Irvine Housing Blog

I thought like the people in the stories; still do.  It is just timing.

How’s the For Sale signs been at Woodbury recently? Last I remember, back in ‘08, For Sale signs were everywhere. You wouldn’t believe the amount of For Sale inventory we had back in those days.

The second story doesn’t even have a logical narrative to it.  Guy gets a loan and has to scrimp to pay it off.  The house could have doubled in value and he still would have been driving his Intrepid and watching broadcast TV, because his financial problem is his loan and his loan hasn’t changed. After spending many years traveling to Ethiopia, Madagascar and other garden spots, his problems seem pretty puny to me.

You screwed up the HOA here, it should be a lot more usury to live in the rat race of fascist Irvine, in the special sub segment of Woodbury.

I also think your mortgage rates need some adjustment based on amounts greater than the standard conforming limit and in other cases FHA, rates, fees, etc.

If we are going to talk rental parity, the calculations should be as accurate as possible.  We don’t want anyone handcuffed to their Irvine town home thinking they were at rental parity when they weren’t.

I’m not sure if anyone posted this link yesterday regarding principle write downs:

http://money.cnn.com/2010/03/26/news/economy/Obama_mortgage_relief/index.htm?hpt=T2

The Wakefields buy a house in 2005 and are fully aware that the sellers are making a 100K profit.  They didn’t think anything fishy was going on, didn’t ask any questions, or do any homework.  In 2005, all one had to do was google “house prices” and see tons of blogging going on about a housing bubble.  I guess these people figured all that housing bubble talk was just a bunch of internet UFO nonsense.

They happily went along with the scheme, probably dressed up in nice outfits to attend the signing ceremony, and grabbed the bag because they believed they would be next in line for their own 100K profit in a few years.

And now they are adopting “the children” and would have loved to have had their house pay for it.

I am glad that this couple is not producing genealogical offspring - at least the adopted kids have a chance of developing a brain so long as they can unlearn all that garbage the Wakefields will be teaching them about personal finance.

Can anyone explain what the hell kind of business does a 75 year old man have in taking out a 600K mortgage?  He states that he is an engineer which astonishes me.  I’m guessing that he is not a very good one (just a guess).

It was the old buy a 650K house and install a movie theatre in the basement routine.  How could it have not worked out?

He spent 100K installing fluff upgrades to trick out the basement - obviously assuming that a wealthy rapper or movie star would be there to pay him a king’s ransom for his totally sweet handywork.

Amazing.  This man’s parents would be so ashamed.

Not to be ageist, but why would you give a 5-yr IO-arm to a 60 year old?  Was she planning on still being working in 5 years when the payment jacked up?  So income goes down, payment goes up, and it makes sense how?

She should not have been loaned the money to try that plan.  I feel bad for her, but we all would have been better off had she moved into somewhere smaller to begin with.  I put a lot of blame on the lenders as they should have known her situation.  When you get a mortgage, the person loaning you the money should know a lot about you and your plans for the home.  Either she didn’t disclose her plan or the lender didn’t ask - I’m guessing the latter.

All these sob stories have one thing in common.  The idea that real estate prices never go down and there is forever appreciation. 

The lady who wanted the house to pay for her adopted child, the guy sentenced to drive a car with 188K miles on it, the couple who might have to write a check for 20K to sell their house to upgrade to a bigger one…boo hoo, cry me a big river.  These people sound like they have intellects of a 14 yr old.  Nothing is guaranteed in life regarding investments (real estate, stocks, baseball cards, collector cars, etc) all can lose money. 

I am disgusted at our entitled society today.  These people should be happy they have a roof over their heads and food on the table.  Rant out.

AZDavidPhx
The fellows is an engineer and likely able to do the math. His mistake was putting extra money (if his own) into the house with little or no chance of payback. If he’s still hasn’t put any of his own money, he may be able to walk away with a few years of free rent.  He and his wife are in the special catagories for banks— senior citizens. Hope they enjoyed the movies at home.

