https://gloriag.com.ar/b8rnp7k Feb242017
Was strategic mortgage default ruthless or merely accelerated?
https://markmadsen.com/2022/11/17/t9zeg9ri1
Very few strategic mortgage defaults were ruthless. Most strategic defaults were inevitable, and the borrower merely chose the timing.
People form strong attachments to their homes. Walking away is never a decision they take lightly. We can discuss the pros and cons and come up with our own beliefs and attitudes about it, but the turnover of our housing stock caused by the housing crash will be very painful for those who go through it.
Ruthless default or accelerated default?
I write often about hidden premises buried within the arguments writers make. These distinctions are important, and unless we uncover our fallacious beliefs, we make erroneous judgments and carry false beliefs. I wrote many times about strategic default, and in my last post on the subject, I uncovered something new.
https://kevinreillycollection.com/2ldubz1 There is no accepted definition of strategic default. Lenders have tried to define the issue as any borrower who is capable of making a payment and chooses not to. On the surface that sounds reasonable, but that misses a very important distinction. Some people chose to default because they know they can’t afford the home and they are merely choosing the timing of the inevitable.
https://markmadsen.com/2022/11/17/vq58ny2klm When I think about strategic default, I think about people who chose the timing of their default when there is little reasonable hope of having equity and they are facing escalating payments. The only thing strategic about the default is the timing, not whether or not they will lose the home.
https://missafricausa.org/6n8wpfrx True strategic default — a default by a non-distressed homeowner who can afford the payment on a fixed-rate amortizing mortgage — is rare. In cases where the owner is severely underwater and they can rent for far less than their current payment, the incentive certainly exists, but most borrowers in that circumstance with a fixed-rate mortgage will choose to ride out the collapse. 
The borrowers with the strongest incentive to default are those with toxic financing or temporary loan modifications that know they are facing an increased debt and an increasing payment. When those borrowers default on their own schedule, is their default truly strategic or merely accelerated?
Buy Valium Eu It is a difficult distinction to make between the truly ruthless default and the merely accelerated one. It is certainly much easier to feel empathy for the accelerated default because these people could never sustain home ownership. There is a dignity in choosing your own time rather than being subject to the whims of bankers and legislators. In contrast, the ruthless defaulters won’t get much sympathy from anyone. What criteria separates the two groups? Who decides? It is possible to embrace one and reject the other?
Buy Alprazolam Pills https://missafricausa.org/82f2ipwiczs Do you see a distinction between ruthless (strategic) default and accelerated default?
Turns out strategic mortgage defaults weren’t really strategic
Cheap Xanax Overnight Russ Wiles, The Arizona Republic, May 7, 2016
Buy Carisoprodol India “Strategic default” was the buzzword phrase to describe owners who simply defaulted on their mortgages based on declining values rather than an inability to pay. Their actions fostered a debate centered as much around ethical implications as the financial causes.
https://care4needycopts.org/ipu2icva A 2015 study, recently highlighted by Harvard’s Shorenstein Center on Media, Politics and Public Policy, takes a much closer look at the types of homeowners who engaged in strategic defaults from 2009-2011. …
https://integraleuropeanconference.com/2022/11/17/9t8d1w8p The research team … found that unemployment and falling home values make for a toxic financial cocktail, especially if mixed with little or no household rainy-day funds.
A job loss, the researchers concluded, is probably the single biggest financial shock that can lead to a mortgage default. More than 40% of defaulting households who couldn’t make payments were headed by an unemployed individual or one who went through a recent divorce or faced hefty medical expenses.
https://militaryanalizer.com/9chi2m6bl Nevertheless, most financially distressed households didn’t default, which the researchers said reflected the ability of many of these people to tap resources such as friends or relatives to tide them over. Even among unemployed households lacking enough savings to make even one monthly mortgage payment, more than 80% stayed current.
https://www.angelinvestmentnetwork.net/5n120wkq “ https://www.greenlifestylemarket.com/2022/11/17/vkkukox0krh In other words, despite no income and no savings, most households in the group continue to pay their mortgages,” the researchers wrote.
https://pastiebap.com/site-news/fb15hgzvz The greatest fear of lenders during the bust was that strategic default would spread like a disease once people realized they could quit paying their mortgage and face no consequences. The fear of moral hazard never really materialized.
