60-day-Delinquent Loans Fall for First Time in Two Years

Jun 28th, 2010  
by IrvineRenter  in News

Astute Observations

Astute Observation by lowrydr310
2010-06-28 07:28 AM

RBS tells clients to prepare for ‘monster’ money-printing by the Federal Reserve

Fiscal largesse had its place last year. It arrested the downward spiral at a crucial moment, but that moment has passed. There is a time to love and a time to hate, a time for war and a time for peace. The Krugman doctrine of perma-deficits is ruinous - and has in fact ruined Japan. The only plausible escape route for the West is a decade of fiscal austerity offset by helicopter drops of printed money, for as long as it takes.

Time to buy some real estate at today’s still-inflated prices, so we can pay it back with even higher-inflated dollars!

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Astute Observation by IrvineCitizen
2010-06-28 07:30 AM

What are the financial repercussions to these people?  You have many excellent profiles of massive abuse but it would be interesting to know if the people are in financial ruin or if they still have hundreds of thousands in the bank. 

These people took $300,000 out.  That buys a lot of Mercedes and Range Rovers, vacations and home upgrades.  Then they squat for 6 months and save all of the mortgage payment and property tax money.  You can save up a lot of money by not paying your mortgage or property taxes for a year.

If you do this with two or three houses you become a mini mogul.  $300K x 3 = A million bucks.  Not too shabby. 

I do know after a foreclosure you can’t get any loans for two years.  Maybe they’re on the hook for the taxes.  I know second mortgage defaults count as income. Or maybe not.

I feel your frustration.  Everybody in my neighborhood has nice things. Beautiful cars. 50K kitchen upgrades. Trips everywhere.  At least three are in Trustee Sale phase now.  They haven’t paid their property taxes for two years yet their kids attend the same schools as our kids.

We’re the fools because we didn’t take advantage of the situation.  There are no repurcussions.

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Astute Observation by Kelja
2010-06-28 07:57 AM

CitizenIrvine—————I feel your pain. I too, am the fool——far too smart, as it turns out, for my own good. Should have drank the Kool-Aid.

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Astute Observation by IrvineCitizen
2010-06-28 08:14 AM

Can you imagine what would have happened if in every case after two months you received a NOD and exactly three months after that you had a NOS and were EVICTED. Then all of your delinquent HELOC and second mortgages were counted as income and you were immediately on the hook for the taxes. 

There would be so many people living in apartments, declaring bankruptcy, moving out of state to survive, etc.

But you can sure as hell bet neighbors would get wind of that crap and start doing everything they could to make ends meet.

There is no impetus for doing ANYTHING about their situations today. Who cares?  5K a month mortgage payment + 1K a month property taxes means you save $72K a year - CASH.  You drive on the same roads (in nicer cars), kids go to the same schools, you shop at the same stores, go to the same parks. What have you got to lose?  Do it for 18 months and you’ve got $108K cash.  Now all you have to do is wait it out for 6 more months and now you can buy whatever you want with that 100K downpayment and tons of inventory at lower prices.  SCORE!

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Astute Observation by cran
2010-06-28 08:34 AM

What makes you think these people are saving the money? They spent their houses because they needed money to spend on cars, vacations, clothes etc.

Now they don’t have access to HELOC money and they stop paying their mortgage so they have enough money to spend on the same things as before. Just go to the malls and you’ll see them.

These people are not saving all that money, they spend it.

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Astute Observation by Walter
2010-06-28 08:50 AM

HELOC money drove the economy in the run up phase, squatting money is keeping the economy alive in this phase.

Will this phase last forever, or will there be a true payback some day. Oh ya, I almost forgot, good taxpayers like me are paying it back as we speak.

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Astute Observation by newbie
2010-06-28 09:55 AM

Cran,
You’re probable right, they spenting it, but enjoyed the spending and the vacations, cars ....  It part of the stimulus package.  Too bad I don’t qualify.

Not all HELOC/HEW abusers get the multi-year free rent.  I saw one Irvine black bankster get the boot with only 8 months of free rent (but $600,000 profit for less than “1 year investment.”  The $600,000 can still buy a nice house on other areas or years of rent.  But who needs the credit RATING when there’s half million in the bank.  One can still get loans and credit cards with a bad credit rating, just pay a higher interest.  Years past, banks offered larger credit lines to people who have defaulted.

