Archive for March, 2012

When subprime borrowers defaulted and lenders foreclosed, the bottom fell out of the housing market. As the distress from toxic mortgage debt worked its way up the housing ladder, each subsequent rung collapsed. Only the upper tiers remain inflated, although probably not for much longer. With the collapse of the bottom of the market, the equity vanished that is necessary to sustain the upper levels of the housing market. In order for the housing market to find a stable bottom, first-time homebuyers must come forward to absorb the distressed inventory. Unfortunately, the typical pool of first-time buyers composed of recent college graduates can't find jobs, and many are burdened with so much student loan debt they can't qualify to buy…[READ MORE]

Last fall I documented Desperate for cash: BofA cuts 30,000 jobs, ramps up foreclosures and Bank of America foreclosure notices increase 116%, spring 2012 rally doomed. It's spring now, and although current bank inventory on the MLS is low, the pipeline of foreclosures is still quite large, and now properties B of A began foreclosing on last fall are already coming to market (see today's featured property). It has begun. Home repossessions set to jump in 2012 By Jon Prior Analysts expect between 900,000 and 1 million homes will move from delinquency into REO in 2012, back to levels seen before the robo-signing slowdown. Servicers moved roughly 800,000 properties through the foreclosure process and into REO liquidation in 2011, according…[READ MORE]

Treasurys plunge as traders, Fed bet on economic strength; mortgage rates may creep up By Associated Press, Published: March 14 WASHINGTON — The bond market is betting on a stronger economy. Prices for U.S. Treasury debt plunged for the fifth straight trading session Wednesday, and the yield on the benchmark 10-year note spiked to its highest level since October. Money poured out of bonds and into stocks after rosy words on Tuesday from the Federal Reserve gave traders confidence that the economic recovery is strengthening. Major stock market averages are at or near four-year highs. Treasury yields — and interest rates that take their cues from Treasury yields, including mortgage rates — remain near all-time lows. So while mortgage rates…[READ MORE]

B of A is working to obtain maximum public relations value from the settlement agreement. Based on articles like this one, it looks like B of A is the most generous (and stupidest) bank on the planet. BofA to slash mortgage balances by $100,000 or more By Les Christie @CNNMoney March 9, 2012: 3:09 PM ET NEW YORK (CNNMoney) -- Bank of America will significantly slash mortgage balances for as many as 200,000 borrowers. As part of the $26 billion settlement reached between the five major mortgage servicers, the federal government and the attorneys general of 49 states and District of Columbia last month, Bank of America (BAC, Fortune 500) customers who qualify could see their mortgages reduced by an…[READ MORE]

Rents have been rising in Irvine and in Orange County since early 2010 when we began to pull out of the recession. The trick is to identify the reason for this increase. If it's due to a recovering economy, then the recent rent increases are normal and sustainable; however, if it's due to another cause, the recent uptick in rents may be a bubble waiting to pop. Some amount of the increase in rents is likely due to improved economic conditions. For as bad as the recession was, and for as weak as the recovery has been, the economy is growing. But why else could rents go up? The plethora of foreclosures in Orange County forced many former loan owners…[READ MORE]

I developed the OC Housing News Market Newsletter to provide information on the local housing market useful to potential homebuyers. I believe people make good decisions when given good information. We all know the information provided by realtors on the housing market is manipulated to motivate buyers to act. realtors numbers are rarely accurate, and like the boy who cries wolf, nobody believes the realtor who cries buy. I also follow a philosophy of constant improvement. When I first published the OC Housing News Market Newsletter, I assembled a great deal of data and struggled to find a coherent way to present it. Creating fancy charts and graphs is easy. Presenting and interpreting data in an easy to understand manner…[READ MORE]

Despite a vigorous public relations campaign by both government officials and bank representatives, the sheeple are angry over the terms of the bank settlement. Loan owners are upset because they are not getting the break the believe they deserve, and prudent borrowers are upset because they know others are getting handouts. The only people who are happy with the settlement are bankers, and perhaps government officials who look like they did something. Rage grows over mortgage deal By Les Christie @CNNMoney March 13, 2012: 11:00 AM ET NEW YORK (CNNMoney) -- As more details emerge about the massive $26 billion foreclosure settlement between the five biggest mortgage lenders and the states' attorneys general, a growing number of borrowers are realizing…[READ MORE]

House prices still seem very high in Orange County. The most recent median home price reading is $375,000, and houses sell for around $260/SF. Many potential buyers still lament the high cost of housing in Orange County, and compared to the late 1990s, house prices are much higher than inflation alone would dictate. So are house prices still too high? Compared to the 1990s, house prices are too high, but compared to the peak of the housing bubble in 2006, prices are much, much more affordable, particularly on a monthly payment basis. Consider this, in July of 2006, mortgage interest rates were 6.76%. Today they are 3.88%. Further prices are about 30% to 40% lower. Since about two-thirds of all…[READ MORE]

The lending Ponzi scheme that inflated the housing bubble popped in August of 2007 with a credit crunch. Lenders realized their collective folly and abruptly stopped lending to prevent further losses. Without the lender air needed to sustain the bubble, house prices abruptly collapsed, and millions of borrowers who never could afford their payments gave up trying. The surge in mortgage delinquencies far outpaced the ability of lenders to process foreclosures and absorb them in the resale market. Rather than accumulate 10 million REO or push house prices back to 1990s levels through an MLS fire sale, lenders decided to allow millions of delinquent borrowers to occupy properties they were not paying for. Shadow inventory was born. Overhead supply of…[READ MORE]

As most regular readers know, I believe the National Association of realtors frequently tells self-serving lies. They try to portray their actions as serving the market or the interests of loan owners, but their first priority is themselves and generating commissions. When the interests of the market are in conflict with the self-serving interests of realtors to generate commissions, the statements and policies of realtors will always favor their own interests. Today's article is a clear example of their narrow, self-serving focus. Government Foreclosure to Rental Pilot Programs Not Needed in Most Markets, Say Realtors(R) March 1, 2012, 3:40 p.m. EST WASHINGTON, DC, Mar 01, 2012 (MARKETWIRE via COMTEX) -- Housing markets are complex and varied, and a government pilot…[READ MORE]

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