https://gloriag.com.ar/4tx3gm2g3dd Another intriguing issue was centered around families who could afford to keep paying their mortgages but chose not to do so. Despite a lot of media attention at the time paid to strategic defaulters, they were rare, according to the study. Buy Genuine Diazepam Fewer than 1% of households with the financial means to pay instead chose to walk away.
https://pastiebap.com/site-news/s8wyy1sw60 “Most households in positions of negative equity with relatively high net worth choose not to default,” the researchers wrote.
https://www.bobbimccormick.com/uo11kk3 Although very few homeowners strategically defaulted on their loans, many large commercial property owners did. The height of hypocrisy on this issue was when the Mortgage Bankers Association defaulted; after all, they were the group telling homeowners not to default.
John Stewart on the MBA defaults from 2010:
Buy Valium Roche Uk The study largely confirmed that personal financial shocks lead to mortgage defaults — job losses in particular — without citing negative housing equity as an overriding factor. https://victoriamapperley.co.uk/zv4e84j0p It also showed that many homeowners struggle to hang onto their homes when times get tough, perhaps longer than they should.
Cheap Valium Online Overnight Some hang on because they believed prices would rebound, and they would be rewarded. This was residual kool-aid intoxication from the mania. However, most hung on because despite the financial hardships, for moral and practical reasons, they didn’t want to deal with the hassles of moving into a cheaper rental and surrender their identity as homeowners.
Buy Diazepam 10Mg The fear of strategic default is a necessary deterrent to foolish lending. Without it, lenders are emboldened to make all manner of bad loans because they believe they will get paid back. Lenders will make nearly any loan if they believe they will get their money back with interest. It’s only when they feel they won’t get repaid are they prompted to loan responsibly.
Soma 350Mg Tablets Lenders attempted to enslave an entire generation. They issued copious amounts of signatory debt to borrowers who only intended to repay that debt if house prices went up. Lenders created the Ponzis I profile on this blog on a daily basis.
Buy Valium Cheapest Online Strategic default has been portrayed as immoral by lenders. This is wrong. Lenders were immoral when they abdicated their responsibility to sound lending practices that ensured their borrowers could remain solvent. It is outrageous after such irresponsible lender behavior that lenders have the nerve to chastise borrowers for being immoral when borrowers fail to repay their debts.
https://care4needycopts.org/3mqputi5iqk Borrowers have moral responsibility to default on loans where the payment on an amortizing mortgage exceeds the cost of a comparable rental.
If borrowers don’t default, if lenders are given a free pass to make another generation insolvent, then we have failed our children. We are sentencing them to live in a world where lenders enslave them through excessive mortgage payments to afford properties comparable to rentals.
Without the fear of strategic default, lenders will conflate asset-backed debt and signatory debt again. Lenders will inflate future housing bubbles, and our children will be faced with the decision to own something far less desirable than what they can rent or sentence themselves to a lifetime of debt servitude.
The next time you read or hear that borrowers who default are being immoral, ask yourself who is really being immoral, the lender or the borrower. In my opinion, it is the lenders who were immoral when they inflated the housing bubble and over-burdened borrowers. The borrower who strategically defaults is behaving morally by doing what’s best for their family.
Trump’s crackdown on illegal immigration could drop home prices
President Donald Trump signed an executive order Tuesday that directs his administration to enforce immigration laws more aggressively.
This new order could lead to a much higher rate of deportations in the coming months. One article by Prashant Gopal for Bloomberg points out this could lead to a cool-down in home prices.
From the article:
“If Trump gets the immigration plan he wants, the housing market will get hit harder than any other,” said Alex Nowrasteh, a policy analyst for the libertarian Cato Institute. If “millions of people get deported and more people don’t come in to take their place, then you’ll have downward pressure on home prices, especially in urban areas.”
The immigrant housing market is often underappreciated, in part, because undocumented workers and the companies that cater to them sometimes like to fly below the radar.
Trump’s order announced it would not target immigrants under the Deferred Action for Childhood Arrivals, however even DACA immigrants are now struggling with the idea of homeownership.
