Doo! DooDoo!

LOL! The perpetual mortgage hamster wheel.

Not sure if Irvine Company bought down the bonds but the Mello Roos at Portola Springs is lower than what it was…

This place looks nice. Lot of square feet for a 2 bedroom. But it is 3 floors.

About the house yesterday…I walked the dog over that way last night. 25 Whispering Wind (not 11 as I thought) was listed a few months ago for over 1.2 mil. It must have sold because the sign is gone. And in the realtor comments about yesterday’s house it mentioned a recent sale in the price range of their list price. Or should I say the flipper’s list price? The point being, maybe there are buyers for that house at over a million.

Love the blog.  How can one determine which areas are a Mello Roos district?  Is that public information?

They must have paid down the bonds then because the only ways to reduce Mello Roos is to refinance or to pay down the principal, and I doubt they are getting better debt financing terms today.

With the current financing terms available, someone may be able to raise the money. The jumbo market is still frozen, so unless someone has a lot of cash, I doubt the guy gets the price, but anything is possible in our crazy market.

After thinking hard about the recent recovery in the housing market, I’ve concluded it must be the cheap financing.  Really, it’s what got us into this mess in the first place.  People can’t resist those low interest rates.  Look at car companies when the first started 100% financing after 9/11.

My prediction: we won’t see things start to drop again until the cheap money runs out.

You lost me with the Hillary Clinton witch image.  What’s that supposed to mean?  She’s hardly the villain in this real estate mess.

Wow, those are some powerfully offensive images you got there. And which have nothing to do with real estate. Do I need to see gals in bondage? Caricatures of Hilary Clinton as a witch? Some smiley big bazoombas—I mean pumpkins?

WTF? I love reading your blog, but this is really unnecessary, IMHO.

And yeah, I DO have a good sense of humor, thanks for asking.

Good question. 

I think Irvine Rentor left out a bit of context to Mello Roos laws.  They became law shortly after prop 13, and were a politician’s backlash of sorts in response to prop 13.  Mello-Roos were designed to be a property tax that legally got around prop 13 limits.  Previously, various levels of governments were funding infastructure for new development.  After Mello Roos this was being privately funded so therefore some previously allocated tax money was being freed for other uses.

To directly answer your question- Mello-Roos took effect in the very early 80’s.  Everything built before 1980 does not have Mello-Roos and everything built after 1982 does have Mello-Roos.  Does anyone have more exact info on when this started? (1981?)

IR, your point about the benefits of privatizing infastructure development thru M-R is well taken.  I agree this is how it should be done.  I dislike M-R because it was not really done for the sake of privatizing something, rather it was a sneaky way to increase taxes after prop 13.

“limit HELOC abuse by making cash-out refinancing in excess of the original purchase price an event that triggers property tax re-assessment.”

This is one of the best ideas floating around.

I will add: the FDIC should only pay out 90% when a bank fails. This will protect depositors from catastrophic loses, but provide incentive to put their money in sound institutions.

They are easy to implement and will go a long way to help stop, or at least lessen the next crisis. But with politics as they are, they will never happen.

Instead we get more first time buyer credits, GMAC bailouts and the Fed buying mortgages to prop up our system.

Walter,

Does the $8000 first-time tax credit really make a difference?  Please see this news link:

http://news.bbc.co.uk/2/hi/business/8330513.stm

Regards,
Hard Numbers

For a lower end property, let’s see:
1% normal property tax
1.8% MR assessment
only 2.8% reoccuraning cost.
plus 5% interest.
7.8% interest and taxes.

Add
0.5% for Insurance
1.0% for repairs and replacement
0.2% for Lawn and Garden
? for HOA
amortized cost of purchase and sales fees /commissions , 1%-2% on purchase and 7% on sales.

The real expense of ownship really adds up quickly.  The benefit are stability, interest deduction, limited redecorating (HOA restrictions).  It may work out if you stay long enough and the price goes up enough to cover the transaction costs.

