Author Archive: OCHN Contributor

Jacobim Mugatu, 2/15/2015 To me, this “real estate recovery” has been nothing but a false front, a Potemkin village – the kind that the residents of Rock Ridge built to thwart Hedley Lamarr and his villains from taking over in “Blazing Saddles”. From artificially restricted inventory to unsustainable low interest rates, home prices have bubbled up well past an affordable level for all but those with stratospheric income. The rise of all cash sales – nothing more than money laundering sourced from every corner of the globe – has destroyed real price discovery and the velocity of true market demand. When you listen to those in the real estate industrial complex, none of the aforementioned issues are the cause of…[READ MORE]

If you repeat something enough times, does it make it true? One of the great Real Estate canards of the past year is the “myth of shadow inventory”. The realtor community had been drum beating this meme throughout 2013 in an effort to show how strong the market has been, and why you need to buy because inventory isn't coming back.  A simple Google Search for that phrase yields hundreds of articles posted just last year.... A myth-busting cacophony, or conspiracy, if you like. But does repeating that shadow inventory is a myth mean it’s true? I don't think so. Yes, there are fewer foreclosures thanks to market interference/consumer protective laws like California’s “Homeowner’s Bill Of Rights” and Nevada’s similar…[READ MORE]

Just like FHA mortgage insurance premiums, Fannie and Freddie are also increasing their Guarantee Fee (G-fees).   They have been increasing since 2008, when the government purchased 79.90% ownership in each government sponsored enterprise.  The initial reason for increasing the G-fees was due to the cost of all those GSE-backed loans going into default.  In subsequent years there were other reasons for G-fee increases for example the mortgage tax (collected through the G-fees), and the stimulation of the private mortgage market.   If fact, Federal Government collects so much revenue it's used to help fund the government during the sequester for an extra couple of days FHFA Announces Increase in Guarantee Fees The Federal Housing Finance Agency (FHFA) has directed Fannie Mae and Freddie Mac to…[READ MORE]

High-end properties were once immune to foreclosures.  These loanowners had little fear, compared to a loanowner in the Inland Empire that had a much greater chance of a foreclosure action by the bank.  This recent change in bank foreclosure policy is an indication of confidence by the banks that the cloud inventory is now completely under control, at least for the time being. HIGH-END FORECLOSURES UP 61 PERCENT YEAR-TO-DATE IN 2013 Overall U.S. foreclosure activity is down 23 percent year-to-date through October 2013, but foreclosure activity on properties in the $5 million-plus value range is up 61 percent from the same time period in 2012. Defaults in that range were infamous, however defaults in that range they seem to rarely materialize into…[READ MORE]

Just in case you didn't know FHA is a government insurance program for lenders. FHA has front-end Mortgage Insurance and regular Mortgage Insurance and it's paid by the borrower.  These rates have greatly increased since 2007. Now a new question is being asked.  Is FHA now one the lenders (really an insurance product) the government tried to band after the housing bust. The FHA is a predatory lender According to the FDIC's Inspector General: "Predatory lending typically involves imposing unfair and abusive loan terms on borrowers, often through aggressive sales tactics; taking advantage of borrowers' lack of understanding of complicated transactions; and outright deception." This happens all the time with payday loans, auto title subprime loans, and even student loans.…[READ MORE]

ARM's, option ARM's, negative amortization loans, and interest only loans were going to cause a wave of defaults as these affordability products where going to reset and/or recast.  This was the grim prediction after 2008.  However, due to programs like HARP which modified these loans into...well affordability products part 2, these homes weren't sold by the banks.  In addition, the Federal Reserve through it's ZIRP and QE programs pushed mortgages rates to their recent ultra lows which allowed the new affordability products part 2 to have lowest possible rates.  However, in the past few months mortgage rates have increased which has caused number of refinances to drop. Home equity lines due for reset may be looming financial disaster Some borrowers…[READ MORE]

We get questions all the time, how long must I wait before I can purchase a house after foreclosure, bankruptcy, or short sale. Philadelphia Bankruptcy Lawyer allow you and your family to protect your home and other assets through bankruptcy protection. Finally here is some valuable information. Chapter 7 Bankruptcy Chapter 13 Bankruptcy Fannie Mae 4 years (Chapter 7 or 11) Fannie Mae 2 years from discharge date Freddie Mac 4 years from dismissal (Chapter 7 or 11) 4 years from dismissal date FHA 2 years from discharge date Freddie Mac 2 years from discharge date VA 2 years from discharge date 4 years from dismissal date USDA Rural 3 years from discharge date FHA & VA 1 year of…[READ MORE]

The current housing market is now testing 50% investor participation levels on closed sales. Maybe soon the market will test 55% or 60% investor participation levels.  According to this article below, all cash sales are being classified as institutional investors because rarely owner occupied sales are done with all cash which some exception of course.  However, investor purchases are negating the affect of lower rates by increasing home prices.   Lower rates are helping the banks, loan modification programs, and local governments to collect tax revenues, but lower rates are not helping the first time home buyers.  In fact, the trade up home buyers are not doing much better.  Enter the cash investor. Nearly 50% Of All Home Sales Now…[READ MORE]

I have been surprised that SB 30, the California legislation that would give tax relief on debt forgiveness on a principal residence hasn't been passed for 2013.  Since 2008 if you had debt forgiven by a lender, that forgiveness hasn't been subjected to both federal and state income tax.  For example, the bank gives you a $100,000 mortgage and you don't pay it back, the loan is then treated as income.  For 2013 it seems that it was just going to get another rubber stamp approval year.  However as of August 30th it still has been stalled in the California legislature.   CAr has a powerful lobbying branch in both Washington and Sacramento.  In fact, Larry Roberts just recently posted…[READ MORE]

According to Wikipedia:  The American Dream is a national ethos of the United States, a set of ideals in which freedom includes the opportunity for prosperity and success, and an upward social mobility achieved through hard work. In the definition of the American Dream by James Truslow Adams in 1931, "life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement" regardless of social class or circumstances of birth. The idea of the American Dream is rooted in the United States Declaration of Independence which proclaims that "all men are created equal" and that they are "endowed by their Creator with certain inalienable Rights" including "Life, Liberty and the pursuit of Happiness.…[READ MORE]

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In Memoriam: Tony Bliss 1966-2012
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