Irvine Housing Blog

I read somewhere yesterday that the settlement was structured so that BofA pays $20mil and somehow he pays nothing… Not sure how that works.

Also, when Option Arms were the hot item, they earned 3x the typical margins in the secondary market, and 20-something-year-old sales agents where I worked were paid 3x the normal commission… For this reason they pushed these loans on everyone they could doing whatever it took to convince them.

I never understood why these loans were worth so much more than a conventional loan when they only earned 1-2% initially. I guess the market thought they’d be wildly profitable when they reset, but we never got that far - they imploded before that day came.

I don’t understand the concept of owning a propetry for just a year (unless you are just blatantly flipping it, which doesn’t seem to be the case here).  Transaction costs are large, and moving is a pain in the butt.  Of course, there could be an unexpected job loss or transfer, death, or family issue that requires an unexpected out of town move.

As for whether or not it will sell at a profit (minus costs, of course), I wouldn’t be surprised.  The owner purchased at close to the absolute bottom, and the last four sales of this exact floor plan all sold significantly above their list price.

What I find amazing is how little outrage we are seeing wth these reports of the Federal Reserve blatantly and openly coming out and saying that we don’t have enough inflation.

While everybody is running around with their hair on fire over MERS and robo-signers and deadbeat house debtors being foreclosed “fraudulently” - we have the central bank right out in the open calling for the theft of everyone’s money.

The master of the universe is now saying that we don’t have enough inflation so we need to print enough money to cause inflation that wouuld equal 2% per year since 2007.

OH, so I guess Ron Paul was right then - the job of the Central Bank is indeed to create inflation after all.  The sheer hubris of these people is stunning - thinking that they can just create money out of thin air to cure what ails us.  This is going to come to an end at some point.  I suspect even within my own lifetime.

“...Bank of America is paying his legal bills and part of his fine? That’s outrageous! ...”

Well, technically an insurance company is likely paying BoA’s portion through a “Directors & Officers” policy.

Given we are in an election year, I wish someone in one of these debates would ask Jerry Brown the following:

“Mr. Brown, under your recent months as California Attorney General, you have been very vocal about going after the fraud in Bell.  In the past years since the real estate market collapsed, the media has been flooded with cases of mortgage fraud, both from the loan originators and the people obtaining the loan.  I think everyone here will agree that the fraud involved was on a much more widescale basis than what happened in Bell.  Can you please describe what your office has done to go after loan originators (including executives and loan officers/processors) as well as individuals who knowingly falsified loan documents in order to obtain a loan?”

I would ask a similar question to both gubernatorial candidates and AG candidates about if elected what they will do.  And I won’t let them out the easy way by only talking about commenting on executives.  Pin them down and ask about the actual loan officers and homeowners who knowingly committed fraud.

http://www.amazon.com/Monster-Predatory-Lenders-Bankers-America—/dp/0805090460/ref=sr_1_1?ie=UTF8&qid=1287589613&sr=8-1

I’ve read many books recently regarding the state of the economy/housing market, but I think that this book (published next week) will keep me up nights. It looks like it covers Countrywide and Ameriquest.

I understand you anger at Mr. Mozilla and he should go to the Federal Pen.  But, think of money like drugs.  Mr. Mozillo was just pusher, the banks, e.g. Lehman Brothers, were the “grower, suppliers and cartel” behind Mr. Mozilla.  I’d be a lot more angry at the Investment Banks than Mr. Mozilla.  Without someone to pedal these loans to, he never would have ammounted to anything.  And what about the US Government?  Who bailed out these banks at tax payer expense?

virus out of the “vile” (vial)

and I’m not quite certain whether I would prefer mozillo to be in jail or forced to live in a squalid apartment complex in anaheim with his former mortgagees

I wonder if anyone can now ask for equal treatment under the law? Mozilo took something over $450 million, and is being (personally) fined somewhere around $26 million, perhaps less. He’s 71, got $100’s of millions and is barred from being a company director. They might as well impose a lifetime ban on him playing center in the NBA also. So the next time anyone gets caught for theft, offer to pay 5% and keep the rest, while promising never to work as director for whoever you’ve robbed. At least with all of our problems, the US is taking leaps forward to being a more compassionate and forgiving society.