I agree low interest rates are critical. However, the Fed buying 1 trillion $ of mortgage backed securities, which is ending (next March?) played a major role. The $8000 tax credit is a smaller factor and is also slated for extinction but just when remains unknown. Given that somewhere between 25% and 67% of the mortgages created using the $8000 tax credit are known to be fraudulent, logic would dictate that it simply be allowed to die next month as scheduled. However, there’s an election coming up…

This was reported on Lansner’s blog this morning.  It’s comical and I thought it was worthy of sharing over here.  It is just further PROOF that real estate sales are greatly about bluffing, hype, and just generaly out bullshiting your opponent.  Anybody thinking about buying a house should read this because it applies to all housing.

$3 million price cut sells TV-featured O.C. mansion

A Newport Coast home was featured Monday night on Bravo TV’s “Million Dollar Listing,” with an asking price of just under $10 million.

There was a big fight over the difference between that price and the $8 million cash offer

A fight over 2 million bucks!  But the proposed buyer doesn’t give in and refuses to raise his bid.

What you didn’t see play out on the show: The 6-bedroom, 9-bath Pelican Crest house wound up not selling, then going into foreclosure a few weeks after the episode was taped.

Uh-oh, perhaps the seller couldn’t sale the property for 8 million cash, becase he/she owed more than 8 million.

And the Realtor who made the $8M offer, which the owner deemed “insulting,” was the one who the lenders called to sell the property after they took it over!

LOL!!!!  The seller was INSULTED by the 8m cash offer.

And sell it he did. Lance Fogel of Hom Real Estate Group in Newport Beach got $7,050,000 for it.

We have a winner!  The buyer saved himself almost 1 million dollars by simply NOT playing into the sellers bullshit “insulting” bluff.

@_@  what is that last bondage-esq picture?

yeah the first picture kinda worked with the songa nd then it was downhill from there— the Hillary as a witch on her way to the white house picture was .... and the porn picture at the bottom is just flat out of line.  Women are witches so tie them up and dress them in lingerie?  I mean, what’s the tie in to halloween OR the housing blog?  Really poor taste .... plus i had to make sure no one at work walked by and saw them over my shoulder -_- 

the article was good though…  I’ve been thinking about how much more my limited savings account will be in terms of downpayment % if my house price is lower even with an equivalent monthly payment.  Thats actually a big deal IMO - if an 8% interest rate means suddenly you have a 20% down payment in your bank account rather than 12% down payment, that changes what’s affordable too.

With a FC, maybe the “owner” could walk away without paying the balance and sales cost.

As least the buyer’s agent presented the “insulting offer.”  A family friend made such an offer, but his realtor would not submit the “insulting offer.”  My friend got another agent to submit the offer.  The offer was accepted without haggling.  Second agent made an easy 2%.

Question for anyone knowing the answer:
I thought virtually all Mello-Roos were not tax deductible. Are any in Irvine fully deductible?

What is “lower”.  I was up there 3 weekends ago and it was still 1.9% in Paloma.

Calling the bottom?

Home prices in major cities continue to climb

“Christopher Thornberg, a Los Angeles economist who was an early predictor of the housing bubble, disagreed.

“I can’t emphasize enough how this rally in the market is being driven by policy and not fundamentals,” he said.”

I figured I would get some flak.

The theme is “Witchy Woman” which strongly implies a witch with sexuality. The first one is an obvious connection, and the second one is just a funny cartoon—one that I feel captures Witchy Woman very well. The Jennifer Aniston image was a stretch, but it has been on the blog two or three times before, and I keep putting it up because people like it (see comment below). The Hillary cartoon I put up because I thought it was a particularly good caricature. I try to remain apolitical even though I have expressed policy positions related to borrowing and real estate that most interpret as being on the Left. I make fun of politicians of both parties equally.

I like to explore the edges, it makes the blog more interesting. When on the edge, I always cross it for a few. I never set out to offend anyone, but I don’t usually filter my work to avoid it either, particularly if there is a point to make or if it part of the theme of the post.

I believe the law allows you to deduct the interest portion of your Mello Roos. The older CFDs where the bonds are nearing maturity, most the payment is going toward principal, so the deduction gets smaller each year. The newer neighborhoods with high Mello Roos should have bigger deductions as most of the payment is interest.

Of course, in the real world, most people deduct the whole thing and hope they don’t get audited.

