices are going, ’cause your screwed! Sorry that is life, you are the next runner up on the
“American Loser” show
June 7th, 2009 at 10:13 am
Follow up, and i forgot to mention to newhomeowner; how will you feel when you are 50% down from todays prices?
How would you feel if they NEVER return to your purchase price? You don’t care?
Then you bought a prison not a home.
June 7th, 2009 at 9:58 pm
Mike:
First off…what the hell do you do to spend over $3500/month on fuel? If you tell me that it’s because you own 2 or 3 SUVS to drive your kids to school…then frankly too freaking bad. Adjust your lifestyle, drive less, do whatever others do to cut fuel costs.
Should I give a sh^t about the douche bags who go around in Suburbans and Escalades and Hummers to drop of their kids to school when they could do with a 25-30 MPG sedan? Too freaking bad they are spending money of fuel and over extending themselves. If they had half a brain, they’d have been wiser.
We barely break $250/month for fuel costs…so whatever the hell you are doing…short of having a construction company or something…is completely retarded.
Secondly, just because you are upside down doesn’t mean you should walk. If you made a bad decision in life…as many did KNOWINGLY in this market (otherwise known as gambling)…do you expect others to bail you out?
Let me ask you something. You go to Vegas, you make a bet…you lose. What do you expect the casino to do for you? Give you a free room, dinner, and your money back?
So are you being sarcastic or serious?
June 8th, 2009 at 8:33 am
No, the fuel is not for hummers etc. either way. My actual fuel cost was over 2k. If fuel was $1 per gal; my cost would have been near $500/mo. in 1998 the economy was no better than last year,and average MPG of cars was not much worse than most newer MPG standards. Wages are no better today than in 1998, so why should the fuel cost about 4x more? Why would gas be 1.40 in Dec 08? Theft at $4.50. simple.
I know some very small construction companies that were paying 8k/month fuel cost for only a few trucks. It does not increase your income. And in a bad economy you cannot increase your prices to cover the added cost. Also many times you are requred to do fewer, smaller jobs increasing your driving. None of these things are the fault of the people, It is a direct result of the economy. Individuals only have a small amount of control over costs and waste reguarding their habits.
Most people buy gas because it is required, not because they feel like spending money.
Either way, do you think fuel did not cause a problem for many people and business’?
Do you really think that if a buyer in 2006 put down $100k and is now upside down $250k is irresponsible? It is happening every day.
The problem with your logic is that you are only blaming the individuals not the overall economy or gov. Like ex owner said he is partially responsible but only to an extent.
Like I said; If you bought a home in the last 12 months and thought you were “secure” etc. and your home goes down another 50% from where you bought and NEVER goes back up are you irresponsible?
Fact of the matter is: prices are determined by lender guidelines and terms. NOT PRICE
The general public is being robbed 1000 different ways. Most of which we have very little control.
Where do you think prices would go if terms were 2% int only 580 FICO 0 down, no limit on the number of homes or DTI?
Where do you think prices will go if terms are 30% down PITI 720 FICO 28%DTI?
hummmmm?
People that bought when terms were tighter 20 years ago were no more responsible for prices going up than a person buying in 06 and prices going down.
The banks control the TERMS.
Personally, I think they should keep changing the guidelines over the next 10 years, for example. in 2009 rate 5% 10% down 650 fico, 2010 rate 6% 15% down 700 fico, 2011 rate 7% 20% down 720 fico,2012 rate 8% 30% down 740 fico ETC. that way nobody could ever sell or refi.
Sounds fair? That is what has happend to people that bought in the last 5 years. Change the terms and blame the people.
Forget the move up buyer, game over….
June 8th, 2009 at 9:46 am
Mike,
It’s called self control. Right, the government, banks, etc dangle all these incentives for buyers, however, if in the end you can not afford it, you can not afford it. It wasn’t like the real estate agents, banks, government all held a gun to your head forcing you to sign the mortgage. You made the choice out of your own free will.
