Feb052015
Real Housewife of OC hasn’t paid her mortgage in 6 years
Peggy Tanous spent the last 6 years squatting in a million dollar Irvine home.
When people quit paying their mortgage, banks used to foreclose on them get their money back at the sale, but not long after the proliferation of toxic mortgage products from 2004-2007, so many borrowers quit paying that banks couldn’t process the millions of foreclosures, so they allowed delinquent borrowers to stay in their houses without paying; squatting was born.
Of course, delinquent mortgage squatting doesn’t meet the technical definition of squatting, which is possession of real estate without the owner’s permission. In these circumstances the squatters are technically still the owners of property, so there is nothing illegal going on, but these owners are generally hopelessly underwater and failing to make their mortgage payments. They are in possession of real estate that can be called to auction at the discretion of their lender at any time. Ultimately, they will lose their homes, but sometimes it takes a very, very long time.
Many people bought opulent homes during the housing bubble because their inflated egos demanded it. A big house gave them status.
Status is an internal perception about what people believe other people think about them. It has nothing to do with what other people actually do think about them (as if that mattered anyway).
For instance, I think the women on the The Real Housewives of Orange County are soulless, fame-obsessed caricatures. I feel disdain for the way they live, what they believe, and what they represent. However, they think I, and everyone else who knows them through the show, believes they are something special, something to envy as if they really have it “going on.” They have status. Not because people regard them highly, but because they think people do.
Most people watch The Real Housewives of Orange County and feel superior (how could you not) but some actually watch looking for role models or a how-to manual for being pretentious — a ghastly side effect our sons and daughters pay with their souls.
For people who don’t have the internal strength to base their self worth on what they believe about themselves, they end up basing their self worth on their perceptions of what other people think about them. Once they have given their power away to others in this manner, people will expend tremendous amounts of time, energy and money in a vain attempt to influence other people — hence we have fancy cars, opulent houses, designer clothing, and all the other trappings of conspicuous consumption. In my opinion, this is a sickness (their mind control fails on me.) It is a consuming disease which fed on the borrowed money made available during the housing/credit bubble.
I know it’s not particularly spiritual, but it’s hard not to feel a twinge of shadenfreude when one of the OC Housewives falls on hard times…
“Now, we’re not ones to go ’round spreadin’ rumors,
Why, really we’re just not the gossipy kind,
No, you’ll never hear one of us repeating gossip,
So you’d better be sure and listen close the first time!”
The Hee Haw Gossip Girls
Homeless Housewife? Former ‘RHOC’ Star Peggy Tanous Facing Foreclosure After Missing 75 Mortgage Payments
By Alan Duke, February 2, 2015
Former Real Housewives of Orange County cast member Peggy Tanous could soon be without a real house as a bank wants a bankruptcy judge’s permission to take the one she’s lived in for the last eight years, according to court papers obtained by RadarOnline.com
U.S. Bank claims Tanous has missed the last 75 monthly payments of $6,000 and that she owes the institution $1.54 million on the Irvine, California, house that’s worth just just $840,000. Tanous also owes $300,000 to another bank on a second mortgage on the house she bought in 2006, the court filing says.
Peggy Tanous purchased her home on 2/17/2006 for $1,379,000 using a $965,300 first mortgage, a $344,750 HELOC and a $69,250 of her wealth in a down payment. It’s possible she put over $400,000 down if she didn’t use the HELOC, but evidence is to the contrary.
On 10/24/2006 she refinanced with a $1,000,000 Option ARM with a 1.5% teaser rate, and she obtained a stand-alone second for $312,540. If she didn’t use the HELOC at the purchase, she pulled the money at this refinance. It seems pretty obvious she couldn’t afford the house.
The house was just just three days away from a foreclosure sale when Tanous filed for voluntary Chapter 7 bankruptcy in February 2013. The bank is asking the judge to lift the automatic protection from foreclosure because she has no equity in the property.
Court documents show her annual income is just $30,000 a year since she left the reality show in 2012.
After her first season she underwent cosmetic surgery — a surgery that took place while she wasn’t paying her mortgage.
“Orange County women are very big on up-keep. Some people go in for boob jobs has much has they go in for oil changes.” – Peggy Tanous commenting on her third boob job. “The Real Housewives of Orange County” Episode Five.
