Rudolph the Red-Nosed Reindeer

When I was growing up, the Christmas season usually kicked off in early December with classic Christmas movies. One that I looked forward to every year was Rudolph the Red Nosed Reindeer. Burl Ives sang all the tunes from that movie. Here we go…

Rudolph, the red-nosed reindeer
had a very shiny nose.
And if you ever saw him,
you would even say it glows.

All of the other reindeer
used to laugh and call him names.
They never let poor Rudolph
join in any reindeer games.

Then one foggy Christmas Eve
Santa came to say:
“Rudolph with your nose so bright,
won’t you guide my sleigh tonight?”

Then all the reindeer loved him
as they shouted out with glee,
Rudolph the red-nosed reindeer,
you’ll go down in history!

Rudolph the Red-Nosed Reindeer — Burl Ives

.Sometimes when I see what people did and how they lived during the bubble, it fills my Reservoir of Schadenfreude. Today’s featured property has a story to tell, and I want to thank Brittney for providing me the detailed mortgage data that allows me to tell it.

24 Shady Lane Front 24 Shady Lane Kitchen

Asking Price: $1,249,000IrvineRenter

Income Requirement: $312,250

Downpayment Needed: $249,800

Purchase Price: $1,157,000

Purchase Date: 1/6/2005

Address: 24 Shady Lane, Irvine, CA 92603

Beds: 3
Baths: 3.5
Sq. Ft.: 2,629
$/Sq. Ft.: $475
Lot Size: 5,053 sq. ft.
Type: Single Family Residence
Style: Mediterranean
Year Built: 2005
Stories: Two Levels
View(s): City Lights
Area: Turtle Ridge
County: Orange
MLS#: S512996
Status: Active
On Redfin: 8 days

From Redfin, “Best deal around. Great plan 1 in private cul de sac location in the prestige Ledges at Turtle Ridge. Home shows as new very clean private location and great value for the Ledges estate. Nice rear yard area and great street appeal. Truly great deal here priced below most homes in area.”

How can any “plan 1” be worth over $1,000,000?

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{adsense-ir}
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This one isn’t a rollback yet, but I doubt the owners care because they have already made their money on the deal. Let’s look at the loan history on this property and see just how these people managed to live over the last 3 years.

24 Shady Lane BackThe property was purchased in January 2005 for $1,157,000. The combined first and second mortgages totalled $1,156,730 leaving a downpayment of $270. Let’s just call it 100% financing.

By April, they owners were able to find refinancing through Countrywide with a $999,999 first mortgage. This mortgage was an Option ARM with a 1% teaser rate. The minimum payment would be $3,216 per month.

Also in April of 2005, they took out a simultaneous second mortgage for $215,000 pulling out their first $58,000.

So look at their situation: They are living in a million dollar plus home in Turtle Ridge making payments less than those renting, and they “made” $58,000 in their first 4 months of ownership.

Apparently, these owners liked how hard their house was working for them, so they opened a revolving line of credit (HELOC) in August 2005 for $293,000. Did they spend it all? I can’t be sure, but the following certainly suggests they did.

In December of 2005, they extended their HELOC to $397,990.

In June of 2006, they extended their HELOC to $485,000.

In April of 2007, the well ran dry as they did their final HELOC of $491,000. I bet they were pissed when they couldn’t get more money.

So by April 2007, they have a first mortgage (Option ARM with a 1% teaser rate) for $999,999, and a HELOC for $491,000. These owners pulled $333,000 in HELOC money to fuel consumer spending.

nouveau riche universityAssuming they spent the entire HELOC (does anyone think they didn’t?), and assuming the negative amortization on the first mortgage has increased the loan balance, the total debt on the property exceeds $1,500,000. The asking price of $1,249,000 does not look like a rollback, but if the property actually sells at this price, the lender on the HELOC (Washington Mutual) will lose over $300,000.

These owners will probably just walk away. I doubt they have any assets. They never put any money into the deal, they pulled out $333,000 in cash, and they got to live in Turtle Ridge for 3 years. Not a bad deal — for them.

Karma will not leave these people alone though. They have become accustomed to a lifestyle far beyond their means. Their house was providing them with $111,000 a year in tax-free income. When they get forced out, their credit will be ruined, and they will have to go from living the life of the nouveau riche to being a destitute renter. We can only hope this transition is painful and the memory of what they lost lingers for years.

