The question for the newly above water borrower: to sell or not to sell

 NEWS
Mar 162013
 
The question for the newly above water borrower: to sell or not to sell

The increase of home values have pushed some 1.4 million underwater borrowers into positive equity territory. The Federal Reserve have engineered ultra low mortgage rates and banks have suppressed the shadow inventory into “cloud inventory‘” Meaning many homeowners will receive loan modification after loan modification leading to a false sense of confidence, but in the long term most will end up losing their homes. However, for these newly above water borrowers threats still remain to push them underwater again. Whether its market risk, balloon payment shock, mortgage rate increases, tax law changes or even demographic changes in their neighborhood it’s [Read More...]

Crooks, thieves, and liars: the nefarious characters of the housing bust

 MISSION VIEJO, NEWS
Dec 142012
 
Crooks, thieves, and liars: the nefarious characters of the housing bust

Have you noticed that most of the human interest stories from the housing bubble have no heroes? The housing bust has brought out the worst in mankind. Every party involved seeks to avoid any financial responsibility while simultaneously looking for ways to game the system to their advantage. The cast of characters includes lenders, realtors, delinquent mortgage squatters, holdover tenants, mortgage brokers, basically anyone involved with real estate. Today’s featured article describes some of the nefarious characters, looks at their motivations and false beliefs of entitlement, and illustrates what happens when everyone is wrong, greedy and stupid. Owner leaves his [Read More...]

Loan modification defaults soar 24%, can-kicking fails

 LAGUNA BEACH, NEWS
Nov 262012
 
Loan modification defaults soar 24%, can-kicking fails

Whenever I make a prediction that goes against the conventional wisdom, I take the risk of looking the fool. On those occasions when I am right, it’s very satisfying. Even though I know I shouldn’t, internally, I enjoy a silent I-told-you-so. Almost four years ago now, lenders embarked on their plan to modify loans to get people over the “rough patch” caused by the recession. From the beginning I said these programs would fail largely because the people being helped simply couldn’t afford their homes. They were Ponzis. When a borrower has gone Ponzi, the “rough patch” is when they [Read More...]

Pent-up demand from boomerang buyers may not materialize

 LAKE FOREST, NEWS
Nov 142012
 
Pent-up demand from boomerang buyers may not materialize

A big part of the bullish sentiment toward real estate is the believe that former owners who lost their houses in foreclosure will return in droves to mop up the supply of shadow inventory and push prices higher. But what if they don’t come back? What if they were so burned by the experience that they choose a lifetime of renting instead? A recent study from the federal reserve suggests this may be the case. Almost 75% of those who lost their homes to foreclosure may never return, and if they don’t the so-called recovery may be much weaker than [Read More...]

September delinquencies skyrocket 7.72%, foreclosure filings decline 20.4%, shadow inventory grows

 GARDEN GROVE, NEWS
Oct 252012
 
September delinquencies skyrocket 7.72%, foreclosure filings decline 20.4%, shadow inventory grows

The golden age of delinquent mortgage squatting continues. Those who aren’t paying their mortgage today can expect their free ride to continue indefinitely. We know from the report released by ForeclosureRadar.com that MLS inventory is NOT coming as foreclosure filings dry up. In California, the number of NODs declined 20.4% last month signaling that lenders are in no hurry to process their bad loans and push out the squatters. This slow processing creates a strong incentive for borrowers to strategically default because if they quit paying, they get to live for free, probably for a very long time. Rising prices will [Read More...]

Allowing delinquent mortgage squatting causes more strategic defaults than crashing prices

 NEWS, ORANGE
Sep 282012
 
Allowing delinquent mortgage squatting causes more strategic defaults than crashing prices

Ever since the housing bust began, banks have been caught between a rock and a hard place. On one side, if they foreclose and liquidate their inventory, prices plummet which prompts underwater borrowers to strategically default. The downward spiral of strategic default is in clear evidence in Nevada. On the other side, if banks don’t foreclose, borrowers know they can quit paying and live payment-free indefinitely. This method has the advantage for banks of providing an illusion of collateral value backing their loans, but recent data shows banks build an even larger shadow inventory that must eventually be liquidated. Those [Read More...]

Potential government-induced mortgage credit crunch in 2013

 IRVINE, NEWS
Sep 182012
 
Potential government-induced mortgage credit crunch in 2013

To understand the credit crunch, and why we might have another one, I have a visualization exercise for you that I originally posted back in 2007: Imagine a room with 100 people representing the pool of subprime borrowers. These are new entrants to the market. They were previously unable to buy due to bad credit, lack of savings, and other reasons. All of them are told they are going to bid on an asset that never goes down in value, and they will be given the ability to borrow unlimited funds (stated-income “liar loans”) The only caveat is the borrowed money [Read More...]

Bank’s residential loan delinquency rates more than FIVE times historic norms

 MISSION VIEJO, NEWS
Sep 062012
 
Bank's residential loan delinquency rates more than FIVE times historic norms

Shadow inventory is primarily a problem for major commercial banks. The GSEs have been processing their foreclosures, and although delinquencies at the FHA are increasing, these are fresh delinquencies, not long-term shadow inventory. The too-big-to-fail commercial banks have been endlessly can-kicking to delay what I believe are inevitable write downs. For as long as records on delinquencies were kept, rarely did the rate exceed 2%. Currently, it is over 10%! To make matters worse, the delinquency rate for commercial banks is not declining as fast as delinquencies overall. Over the last two years, the rate dropped from from a peak [Read More...]

