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Author Archive: Irvine Renter

The OC Housing News analyses every for sale property on the MLS for its potential as a cashflow investment based on advanced hedge fund algorithms. Between late 2010 and early 2012, I purchased 53 homes in Las Vegas -- sight unseen. I used a service that provided pictures of the properties, but since these were all auctions, sometimes the inside views were not available, so I had no idea what I would find if I won at auction. Does that sound scary or crazy? It was a manageable risk. Usually, whenever I bid on a property where I couldn't see the inside, I simply bid less to give myself an allowance in case I had to replace everything, and sometimes…[READ MORE]

Reverse mortgages sacrifice a financial future and result in many potentially negative outcomes. I’m not a big fan of debt, in case you didn’t notice. I don’t like consumer debt, and I really don’t like reverse mortgages. I wrote that Home ownership with no mortgage is the best retirement plan. It stands to reason that I view taking on mortgage debt in retirement as the worst retirement plan, yet many people turn to reverse mortgages as the primary financial planning tool for their golden years. Reverse mortgages sound like a good deal: The lender gives free money, and the borrower doesn’t have to sell their house. It shouldn't be surprising the loan is popular, particularly among spenders and Ponzis. Unfortunately,…[READ MORE]

Would you allow the federal reserve to ban currency so banks could charge you to store your savings? Money is both a medium of exchange and a store of wealth. Money represents the stored value of labor not immediately converted to consumption. Historically, people used scarce items like gold that were durable, difficult to replicate, easy to store, and easy to transport both to acquire goods and services and as a store of wealth when no goods and services were required. Gold served as money for millennia, mostly because nobody figured out how to transmute other elements into gold. However, once rulers started coining gold, they began to substitute other metals, shave the coins, and reduce the size of the…[READ MORE]

Lending industry and realtor lobbyists argue lending standards are too tight and should be loosened up. They are wrong on both counts. Real estate industry lobbyists appeal to lawmakers for policies the real estate industry believes will promote more transactions at higher prices. Most often this myopic lobbying causes unintended long-term detrimental impacts on the housing market. In 2004 every realtor wish was granted: lending standards were loosened to the point of complete abandonment, and restrictions on the amount prospective buyers could borrow were also removed through teaser rates, liar loans, and negative amortization. In the short term, realtors reaped the benefits as transaction volumes escalated even as prices rose higher and higher. Rather than being the culmination of all…[READ MORE]

Struggling in the Internet era, newspapers increasingly rely on real estate advertisements for survival, corrupting the integrity of their coverage. The Internet changed the way people stay informed. A single reporter can publish a story on the web, and millions of readers can access the information for nothing. Rather than paying the cost of printing and distributing paper with the printed words of local reporters, citizens eliminated the middleman distributor and turned to the web more and more over the last 20 years. Since most news reporting was redundant, and since citizens had less expensive and higher quality alternatives, many newspapers stopped print publication, scaled back staff, and consolidated into conglomerates. Despite these measures newspaper advertising revenues spiraled downward. Car…[READ MORE]

Just as Midas turned everything he touched to gold, Dick Fuld turns everything he touches to crap. Guy Who Tanked Lehman Now Tanking a Malibu Golf Course Friday, April 10, 2015, by Adrian Glick Kudler In 2008, Dick Fuld was responsible for the largest bankruptcy filing in American history as the long-time, last-ever CEO of Lehman Brothers. The investment bank's collapse—the result mostly of hoarding shitty securities backed by subprime mortgage loans—triggered a global recession that disfigured a lot of lives. That guy should probably never have control of anything ever again, not even a stake in a golf course. Well, Fuld is in fact a partner in the Malibu Golf Club, a non-membership course that is open to anyone…[READ MORE]

If you were selecting a real estate agent to represent you, would the agent's style matter more than their competence? A very high percentage of people who use a real estate agent to buy or sell a home use the first agent they contact and don't shop around. This fact is largely what keeps bad agents in business. Due to the way most people select agents, being found is more important than being good; style is more important than substance. A new firm in New York fully embraces the current system. Fashion Realty, Inc. Launches a Real Estate Brokerage Firm in NYC With "Style" A newly-launched real estate brokerage firm in New York City takes a new and unique approach…[READ MORE]

When lenders deny short sales, it removes MLS inventory from the market and contributes to low sales volumes and inflated house prices. I've mentioned many times that the housing market bottomed in early 2012 because lenders changed their policies toward delinquency and foreclosure, not because fundamentals of the housing market improved. Rather than foreclosing on delinquent borrowers, lenders began offering generous loan modification terms to cure the delinquency -- at least in the short term -- thus can-kicking became official bank policy. Another policy lenders implemented had less fanfare but was equally as important as loan modification in drying up the MLS inventory: lenders stopped approving short sales. When a seller can't obtain enough money to repay the loan at…[READ MORE]

Data shows very few recent mortgage originations were from borrowers with a previous foreclosure. Over the last several years, the financial media periodically runs stories about the return of boomerang buyers, those who lost their homes in foreclosure but bought again. From the beginning I flatly stated this group would not participate in the housing recovery, and they would not be a significant source of demand. In the most complete study conducted on the behavior of boomerang buyers, the authors concluded that "Only about 10% of borrowers with a prior serious delinquency regain access to the mortgage market within 10 years of their default." So why did so many analysts think it would be different after the housing bust? Most…[READ MORE]

Lenders are willing to provide HELOC money requiring no payments until the time of sale if the borrower splits the remaining equity. Are there any circumstances under which homebuyers would be willing to share in the upside of home price appreciation? I wrote about the concept of equity share as an option for housing bears. In that program, an investor puts up half the down payment in exchange for half the net profit at sale. Anyone who believes house prices will not rise would strongly consider such a deal because someone else ties up their money in the property rather than the buyer. Of course, then the property is burdened by a third-party equity claim, which most people don't find…[READ MORE]

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