These people likely drank the kool aid and actually believed this kind of lifestyle could be sustained. That level of ignorance makes it hard to have much sympathy for them. However, when you see the excess of this lifestyle, you can’t help but wonder if it was worth it.

If you knew prices were going to collapse, and the lifestyle was not sustainable (like many on this board did,) would you have done it anyway? When you see the lives led by people like today’s owners, it is not difficult to see why so many chose that life.

69 thoughts on “Rudolph the Red-Nosed Reindeer

  1. lawyerliz

    Call me crazy, but I wouldn’t have even enjoyed my ill-gotten gains. I would have felt too anxious and guilty about paying it back or knowing subconsciously I couldn’t pay it back.
    —–

  2. shhhhh

    It was drilled into my head at an early age to live always within your means. However, it was a struggle right out of college in the ’80s. I recall not being able to pay my $320 balance on my credit card; thus, it ‘ended’ in a charge-off. It dinged my credit for seven years thereafter.

    Scale aside, this is not much different than what these owners did. I often wonder, if exotic loans were readily available back then, would I have done the same? I’m guessing, no, but you never know.

    $320 vs. $111,000/year vs. a broken mirror? Is the penalty really the same (seven years of bad credit)?

    BTW, I’m now a healthy 750 who sold at the market’s peak. (I sound like a corny weight-loss infommercial, eh?)

  3. IrvineResident

    folks, multi-generational family living is how you can afford a house in Irvine:

    7 SALVO, Irvine, CA 92606
    List Price: $1,428,000

    “Premier westpark trieste model home on largest culdesac lot.Built for multi-generational family living,downstairs master suite,sitting room and bedroom,upstairs,2 master suites,2 second bedrooms,sitting room,plus formal livg and dining rm,private wrap around rose gardens new kitchen,stainless thermador appliances,center island, additional office/craftroom off of laundry!Incredible one-of-a-kind floorplan.Security system,big screen tv w/surround system,dsl,walk to plaza vista school”

  4. golfproz

    They could have taken that $333K and bought a small condo, lived rent and payment free happily ever after. But did they……no chance.

  5. Mr Vincent

    …and according to some of our leaders, we are suppose to feel sorry for these people who are in trouble with their mortgages.

    Regarding the house….pretty bad curb appeal…tiny lot.

    750k

  6. Crusader

    This is all pretty amazing Kool Aid considering all the hoops our lender made us jump through to get a loan during the S&L crisis of the 80’s even with a good job and 40% down.

  7. Jim

    Hi IrvineRenter, love the blog. This one’s a great story.

    Little correction for you. The payment rates on option-arms aren’t used in the manner you’ve used here. The 1% pay rate would be used to calculate the minimum payment as if this were a 30-year fixed rate mortgage at 1% interest.

    For example, a $100K option-arm with a 0% payment rate, wouldn’t have a minimum payment of $0. It would have a payment of $100k/360 (360 months = 30 years * 12 months)

    The actual minimum payment on the above mortgage would have been $3216, not $833. Still well below the fully amortizing payment. Of course, the most frightening aspects of the option-arm, and probably the one least picked up on by the media, is that the interest rate typically resets EACH AND EVERY MONTH, usually with no grace period.

    Keep blogging!

  8. Eno

    Awesome. Hilarious. Hard to believe.

    BTW, you missed an opportunity to use the video for Pavement’s “Shady Lane.” Save it for the next one on Shady Lane. 😉

  9. awgee

    I doubt they had the foresight to do the following, but if they were really gaming the system, they could take the $333,000 and rent a very nice home for many years. And they could do it before the property goes into foreclosure and ruins their credit report.

  10. Kelja

    I had a couple of properties I sold a few years back & began to rent. I thought the prices then didn’t make sense. Of course, I missed out on all the incredible price appreciation during the height of the ‘false housing spike’ of the last few years. In the end, I will be proved right but my timing absolutely sucked!

    My wife keeps going back to this and saying if we only waited we could have cashed out at the top! Well, I proved that I’m no wiz at picking tops or bottoms for that matter. Only being human, if, hypothetically, we hadn’t sold out but started to sell & buy (flip) real estate, I wonder if we would’ve been some of the kool-aid drinkers you write about here.

