Irvine Housing Blog

Banks were never counting on your word to back up a mortgage…that’s what the collateral value of the home is for.  That’ also why credit cards rightfully carry higher rates than mortgages - there’s nothing to take back.  When there’s 20% down on a home, in a market that is not declining, the lender might profit off a foreclosure.  But they’d usually work out the loan or the owner would sell.  Now we’ve got no-downs in a decline so the collateral doesn’t cover the loan. 

CalculatedRisk’s Tanta talked about the three C’s of mortgage underwriting.  People loved to talk about ‘subprime’ and the riskiness of those with low credit scores (one-C).  They didn’t want to talk about the middle/upper class that borrowed way past their income paying Capacity.  Or the corrupt appraisal system that would give the collateral any value to get the deal done,

The bubble was built on an idea that prices would continue to increase.  Not even that they wouldn’t go down or might stay flat, but the constant increase was a necessary condition for all the fancy mathematical analysis underlying the mortgage securities.  Garbage-in-garbage-out is what they taught in my 8th grade programming class.  You put in pure assumptions as fact into your program and you can get it to tell you whatever you want.  I got a 50% raise from 2002-2003.  If I assumed that would continue, I could have bought a much bigger home in 2003.

I’ll bet there was a 2 year pre-payment penalty on their last refinance. They put it on the market in late February 2008 at a price ($639,000) that would have had them just barely getting out after the six percenters took their hard earned payola.

Somehow, with the prepayment penalties and the ARM resets baked into the loans, I think that the banks had calculated things perfectly so that as soon as a borrower went “ponzi”, there was no escape.

Bogus, corrupt lending IMHO.  This bubble was perfectly planned.

3 years for a non-violent crime where no one was injured and no property damaged?  You could get less on a DUI with massive property damage and injury.

The difference between the Duncans and the typical foreclosed squatter is the diff between civil law and criminal law.

Strange and illogical be the workings of our legal system. I believe that 3 years is a little severe for the Duncans’ crime, but they DID break and enter, strictly speaking, and there was a time when breaking and entry got you ten years at least, and more serious and violent crimes, such as armed robbery, guaranteed the perp 20 years in the house of many doors. However, nowadays we let murderers walk the streets after five years, and we as much as invite people to borrow money they have absolutely no chance of being able to repay.

What I find much more unjust than the difference between the treatment of the people like the Duncans, and foreclosure “victims” who squat for two years, is the difference in treatment accorded different classes of debtors, mainly that of people who owe large amounts of college debt, and people who owe mortgage or credit card debt.

If you have home debt or cc debt, or car loans that you can’t pay, you usually can get completely cleared, or at least must pay back no more than 20% of your debt, and even higher-income people are completely cleared if their debt loads are large enough.

However, there is one class of debtors to whom no quarter is given and who occupy a different class completely, and that’s people who owe college loans. Not only can you not bankrupt out of federally-insured college debt (Sallie Mae and other federal loan programs), but the Bankruptcy Reform Act of 2005 made it impossible to clear private college debt that is not federally insured.

The Truth in Lending laws are not applicable to college debt, and there are no limits on the late fees and “collection” fees a lender can apply to a loan. Inability to pay because of illness, accidents, or unemployment will get you no forbearance. Creditors are allowed to use tactics they haven’t been allowed to employ for other kinds of deadbeat debtors since the early 1960s- creditors can call your neighbors and relatives and lie, telling them you used them as co-signers. They can call your employer should be lucky enough to have one. Worse, default often causes you to lose the license or certification to practice the profession you borrowed hundreds of thousands of dollars to prepare yourself for. Lenders almost always apply a “collection fee” of 25% OF THE OUTSTANDING BALANCE, for every late payment, which is how a balance of $20K becomes $80K in a couple of years. Larger balances often bury the borrower for life.

While I believe that general amnesty for all college borrowers is a bad idea, especially if we continue to enable the creation of still more unrepayable college debt through federal student loan programs, we need to grant college borrowers the same rights and protections that other creditors have. There should be no class of debtors automatically consigned to virtual life-long debtors prison while others walk completely free after scamming the system for hundreds of thousands, or even millions, of dollars. That,of course, means that the bulk of the tower of college debt out there won’t be repaid, because most of the people who incurred it will never get jobs that pay the salaries that justified going into school debt, or will pay the debt back.

Time to sunset all the federal programs that accomplish nothing but to make debt slaves of our population, and shut down Sallie Mae AND Fannie, Freddie, and the FHA.

However, the only way we will ever get our economy moving is to get rid of all the debt hanging over it, and the only way to clear all the debt that can never be repayed is by foreclosure and bankruptcy. So we must let this debt be cleared through bankruptcy just like we let FHA loans and loans insured by Fannie and Freddie be cleared through bankruptcy and foreclosure, especially since the “collateral” in a house loan- the house- is usually worth so little relative to the amount of debt it secured, that the loans are essentially unsecured just as college loans are. Both elementary justice and the need to reset our economy demand that we allow college debtors the same rights as other debtors.