Back when she was contemplating the boob job, did her and her husband look at their income and their obligations and decide it was better to have big tits than pay a mortgage? Lenders must love that kind of decision making. Entitlements trump financial obligations every time.
Her only income appears to be $2,500 in child support from ex-husband Micah Tanous, although she’s never publicly acknowledged the divorce.
And she can’t plan on Bravo paychecks to save the day: A source recently told Radar she “hasn’t been asked back” to film RHOC again.
Did you pay your rent or make your mortgage payments over the last six years? How nice is your house? How would you have liked to live for nothing in the house below? It’s hard to feel bad for someone who just spent the last 6 years squatting in a nice Irvine home.
“Gloom, despair and agony on me-e!
Deep dark depression, excessive misery-y!
If it weren’t for bad luck I’d have no luck at all!
Gloom, despair and agony on me-e-e!”
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“Better To Have Big Tits Than Pay A Mortgage”
You’ve conjured the perfect title for your future book on real estate in the United States. Subhead: “Land of the indebted, home of the silicon enhanced.”
“Better To Have Big Tits Than Pay A Mortgage”
Exhibit(s) “A” (pun intended) of those who buy things they don’t need, with money they don’t have, to impress people they don’t know.
Yet another example of the arrogance, greed and sense of entitlement that pervades throughout our culture.
“Goldman Sachs Group Inc. is joining other banks in peddling something they’re referring to as a “bespoke tranche opportunity.”
The deals are “attractive for credit-savvy investors in the post-QE credit picker’s market,””
Goldman Sachs Hawks CDOs Tainted by Credit Crisis Under New Name
Just my opinion: There are recognizable indicators to a future currency/debt crisis.
This is concerning. We are laying the groundwork for the next deflationary collapse, depending on how much debt is applied to these structures.
Trulia: Winter sun brings out the home seekers
winter sun? How about mortgage rates under 4%
Trulia (TRLA) finds that January and February search activity is 2% above the annual average, rising to 10-15% above the annual average in the peak months from March to July.
That’s the latest word from Jed Kolko, chief economist at Trulia.
Here’s a taste of what he found.
The housing season starts earliest on Florida’s west coast. In January and February, home search activity is 22% above the local annual average in Cape Coral-Fort Myers and 17% above in North Port-Sarasota- Bradenton. Three other Florida metros and the Arizona metros of Phoenix and Tucson are also in the top ten. All but Kansas City are in the Sunbelt.
In several smaller metros as well, January/February search activity is 15% or more above the local annual average. All are in Florida, including Punta Gorda, Naples, Ocala, and Port St. Lucie. In the Sunshine State, the early-bird special isn’t just for dinner – it’s also for housing.
The metros where winter home searches are slowest relative to the annual average are in upstate New York (Syracuse, Buffalo, Rochester), New England (Cambridge-Newton-Framingham, Hartford), and the cooler, wetter winter markets on the Pacific (Seattle, San Francisco). Honolulu and Houston are on the list of metros that wake up later, too. But the dips are just in the mid-to-low single digits. No markets are as far below the annual average for home search activity in January and February as the west coast of Florida is ahead.
Watt will not be reducing mortgage principal
Reducing everybody’s principal would cost taxpayers billions
Watt discussed the idea of reducing principal on severely underwater properties, a strategy that this predecessor, Edward DeMarco, was staunchly against.
While noting that the idea had never been taken off the table, he said that any cuts will be “substantially narrower” than what some housing advocates have called for, adding that the focus would be to reduce the risk to both the GSEs and taxpayers.
“Reducing everybody’s principal would cost taxpayers billions,” Watt said.
I wish during Congressional testimony, Watt would just have an honest conversation on this topic. Go through four or five underwater households’ finances and determine who deserves a write-down and who doesn’t. This exercise would prove that this is such a complicated and inherently unfair idea, making it impracticable to implement.
Watt have an honest conversation? I don’t think he’s capable.
He’s also smart enough to know the truth doesn’t serve him or the political left. As you noted, if people really saw the truth of the borrowers who would benefit from principal reductions, the public outcry over providing that benefit would be enormous.
How would the public feel about someone getting a tax break who extracted $200,000 equity from their house?
What would an example be of someone who deserves a write down? Off the top of my head, the only situation I can think of in which someone deserves a write down is one in which the borrower’s name was forged on all the closing documents, and they never agreed to the terms.