    I’d like to think not, but I wonder if we would’ve been caught up with the euphoria.

    My mistake was not understanding how Greenspawn not only increased the size of the punchbowl, but spiked it with 200 proof ethanol.

  11. mopar777

    This has to be the most butt-ugly house I have ever seen for over $1M.
    Whatever appraiser said that this eyesore was worth 1.5 should be stripped of their licence permanently and investigated for fraud. Good move WaMu! now your going to eat half a mil.

  12. NanoWest

    Don’t feel bad about selling early…..most rational people figured that the game was over in 2003.

  13. Land of Delusion

    IR:

    Love the blog and especially the income requirement/down payment breakdown. I’m curious about the 20% down payment figure you’re using.

    Obviously lending standards have tightened lately, but has it gotten so restrictive that 20% down is now “officially” required? In other words, if I walk in to a mortgage broker’s office with a great FICO, income verification and 10% down, would I be shown the door?

    Or are you using the 20% figure because it represents a traditional figure you think lenders will return to in the next few years?

  14. buster

    Sorry, this doesn’t qualify for Schadenfreude. Today’s homedebtor is a true WINNER in the game of housing musical chairs. He playing his cards right, got a nice house for very low rent, took a ton of cash out and is slamming it back to the bank. Yeah, yeah, I know the it’s not “moral” to borrow what you have no intention of paying back, but this homedebtor didn’t see it that way. To him, it was WaMu’s obligation to make sure WaMu was covered on their loan.

    Did poor little WaMu really get beaten by this big, bad homedebtor? Or did WaMu get beaten by their own greed and stupidity? Who’s really the “bad” guy here, the homedebtor or WaMu? Who created the bubble? Who created the root cause of pricing good, solid people out of homes they wanted not for investment but as a place to live? This homedebtor or WaMu? There’s a fool born every minute and two to take him, as the saying goes, and WaMu was the fool. WaMu deserves to take this loss.

  15. Ken

    Schadenfreude silver lining: There’s a chance that the HELOC debt won’t be tax free–if it’s non-recourse (and usually only purchase loans and rate/term re-fis are recourse) and the bank forgives it, the forgiven amount is considered taxable income. This means they could have ~$150,000 of tax liability hanging over their heads, and that’s much harder to get rid of than any other form of debt. (If they’d really been planning an exit strategy they should have rolled the HELOC into R/T refi a little while ago.)

  16. Patricio

    While taking a bike ride through Huntington Harbor yesterday, I saw two houses for sale oddly across the street from one another. One had a boat dock 1.4 mil and was a decent house probably 30 years old. The other was across the street and it was 1.1 mil and it was bigger and nicer with out a boat dock. So, if I can buy houses on the water and next to the water for the same or less…why in the hell would I even think about Irvine?

  17. lg

    10% down payment options are still available for someone with strong credit and full documentation. i believe that IR has been using 20% as a traditional figure.

    something that may need to be mentioned will be the increasing difficulty in obtaining loans due to areas deemed a “declining market.” traditional lending guidelines typically state that lenders will not lend in such areas. unfortunately southern california (as well as most areas that saw significant appreciation) may be classified this way in the coming months/years. we are already seeing guideline restrictions that specifically target california that may reduce lenders’ maximum limits by as much as 10%.

  18. rsm

    The truly gut wrenching aspect of this whole real estate/investment banking debacle is that you and I ( mr. and mrs. taxpayer) will end up bailing out the theives. Don’t think so?….as the asset backed commercial paper market as basically shut down, the portfolios at the FHLB have expanded exponentially. Countrywide as an example has tapped this source of funding for $51B…..when they go belly up, who do you believe will eat it? Even though it is a GSE ( gov’t sponsored ent. without explicit gov’t guarantees….it is “to big to let fail”. You and I will be paying for this with higher taxes and lending rates….So, if you happen to know or run into people who have gamed the system, kick them in the groin for me.

  19. NanoWest

    This is a great question. What is really going on in the lending industry now in terms of down payments and loans ? Any mortgage brokers out there with some information ?

    Anyone able to look at the financing used in Irvine to purchase homes over the past two or three months ?

