The more we learn about the foreclosure settlement, the more we see how much of a gift to the major banks this agreement really was. First, they no longer have to deal with any liability for their foreclosure practices. Second, they are allowed to credit their losses on short sales against the settlement payments, so they won't actually have to pay any cash. And now today we find out they managed to get the administration to agree to allow them to steal from investors with first liens on properties where the banks have second mortgages. It's outrageous. I don't think it's legal. But banks managed to get this perk as part of the settlement. Banks Win Reprieve on Home Equity…[READ MORE]

February is historically a bad month for real estate prices. The deals that close in February were negotiated in December and January, which are usually the weakest months of the year for real estate. And since this last fall and winter were particularly bad, the drop in February is not surprising. Bottom for 2012? Shevy tells me the low interest rates and relatively affordable prices are motivating many buyers. Shevy and his team have been very busy since the first of the year. With the declining inventory we witnessed in January -- an extraordinarily unusual occurrence -- conditions are ripe for a spring rally. If lenders release more product -- which they should -- I expect to see sales volumes…[READ MORE]

One of the cartoons I post when appropriate is called the National Squatters Entitlement. It speaks to a truth about people's attitudes toward home ownership. People convince themselves they own property even if they have no equity claim. Their names may be on title, but all they really own is their loan. I discussed this at length in Money rentership: housing and the new American dream: The mortgage encumbrance gets to the core of the unnoticed change in people’s concept of property ownership; people who have little or no equity stake in a property have no ownership despite what legal documents may say. What they have is money rentership and the illusion of home ownership. Emotionally, they still feel like…[READ MORE]

I have written a few times about flopping: realtors who sell REO for under-market prices to favored buyers. (see Flopping: unscrupulous realtors deceive lender clients and profit from fraud, Floppers: realtors who profit by ripping off their lender clients, and most recently realtor flop in San Juan Capistrano.) A flopper doesn't get the highest and best price for the property. The practice of flopping is unethical because the agent shirks their fiduciary responsibility to the seller to favor a buyer, most often for a kickback or promise of a future commission on the flip. Flop sales exasperate buyers who miss out on obtaining the property. Many buyers would have paid a higher price if given the chance, and they feel…[READ MORE]

Housing: The 6-Year BustFebruary 28, 2012 -- by Jacob Goldstein NPRCase Shiller 20-city composite, not seasonally adjusted U.S. home prices hit a new, post-bubble low at the end of last year, according to today's Case Shiller numbers. A few noteworthy details: The housing bust is now nearly six years old. Understandable, perhaps, given the size of the bubble and the endless, painful slog through millions of foreclosures. Still, six years is a long time. There are still millions more foreclosures to go. There could be 1 million foreclosures this year, and another million next year, according to RealtyTrac, a company that studies this sort of thing. In a normal year, there are fewer than 500,000 foreclosures. There is no longer…[READ MORE]

Fed's Bullard: Not Feasible,Desirable To Reflate Housing Bubble Friday, February 24, 2012 - 11:36 -- By Vicki Schmelzer NEW YORK (MNI) - The U.S. housing market continues to faces significant "headwinds, St. Louis Federal Reserve Bank President James Bullard said Friday. Bullard offered his observations on a piece "Housing, Monetary Policy and the Recovery," co-authored by Michael Feroli, chief U.S. economist at JPMorgan Chase, Ethan Harris, co-head of global economic research at Bank of America Merrill Lynch, Amir Sufi, professor of finance at The University of Chicago Booth School of Business, and Kenneth West, professor of economics at the University of Wisconsin, which was presented at the Forum, sponsored by the Chicago Booth School of Business. "The authors counsel that…[READ MORE]

The housing bust began when subprime borrowers were unable to make payments on their 2/28 loans. Subprime borrowers have less resources than other borrowers, so when they experience any financial distress, they immediately implode. The collapse of subprime in 2007 led to a large number of foreclosures in 2008, and housing began its death spiral. I have been bearish on high end properties since the beginning of the housing bust. So far, reality has not met up with my most dire predictions. Despite this fact, my basic analysis of the situation hasn't changed. The high end is going to come down, and it will be very painful for those who have been spared to worst so far. Market observers who…[READ MORE]

Many issues compete for our attention in the wake of the housing bust. In the sidebar of the blog is a list of topics of interest I write about frequently. However, the importance of these issues is not equal. Underlying most of them is the central problem of the housing bust: moral hazard. Every decision we make in life has consequences. If we save regularly and invest wisely, the consequences are wealth and peace of mind. If we spend foolishly and speculate wildly, the consequences are periods of feast and famine, delusions of grandeur, enormous entitlements, and when times are tough, unbearable stress. Positive results come from good decisions and visa versa. That's how people distinguish wise from unwise and…[READ MORE]