This point has been made through out this blog. My dream is to own a Ferrari. If the dealer came up to me and offered an $8,000 credit and the government said it would give me a tax break and the bank would give me a good rate, in the end, can I really afford to buy it? I need to think about the ramifications, not only in terms of the initial cost, but also the cost in maintenance, etc. Yes, owning it would probably make me really happy, but in the end, I would be over stretched. If i chose to buy it, it would be a “gamble”.
I’m sorry for your situation, but in the end, we all make choices out of our own free will. Some of the choices are good, some are bad and we need to live with it.
June 8th, 2009 at 9:56 am
The banks/lenders/servicers are doing PR’S……just got someone 136k PR on their 1st mortgage, and settled a 92k 2nd mortgage for 9k…..
June 8th, 2009 at 12:10 pm
MIKE:
If a normal person who owns no business is using $2K a month of fuel, they deserve to lose their home. That’s the ludicrous and completely unnecessary.
For me to have fuel costs of $2k a month, I’d have to spend in a DAY what I usually spend in a month…EVERY DAY for the whole month.
Businesses can also write that off..I cannot.
Lower your fuel bills. Drive a smaller car, drive less. Walk, take the bus, bike, whatever.
June 8th, 2009 at 1:59 pm
Nevermind. Sometimes life is more complex than that. Write offs don’t pay bills. thanks for your insight
June 8th, 2009 at 2:24 pm
Please stop using cars and gambling as analogies to this issue- they are not even close.
Loanmodchick- who were the servicers ? and what was the main reason for PR? also were there strings attached?
June 8th, 2009 at 2:32 pm
bought at the wrong time-
Servicers were Litton/Popular.
Main reasons was dramatic drop in income and CLTV at 140%
Nope, no strings attached!
June 8th, 2009 at 3:08 pm
wow thats awesome!! 1 home owner saved now 100,000’s to go- you go loan mod chick- save the world lol
June 8th, 2009 at 3:11 pm
Yep! One person at a time!
I also got him a 2% fixed for 40 years for 5 years, adjusts 1% each year; locks in a 6 at year nine. PITI payments.
: )
June 8th, 2009 at 4:41 pm
MIKE:
Indeed…nevermind…because what you claim makes no sense at all.
bought at the wrong time:
Yea they are the same….deal with it.
June 9th, 2009 at 10:04 am
NOZ:
“Let me ask you something. You go to Vegas, you make a bet…you lose. What do you expect the casino to do for you? Give you a free room, dinner, and your money back?”
No you don’t and niether does anyone else who gambles at a place where you GAMBLE.
NOZ:
Secondly, just because you are upside down doesn’t mean you should walk. If you made a bad decision in life…as many did KNOWINGLY in this market (otherwise known as gambling)…do you expect others to bail you out?
Yes – yes it does it is a life choice- walk if you have to- that has nothing to do with you NOZ. It isn’t asking anyone to bail them out. It was the papers signed and the agreement between the bank and the buyer. If the bank comes looking for a handout because they made a bad gamble then you should take your anger out on them. They want your tax money Noz, not anyone else.
June 9th, 2009 at 10:32 am
bought at the wrong time:
So buying a home with your eyes closed in a volatile market isn’t gambling huh? You just chug along and believe everyone else and do whatever everyone else is doing right? Just copy your neighbor and hope to make a buck…is that it?
Regarding bailouts and walking…I bet most walkers would love for banks to modify their loans at other people’s expense…precisely what this loan mod/stimulus BS is about.
Walkers like yourself went into a home purchase probably with little to no proof of income…because most of you didn’t give a damn about the consequences…just a quick buck was on most peoples’ minds right?
Now that folks who really want to buy (i.e. don’t have a down payment, or make less than average), they are shunned by banks because they don’t make enough, have little to money down, etc….essentially the market was completely messed up by the former bunch of charlatans who went around getting loans and cash outs to buy and flip.
I’m angry at the banks too…but that doesn’t get crook home owners and buyers off the hook either. Doesn’t any read contracts they sign anymore? No sense of obligation and responsibility? I don’t get it.
