Back in August of 2010, I noted that HELOC abuse had hit a record low. Since then, it has declined even further. A recent report from Fannie Mae puts mortgage equity withdrawal at a 26-year low. I guess when owners have no equity, it’s much harder to raid the piggy bank. Our national economy has become completely dependent upon loan owners. What will it take for us to kick the habit? 85 Percent of Refinancing Homeowners Maintain or Reduce Mortgage [Read More...]
This Woodbridge REO is a 2002 rollback priced at $231/SF. The property was purchased on 4/29/2002 for about $167,000. The owners used a $167,200 first mortgage and a $0 down payment. On 7/21/2004 they obtained a $58,000 HELOC, and on 6/13/2005 they refinanced with a $239,250 first mortgage. They only obtained $72,250 in mortgage equity withdrawal, but since this property hasn’t appreciated in the last 10 years, and since the owners stopped making payments, this went back to the bank. [Read More...]
Money won't buy happiness, but it can provide the finest forms of misery. Everyone wants money. If given the chance to do nothing and obtain money, most people would take it. Such was the lure of the housing bubble. People only had to do two things to obtain copious amounts of cash. First, they needed to buy a house. Then they needed to find a lender who would give them money for signing some paperwork. That's it. No work, no [Read More...]
Money won’t buy happiness, but it can provide the finest forms of misery. Everyone wants money. If given the chance to do nothing and obtain money, most people would take it. Such was the lure of the housing bubble. People only had to do two things to obtain copious amounts of cash. First, they needed to buy a house. Then they needed to find a lender who would give them money for signing some paperwork. That’s it. No work, no [Read More...]
Why did the home ownership rate go up? Many people have speculated as to why the home ownership rate rose from a stable 64% to an unstable 69% beginning in 1996. Many political operatives have tried to tie this to one piece of legislation or another, and the article I am featuring today does the same. I am going to add a crazy idea to that mix. To be honest, I don’t believe political decisions and government policies had much to [Read More...]
Everyone in California loves that Piggy Bank in their house. Most people here are so kool aid intoxicated that they take the free money for granted. It is just another California entitlement. Americans Tap $8.3 Billion in Home Equity, Least in a Decade By Bob Willis – Jul 28, 2010 7:26 AM PDT Americans in the second quarter tapped the smallest amount of home equity in a decade, showing households are focused on repairing tattered finances. No. It shows that households don’t have any [Read More...]
The show Extreme Makeover Home Edition helps families coming from difficult circumstances have a new life. The extreme examples they choose make for interesting drama, and I have found myself watching this show and rejoicing with the happy families. Watching the show makes you feel good; it leaves you believing that good people can come together and make a real difference for those who would otherwise struggle mightily. There is a fine line between extreme joy and extreme anger and sadness. When you see people who have [Read More...]
We are all living in our own bubbles. Each of us has a tenuous grasp on reality, and with the steady flow of bullshit and propaganda that implants gross lies into our collective consciousness, our perception of reality becomes ever more distorted. It is a difficult and often time-consuming task to find Truth and Reality buried beneath obtuse writing and intentional obfuscation. Bubble thinking is rampant, and the primary reason for its persistence is that people want the free spending money houses [Read More...]
There is a simple truth about the housing market; people are going to buy and sell homes when is suits their life’s circumstances. Unlike many of the readers of this blog, few base their decisions on market dynamics, and even when they do, each sets their own risk parameters. The main factor separating those who benefited from the housing bubble from those who did not was a Simple Twist of Fate; for some it was time to sell or buy, [Read More...]
Have you ever stopped to ponder the issue of moral hazard? At its most basic, moral hazard is any change in behavior that comes about when people believe their actions have no consequences. The housing bubble was built on moral hazard. None of the parties to the real estate transaction believed they had any risk. Borrowers and lenders both believed real estate always goes up, so there was no market risk. Some savvy borrowers realized that 100% financing was transferring [Read More...]
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