We are finally back. I apologize for the inconvenience.

There have been a spate of articles in the last week on foreclosure vs. short sale options for individuals under water. These owners may eventually fall into that category unless they are fortunate enough to sell.
It appears that choosing foreclosure (vs short sale) may be the less worse alternative. Simply not paying the mortgage will net owners about a year, probably more, to save the mortgage payments to put down on another cheaper property or invest in a CD if they have to rent. In this price range, they would save about $125,000+ in one year. That’s a nice down payment.
If the very high end prime loans resetting in 2010 have a substantial number priced like this, this will be a disaster.

LOL… My home in orange (a conveniently-sized 1600 sq ft/ single story) is on a lot almost a big as this monster home. We have front, side and huge backyard

And, no, I’m not just jealous of their size. I’d love a large home, BUT NOT THIS ONE! Ewwwwww!!

“If you had $3,000,000 to spend on a house, would you spend $3,000,000 for a tract home in Shady Canyon?”

My guess is that even the guys getting Goldman Sachs (or similar) mid 8-figure and up bonus money aren’t buying these with the left-over dribblings from their real purchases. Hard to believe that the alleged rich foreign buyers are snapping them up. I have no clue who could or would support this particular market and price. I’m not making $550k per year, so perhaps I just don’t move in the right circles.

http://online.wsj.com/article/SB125902556993561567.html

This guy claims he’s a victim for buying at the top, LOL. I say he’s a victim of a ponzi scheme!

These are just “feel good” listings.  It makes the seller/debtor “feel good” that an agent took his fantasy listing.  It makes the neighbors “feel good” that other underwater homedebtors are “confirming” their fantasy about how much their homes are worth.  Living in fantasy is much nicer than living in reality—until the sheriff comes to move you out!

FDIC is insolvent.  Prepare for more bailouts.

http://online.wsj.com/article/SB125907631604662501.html?mod=WSJ_hpp_MIDDLTopStories

From article: “There is no question that credit availability is an important issue for the economic recovery,” FDIC Chairman Sheila Bair said in a press conference to announce the quarterly results. “We need to see banks making more loans to their business customers.”

Um, Sheila, the intelligent business people to whom we would like to loan money are not asking for it.  So, would you like the banks to loan to the ones that aren’t so credit worthy?

Here’s a solution:  Let’s lend to these non-credit worthy people (as there are a LOT of ‘em),allow banks & lenders to collect fees for their invaluable services, and have the taxpayer back-up the loans!  This worked before, no?

“If you had $3,000,000 to spend on a house, would you spend $3,000,000 for a tract home in Shady Canyon?”

Yes

...although not if I could buy it for $2.4M.  But Shady Canyon gets a bum rap around here.  It’s a beautiful, quiet area, and this house is at worst a tract mansion.  I’d rather live there than in some $3M 1968 CDM/Balboa bungalo with no parking or a Newport Coast tract condo.  Where in this neck of the woods would you buy your $3,000,000 non-tract home?

thrifty,
remember to add 1% property tax, plus MR and HOA fee that can be saved by FC instead of a short sale.  That will be at least $30,000 in one year.  Saving of $150,000+ per year will be a good for many years of renting and credit rating healing.  A short sale may require one to bring cash to the table.  Maybe string the FC to 18 to 24 months?

Alan,
The WS crowd are not buying houses now.  They are too busying buy companies.  When the companies value goes up they will sell the companies at inflated prices to the pension plans.  Then pop.

Serious, house buying will come after they drop and start to raise again. 

Why buy at the peak or on the way down when your the market leader?

[qoute]“We’re sitting here draining our assets to keep current” on the mortgage. But, at some point, he adds, “you have to limit your exposure to being a victim in this.”[/qoute]

Victim?

Idiot.

I think maybe I would pair down my requirements a little (say 800sqft and $500/mo less HOA) and go with something like

http://www.redfin.com/CA/Irvine/18661-Via-Palatino-92603/home/4738404,

After that, if was so inclined, I would add the 800 sqft somehow (Another room above the garage or something?) for < $1MM. I think I would be way ahead and I would have nicer neighbors, plus I would have a larger lot.

Now I am not saying that I could afford any of this but IF I HAD to blow $3MM on something, I think I wouldn’t want a tiny pool, no view and a $600/mo HOA unless they vacuumed/trimmed my yard/street/lawn/area clean every two days with a silent vacuum system that required no humans and was 100% reliable. I would also want a pool boy with ready heated towels for that $600/mo, and a weekly car wash service for me and the Mrs.

Did I miss anything? I know at the $1000/mo level I get my own concierge but I am not looking for that level of luxury.

Wait! I looked at the pictures for the place I suggested for 2/3 the price and you are probably going to say “but the BBQ isn’t as nice!”... It’s true! I agree with YOU! But at least there is a basket ball court.

Sorry about the first link. Here it is.

Fannie Mae: No investors for 15 days

Fannie Mae won’t consider investors’ offers on foreclosures for first 15 days on market

WASHINGTON (AP)—Fannie Mae says it won’t consider offers from investors to buy its foreclosed properties until they have been on the market for 15 days.

During that period, Fannie Mae will only consider bids from buyers who intend to live in the homes, or those using public housing funds. Fannie Mae says the First Look initiative announced Tuesday applies to more than 72,000 properties nationwide.

For buyers using money from public entities such as the Department of Housing and Urban Development, Fannie Mae also will waive deposits, allow buyers to renegotiate after an appraisal, and receive up to 45 days rather than a typical 30 days for closing.

Zoval: The clock is still off by 1hr. It is 3:02p as I post this.

Somehow I don’t think that anyone using Fannie Mae or HUD money will be looking at this house.