Lenders created a culture of delinquency

 NEWS, YORBA LINDA
Sep 042012
 
Lenders created a culture of delinquency

When I grew up, I watched my parents work hard and pay their bills. Their house payment was the largest of of their bills, but they sacrificed to pay down their mortgage to eventually become payment free. This was the experience of most Americans, a collective lesson we learned about responsibility and deferred gratification. Lenders destroyed that and replaced it with a culture of Ponzi borrowing and a series of poisonous beliefs that turned responsible homeowners into reckless and irresponsible loanowners. How sweet it is… It wasn’t enough to merely give millions of Ponzis billions in free-money loans. That alone [Read More...]

Fed study concludes delinquent mortgage squatters lower values, foreclosures improve values

 NEWS, SANTA ANA
Aug 212012
 
Fed study concludes delinquent mortgage squatters lower values, foreclosures improve values

There are many myths about housing markets perpetuated by banks and the financial press. Two of these myths include (1) keeping people in a house keeps up the values, and (2) foreclosures reduce neighborhood values. Many believe that allowing delinquent mortgage squatters to stay in place improves the condition of a property. Perhaps in rough neighborhoods prone to property crime, occupancy is better than abandonment, but in most neighborhoods, when delinquent mortgage squatters stay on, they property gets run down. Why would anyone spend any money to improve or even maintain a property in which they have no financial interest? [Read More...]

Foreclosures dominance of housing market projected to end in 2015 or 2016

 NEWS, TUSTIN
Jul 192012
 
Foreclosures dominance of housing market projected to end in 2015 or 2016

At some point, the dodgy loans of the housing bubble will be recycled, delinquency rates will fall back to normal, the shadow inventory will be processed, and foreclosure rates will decline to the point they no longer dominate market sales and keep prices from rising. But when will that happen? Based on the most recent data from Lender Processing Services, I have extrapolated recent trends to attempt to answer that question. But first, we need to understand where we are in the process. In early 2012, lenders halted processing shadow inventory of long-term delinquent loans to attempt one more round [Read More...]

Over 4,000 REO in OC, over 230 in Irvine

 ALISO VIEJO, NEWS
Jan 252012
 
Over 4,000 REO in OC, over 230 in Irvine

Many have speculated as to when the housing market will bottom. The short answer is, nobody knows, but there are some guideposts to watch out for. First, in order for house prices to bottom, they must be affordable. Sub-4% interest rates combined with falling prices have made houses affordable on a monthly payment basis. Second, supply and demand must rebalance and demand must outstrip supply for prices to go up. That criteria is more elusive. When the housing bubble popped in 2006, people began defaulting on their mortgages. A credit crunch ensued in 2007, and foreclosures began to mount. By [Read More...]

Principal reductions fail to reduce future default rates

 FOUNTAIN VALLEY, NEWS
Jan 232012
 
Principal reductions fail to reduce future default rates

Principal forgiveness is the worst policy option. Despite this fact, it’s so appealing to loan owners and politicians, reporters are keen to write about the prospect. However, the world is not comprised only of loan owners. Nearly 40% of households are renters, and of the remaining 60% who own homes, 90% of them are still paying their mortgages. Ninety-four percent of the population is asked to fix the problems of the 6% who are loan owners and the banksters who created the problem. Lenders and loan owners have problems. Lenders made loans their borrowers can’t repay, and now both parties [Read More...]

Mortgage delinquencies at major banks still more than 12 times normal

 NEWS, WESTMINSTER
Jan 022012
 
Mortgage delinquencies at major banks still more than 12 times normal

A new study from Office of the Comptroller of the Currency showed mortgage delinquencies at major banks at 12% when it is normally less than 1%. Many of these mortgages are shadow inventory where banks have been allowing delinquent mortgage squatters to stay rent-free for years. Also, foreclosures are increasing rapidly as the banks are finally accepting rising prices will not bail them out, so they are going to have to clear out the delinquent borrowers on their own. Amend, extend, pretend is dead. Mortgage Default Is A Financial Bonanza For Many Homeowners As Foreclosure Crisis Continues December 22, 2011 [Read More...]

Mortgage delinquencies expected to rise into 2012

 LAKE FOREST, NEWS
Dec 142011
 
Mortgage delinquencies expected to rise into 2012

Mortgage delinquency rates will likely decline in 2012 as lenders foreclose and remove the loan from the delinquency pool. Unfortunately for lenders, the delinquency rate is expected to rise for the first quarter of 2012 as declining prices and a weak economy prompts more borrowers to strategically default. 2012 mortgage delinquencies seen dropping sharply By Eileen Aj Connelly NEW YORK – If the U.S. economy does not suffer more setbacks, the rate of mortgage holders behind on their payments should decline significantly by the end of next year, according to credit reporting agency TransUnion. Mortgage delinquency rates — the ratio [Read More...]

Delinquent mortgage squatting time sets new record

 IRVINE, NEWS
Dec 082011
 
Delinquent mortgage squatting time sets new record

Some lenders may be increasing the rate of foreclosures, but overall, the time it’s taking banks to foreclose is increasing. The foreclosure time now stands at a record 631 days. Foreclosures don’t take forever, but they certainly do take a very long time. Foreclosure used to be a deterrent to prevent borrowers from becoming delinquent on their loans. Now that the process takes so long, the prospect of two years of free housing is actually becoming an inducement for strategic default. Average Foreclosure Time Sets New Record Published: Thursday, 1 Dec 2011 — 9:30 AM ET By: Diana Olick CNBC [Read More...]

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