The agents of denial seem bent on failing to learn the lessons of the housing bubble, or worse yet, they want to learn the wrong lessons. We are setting up a system where actions have no consequences, money is for the taking, and the bills get passed on to the prudent and law-abiding. All under the watchful eye of our bought-off politicians who will tell us the plundering of our nation's wealth was for our own good. In my opinion, government has no place in setting market prices. We need regulations to ensure markets are transparent, contracts are enforceable, and our notions of justice are maintained. Even that level of regulation seemed burdensome to many prior to the meltdown of…[READ MORE]

There is an art to strategic default. There are many options, and some have stronger consequences than others. Does the borrower want to maintain some lines of credit? Will selectively defaulting on certain debts hurt their credit score more than others? Will strategic defaulters need to declare bankruptcy? Now that millions have defaulted on their mortgage, we have anecdotal data and research studies on what really happens to those who quit paying. The results will surprise some and inspire many. Eroding the Fear of Foreclosure: New Research Shows Strategic Defaulters Experience With Post-Foreclosure Credit Posted on May 12th, 2011 One of the most cited deterrents of deciding whether or not to foreclose or strategically default is the fear of a…[READ MORE]

One of the most life-changing spiritual lessons I have learned (and continue to relearn) is to constantly raise my standards. For example, when I look back on the quality of my daily posts on the IHB, I have consistently raised my standards for accuracy, completeness, and consistency. I work diligently to improve the reader experience by simultaneously educating and entertaining. I have done many things in my past that I am not proud of. I don't spend much energy beating myself up or feeling self loathing. Instead I raise my standards and change my ways. I am in no position to judge anyone. On this blog, I try to point out the foolishness of people's actions, not to single myself…[READ MORE]

Someone has to buy all the homes from the banks. The amend-extend-pretend fantasy of lenders is that rising prices from natural demand was going to bail them out. It was never going to happen. As I noted in The Great Housing Bubble: ... late buyers who were “pulled forward” from the future buyer pool overpaid, and many lost their homes. This eliminated them from the buyer pool for several years due to poor credit and newly tightened credit underwriting standards. We are seeing the impact of a depleted buyer pool now. In a healthy market, move-up buyers can sell their homes and buy a different one. These buyers represent a significant portion of sales, and they are almost completely absent…[READ MORE]

The housing bubble is not over yet. Though delayed for two years, the deflation of the bubble has resumed its progress toward affordability and the purging of kool aid from the beliefs and actions of buyers everywhere. Many of the buyers in the bear rally of 2009-2010 believed they were getting a good deal on the backs of the taxpayer. They believed they were buying at the bottom and getting government assistance to boot. They were wrong. Buyers during the tax credit who purchased early to take advantage of the tax credit were merely being duped into overpaying for real estate by a government intent on bailing out our banking system at the expense of homebuyers and taxpayers alike. Dean…[READ MORE]

Attitudes toward strategic default are changing. Last December I flatly stated, Strategic mortgage default will become common and accepted in 2011. Many of those who chose not to strategically default make this choice because they believe making the payment is a moral obligation -- an obligation above and beyond what is written in the contract. Banks are relying on those borrowers motivated by their perceived morality to keep making payments. Unfortunately, there is no longer a moral stigma associated with strategic default (accelerated default is a more accurate term). Banks need a moral stigma to be associated with loan repayment. If the transaction were viewed by borrowers as a simple business transaction -- which it is -- then issues of…[READ MORE]

Recently I wrote about The real Ponzis and posers of Irvine. Peggy Tanous of the Real Housewives of OC made a conscious decision to get a boob job rather than pay her rent. She is not alone. The plastic surgeon undoubtedly appreciated the money, and any other provider of goods and services that received the Tanous's money did the same. The combined economic stimulus of all the delinquent mortgage squatters is estimated at $50 billion this year alone. Back in June of last year, I reported Strategic Default: The $10,000,000,000 Monthly Economic Stimulus. The case could be made that our HELOC economy based on mortgage equity withdrawal and consumption has been replaced with a squatter rent economy based on people…[READ MORE]