Agreed, you would be hard-pressed to identify a household that I’d agree deserves a write-down.
Saving the so-called system cost taxpayers $trillions upon $trillions, yet the bureacrats/economists/MSM and kool-aid drinkers today proclaim the economy is doing just fine (not perfect but growing), unemployment rate is 5-6%, inflation is low, dollar is rising and everything is pretty good.
What would be the harm of something that would only cost taxpayers billions?
I thought you might like this.
The Big Lie: 5.6% Unemployment
Here’s something that many Americans — including some of the smartest and most educated among us — don’t know: The official unemployment rate, as reported by the U.S. Department of Labor, is extremely misleading.
Right now, we’re hearing much celebrating from the media, the White House and Wall Street about how unemployment is “down” to 5.6%. The cheerleading for this number is deafening. The media loves a comeback story, the White House wants to score political points and Wall Street would like you to stay in the market.
None of them will tell you this: If you, a family member or anyone is unemployed and has subsequently given up on finding a job — if you are so hopelessly out of work that you’ve stopped looking over the past four weeks — the Department of Labor doesn’t count you as unemployed. That’s right. While you are as unemployed as one can possibly be, and tragically may never find work again, you are not counted in the figure we see relentlessly in the news — currently 5.6%. Right now, as many as 30 million Americans are either out of work or severely underemployed. Trust me, the vast majority of them aren’t throwing parties to toast “falling” unemployment.
There’s another reason why the official rate is misleading. Say you’re an out-of-work engineer or healthcare worker or construction worker or retail manager: If you perform a minimum of one hour of work in a week and are paid at least $20 — maybe someone pays you to mow their lawn — you’re not officially counted as unemployed in the much-reported 5.6%. Few Americans know this.
Yet another figure of importance that doesn’t get much press: those working part time but wanting full-time work. If you have a degree in chemistry or math and are working 10 hours part time because it is all you can find — in other words, you are severely underemployed — the government doesn’t count you in the 5.6%. Few Americans know this.
There’s no other way to say this. The official unemployment rate, which cruelly overlooks the suffering of the long-term and often permanently unemployed as well as the depressingly underemployed, amounts to a Big Lie.
Yep… http://research.stlouisfed.org/fred2/series/CIVPART/
The 1950’s were a time of great prosperity yet the participation rate was much lower than it is right now. Curious…
The 50s were prosperous relative to the Great Depression and WWII that preceded it, but it was not prosperous by today’s standards.
What I find interesting about that chart is the enormous increase in labor participation caused by women entering the workforce. Back in the 1950s, it didn’t take a dual wage earning family to afford a house; today it does.
Many parts of the country still don’t require a dual income to afford a house, but obviously in most of California it does.
Great prosperity = high income. Perhaps one income was high enough to support a family.
BUT.. perception is EVERYTHING in the current market.
Watt Claims He Is Powerless to Alter GSE Bailout Agreement
conveniently hides behind agreements he could change
As stakeholders continue to battle with the government over what they say should be their share of Fannie Mae and Freddie Mac’s profits, the regulator in charge of overseeing the two GSEs says he’s not in a position to act on that situation.
One thing Watt says he has no plans to change is the GSEs’ current bailout agreement with the government, which has allowed the Treasury Department to sweep nearly all of their profits since August 2012.
Despite protests and lawsuits from politicians, industry groups, and investors about the terms, Watt told reporters he doesn’t perceive “that it’s [his] responsibility to start that discussion,” according to the Wall Street Journal.
“I inherited a set of agreements,” he said. “I know why they were put in place, basically as a quid pro quo for rescuing Fannie and Freddie. … I just have to live with it.”
Bruce Berkowitz, the CEO of Fairholme Funds, said he does not believe that Watt is powerless to act in this situation. Fairholme, one of the GSEs’ largest investors, has a lawsuit pending against the government which claims that the sweeping of GSE profits into Treasury is unconstitutional.
“According to recent Congressional testimony, Mel Watt, our conservator at FHFA, claims he is unable to end his own conservatorship,” Berkowitz said in a conference call earlier this week. “In the history of conservatorships, this is a first. Think about it.”
Unemployment Rate Falls, Payrolls Increase in Most Metro Areas
The unemployment rate dropped year-over-year in 341 out of 372 metropolitan areas in December while payrolls increased in 312 metros, according to data released by the U.S. Bureau of Labor Statistics on Wednesday.