  20. Kelja

    Yes, Ken, these greedy bastards should be on the hook for at least their tax liabilities.

    But, our ever-wise legislators seeking votes will undoubtedly let them off the hook.

    You can bet on it.

  21. mark

    If this is “bad curb appeal” I’d like to see “good curb appeal.” I’m not a big fan of Mediterranean style homes, but this is an attractive home to pull up to after a long day’s work.

  22. IrvineRenter

    I have written some satire on this blog, but I couldn’t channel the kool aid long enough to do Truthiness.

  23. IrvineRenter

    I wonder if that will come to pass. The one “bailout” idea that seems to have wide public support is the elimination of the tax on debt relief for the foreclosed. Of course, if more stories like this one are told, that support may disappear.

  24. houseonlegs

    Lenders still allow 95% loan to value (LTV) for purchases on conforming loan amounts, under $417k. If the appraisal states that the property is in a declining market area, some lenders will not touch it. Other lenders will consider depending on the loan to value. When I worked for a lender, we would decrease the max LTV by 10%, but that was 6 months ago. The housing bubble fueled greed for everyone involved. The lenders would lend on whatever they could sell to Wall Street and the borrowers would take whatever the lenders would lend them. I believe that lending standards will become much tighter than we expect, they just take a long time to catch up.

  25. mark

    4 times income is repeated constantly because that’s been the historical standard for SoCal, but don’t accept that as reasonable for your own personal standards. If you can’t mortgage

  26. tonye

    If they were smart, they would have traded those dollars into loonies.

    Really, the 70 loonies in my drawer have been my best investment for the last three years!

    All in all you have to hand you share of blame to the bank. They were just a guilty as the homeowners. Indeed, the whole blame belongs to the ENTIRE RE INDUSTRY for participating in this obvious Ponzi scheme.

    These homeowners played the game _almost_ perfectly. The lived rent free for three years and now they can just move out. I say “almost” because we don’t know if they stashed the money away or blew it.

    If they blew the money then they are hosed.

    If they stashed the money in cash, then they’re OK

    If they stashed the money in a US account then they may have to pay some of it back.

    If the stashed the money in another country (Canada?) then they are truly and absolutely winners. Don’t pass Go… they don’t need to, they own hotels in Park Place and the Boardwalk!!!!

  27. Jim Jones

    I would be interested in the mind set of these folks. Did they walk into this thinking this was something that they could sustain and then later realized that only way to keep it going was to scam the system? Or did they approach it as a scam from the get go?

    Me, I can’t imagine enjoying a homelifestyle like this knowing that it was not sustainable and was based on dishonest conduct for which others would eventually suffer.

    I agree with the other posters who assign a large portion of the responsibility for this nonsense to the lenders.

  28. tonye

    Oh.. something else… this property is going for $435 sq/foot. This is gonna have a disastrous effect on the other properties in TRidge.

    Finally we’re seeing a property that is coming back to what it got sold for as a new property in late ’04.

    As I noted earlier, TRidge was overpriced all the way. But homes like these that sold earlier were not as “overpriced” as the later phases. So this home had less to fall ( in reference to the original selling price ) than later units.

    IMHO, all of TRIdge will fall to just below the price of the original phase for any one development. (Phase 1 price). This puts it at no more than 400 bucks per square foot, PLUS a premium for a view lot, PLUS the cost of reasonable landscaping. The homes higher up will of course sell for more, but not above $550. This may be bad news for our favorite RE broker, Hanu Reddy, with his Palazzo at the Top but I think this is what the area will settle for.

    In the meantime, of course, corrections tend to overshoot, so you can see that prices will drop below what I think a normal market would bear.

    And as much as my wife may want to pull the trigger then and “move on up”, I will hold steady on my $3700 per year RE tax chateau. ;-D

  29. IrvineRenter

    4 times income is aggressive by standards in the rest of the country. If you put 20% down, and only pay 4 times income for the property, you are only borrowing a bit over 3 times income. If interest rates remain low (doubtful IMO,) then borrowing 3 times income should still be possible within 28% DTI.

  30. Patience

    Oh my god. If my family had to live there together you would soon be reading in the OC Register about the bloodbath at 24 Shady Lane.