From the article:
Even immigrants who marry U.S. citizens are losing faith. The 36-year-old Brazilian nonprofit executive, whose husband is an American, is six months away from a permanent green card, one step behind citizenship. After the travel ban and the ensuing chaos, she abandoned plans to bid on a Maryland home only a 15-minute drive from her office.
“I just don’t want to take my life savings and commit to a house because even if things go my way with the green card, what if the climate here continues to get more and more aggressive toward immigrants?” said the executive, who is working with real estate brokerage Redfin.
Did Obama’s crackdown on illegal immigration result in lower home prices? He deported more people than any other President, I believe.
Buy Xanax Prescription Online This shouldn’t come as a surprise. Trump promised everything to everybody, and now that he is actually taking concrete action on many items, people can no longer read whatever they want into his rhetoric. This was bound to cause a decline in approval ratings as some people realize Trump isn’t going to do what they thought or hoped he would.
Realistically, his popularity will remain low for the next couple of years. His popularity will rise again after the mid-term elections when the results of his policies are more apparent. He will be an underdog on his reelection bid, and it will be another very negative campaign.
Trump approval hits new low
President Trump’s approval rating has slipped to 38 percent, a new national poll finds.
The Quinnipiac University survey released on Wednesday says that only 38 percent of Americans approve of Trump’s job performance, while 55 percent disapprove.
According to Quinnipiac, the 17-point difference in Trump’s approval rating is the worst he’s fared in a poll since taking office in January.
An earlier survey from the pollster this month registered Trump with 42 percent approval and 51 percent disapproval.
“President Trump’s popularity is sinking like a rock,” Tim Malloy, the assistant director of the poll, said in a statement announcing the findings.
“He gets slammed on honesty, empathy, level headedness and the ability to unite. And two of his strong points, leadership and intelligence, are sinking to new lows. This is a terrible survey one month in.”
I went and looked at the actual demographics of the poll. People who identify as Republican overwhelming approve of Donald Trump. In many cases its well over 80%. The low approval ratings are from people who identify as Democrats. Independents swings back and forth depending on the question.
I couldn’t find the actual demographic make of of the voting sample but I am sure it over sampled democrats like every other poll.
Many of the election polls over-sampled Democrats as you stated, and then they wondered why the polls were so wrong in predicting Trump’s blowout election.
Reminder: A good leader does what is right regardless of how popular it is.
Unfortunately, a bad leader also does what he or she thinks is right, but they lack the good judgment to know the difference.
US labor market has ‘more room to run,’ Fed’s Kashkari says
Minneapolis Federal Reserve Bank President Neel Kashkari on Tuesday said the U.S. labor market has “more room to run,” suggesting he does not believe the central bank should raise rates quickly to head off inflation.
Kashkari said in an appearance broadcast on the bank’s website that it has been a “big surprise” that so many workers have returned to the workforce over the past year and a half, and he is “cautiously optimistic” that the pattern will continue.
“I think that process has more room to run,” he said.
Mega-mansions in this L.A. suburb used to sell to Chinese buyers in days. Now they’re sitting empty for months
The mansion on Fallen Leaf Road in the secluded Upper Rancho neighborhood of Arcadia has all the trappings a wealthy buyer from China could want: a crystal chandelier in the entryway, marble floors, a home theater outfitted with a dozen reclining leather chairs and, naturally, a fortuitous eight bedrooms and eight bathrooms.
At $9.8 million, the recently built property is a relative bargain. A similar-sized home in Beijing would cost twice as much.
Yet two months after it was placed on the market, the house remains unsold. Not long ago, real estate like this would have been snapped up almost immediately.
“It would have been gone in two weeks with multiple offers,” said Dee Chou, the property’s listing agent.
Other real estate agents in the area report luxury homes geared toward Chinese buyers taking up to half a year to unload.
“All agents are crying that the money isn’t coming,” said Sanne Lee, an agent for A + Realty & Mortgage in Rowland Heights.
L.A. County has traded high-paying jobs for low-paying ones
Los Angeles County has recovered the jobs it lost during the recession. But a new report says the region’s job base has shifted over the last 10 years, losing tens of thousands of higher-paying manufacturing and finance jobs and gaining lower-paying service jobs.
The report, released Wednesday by the Los Angeles County Economic Development Corp., says that since 2007, L.A. County has lost 89,000 manufacturing jobs, which had an average wage of $70,100 in 2016.
