Archive for September, 2010

I recently wrote that squatting is becoming a way of life for many delinquent borrowers. Of course, this doesn't meet the technical definition of squatting which is possession of real estate without the owner's permission. In this instance, 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. Today, we are going to look at other forms of squatting from the traditional adverse possession to the return of former owners who couldn't leave their…[READ MORE]

Zero down mortgages were a big factor in the inflation of the housing bubble. The debate now is whether or not this form of financing is inherently bad or if that bird can change. This is one Phoenix that probably shouldn't rise from the ashes. I wrote about the evils of 100% financing in The Great Housing Bubble: 100% Financing is a path to destruction Once 100% financing became widely available, it was enthusiastically embraced by all parties: the lenders suddenly had a huge source of new customers to generate high fees, the realtors and builders now had plenty of new customers to buy more homes, and many potential buyers who did not have savings were able to enter the market. It seemed like…[READ MORE]

Is the US housing market going down in flames again. A precipitous drop in 2008 was temporarily halted by a massive government effort, but with the market props removed, it looks like house prices are going to resume their decline. U.S. home prices face three-year drop as inventory surge looms By John Gittelsohn and Kathleen M. Howley (c) 2010 Bloomberg News Wednesday, September 15, 2010; 12:24 AM Shadow inventory -- the supply of homes in default or foreclosure that may be offered for sale -- is preventing prices from bottoming after a 28 percent plunge from 2006, according to analysts from Moody's Analytics Inc., Fannie Mae, Morgan Stanley and Barclays Plc. Those properties are in addition to houses that are vacant or…[READ MORE]

Many people believe the crash is over because removing the supply stabilized prices. Most people who carefully watch housing markets agree that a cartel of lenders controls the market through its ability to control supply. Since lenders are being permitted to hold non-performing loans on their books -- and allow delinquent borrowers to squat -- they control the flow of properties through the foreclosure process. Also, they control the approval of short sales; therefore, they control the flow of properties through the short sale process. Since distressed sales of foreclosure properties and short sales make up a significant percentage of market sales, lenders control the bulk of the supply on the market. I believe this cartel will fall apart partly because all cartels are…[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 do with the growth in home ownership. Lax lending standards and lowered down payment requirements added buyers to the pool by converting good renters into bad loan owners.   If you want to blame any particular policy for this,…[READ MORE]

Some housing markets need a tourniquet to stop the profuse bleeding of home equity. In the most beaten down markets, prices have overshot fundamentals to the downside. In Monday's post I discussed Another Dumb Idea to Shift Private Mortgage Losses to Taxpayers. Today, I am going to look at a much better proposal for dealing with the reality of millions of foreclosures owned by the US government. GSEs to Lose Tens of Millions Lisa Marquis Jackson -- John Burns Real Estate Consulting August 28, 2010 While officials were gearing up for the August 17, 2010 meeting on GSE reform, the GSEs were losing millions of dollars every hour. Why? Because home prices are falling again. We have a solution. Recent…[READ MORE]

Bubble Blogs and Deflation Psychology The IHB has never been a bubble blog, but it is often labeled as such because I have been bearish on housing for so long. I am still bearish on Orange County, but I am very bullish on Las Vegas and many other beaten down markets. Someday, I may even be bullish on Orange County -- probably after all the bulls give up. Bubble blogs resonated with many people because they spoke a truth about greed and stupidity during a period of mass financial insanity. Prices were insane, and bubble bloggers said so. Once prices started to fall, bubble bloggers were heard by a wider audience and they fed into the cycle of deteriorating buyer confidence. Falling prices…[READ MORE]

Last week I wrote about The Upcoming Collapse of the Banking Cartel. In that post, I noted that as soon as the parties to the cartel begin to feel some urgency to liquidate their holdings that the cartel would crumble. The only thing sustaining prices are current levels is the limited availability of product. Once enough product hits the market in a salable form (short sales are still a very slow process), prices will begin to fall. Given how much effort and resources the government has put into market stabilization, it is surprising that the FDIC, the GSEs and the FHA are leading the movement to liquidate properties and bring down the banking cartel. FDIC sells another $760 million in REO…[READ MORE]

One housing bubble phenomenon was that the right ones -- prudent people who knew what they could afford -- were kept out, and the wrong ones -- kool aid intoxicated fools -- were let in. That mistake was bad enough, but now our own government is frantically working to repeat this mistake. Rather than doing something corrective, like letting house prices fall, our government is going to extreme lengths to keep the right ones out and keep the wrong ones in. Perhaps the administration is finally seeing the light, and in an amazing turn, they might actually let house prices fall. Grim Housing Choice: Help Today’s Owners or Future Ones By DAVID STREITFELD Published: September 5, 2010 The unexpectedly deep plunge in home sales this summer is likely…[READ MORE]

In Memoriam: Tony Bliss 1966-2012