  31. houseonlegs

    I think that the borrowers originally purchased this home thinking they were going to be able to sell it in a few years and make some money. They kept taking cash out because they still believed that they were going to be able to sell it and make some money. I know quite a few people who got stuck in this situation. They would do a cash out refinance evey 6-12 months because they couldn’t afford the monthly payments on their current balance, but since equity just kept growing, they just kept borrowing believing it was never going to end. When they couldn’t borrow anymore, they walk away.

  32. Ken Houghton

    I can’t figure out the cash flows here. The largest HELOC we saw advertised around here (Back East, as it were), even at the height of the bubble, was 125% LTV.

    From what I can see, by December 2005–long after the bloom is off the rose, and clearly at a point where the Credit Reporting Agencies are noticing the transactions, which is generally a flag–WaMu is giving them a HELOC of at least 33%, while the mortgage is still close enough to 100% for estimation purposes (assuming they weren’t playing IR tax-arbitrage and using the HELOC to pay down the mortgage).

    And then they (WaMu, that is) throw in another $100K. On a property they don’t even own, with customers who appear at best overextended (again, assuming they weren’t paying down the mortgage).

    So is the missing detail that they were using the HELOC to pay down the mortgage? Or was WaMu really that poorly run??

  33. Chui Tey

    No they couldn’t. The bank would have gone after this asset, as the bank was out of money for $ 300,000.

  34. rastaman

    you have stirred up that clown something awful — he continues to spam the Lansner blog with all manner of vitriol about this posting.

    Keep up the good work! The poor fool must have a reset coming due in Turtle Ridge — where Irvine tract homes think they have died and been reincarnated as Newport Coast.

  35. former_irvine_resident

    Thanks IR, this one is a classic. I remember this version of Rudolph the Red-Nosed Reindeer as a child. Funny thing is that the snow monster scared the hell out of me for several years even though I knew he would turn out friendly in the end.

    I don’t think this bubble will turn out too friendly though for either overexposed homeowners, banks, investors, or taxpayers. What a nightmare.

  36. squareround

    When will Countrywide go bankrupt? Can you guess?

    I was astonished to know that the lady who help people clean apartments and house monthly has just bought a house at Anaheim. The price is 500K. Zero downpayment. First loan at 6%, second loan at 8%. The lending happened in August 2007. What the hell the Countrywide is still doing? What is more, she said she is the only name on the loan because her husband has a bad credit.

  37. Alan

    I’m still planning on shorting Countrywide, my bet is that they will be in chapter 11 by the end of 2008

  38. houseonlegs

    Everytime you refinance your property, the lender will do an appraisal and base the loan to value off of the current appraised value. For this property, you cannot say that WaMu gave them a 33% HELOC because we don’t know what appraised value they used. Obviosly whatever appraised value they did use, it was over inflated. Regarding the 125% LTV, that is probably referring to a neg-am loan. Lenders would not let you refinace 125% of your homes value. They would give you a 1% loan and let you make the neg-am payment until the balance reached 125% of the original amount, which could take years, then the new balance would reset as a fully amoritized loan. Either way, banks realized too late that their lending standards were out of control.

  39. lawyerliz

    I just went over to Calculated Risk and wow!! Congrats Irvine Renter, extensive quotes and a picture and all.

    Maybe they’ll want to sue Tanta and CR too.

  40. tom termini

    Please remember – subprime refers to the BORROWER’s credit rating, and has nothing to do with the size of the loan, the collateral securing it, etc. Anyone with a crappy FICO score might be a subprime candidate. If their income justified the ration of loan to value (by the bank’s standards), they get the house. If they used an adjustable rate mortgage, and the rate ticks up two points, suddenly they can’t afford that house.

    Why don’t people realize that lending to folks with less-than-sterling-credit can be a benefit: these people get houses to live in! The higher rate they pay offsets the risk to the lending pool (i.e., the bank or the holders of the collateralized debt obligations).

  41. IrvineRenter

    We were linked by Atrios and Calculated Risk today. We should have a lot of traffic based on getting those links.

    I hope Truthiness’s head does not explode…

  42. Chris

    This is a really awesome post.