I took was too stupid to drink the kool-aid, but would likely be vomiting over the foul taste of ill gotten gains.

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Astute Observation by Alan
2010-06-28 11:01 AM

Yes, I tend to doubt the calculations that just add up money not being paid (mortgage plus taxes) and conclude that is cash to save or spend, at least in some significant percentage of the cases. How many were using HELOCs or credit cards to cover the teaser rates and are now cut off from that so can’t come up with the payments? Or they’re out of one or both the incomes they needed to barely keep up?

I don’t have any hard numbers one way or the other, but it is more reasonable to estimate that not all of the HELOCs were completely tapped out, and not all of the money not being paid out actually exists and could be saved.

Then again I don’t see how unemployment checks are financial stimulus - a couple of hundred bucks every 2 weeks may cover basic food and some gas, but not restaurants, sports, electronics, cars, etc.

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Astute Observation by newbie
2010-06-28 03:05 PM

The stimulus money is the free rent/taxes which is $1500 to $16,000 per month.  No typo on the $16,000 is for the NPB $3.2 million HEW that was featured in IHB.  I think that the lower amounts are for folks that are hard up on the job situation, and the higher amounts are strategic defaults that have used the CA single action rule to milk the system (purchased house in FL that are shielded from judgements if the leader tries for a judical FC).  I think the NPB was getting more than 2 years of free rent and no end in sight.

The extended unemployment is a cheap way to buy votes.  Just think if the bailout money was used just as to give a one time gift to every citizen or a make work project :  All unemployed workers to kept their neighborhood clean, fix and clean the schools and parks.

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Astute Observation by Mark
2010-06-28 09:49 AM

I think it’s interesting that many comments here are attributing “what we would do” in these people’s shoes.  Apparently we would sock away our mortgage payment and property taxes.

The truth is that most of these distressed borrowers had no idea the housing market and economy would take the face plant that it did, and they had even less an idea that they would be bailed out by federal and state legislation.  They did not behave as they did knowing they’d be saved. They were reckless. Why do we think they would change? 
 
They were not savers then and they are definitely not savers now.  At some stage we need to all acknowledge that financial restraint never enters their thought processes.

Like Gator in the movie “Jungle Fever”:

Momma: “You’re out of your mind. I’m not giving you a red cent!......And what happened to
your father’s color TV??”

Gator: “Mama, I smoked the TV.”

Momma: “Lawwd have mercy on your twisted soul!”

Gator: “I ain’t goin’ nowhere till you give me some money!”

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Astute Observation by CCR
2010-06-28 01:44 PM

I do not care much of what all these people have done and why, beyond the fact it did impact the market.

Problem right now is really when to buy. I think like a lot of people (on this blog), I have save a lot of money, and also make enough to get a 6-800k$ house with only a 15y mortgage of 50%.

But, I’m still not convince we are even close to the end of the drop. Irvine has been protected to a sharp drop, and it takes really a while to get something which I would agree to pay more than rental parity, but not twice !

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Astute Observation by tlc8386
2010-06-28 03:53 PM

People just expected housing to keep going up after all it did for ten years. So the heloc loans kept coming and so did their spending they felt totally entitled to it because housing always goes up.

This was the main error in thinking. The gravy train simply stopped and now without appreciation there is no extra money except by stop paying the mortgage and wait for someone to kick you out.

Meanwhile life goes on.

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Astute Observation by Anonymous
2010-06-28 04:05 PM

Price to income ratio is 27:1

http://www.businessinsider.com/the-chinese-real-estate-bubble-is-the-most-obvious-bubble-ever-2010-1#prices-are-way-out-of-whack-compared-to-global-standards-3

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Astute Observation by newbie
2010-06-29 09:04 AM

IMHO:  PRC market is vastly different from the US market on who rents and buys.  The buyers have money, large downpayments and large incomes, while most of the masses have small incomes and don’t own the houses.  Down payments needed are 20 to 30% on the primary home and 50% on the second house, all with high documentation.  The overall cost to income is very high.  The bankers in PRC are liable for bad loans—who wants a bullet or prison time for making bad loans or having your family stuck with making good on the bad loans?

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