The BLS’ December 2014 Metropolitan Area Empl0yment and Unemployment Report found that 208 metro areas out of 372, about 56 percent, had an unemployment rate December’s adjusted national average of 5.4 percent. BLS reported that 158 metros had an unemployment rate below 5.0 percent. The lowest unemployment rate for the month among metros was in Midland, Texas, at 2.1 percent. Of the 49 metros that had a population of at least one million in the 2000 census, the highest unemployment rate in December was in Memphis, Tennessee, at 7.6 percent.
Continued labor market improvements may bode well for the housing market for the coming year, since housing relies on steady nationwide employment to flourish, according to some economists’ predictions. The national unemployment rate continues to drop – December’s rate of 5.4 percent represents a decline of 1.1 percentage points from the same month a year earlier.
Peggy was typical of many Bravo “Housewives” – a stay-at-home mom with no marketable skills nor degree, married to a “business man” who appears successful, even though nobody ever really explains what he does for a living. Her only income after the divorce is $30K from child support. That sure ain’t “livin’ the life!”
The $30K goes a lot farther when you don’t have a mortgage payment.
Since her “income” is in the form of child support, she gets the added perk of owing no taxes on the money.
I wonder if she is on government assistance?
If you’re poor and live in Riverside you get foreclosed on in 90 days. If you’re rich and live in Irvine you don’t get foreclosed on in 6 years. What a country!
Except that in this case, and most others, this household wasn’t, and isn’t, rich. Might be more accurate to say, “If you live in a higher-priced home with a huge mortgage, your foreclosure time-frame expands dramatically.”
I take it you’re not a professional comedian? 😉
Sorry, the term “rich” always spurs me to comment.
Squatting is only for those with the courage to take out mortgages so large the bank can’t afford the loss.
It reminds me of the old saying that if you borrow $1,000, the bank owns you, but if you borrow $1,000,000, you own the bank.
Ocwen takes a $64m hit in Q4-14 for “uncollectable receivables”.
The result will be a record loss for the company in the fourth quarter of 2014 and for all of 2014. Also, it expects to sell from $5 to $20bil worth of servicing rights per month through the end of 2015.
http://www.marketwatch.com/story/ocwen-expects-loss-on-regulatory-problems-2015-02-05-124854640?link=MW_home_latest_news
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Uncollectable receivables + dumping billions in servicing rights each month in 2015 = very telling!
Perhaps this signals a turning point in amend-extend-pretend.
Fact #1: Ocwen paid top dollar for those servicing rights because their model was to make up the difference on ancillary fees charged by their affiliates.
Fact #2: The value of MSR’s moves in tandem with interest rates because the lower interest rates go, the more likely borrowers are to refi out of their loans, which reduces the size of the servicing pool. This in turn reduces the value of the rights to service the underlying pools. Conversely, if interest rates were to increase it would raise the value of servicing rights because borrowers are much less likely to prepay the loans.
Conclusion: It’s very likely that because they paid top dollar for these rights and that interest rates have since declined, Ocwen will be taking losses on the sale of these MSR’s. It will free up cash and help them pay down debt (which I’m guessing is at usurious rates from the “unspecified bank” mentioned in the article), but the sales will be booked as further losses on the income statement.
These losses will show up on future earnings calls and pound their stock even further into the ground.
Stay tuned!
Another perspective on Ocwen:
Yves Smith via her blog
I agree with everything he says except his basic premise that a stronger Foreclosure Settlement agreement would have prevented this. It wouldn’t have.
Ocwen embarked on a strategy of aggressive growth based on picking up subprime MBS that banks could no longer handle on their own. The big elephant in the room was the new Basel III requirements which were going to severely punish banks’ capital ratios for holding non-performing loans in their servicing portfolios. Ocwen knew that banks would be offloading lots of subprime MBS as a result, and they formulated their aggressive growth plans based upon it.
All of Ocwen’s problems are the result of growing too quickly and not having good controls in place. Punishing them more severely under the Foreclosure Settlement wouldn’t have changed that, and it wasn’t justified because the government couldn’t prove that any borrowers were wrongly foreclosed on.
[…] assured the banks of losses far in excess of what they could afford; thus you get borrowers like Peggy Tanous who lived payment-free for over six years. It was the prime borrowers taking out huge loans that were responsible for the housing […]