Archive for January, 2014

Borrowers face rising costs on FHA loans and the lower limits on what they can borrow, reducing the size of the borrower pool and increases the cost of debt. This will hinder efforts to reflate the housing bubble. I recently reported on how the FHA lowered the boom on Coastal California housing markets. A lower FHA loan limit affects houses priced in the $650,000 to $800,000 price range because borrowers looking to borrower more than $625,500 must use jumbo financing, which usually requires at least 20% down and higher FICO scores. Previously, a potential buyer of a $765,000 home only needed a $35,250 down payment to complete the sale. Now that buyer must come up with $153,000, and they are…[READ MORE]

The federal reserve is tapering its purchases of mortgage-backed securities. This may drive up mortgage interest rates and cause housing markets in more sensitive markets like Coastal California to feel pain though lower sales volumes and perhaps lower prices. If mortgage interest rates go up and incomes do not, borrowers will not be able to borrow enough to support today's prices. In June of 2013, rising interest rates killed the bubble reflation rally that began in early 2012; prices stopped going up, and transaction volumes declined to levels lower than witnessed in 2012. If mortgage interest rates move even higher, sales volumes will decline further, and it may begin to erode pricing, although a crash is unlikely given the nature…[READ MORE]

Lenders want to pass interest-rate risk on to unsuspecting borrowers while working within the confines of the new qualified mortgage rules. Although some borrowers claim to understand the risks, if their bets prove wrong, most will petition for bailouts, and they have every reason to expect to get one. For every good law, shysters find a loophole. Bankers proved, time and again, they will develop "innovative" loan products, designed to generate fees, which borrowers invariably fail to repay because disguised somewhere in the terms, a provision causes loan payments to increase, the borrower can't afford the new payment, and the borrower defaults. The new qualified mortgage rules attempt to reign in the worst of these abuses, but on the margins,…[READ MORE]

The NAr wants to overstate the current month's readings and downward revise the previous month's readings because it always makes the current month look like it's increasing. The National Association of realtors lies about market data; it doesn't just exagerate or consistently repeat honest mistakes -- it lies -- knowingly and purposefully. Back in early 2011, I reported the National Association of realtors caught lying about home sales. Later, Reuter's reported Existing home sales to be revised down from 2007, and ZeroHedge noted US Housing Market Was Artificially Inflated By 14% In 2007-2010 NAR Reports. The NAr would like everyone to believe these were "honest" mistakes and that this corrupt trade organization intended to provide accurate data, but they merely made a…[READ MORE]

The housing bubble pulled forward a generation of buyers; the housing bust cost these buyers their homes and their good credit, removing many of them permanently from the housing market. Lenders succeeded in manipulating market prices by restricting supply; however, for a true recovery in housing, the market requires resurgent demand from first-time homebuyers and move-up buyers. These two groups are typically the largest source of housing demand, with the first-time homebuyer the bedrock of the housing market; without first-time homebuyers, no move-up market exists. The first-time homebuyer market propels upward by job growth and household formation; when the economy is strong and creating good-paying jobs, young people form new households and use their new income to bid for real…[READ MORE]

Watch this video, and witness for yourself the expertise and professionalism of the Akason Realty Consultants Team. Seeing is believing. This house sold quickly for above asking price, largely due to this video. If you're thinking about selling, you want a video like that for your home, don't you? Akason Realty Consultants is a team of seasoned professionals expert in advertising, marketing, and sales. Together with OC Housing News, Akason Realty Consultants is a powerful real estate technology company connecting buyers and sellers by utilizing state-of-the-art marketing tools and methods. Put the Akason Realty Consultant team to work for you today! Shevy Akason - Evergreen Realty - ARC Group Name Email Phone So what will the Akason Realty Consultant team…[READ MORE]

The Fed annouced a couple of weeks ago that the Fed would taper it's asset purchases by $10 billion per month.  That's nice.   According to the above chart, and I have no particular reason to doubt it, Chinese holdings of US treasuries have increased by $134 billion in the past year.  If the Fed does decrease it's treasury buying by $5 billion per month, then it would seem like the Chinese have enough interest in US treasuries that the Chinese could buy the $60 billion per year that the Fed would not be buying.  But, then who would buy the $60 billion that the Chinese bought last year?  What if the Fed increases it's tapering to $20 billion per month…[READ MORE]

By claiming adverse possession, delinquent mortgage squatters may be able to rescind a lender's right to foreclose if the borrower made no payments for five years, paid their taxes, and failed to respond to any lender loan modification offers, and the lender issued no Notice of Default. When Richmond, California, announced a plan to seize underwater mortgages, the parties holding those mortgages not surprisingly freaked out. Five years ago, enabled by mark-to-model accounting, lenders embarked on a strategy of loan modification can-kicking to delay or avoid recognizing losses on bad loans. Lenders planned to remove the distressed inventory from the market, allow house prices to rebound to improve their capital recovery, then resolve their bad bubble-era loans. Their plan works…[READ MORE]

Whatever you believe about the morality of strategic default or the desirability of punishing them to prevent moral hazard, the practical problems of identifying and pursuing strategic defaulters makes the task too costly and difficult to be effective. I first began writing about strategic default back in 2008 in the post Should you walk away from home debt?. Many people faced a cost of ownership greatly exceeding the cost of a comparable rental, and with declining prices, they were sinking underwater and had no realistic hope of future equity; therefore, on a purely financial basis, borrowers who strategically defaulted were wise because the shortest path to equity was to walk away from the huge debt, save money, and wait until…[READ MORE]

San Francisco is the most overvalued housing market in the United States; however, the conditions necessary to cause a catastrophic house price decline are absent, and it seems unlikely house prices will crash. I have a challenge for housing bears: outline a realistic scenario where prices crash from here. I'm an old housing bear; I would be happy to carefully and loudly pontificate on an upcoming market crash, but I simply can't come up with a realistic scenario whereby it occurs. Sure, there are implausible scenarios, mass investor exodus, suicidal lender policy changes, sudden interest rate spike to 7%+, but nothing that seems very likely -- or possible at all. The premise of the original housing market collapse went something…[READ MORE]

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