The 100% or more loans made a lot of sense in CA.  If the market goes up, I win.  If the market is steady, I win.  If the market crashes, I get 2 years of free rent and get a ROI of at least 200%.  The only losers are the taxpayers, renters, real shareholders (who used their own money) and those that put put down more than 12% on housing or investment property.  Note that it’s shareholders that purchased with their own money, not the banksters who were reward with the shares or options.  The bansters cashed it at the high and then repurchased after the crash.

I lost on all 3 factors. :{

The only difference between these stories and my mother’s story is the amount of money put down. My parents bought a house to retire to when Dad was nearing retirement. They put 50% down on a house that cost $600k at the time. It’s now worth more like $500k, $520k if she’s lucky. When my father passed away Mom sold the year-round house and kept the proceeds (well actually I think she spent them on french drains, new gutters, and much-needed deck refinishing before it rotted). SS and a small pension are enough to cover the mortgage payment on the retirement home, and the substantial 401k pays for the rest.

But at some point she will want to downsize to a home that she owns outright. She could do so now, buying a $170k condo, but (a) I don’t think she’s ready to realize a 44% loss on her downpayment and (b) the big house has it’s uses for now, since all of the daughters can visit at once and still fit.

The similarity is that (a) the 30 year loan she has, she doesn’t intend to pay off entirely by paying down the loan, she intends to pay it off in a sale. (b) if she knew then what she knows now, she would have gone for something she could own outright in the first place. Which, a $300k condo at the peak, might very well have been nicer than a $170k condo now… (depends on the market of course).

Because essentially, even with 50% down, the leverage is what’s hurting her. It’s not a 20% loss it’s a 40% loss.

Over the past 25 years in the mortgage biz I’ve found the four groups of people with consistantly low common sense levels are:

1) Teachers. (Those who can’t do, teach, has never been more true in my experience. Most believe they have smarts, but their decisions have shown to be otherwise)

2) Engineers. (They over analyze things to death, trying to save a penny, but at a cost of a dollar. The story in todays post is not unusual)

3) People in the mortgage biz. (A small amount of information based on limited experience will certainly become weaponized quickly. Again, from this post “lost her job as a mortgage underwriter…”)

4) Attorneys. (Most of the lawyers I’ve worked with believe they are bulletproof, able to fall back on their litigation skills to extracate them from looming financial peril. Serial refinancing and HELOC abuse has been their kryptonite.)

I’d list Realtors but I try to avoid Realtor loans because of the moral hazard issues associated with lending to people you work with. Kinda like loans to family members. You’d love to help, but if things go sideways it makes for a very tense relationship thereafter. Given how many realtors have found out that being a mini-Trump also means multiple bankruptcies to avoid creditors, they are too easy a target to comment on.

repeat ad infinitum: Common sense isn’t.

My .02c

Soylent Green Is People.

If I were a conspiracy theorist I’d think this was all a grand plan to get boomers to work and pay taxes until they drop dead, like many of them will.  A former freind of mine in Escondido is just getting into the screenmobile business at age 67. They got foreclosed out of their custom home of course and had NO savings or rentals.

Great post Larry

I love how my $150k Riverside house would rent for about $1,500 but an Irvine condo that costs four times as much would rent for less than twice as much.

REVERSE MORTGAGE: “That’s when a homeowner who is older than 62 borrows money from his or her home. It isn’t paid back until the owner dies, sells the home, or permanently moves out.”

They forgot to mention one other scenario:  When the old person just won’t die and the equity is drained, the bank kicks his butt out to the street.

Who’s the fool?  The people who borrow too much money for more house than they can afford, who then make a hundred K a year in HELOC income off it for a few years, and then live in it rent free for a year or two, or the people like us who are still renting and getting stuck paying for the government bailouts of the banks that should have been allowed to go under?