And when we’ve done that, we need to sunset the federal student loan programs and subsidies AND all federally insured house loans and “affordable” housing subsidies and programs, so that we never again blow up the monstrous debt bubbles of the early 21st. People aren’t entitled to the money for college anymore than they’re entitled to subsidies to buy a house. Best of all, perhaps when we eliminate college loan programs and subsidies, tuitions will reset to levels affordable to those paying as they go, and best of all, perhaps employers will provide the on-the-job training they did in former times, instead of demanding college degrees for non-professional jobs that will never pay the incomes that justify spending $50K or more obtaining a degree.

I actually used to live on this street.  I don’t think this was a problem for them because last time I heard they bought/owned a house in another cheaper state before the crap hit the fan with this house.  Maybe that’s where some of the heloc money went.

It’s simple class warfare. If these people had money, they wouldn’t spend a day in jail. Our justice system is bought and sold for.

Class warfare is especially prevalent in the “Drug War”. Crack cocaine gets a stiffer penalty than poweder cocaine…why? Black americans are arrested and incarerated at a much higher rate for marijuana…why?

These squatters were charged with crimes that you and I as taxpayers, will have to pay for, including any jail time. The pigs love it, beat cops, prison guards, prosecuting attorneys and all the lackeys get paid 3% at 50, get praised as “heroes”. The term pig probably didn’t originate from the hordes of “heroes” greedily chowing down at the trough of public funds, but the mental picture works quite well.

Animal Farm indeed. Class warfare, it rocks. Anyone ever see “COPS” on TV breaking down the doors of Newport Coast homes for drugs? Oh that’s right, rich affluent people don’t abuse drugs.

Class Warfare.

Upgraded University Park Home With Remodeled Kitchen, Recessed Lights, French Doors

Why says Irvine is Immune? Take a look
http://www.latimes.com/business/la-fi-ghost-towns.eps-20110106,0,4631232.graphic?source=patrick.net#content

Irvine (-36%) prices dropped more than LA/Long Beach Area (-32%)

Methinks IR will change his tune when he has to deal with a breakin squatter in one of his investment properties..

remember all that back and forth on foreclosures and banks producing the correct documentation…well it looks like a judge just made a ruling.  i think its absolutely wrong and am amazed that this happened. 

http://www.bloomberg.com/news/2011-01-07/us-bancorp-wells-fargo-lose-pivotal-massachusetts-foreclosure-case.html

The state Supreme Judicial Court today upheld a judge’s decision saying two foreclosures were invalid because the banks didn’t prove they owned the mortgages, which he said were improperly transferred into two mortgage-backed trusts.

If you find that your mortgage company used MERS, then you should strategically defualt and sqaut in the home rent-free.

Squatting has the benefits of living rent and worry free, all the time saving loads of cash.  But do not take the money and spend it like some morons have.  Use it to buy your mom, dad or trusted relative a home free and clear.

When bill collectors call, just tell them that you are recording the conversation for quality control.  Just watch them slink away.

When you receive the foreclosure notice, do not move out.  Fight it every step of the way, from contesting the filings of the banks, to appealing the decisions of the judge.

In time, the bank will move on and stop harrassing you.

However, under no circumstances should you strip the house of copper and fixtures, pour cement in the toilet, leave rotting meat in the ducts, or take a sledgehammer to toilets, walls and countetops.  You have to draw the line somewhere…

IR, the only problem that I have with your call for the non-payers to move out is that until the bank takes title, they are legally responsible for the property.  So if they move out and squatters move in, or the place burns and it involves a neighbors house, or if the yard goes wild and the city levies a fine, they are on the hook.

The solution is for the bank to *actually* take back the property title in a timely way.  Until that happens, I would actually counsel (though IANAL) to stay in the property to safeguard it.

Squatters? Delinquent loan owners?

You guys crack me up. You seem to ignore the fact that this corrupt banking system has no right (let alone authority) to foreclose.

The banks never had the money they ‘invented’ for you out of debt and they sold off the notes and have been paid 4x over. Now they are collecting your tax money through HELOC ‘payments’ and STILL foreclosing. But people are becoming privy to this and fighting back.

SEE: ‘Banks illegally foreclosed, court rules’

http://mortgage.ocregister.com/2011/01/07/banks-illegally-foreclosed-court-rules/41292/

The final question is… who are the judges working for: The people or the banks?

Wake up and realise that you have been duped into believing that this corrupt money system is anything more than paper.

youtube ‘money as debt’ & ‘the secret of oz’

=peace

If today’s loanowners had limited their re-fi’s to just lowering the rates and not taken cash out, they would be sitting pretty.

And they still would have had more cash to spend along the way.

Based on the principle value of the refi in 1998, their principle and interest payments would have been about $1090 on a 5% loan with only 8 years left on the mortgage vs $3180 P&I with 25 years left to pay. (assuming that they reset the loan term to 30 years back in 2006)