Victim?  WTH?

You’re a victim when someone mugs you on the street or when the US Gov decides to stick it to you because you make more than $50K a year and are “rich”.

You are NOT a victim when you decide to buy a house and enter a contract with your eyes WIDE OPEN.  These irresponsible people show their immaturity when they call themselves “victims” in order to shuck responsibility for their actions.

The American Progressive Political Machine has long made hay of the politics of victimization. 

IMHO, if this guy walks away from his mortgage he should lose his job as a policeman.  I fully expect cops to be people of integrity and good character. 

Disregarding your responsibility, playing the victim and willingly refusing your financial responsibility are not traits indicative of personal integrity and good character.

Thanks for letting me know - I’ll look into it.  Ok, I think it is fixed now.

The koolaid intoxication appears to be permanent.

Yes, Mr. Victim bought a house way out in the middle of nowhere:

Alongside a bunch of other moronic speculators.

He’s lucky he can get 375K for that.

Keep hoping for the best, sir, and keep making your payments.

... waiting for a rebound? Victim? Truly WTF!

A police officer and a realtor buy a house for $650K. Unless he is the Chief and she is selling million dollar mansions, I guess there was a problemm from the start.

And if they bought the place for $650k and now have a $647k mortgage on a house currently valued at $375k, it isn’t a rebound that will save them, unless the rebound keeps climbing way past the bubble peak. Good luck with that.

I don’t see any moral or integrity fault in sending back the keys and taking the credit rating hit though. Only if they intend to walk away but drag it out for a year or longer for free housing while stripping out and selling everything that isn’t attached to the foundations.

... figures his home now probably is worth only $375,000 to $425,000, even though it comes with a four-car garage, a pool and a 1.2-acre lot.

OH WHOOPEEE!  A four! Count em! 4 CAR garage!  YAYYYYYYY!!

And a POOL!!!

And a 1.2 ACRE LOT!!!

30 miles from CIVILIZATION!

Out in the middle of nowhere!

And his wife is a Realtor (of course) who was probably banking 200K per year before the market crashed.  Apparently she forgot about the “Location Location Location” bible verse that they all swear by.

This will be a foreclosure without a doubt.

they lack a cushion of equity that would protect them if illness or a job loss slashed their income.

WOO WOO WOO!

Should have rented like I did.

Savings accounts can protect you from illness and job loss too!

Just delusional people who are completely detached from reality.  I wish I lived in their world.

IMHO, if this guy walks away from his mortgage he should lose his job as a policeman

Imagine the irony of being a Cop and having the Sheriff show up to kick your ass out onto the street.

Sounds like a great plot for another SuperTroopers movie.

We’re sitting here draining our assets to keep current

But, sir!  I thought you took out a FIXED RATE 30 Year mortgage!

Your payments should not have changed since you bought so why now is it suddenly a drain on your assets? It’s home, not a house! Remember?

It just seems that way.

When enough people lose enough money and finally realize a house is not the road to riches, then the koolaid will be purged.

Of course I could be wrong, it may be a new area where housing prices are detached from one’s ability to pay the mortgage making a house a great investment.

Nah. People are just greedy idiots.

Be patient.

Bubbles can last for years or even decades(especially when something is as illiquid as RE).

Most people are undisciplined and join the bubble. Fine with me.

I’ll be saving and when prices are more affordable I will buy with a big down payment and pay my mortgage off in 5 to 10 years.
After the mortgage is paid off it’s clear sailing.

Notice I have no expectation of housing price appreciation or thinking of my house as an investment or an ATM.

It’s old school thinking but I’m pretty confident it’ll work out.

Correction: “new era” not “new area”.

these first two pictures - ‘can you spot the lot’ - are very confusing. Why did you rotate the 2nd 90 degrees? I could not even tell they were the same neighborhood until I peered closely and could make out the street names.

Even then, the aerial views seem to be of different neighborhoods. In the 1st image, the roof of what I take to be the highlighted house in the 2nd image, does not look the same. In fact, now that I look again, the 2nd image seems to be taken some amount of time after the 1st one, Well Spring seems to have the lots more developed in the 2nd image than in the 1st one.

I’m not even sure what you mean by, ‘pie-shaped’. Maybe because I am not a real estate professional… pies are round, aren’t they? Or did you mean, ‘slice-of-pie shaped’?

All the people casting hardcore judgement suck. You wouldn’t have the balls to say one thing to this guy in front of him because you are all cowards that hide behind the screen.
Americans were deceived, lied to, and DE-FRAUDED. That’s why the price of homes is so unnaturally high. The big boys control it all, including money being lent, and money NOT being lent.
Was it foolish to buy this house at such a ridiculous price? Yes. But he did put 20% down, and he will lose that money. The AGREEMENT was to make payments, or lose the house. Where in the contract are the details about “ethics” and “morals”. The bank doesn’t have any, they go by the LAW, and manipulate that to their advantage as well. If I was that guy, I’d walk in a heartbeat, AFTER I lived there for 12-24 months rent free. And you, the haters, can suck up the payments through the government that YOU voted for. Suck on it, I hope all your homes drop in price by 75%, THAT would make me smile intensely.

The market for homes like this will be light in this economy.  From what I have seen the high end homes are the ones getting hammered.  Anybody buying this home will be phased out of the tax credit as well.

I went with what MSN maps gave me. I didn’t mean for it to be confusing.

And yes, pie-shaped does mean slice-of-pie-shaped, but people in the industry do shorten the expression.

Hi, Angry Homer Debter!

You’ll love it here!

I had no idea that homes were that expensive in your area.  Especially for a track home.  Wow!