Archive for March, 2013

Of all the people who've played a role in the housing bubble and its aftermath, the one who continually impresses me is Edward DeMarco, conservator for the GSEs. He is a career bureaocrat who was placed in charge of the GSEs when they were taken into conservatorship in 2008. He has steadfastly protected the interests of taxpayers much to the chagrin of politicians on both the left and the right. The left hates him because he refuses to give loanowners free money through principal reductions. The politicians on the right who've sold their souls to banking interests don't like him because he pursues buyback claims against the major lenders who underwrote shoddy loans. The one commonality in all his decisions has…[READ MORE]

Now that prices are going up again, the bulls are regaining some of their previous smugness, and some are trying to revise history about how wrong they were over the last six years. Today I want to take a look back at the insanity of the housing bubble and remind everyone that when they hear the kool aid intoxicated bellow their bullish arguments and sentiments, many of the bulls pontificating today were completely and totally wrong for the last six years -- and I don't mean just a little wrong -- most of the bulls were wrong about everything. They were wrong about the sustainable rate of price increase. They were wrong about the direction of future prices. They were…[READ MORE]

Loanowners across the country are deeply underwater, and they have been offered numerous bailouts in the form of loan modifications and assistance programs, refinance opportunities, and interest rate subsidies, plus plenty of lip service from politicians who feel their pain. This has all been a ruse, a diversion from the government's real efforts to save the banks. Today's featured article is about the poor loanowners who are still $1 trillion underwater. Some are so hopelessly underwater that they won't see equity again in their lifetimes. They are renting from the bank with a feeble hope of equity in some far off future that will never come to pass. This false hope is important as it keeps the sheeple paying rather…[READ MORE]

The cost of ownership numbers proclaim now is a good time to buy. However, the available inventory is so low that actually purchasing a home is nearly impossible. As I've written many times, the banks have engineered much of this shortage by endless can-kicking through loan modifications and refusing to foreclose on delinquent mortgage squatters. Lenders benefit from rising prices because they recover more capital when they do foreclose, and loanowners benefit because rising prices also makes it possible for them to sell without the lingering debt issues of a short sale. It's only future buyers that get screwed, and obviously, nobody cares about them. In a normal market, there is not an overhang of distressed loans that need to…[READ MORE]

The foundation of any housing market is the first-time homebuyer. By definition, people buying their first home don't have equity (free money) from a previous sale to extend their borrowing power. Without the activity of first-time homebuyers, those who own homes at the entry level (previous first-time homebuyers) can't sell and buy a move-up property. The first level move-ups ignite a chain reaction throughout the move-up market stimulating sales across all price points. If the first-time homebuyer cohort is not active, the entire housing market seizes up, and sales volumes are low. Recently, reports in the mainstream media are touting the increase in sales activity. While it's true that sales volumes are off the anemic lows of the 2008-2011 era,…[READ MORE]

The State of California now has a policy albeit an unofficial one to curb suburb growth, which will impact homeowners' choices and lifestyles. At one point it was what car you drove in SoCal as the key status symbol, but I think it's turned into where you live and the upgrades to your house.   Southern California a very suburban region and residents have voted with their dollars and feet to live in suburban communities with the longest commutes in the nation.  But this lifestyle is not unique, in fact most US metropolitan areas are majority suburban except for New York.   Therefore, these collection of policies goes against 70 years of lifestyle and purchasing habits in Southern California. In California,…[READ MORE]

For people who purchased properties in California, a non-recourse state, and never refinanced, lenders cannot come after them seeking to recoup their losses on a foreclosure. For those who live in recourse states, or California loanowners who refinanced, the situation is quite different. Lenders still have the right to pursue these borrowers for the deficiency. Most borrowers walked away thinking the debt was extinguished. While it was detached from the property, borrowers are still legally liable for any shortfall on the lender's books. Lenders haven't done much to collect on these old debts so far. Most lenders reason that they couldn't get blood from a turnip, so they have been biding their time waiting for debtors to become solvent again…[READ MORE]