    I think it is too bad you don’t see this kind of story in the main stream media. I have seen countless stories about poor, unsophisticated people being taken advantage of by mortgage brokers, but I haven’t seen any that cover this aspect of the housing bubble – high income people living far beyond their means, and then sticking it to the bank.

    Having come from the midwest, I think that the average midwesterner would be appalled to learn that populist bailouts would be subsidizing this kind of behavior, in addition to helping the “85 year old widow in Detroit who didn’t understand the adjustable rate home equity loan she took out on her $125K house.”

    Anyway, keep up the extraordinary posts!

  43. dryfly

    Ya I followed the link over from CR’s post – outstanding analysis. I’ve forwarded it already to family & friends who are desperately trying to *GROK* this thing. As conservative Midwesterners we mostly don’t get it… Well, at least not until we move to California.

    Very good work – I wouldn’t have believed it was possible until I saw the numbers worked out. Wow.

    Again congrats.

  44. Laura Louzader

    I like the house. It’s attractive and nicely scaled.

    For $800K it looks OK.

    If you locals say it’s overpriced at over $1MM, I’ll take your word for it. I don’t know your market, but read this blog for the general wisdom and perspective on the nationwide housing lunacy.

    I can only say that these homes make Chicago look absolutely insane.

    In this city, people want $998K for crappy 90-year old bungalows that need tens of thousands of dollars in work just to be halfway up-to-date, in moderate-income neighborhoods, like this palatial residence:

    http://homes.realtor.com/search/listingdetail.aspx?sby=2&sdir=0&pg=1&pgsz=10&lid=1089002124&sid=#Detail

    Neighborhood: Edgewater (my home)
    Zip Code: 60660
    Median Income: $34,000

    Nice neighborhood with lots of city amenities and great transportation right on the lake, but lousy public schools.

    And you thought SoCal was insane?

  45. Laura Louzader

    4X income is now considered “conservative” in most locales, but that doesn’t mean it’s good. It pencils out very badly in my case-even with a low debt load ( I don’t run a car), it would leave me with little disposable income.

    When my mother bought in 1971, she put 40% down on a nice brick 4 bed 2 bath, and her mortgage was only 1.7X her income, and she had no other debt. Yet we were still a little squeezed for a while, due to the much higher cost of maintenanance and essential repairs, items we never bothered our heads about as renters.

    The yardstick for a mortgage used to be 2.5X your income, which is really more reasonable considering most people are hauling around a sizeable load of debt, mostly car loans and cc debt, not to mention college loans of up to $175K that are a massive burden even to high earners.

    It would be wise to return to this standard in view of the monster tax hikes in the offing in most places and the rapidly escalating costs of fuel and food.

  46. Smithers

    I have to agree with buster on this one. If WAMU was so stupid as to hand these guys $500K, even though they had never made any down payment, then I am nervous to even keep my “free” checking account at that place. Clearly, no oversight whatsover on their HELOC loan hand outs whatsover.

    Countrywide may do OK (on this one (anyway) and get back most of the $999K.

    Thank you Irvine Renter and your contributers. I read your blog everyday, and I’m not in the Irvine housing market.

    Too bad the OC Register cannot (or chooses not to) do this type of investigative reporting.

  47. central coast observer

    It occurs to me that since “truthiness” is a faux word created by Cobert, a faux conservative pundit, that perhaps the person using the screen name “turthiness” is a faux bull. (Or perhaps doesn’t recognize satire….)

  48. lg

    125% loans were more readily available around 7-10 years ago. at that time, they allowed homeowners to borrower up to 125% of the value of their home. frequently the “value” was an estimated value determined by the homeowner and not an appraiser.

    as the bubble began and values continued to rise, most who were in 125% loans were lucky (and the lenders were lucky) and had their home appreciate enough to get them back in the black.

    the current market cycle makes it more difficult but surprisingly there are still lenders who are offering 125% loans albeit with very strict guidelines and lower loan amounts. although they are marketed as being available, i do not know anyone who has actually closed on such a loan in the past few years.

  49. No_Such_Reality

    My guess is they just wanted the nice house and listened to everybody telling them ‘don’t worry about it’ you can refinance later.

    Scammers would have a dozen properties. Other blogs have sufficiently demonstrated the amount of fraud present in the market. If the owner was scamming, they’d own a half dozen or more properties.

