Anticipate tougher standards; Expect your loan balance to be limited; Save more money; Gather abundant documentation; Obtain a fully underwritten loan approval; Pay off other debts. And expect your future homebuyer to do the same. On January 10, 2014, lenders must fully comply with the provisions of the Dodd-Frank Qualified Mortgage Standards. Why does this matter? Because lenders want the safe harbor protections bestowed on Qualified Mortgages. Given the legal environment favoring loanowners in response to the collapse of the bubble (loan modification entitlements, Loanoweners Bill of Rights, and so on), lenders will not be eager to stick their necks out and make loans outside the parameters of a qualified mortgage. Imagine what will happen if they do. Let’s say…[READ MORE]

Housing market manipulation in Great Britain even more foolish than US. The United States government in cahoots with the federal reserve and our too-big-too-fail banks openly and brazenly conspire to reflate the collapsed housing bubble. Under the guise of economic recovery, ostensibly to help homeowners regain equity, the powers-that-be implemented a variety of market props and manipulations over the last several years. Their first efforts, comprised of tax credits and interest rate stimulus, failed miserably. After an initial boost brought out a chorus of bottom callers, prices reversed and declined for 18 consecutive months. Their most recent efforts involved widespread can-kicking by repackaging bad loans as "permanent" modifications into junk securities purchased by the federal reserve for nosebleed prices. So…[READ MORE]

Current conditions favors loan modifications and squatting over short sales or foreclosures. Higher prices, slowing appreciation, rising lender costs, and stronger lender balance sheets will tip the balance in favor of foreclosure. Banks delay foreclosures on delinquent loans because it's in their best interest to do so. Many houses languish beneath excessive mortgage balances, and if lenders foreclosed on underwater delinquent borrowers, the lenders would lose a great deal of money. Even if the borrowers are current and want to sell the property in a short sale, lenders no longer approve those sales unless the borrower makes up for any shortfall because to accept less than the outstanding balance on the loan would also create a colossal loss. Since either…[READ MORE]

Purchase mortgage applications must increase to compensate for declining investor demand, a difficult proposition considering higher prices, tighter lending standards, and slow job growth. When a financed buyer contracts to buy a home, they apply for a purchase-money mortgage. The Mortgage Banker's Association tracks the number of these applications, and has done so for many years. Studying the chart of purchase mortgage applications reveals much about the health of the overall housing market. In the post 2013 housing recovery was different, in a bad way, an economist with the federal reserve documented how the rapid housing recovery (bubble reflation) in 2013 was unique among price rallies over the last 60 years -- in a bad way; prices did not rise…[READ MORE]

The Orange County housing market holds steady at the limit of affordability for a sixth consecutive month. Price momentum peters to zero. The Orange County housing market fully reflated last year. At the end of a wild 18-month rally, the market reestablished equilibrium at the ceiling of affordability, with momentum abruptly ceasing when rising mortgage rates removed excess affordability. Since housing markets normally pause during the fall and winter, most interested observers believe house prices will resume their powerful upward momentum when the spring buying season produces a bumper crop of eager buyers. If a spring rally does materialize in 2014, it probably won't be lead by owner-occupant buyers. The mainstream media overflows with optimistic (wishful) projections of legions of…[READ MORE]

Where is Germany's gold? Last January, Germany announced that it wants 700 tons of its gold back from the US and France, because the Bundesbank, the central bank of the Federal Republic of Germany or Germany's equivalent of our Federal Reserve, (the biggest difference being that the Bundesbank can print Deutschemarks and the Federal Reserve can print dollars and Germany does not presently use Deutschemarks), plans to store half of Germany's gold reserves in Germany's vaults by 2020. This is 100 deutschemarks. If you are like me, and you probably are, except you are a bit smarter, and handsomer, and more personable, and more sophisticated, ok, not at all like me, you are probably wondering why Germany's gold is in…[READ MORE]

Mark Hanson claims housing data points to a bubble. Robert Shiller warns the housing market shows early signs of a bubble forming. Mark Hanson is the Rodney Dangerfield of housing market economists; he doesn't get much respect. John Burns, the local darling of the MSM, recently said, “I give him zero credibility.” Stern stuff. So when Mark Hanson argues the US is enmeshed in a housing bubble, he's dismissed as a perma-bear, a headline grabber, a fool who gets on TV for comic value. Housing pundits who don't share Mark Hanson's views find it easy to disregard him; dismissing Robert Shiller isn't so easy. Robert Shiller published a book called Irrational Exuberance that predicted a collapse in stock prices at…[READ MORE]

Home sales volumes will decline, particularly in the Bay Area and the Inland Empire, largely due to a lack of owner occupant buyers. Failed loan modifications will cause delinquencies to remain high; foreclosures will increase. Low down payment loans will come back. Last year, the housing market rebounded sharply as inventory remained low, investor activity remained high, and low interest rates spurred an early-year rally that reflated much of the air back into the old housing bubble. Why do I insist on portraying the strong market action as reflating the housing bubble? Three reasons: manipulated inventory, weak owner-occupant demand, and fabricated mortgage interest rates. First, inventory was artificially low due to bank policies regarding loan modifications, short sales, foreclosures, and…[READ MORE]

The current housing boom (or headfake) is the first nationwide increase in house prices since the postwar era not driven by increased demand for owner-occupied housing. Welcome back, everyone. I hope you enjoyed your holidays. In a sustained housing boom, demand comes from new workers forming households with enough qualifying income and liquid savings to purchase real estate at prevailing market prices. This increased demand outstrips supply, house prices rise, and homebuilders respond by increasing the housing stock. The increased homebuilding activity further stimulates employment and housing demand, and the entire economy benefits. House prices can keep rising as long as employment remains strong, wages grow, and interest rates remain stable or decline slightly. Every housing boom since WWII, and…[READ MORE]

Tony Bliss was a close friend of mine who lost his heroic battle with cancer in late 2012. He wrote about his experience in a series of gripping posts that reveal a beautiful and courageous man. I was deeply moved by these posts — some of which are admittedly difficult to digest. This writing is raw. Real. Be forewarned that if you read what follows, you will never be the same. You will laugh, cry, fear, hope, and stare into the abyss of your own mortality. I am honored to share this great work with you here. “Houston, we have a problem!” The clot thickens! Oh What A Night! How the Grinch Stole the Last Half of July and the…[READ MORE]