June 9th, 2009 at 10:53 am
Don’t let my name fool you Noz- or should I say don’t assume anything about me.
I really don’t think we are too far off from each other in thougt- It was the charlatans (all of them) that had a huge hand in this- But you say:
“Now that folks who really want to buy (i.e. don’t have a down payment, or make less than average), they are shunned by banks because they don’t make enough, have little to money down, etc”
That was the problem, in any normal market they wouldn’t have qualified in the first place. But the lenders got creative and wah lah- here we are-
I don’t think anyone and I mean anyone should get bailed- however- If I could choose I would choose the public- it our money-all of ours- the gov’t doesn’t earn money they just collect it from us. All of us.
Keep being callous Noz that fixes everything
June 9th, 2009 at 10:57 am
Being callous has nothing to do with it. People who tried to act like crooks should be screwed over. Regardless of whether they are individuals who work in banks or are shady people trying to buy or sell a home.
You want to blame everything on lenders…but what about the person signing on the dotted line? Did the lender have a gun to that person’s head forcing him or her to sign? Did the lender force that person to draw out hundreds of thousands of dollars of fake equity and so they go and run to the nearest BMW dealer and buy toys?
Keep pushing the responsibility to the lenders Bought at the Wrong Time…that also fixes everything.
June 9th, 2009 at 11:15 am
Is your sole porpose just to start a fight?
no the lenders didn’t hold guns but they could have just said no. They could not have gotten so greedy and created a way for anyone to qualify. They were supposed to make sure that people who signed on the dotted line were on the up and up.
Thats the problem- yes there were flippers and crooks and stated income liars- but who let them do it? No one put a gun to the lenders heads to make more demand. They were in charge.
I believe the topic was the day after the intrest rate spike- not “Noz please give us your nasty opinion on everyone you hate”.
June 9th, 2009 at 11:38 am
It’s called personal responsibility…just because one party allows you to do something that doesn’t make sense does not mean you should do it.
This is a concept that most homeowners who are in trouble or flippers who want a bailout conveniently ignore.
Personal responsibility is something most people definitely get offended about when mentioned….as witnessed here.
June 9th, 2009 at 1:07 pm
NOZ Anyone who to stops paying(or can’t pay) due to increased interest rates, job loss, poor underwriting, bad loans etc. are the reason for prices declining. The banks that wrote the loans and the people who signed for them are reason the market is so messed up. The minority of failures are causing a drop in anyones property value with-in a 1 mile radius.
I comp houses for banks all day evey day.
Sometimes(very often) homes are sold for way less than they would sell for if they waited more than 1 day on the market for a buyer. But due to the banks being in distress, thier poor lending practices etc. they no longer care. They just need any money they can get as soon as they can, combine that with the fact they have insurance on other properties in the same area and know distress sales will cause more defaults(this is a fact). They have an incentive to cause defaults. Same goes for credit cards, they cut the lines and jack the rate, knowing it will cause more defaults, inturn paying them interest & fees on money they knew they should haven’t lent.
Your logic is reasonable, but the system and people involved area not.
Therefore individuals do what is in their best interest, just like the banks.
If the gerneral public could “save or create” like our gov. then , we could simply say we are saving money by not paying bills, or we can create income by not having a job and living for free until they kick you out.
June 9th, 2009 at 1:38 pm
MIKE:
I don’t think we disagree.
Let’s be clear – for someone who:
LOST A JOB
HAS HEALTH ISSUES
HAS LIFE CHANGING ISSUES
IS THROWN INTO TRULY UNFORESEEN CIRCUMSTANCES
– if you have to walk away, then these reasons to do so.
However – for someone who:
BOUGHT A HOUSE TO FLIP
PURCHASE A PLACE THEY COULD NOT AFFORD KNOWINGLY
DID NOT READ THEIR CONTRACT AND NOW CRY WOLF
DID NOT TAKE THE TIME TO KNOW WHAT THEY ARE GETTING THEMSELVES INTO
DECIDES THAT BECAUSE THEIR HOME ISN’T WORTH WHAT THEY PAID FOR IT SO NOW THINK THEY ARE ENTITLED TO NOT PAY
– these people need to lose everything and not be allowed to buy another home again.