    As for apparent tapping of the equity. You see that behavior repeatedly on the call-in financial advice shows. For most, once you’re over your head, you just keep kicking the can down the road trying to turn the corner. For most, every kick just digs it little deeper first a divot, then a hole, and finally a pit.

  50. Law_Student

    Sounds like they had too much fun.

    WAMU was the bigger fool.

    How the hell anyone could get a loan like that is beyond me.
    That looks like some serious fraud on the appraisal and income levels.

  51. michael

    Johnny –

    Any justification for your 70% prediction.

    I was thinking that maybe 60 -70% in Sacramento or Stockton but maybe not Irvine.

    Michael

  52. Wholesale AE

    Nanowest,

    Love your posts on OCRegister. 20% Down is required for stated income, 15% down for full doc. Looking Everybody needs a 680 fico to play in this game. But they will need to document some assets in reserve. Six months of PITI reserves.

    Absolutely ridiculous prices. Big haircut coming for a lot of people.

  53. Wholesale AE

    As recently as six months ago DiTech was advertising 125% loans. That’s right. If your house is worth 400k they will give you $500k. This is stopped. Just like their advertising says, “people are smart”! Yeah right!

  54. Idaho_Spud

    Congrats IR. This post post is now in the Wall St. Journal Blog. Looks like your story is getting a little MSM attention.

  55. polo

    Sorry, but what makes you think that they didn’t spend the money on
    a) a Harvard MBA in finance that will get them a job at a bank (WaMu?)working out problem loans left by the previous management
    b) a condo in Baja
    c) both, with money left for their lawyer?

    Answer probably depends on whether they also bought a Hummer with the money

  56. Bitter

    Please do not let this mulit gen stuff be a trend. My parents live in a nice neighborhood in north OC. The people down the street from them turned their garage into a kitchen & they have a tv, couch & dining room set there. There are so many adults that live in that house & kids too. The city won’t do anything about it despite the fact that it seems like a fire hazard. The people are foreigners & not that there is anything wrong with foreigners but in the 20+ years my parents have lived in their home nothing like this has ever happened. My 70 year old mom now wants to move because when anyone comes over they have to drive by this house & it looks like the entire multi gen family hangs out & eats in the garage all day. My parents best friends live next door to these people & the smell of the food they eat (which stinks) permiates to their yard & they have to close their windows all the time. For some reason I thought it was against the law for more than one family to live in a residence. If not it should be.

  57. What Fakers

    This post is hilarious. I can’t believe they were able to get that much money out of their house. It still surprises me how reckless people live & how they have no concern about screwing people over for material things. I grew up in a family where cash was paid for everything. My parents would never buy anything they could not afford. When it came time for me to buy my place I saved up my 20% & bought my first place. Yeah I know y’all hate Turtle Ridge but I love it & fortunately I bought a place in Arborel back in 2003 & it has turned out to be a good investment. Being single & relatively young it is great to live in Turtle Ridge because it is so close to CDM & Newport. Hopefully I will never have credit card debt & although I drive a nice car the company I work for leases it for me. I would never lease a car I could not write off just so I could drive a mercedes. However, that is not the case with the majorty of people who live in coastal OC. There are so many posers around here. I know married couples that live with toddlers in their small condos in Ashton Green with two expensive cars in the garage & I think to myself… why not move inland & drive a less expensive care so you can have a home with a yard. Peoples priorities are messed up. As I get older I am learning that there are so many unethical people like these homeowners trying to be something they are not.

  58. ipoplaya

    Who’s the moron posting comments on a November blog entry? Must be some other whacko out-of-stater again…

    Hey PUD, did you realize that thousands of Irvine homes don’t even have a HOA? Ruins your the whole intro to your manifesto huh?

    HOAs are run by elected representatives. Ya get it? The homeowners decide who is in office for their respective HOAs. If homewoners have a collective enough problem with their CC&Rs, they vote in new reps and change the damn CC&Rs. This isn’t mother-friggin-Russia or anything… People have choices and options.

    Yes the HOAs make rules that people need to live by, kind of like city, county, state, and federal governments, which also coincidentally are run for the most part by elected officials. If you have a problem with HOAs, you might as well move out of the US because you are always going to be forced to live according the rules created and enforced by organizations run by elected officials.

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