I think it makes a difference. But it is much bigger on purchases below $200,000. Once you are at $500,000, not much of a difference. At those higher prices, the Fed buying mortgages is the big issue.

Just because numbers in some areas were weak, does not mean they would not have been weaker without the credit. And here in So. Cal. buying is difficult. I am an agent I am telling clients unless they are ready to make many offers, often above asking price, it will be hard to make a purchase, and once the supports are gone, prices could go down further.

Good for that second agent.

According to several sources, about 85% of homes bought during the time the credit has been in effect would have been bought anyway; i.e., whether there was a credit or not.
100,000 ( of the 150,000 to 400,000 depending on who you believe) of the purchases using the credit were fraudulent - that’s 25-67%!

Very true. This is why the credit is so inefficient—most people getting it, would have bought anyway.

That said, buyers will raise their offer by up to $8,000 and use the credit to win the bidding get the house of their desires.

another public financing vehicle that developer/builder uses that is similar to CFDs (community facilities districts or more commonly known as Mello Roos) is the AD (Assessment Districts) also a special district formed by a local government agency for which a property rcvd a tax levy for direct benefit from the construction of new public improvements or from the maintenance of existing public improvements. The most common types of public improvements financed thru ADs include roads, sidewalks, sewer facilities and water facilities.

In general, one major difference between CFD and AD is that CFD accomodates different tax rates in accordance with sq ft of the home, so the bigger homes pays more of the CFD special tax, whereas, AD tax levy is determined by the direct benefit regardless of the type of house built on the lot.

In either case (CFD or AD), the newer development such as Woodbury has a very high Assessment Levy (fixed dollar amount) so when home prices drop, the fixed dollar remains but the tax burden increases (% of the value of home relative to the amount of the tax levy).  Municipalities usually don’t like to have TOTAL estimated tax rate (ETR) above 2% but with the decreased home values, most CFD or AD projects are now over the 2% threshold.

I don’t believe the AD tax levy (not the ETR) for woodbury has been DECREASED.  When a CFD or AD bond debt is sold, the bond document outlines if a parcel can prepay (partially or in full), and if there is allowance for prepayment, the monies is used to pay down the bond debt.  I have not read through the bond documents for the Woodbury project so I can not say for certain if this transaction allows for partial prepayment.

Also, there’s two line items for developments on the ranch, one for AD formed by the City for the tax levy and one for CFD special tax formed by IUSD (or TUSD for those Irvine parcels that are within TUSD’s boundaries)...both of which (CFD and AD) are developer initiated financings.

Why are you on the internet at work? And to those that are new this has been brewimg for 20 years. So the Clintons are back to stir the brew once again. Two party system how can they lose. We are the losers.

By the way, in what movie did Jennifer Aniston pose for that picture?

There are also exceptions to this where places are in-filled, newer homes are built in older areas and there are no Mello Roos because the infrastructure has already been developed.

Thank you for your astute observation with the added detail.

yaaaawwwnn.  wake me when you come up with some new material Irvine Realtard.

I hope you just ignore the knee-jerk PC reacion. If some or all of the images either work or don’t work for anyone, a moment’s glance and scroll past is just no big deal. There are enough real issues out there right now to care about, why get distracted over nothing?

Your FDIC proposal will trigger bank runs.  People won’t want to lose even 10% of their funds, and therefore will pull their money out at the first hint of trouble, therefore causing banks to fail that otherwise wouldn’t.  The whole point of the FDIC is prevent that sort of thing.

That is possible. But we already have runs with 100% insurance so some of that effect is already there. Also, will be people that take the chance of leaving the money in because these banks often pay higher rates.

You may be right. To me the question is what is better, a few more runs with consumers being more careful were they put there money in the first place, or the current system. I would opt for the current system if our regulators did their job. We have seen multiple times this is not the case. So let the consumer have a little skin in the game and see if we are better off overall.

It will never happen so all we can do is talk about it.

Sorry, IR, I have to agree with the flak here.  The witchy woman stuff was OK as long as they were clearly cartoons - once you start using real identifiable women, you’re crossing over into political and sexual territory.

