Irvine Housing Blog

IR,

Forgive me if you’ve addressed this point previously… The income requirement on most of the profiled homes likely makes the buyer subject to AMT, which means no tax savings on the property tax.  I realize income isn’t the only driver, but still.

Given one might be subject to AMT over the course of ownership, does it make sense to show property tax deductibility in the analysis?

If you’ve got equity and access to a heloc, you can self ponzi by using heloc money to make 1st mortgage payments.  Or you do a cash-out refi and save the cash for future payments.

Maybe its a southern California thing, but if the ceilings have been scraped, don’t you think they should repair that before they sell the house?  My 5 year old has scraped the walls and this leads to them needing to be sanded and/or repainted.

My guess about the first vs second defaults is pretty simple.  Most homeowners who default on the first and keep current on the second don’t know what the hell they are doing. 

They don’t have a grand plan… it is just that they can’t afford to pay both, and figure it makes no difference which one they pay, so they pay the smaller of the two bills.

Or if they are a little smarter, they choose to pay the loan with the higher interest rate, which would typically be the 2nd mortgage.

How much of this can also be the fact that the first might be securitized and on someone else’s balance sheet, while the 2nd might be held by the servicing bank.  At that point, the servicing bank would have an incentive to tell borrowers to pay them (the 2nd) and not the 1st, in the hope of getting a mod on the 1st.  I’m sure that is against the rules of the securitization/servicing agreement, but so are a lot of other things that have been going on.

“The ceilings have been scraped, Canned lights, 4’ Base boards, Crown Moulding, Plantation shutters”

Great job on the transporter room!  What a great way to entertain your Irvine guests!

Beam us up!

Breaking NEWS!

Used House Sales Down 30% Year Over Year

Although give due credit to the reporter for trying his best to spin it!

Oh my gosh!  Every body in the office is staring at me because I laughing so hard.

Looks like house is already in contract and accepting only back up offers. $362/sqft..its almost close to the peak price. Irvine great.

Those that purchased in Irvine before 2002 are not losing a home to FC, they are just locking in their profits and ending their free rent to FC.  The equity was withdrawn and will not be taxed if completed before ____?___ (end of debt tax forgiveness).  Better than stocks or other investments.

Only ones lossing their house and equity to FC are those who made large downpayments at the peak or thereafter.  According to the leading US economists and policymakers, the US needs to spend it self out of a recession using borrowed money.

AMT is not an all or nothing.  I have a wife and kitds and don’t have interest payments but am hit often with AMT.  The charitable deductions can not be carried forward and the SchA deductions are just reduced.  I just let TurboTax or an accountant figure out the reduction.

REVERTING TO THE MEAN
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Vol. 5, No. 14
December 2010
Federal Reserve Bank of Dallas

The Fallacy of a Pain-Free Path to a Healthy Housing Market
by Danielle DiMartino Booth and David Luttrell

In the mid-1990s, the public policy goal of increasing the U.S. homeownership rate collided with a huge leap in financial innovation. ...

Reverting to the Mean Price
As gauged by an aggregate of housing indexes dating to 1890, real home prices rose 85 percent to their highest level in August 2006. They have since declined 33 percent, falling short of most predictions for a cumulative correction of at least 40 percent.[1] In fact, home prices still must fall 23 percent if they are to revert to their long-term mean (Chart 1). The Federal Reserve’s purchases of Fannie Mae and Freddie Mac government-sponsored-entity bonds, which eased mortgage rates, supported home prices. Other measures included mortgage modification plans, which deferred foreclosures, and tax credits, which boosted entry-level home sales.

http://dallasfed.org/research/eclett/2010/el1014.html
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Somebody at the Fed is going rogue!

Do yourself a favor and sign up for a free 3 day trial at ForeclosureRadar or RealtyTrac.

The good:
The number of loanowners living rent/mortgage free in their stucco boxes in the magic land of Irvine is STAGGERING.  It is literally a Christmas tree with brightly colored ornaments on the map.

The bad:
When you drill in on the NOD/NTS stories, you’ll see folks have squatted many months and years beyond the traditional 6 month mark.

The ugly:
I personally know (work with) two loan owners that are doing strategic defaults.  One is on month ELEVEN with NO NOD FILED. That’s right, he’s a hidden ornament on that Christmas tree.  Add his stucco box to the properties taken back by the bank but not on the market, plus the known properties under NOD/NTS - THEN you have the true picture.

Truly a giant train wreck in the slowest of motion.

As many have stated on this blog, it is we who have diligently waited and/or prudently purchased that are the absolute FOOLS.  By all rights, we should have bought with nothing down, refi’d, cashed out and strategically defaulted, regardless of timing or price or location.

Half the schadenfreude on this site stems from that regret.  ‘Coulda been a contender.