I am only speaking about the client side. I don’t want to get into the charlatanism and crookery of the banking and money industries.
June 9th, 2009 at 3:33 pm
Noz, actually if banks were smart they would allow a person to buy, who defaulted and lost $200k, say they had bought at $400k sold for $250k.(plus misc. costs);
let them buy a home from them for example at $100k and if the value goes up to 200k someday they have something to collect. Obviously this would only work in markets where the current sales prices are well below what the home should sell for in a normal non-distressed market.
Instead they discount them to 50-70k and sell to investors that will never give the bank another cent. Without a home the former owner most-likely would never have income or assets to pay, even if they garnish wages or take other worthless personal property.
This could only happen at the bottom of the market since they may just walk if the home drops further
I see houses that sold for 400k, selling for $100k ,I’m talking about over 2500 st ft homes built in the last 5 years. Not just 1 or 2, that is what the maket is, in some areas of Vegas…
No doubt the current sales price is too low. (But, unfortunatly will go lower)
Someone that can buy for way under replacment cost most likely would have a very good increase in value 5-10 years from now. Unless the economy keeps getting worse.
Like it or not, homes (were) the biggest store of wealth for many decades of people. After a very large correction(now playing at a neighborhood near you) they will be again.
You know as well as I do after prices bottom some bank will start the whole game over. It’s in their best interest. Leaving out the people who default will only reduce any chance of a bank being repaid.
Another way to look at it would be: bought @ 400k walk away lose $200k, assume the home will never go to $400k again.
Buy 2 years later same home for $120k, if the home goes back up to $300k the buyer is better off than paying interest on 400k loan, and would have the ability to sell at a profit of 150k(120-300-costs) add the savings in interest, plus the $150k profit they could pay the loss incured by the original lender. Not to mention the original home couldi’t be sold until they paid the diff. and probally would have defaulted anyway. It would be a much better credit risk for the bank than keeping the $400k house. If the $400k house stays at $120k and never goes up the buyer saves on the interest payment over 30 years. Since we’re gambling, it’s almost stupid to say in the original home.
Of course the numbers change based on a million different factors. Really the people who bailed first(most irresposible) while prices were still near the peak are better off(if they didn’t buy too soon again). They might have only ended up losing 50k for the bank. Someone bailing now may lose 350k. In this declining market the longer people try to save their home the more they lose if they default. They are punished for making more payments. In a declining market the most responsible owners are punished.
Since housing is a gamble this would be the best way to look at it.
June 9th, 2009 at 4:49 pm
Property prices are going to sink like a stone.
June 20th, 2009 at 12:51 pm
If you want to see a reader’s feedback
, I rate this article for 4/5. Decent info, but I have to go to that damn google to find the missed bits. Thanks, anyway!
p.s. Year One is already on the Internet and you can watch it for free.
December 13th, 2009 at 12:32 pm
Once the due date has passed and there
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May 28th, 2010 at 9:57 am
So long as I don’t have to pay the bill for these crook buyers/sellers/walkers/cheaters, I couldn’t care less where the interest rates go.
As far as I’m concerned, any loser who walks away from a mortgage when they could pay for it should be thrown in jail…along with the bank CEO’s and the rest of the Wall Street charlatans like Goldman’s head douchebag. Wow…what a crook that guy is.
Enough giving away crap to people….if they want to do that, then EVERYONE should be entitled to it…not just crook homeowners.
August 14th, 2010 at 10:24 am
I say no more real estate bubbles!
September 1st, 2010 at 4:44 pm
The reason why the economy is in this sorry state is because of the real estate bubble then burst. They’ve should of just raise the interest rates and everything would have been avoided
September 2nd, 2010 at 1:52 am
Banks are not lending money anyway. Taxpayers bailed them out and they received Tarp funds. Instead of lending that money out. They are sitting on it.