The last time you posted that blonde-in-bondage image it was with some possible relevance to a mysterious room in your post.  Today it was gratuitous.

You may not agree with this, but it’s pretty clear that you’re offending a fair number of your women readers (me included) - and more importantly, distracting from your really great and informative posts.  Please keep these things for some other arena - a real estate and financing blog is perhaps not the most fitting environment for edgy postings.

Thanks.

I disagree with the 90% FDIC coverage, but I do think that a bank should have FDIC-covered accounts and high-rate accounts. The FDIC-covered accounts would have regulated interest rates, so WaMu and IndyMac couldn’t have offered those high-rate CDs (that the FDIC honored!)

So if a bank fails, you get to keep your no-interest checking balance and the regulated-interest savings accounts and CDs.

There needs to be some kind of check on FDIC-insured banks (and NCUA-insured credit unions, for that matter).

In a way this already exists. There are the FDIC accounts we already have, and an investment adviser sitting there willing to put your money in a bond fund, uninsured but offering higher returns.

If you don’t keep it very clear and separate, and even with the current system people still misunderstand what they are investing in, depositors will put their life savings in uninsured accounts and then the next crises hits…

Wow, those are some powerfully offensive images you got there

You have no right to not be offended.  Take your jackass opinion and shove it in your ballot box.

Do I need to see gals in bondage

WOO WOO WOO!  Did mommy shelter her little baby from the woild?

, I DO have a good sense of humor

NOT!!!

Bring on the bondage, IrvineRenter.  It’s time to drag these lemmings out of their bubbles.

The witchy woman stuff was OK as long as they were clearly cartoons

OH CLEARLY!  IrvineRenter crossed that line HUH!  DIDN’T HE!  YEA!  Tweedle Dee here said so, IrvineRenter - so take that!

once you start using real identifiable women, you’re crossing over into political and sexual territory

LOL!  OH MY GOD STFU.  Go watch your Fox News leg crossers flashing their junk on the pubic airwaves and stop being a crybaby over some funny pictures that were clearly meant in JEST so a hairbrain goober such as yourself could read into up to the NTH degree and over-react out of your own personal insecurities.

but it’s pretty clear that you’re offending a fair number of your women readers (me included)

LOL!!!!!  Did you hear that, IrvineRenter?  The CUSTOMER is offended by your hate-speech and debauchery! CEASE AND DESIST IMMEDIATELY!  We don’t want the poor women and children to be harmed!

a real estate and financing blog is perhaps not the most fitting environment for edgy postings.

OH MY GOD.  Who dragged in this SPAZZ.

Consider yourselves saluted.

wake me when you come up with some new material Irvine Realtard.

Yea, sure thing SweetChops -  How old “REALTARD”? Going on a couple of years now, oh wait, you just heard it for the first time today and wanted a chance to make a sentence with.  Nicely done!

^VIX went up a lot today. But then you didn’t know since your head was stuck in the toilet all day.

God forbid somebody exercises their First Amendment Right.

Very good Larry! Excellent response to customer/reader feedback! Polished, classy, well thought out; without doubt you are a man we can trust and respect.

When the next crisis hits, it won’t matter if the FDIC gives you double what your saving account is currently.

So you are proposing we do away with the FDIC altogether?

The jennifer aniston image was okay-ish the other time I recall it (that norcal mentioned as well) because it was in context with a “what’s in the MYSTERY ROOM? IS IT A LADY IN BONDAGE?!”  That was humorous usage.  The lady in bondage this time didn’t make any sense, there was nothing witchy about her unless you draw a line to all women being w-itches…..  Actually I suspect everyone would have given the hillary picture a pass since it WAS a witch picture, but that last picture kinda threw it on the other side of the fence.

This is *not* about left-right politics.  Its about gender politics.  Its equally inappropriate when people make sexist comments about Ann coulter and Hillary clinton.  This isn’t political blog or a gender issues blog so why explore the edge of gender issues?  A simple “I’m sorry you found it offensive” would have been fine.

Oh gosh, I hate Mello Roos Taxes.

I have seen that in Santa Ana, but the buyers at Villages of Columbus got screwed with Mello-Roos.