I’m not sure why all of this is shocking. Particularly the surprise that BofA paid his legal fees and part of his penalty. I truly believe that CW and BofA were conspiring this whole situation 10 years in the making.

Are we p.o’d at him for supporting and encouraging Option ARMS (which in itself seems perfectly legal), or that he hid his real concerns presumably for his own benefit (which IS crooked)?  I think the non-conventional products are dangerous, but certainly shouldn’t be illegal.  His decision to push the product the way he did may be morally questionable, but I’m on the fence about whether it should be punishable.  Having said that, he should certainly be investigated for his contradictory actions.

I know there was a lot of pooh-poohing of the NY Times journalistic integrity the other day, but I thought this article on Japan’s lost decade was quite well-done and gave me much more insight than other coverage I’ve read as to how this has been experienced by the average Japanese person:

http://www.nytimes.com/2010/10/17/world/asia/17japan.html?src=ISMR_AP_LO_MST_FB

The article also mentions the new phenomenon of Japanese microhouses.  Very neat to see the latest ways the Japanese have figured out how to make the most of relatively tiny living spaces.  I wouldn’t mind living in some of these:

http://www.npr.org/templates/story/story.php?storyId=128953596

The problem, Irvine Renter, is, just because you hate (justifiably so) what that scumbag Mozilo did, it’s hard to make a criminal case on this. The ARM borrowers *could* have made payments, they just didn’t. And do these foolish borrowers have any complicity in their own improvidence? They were the other half of the transaction. I think the SEC is settling because they realize proving actual crimes is going to be difficult.

A couple of great links on this:

http://www.doctorhousingbubble.com/option-arms-for-dummies-why-45-percent-mortgages-rates-will-do-absolutely-nothing-for-these-toxic-assets/

And here’s the scary one, especially for California RE:

http://www.doctorhousingbubble.com/revisiting-option-arm-data-3-big-banks-option-arm-2010-update/

Anyone who read this and could think the banks are a buy, as many talking heads on CNBC are saying, are fools.

Alan Greenspan, the ex-Chairman of the Federal Reserve of the US, said in an CNBC interview in February 2009, titled, The House of Cards:

“I have got some fairly heavy background in mathematics but some of the complexities of some of the instruments that are going into CDOs bewilders me. I do not understand what they are doing or how they got the type of returns from the mezzanines and various tranches of CDOs. And I figure, if I did not understand it and I had access to a couple of hundred PhD.s, how the rest of the world is going to understand it, sort of bewilders me.”

Man, I couldn’t even read this whole post. I might have an aneurism if I think too much about this. It’s like we’re slowing moving back to a feudal society where the rich control everything. This douche bag basically got off scot free. He has more money than he’ll ever be able to spend. The fine might as well have been a penny. It would have the same effect as this fine.

This looks like a very nice place, but:

$83,394 .......... Income Requirement

$2,790 .......... Monthly Cash Outlays

I earn a lot more than the income requirement, but I couldn’t afford $2700 per month, and that’s with no debt other than a manageable student loan obligation. I’m trying to save some money - emergency savings, 401(k), IRA, yet I still find it extremely difficult to do so.

The greenspan cartoon appeals to emotion.  It assumes that a meat company, left to its own device, would sell tainted meat as a viable long term business model.  All competitors would follow suit, the greener/browner the meat the better.  Customers would flock to buy rancid meat.

And I’ve heard the argument that short term profits cloud business rationale and sometimes it does; but my question is: Which is more crucial to the survival of a company - short term profit or long term viability?

Free market consequence is the ever-looming grim reaper: beheading the unscrupulous and persuading the rest.

The govt can be corrupted; the free market cannot.

sustained inflation

Steady growth!

Speaking of judge’s gavels (see AC/DC lyrics above), here’s a story of one or two who should be beaten with theirs until the beating is futile:

http://www.washingtonpost.com/wp-dyn/content/article/2010/10/19/AR2010101907216.html