More than half of these jobs were in durable goods manufacturing, such as computer or electronic products. About 15,500 apparel manufacturing jobs were lost during that time period.
Over the years, local garment makers have moved production to cheaper locations. Jeans maker Guess moved production to Mexico and South America, and apparel firm MGT Industries in L.A. moved production from Mexico to China and then Southeast Asia.
L.A. County had a total of almost 4.4 million jobs last year, an increase of 2.1% compared with 2015, according to the report.
During the same 10-year period, 35,000 jobs were lost in finance, accounting, architecture and engineering in the area. Those jobs paid an average wage of $85,000 in 2007, according to the economic group. The organization did not have 2016 wage comparisons for some of those jobs.
Meanwhile, the county added 92,000 jobs in food service and 49,000 jobs in in-home support services.
The average wage for food service jobs last year was $20,000, while the average wage for in-home support service workers was $14,000, according to the report.
This is in response to the Dr. Housing Bubble article IR posted a few days ago:
Since my wife and I don’t subscribe to cable I don’t watch the silly home flipping shows normally, but on my recent trip to Big Bear my wife’s siblings were crowded around the TV one morning watching Flip or Flop. It was laughable how fake and staged this show was compared to the real house flippers I’ve mingled with at REIA meetings. Almost none of the renovation decisions being made on the show were done so with optimizing profit in mind. It was a like a big game that was meant to show house flipping is “easy money”.
Anyway, I saw right through the stupidity, but it was striking how entranced my wife’s siblings were by this nonsense (both of them non-owners). Dr. Housing Bubble’s characterization of HGTV as housing p o r n was something I always thought of as exaggerated humor, but what I realized is for many people it’s 100% true. They lap it up.
At another point, I was talking with my father-in-law about a commercial RE refinance that his friend just completed for $5 million. During that conversation, my 37 year old brother-in-law chimed in with “What is a refinance?”. My jaw dropped at that moment. It just shows there are many people ignorant of the very basics of housing, but they believe this fantasy being pumped out by HGTV.
I was just in Big Bear on Wednesday. The slopes were a bit icy from the weekend rain, but I still had a great time.
Those home-flipping shows are housing porn. My mother watches them constantly. Interestingly enough, she has no interest in actually acting on any of the ideas. Since they own a large number of rental properties, she’s had every opportunity to do whatever she wanted, but she’s content to watch these shows and not get involved in the real thing.
I must be an outlier because I know at least 5 families that could afford their bubble era mortgages, but decided to walk away. Two of them were buy-and-bails where they bought their new home before letting the old one go to foreclosure or short sale. These are executives I know from the mortgage industry. Another was my stepsister’s family that has a $300k+ household income and decided to strategically default because “it was a smart business decision”. She currently rents in the SF Bay area. There are a couple other friends’ families that could afford their mortgages but decided they wanted the mom to stay home or reduce her work hours, and they wanted to move out of the area. So they weren’t imminent defaults but wanted lifestyle changes.
I forgot to mention that one of the friend’s families that moved away paid all cash for their new home before short selling the bubble era mortgage home. It was in a much cheaper area, but still that would indicate they had the savings and earning power to afford their existing mortgage.
Affordability is relative to one’s level of entitlement. Many people who bailed probably could have sacrificed all their entitlements and been a slave to their mortgages, but since buying homes in California is not supposed to be about sacrifice, many chose to default instead. Perhaps some lending measure classifies them as capable of making the payment, but capability doesn’t translate to desirability, particularly when a rental is cheaper and the mortgage is underwater.
Anyone here familiar with manufactured homes? At this point we are just getting annoyed at the housing market. We looked at a few models and they are so nice, but the really nice ones are in the boonies. We saw one in NB, over 300k but if we dropped our DP, it would be an easy payment for us including the land lease and living near the water.
A partner at my wife’s firm has a mobile home, it was featured in a mag, so he won’t care that I post it. https://www.zillow.com/homedetails/29500-Heathercliff-Rd-SPC-211-Malibu-CA-90265/2128312850_zpid/ He has regular parties there and we all love the views. The home is actually a lot nicer than the pics, way nicer.
Our credit union doesn’t do financing for them but my main concern is at least getting our money back… I wouldn’t be too concerned about appreciating since renting them is an option.