Irvine Housing Blog

That’s quite a price for a house built in 1900!!

http://beta.news.yahoo.com/ex-citigroup-vp-accused-stealing-19-million-164401628.html

Since this is criminal court instead of civil, the judge will not be able to rule that the theft is not substantial enough to warrant prosecution and employment dismissal.  Or will this be a repeat of past ruling for the banksters ($20 million was ruled not substantial enough for a prior wrongful terminal lawsuit of a bankster,  I don’t know if the company is appealing the judgement).  I hope the courts get serious/just on these cases.

IR, you may be splitting hairs in calling Conservatives liars on the GSE issue…the GSE were not leading but were participating.  The true villains are the Ratings Agencies and the Fed.  Neither have really been called to account for their role.  It was the Fed’s prolonged low interest rate policy that created ravenous appetite for any type of yield and it was obviously the Agencies that gave bogus ratings in exchange for fees that allowed investors eager for yield to invest in the toxic paper that otherwise would have and should have been well outside their investment policy.  So put this economic Conservative on the ‘blame the Fed and the Agencies’ card.

Good info.  Glad I read this site, just so happens the lowest priced homes in my area are GSE REOs.  I was a little scared by the low price, cause you the saying ” too good to be true”  I love that they are in sell mode.  Drive down prices yeah.  Soon as prices for homes and rent goes down, people will have more disc income to help the economy. Good to know they kick in 3.5% for closing cost.  Plus can get homepath renovation mort.too.  pergoganiteel…............

Great article. Useful information. Thank you for this.

Also, fantastic the GSEs are jettisoning properties. This system needs (i) a massive flush, and (ii) lower home prices. Take the pain now. Clear the books. Get families into lower priced homes. Ergo, plenty of discretionary income to fund their lives, save for retirement, provide for their children.

Overpriced bubble real estate financed with Ponzi Fed ZIRP dollars has been financially atrocious for hard-working Americans who pay their bills. Thank god it is swiftly coming to an end.

IR - I know this is off the topic of this particular post but the question keeps surfacing in my mind when I consider the state of the housing market as a whole ... you sort of touched on this a few days ago as well.

In your estimation (or substantiated data) what percentage of current loan-holders are likely in default AND not making payments? Is it reasonable to assume that stat tracks alongside the data detailing how many home loans are currently in default?
(I believe I read recently that of all the mortgages in the US, about 1 in 4 or 1 in 5 are in default ... between 20-25% of all mortgages are in distress.

My neighbor and I have had more than a few discussions on this topic and I’m curious if what I suspect (20% of mortgages are not getting paid) has any basis in fact.

Keep fighting the good fight!

“With the government now insuring nearly the entire housing market, if we allow this behavior to resurface, all taxpayers will be subsidizing this theft.”

Well, if everyone does this, then it’s no longer theft.  It’s just perfectly acceptable & neutral behavior.

I apologize if this is off topic, but how do you calculate the dollar amount for tax savings?

My husband and I are trying to figure out whether buying or renting at the moment is going to be cheaper for us. In Ladera Ranch, a 2700 sq ft house will cost us approximately 3900 to rent or 599k to purchase. My parents are gifting us a 4% down payment and covering closing costs. In a situation such as this, do you think it’s wiser just to purchase?

From the FC graph of GSE and private loans from 2009 to current, the total number seems to be stable.  The improvement is transferring the bad loans from the bank to the taxpayers.  HoRay.  Recession will soon be over once most of the bad loans are off the banksters’s books.  Time to give them another bonus on the taxpayers’ and stockholders’ dime.

If the GSE cover closing cost, then it will be another FHA walk-away loan—another form of loan modification to a new sucker/buyer or taxpayer.  Rewrite a bank loan to GSE loan with a new buyer, low to nothing down.  Delay and stick it to the taxpayers again.  The beat goes on.

“The banking cartel who is still withholding inventory will be left with devalued REO.”

yep. this sounds strangely familiar, maybe because it seems like so many good folks have been saying it for a couple of years now. 

I realize I’m a couple weeks behind on my housing bubble news (busy with work + family life), but don’t the banks have roughly 10x the number of distressed inventory (counting only foreclosures and REOs, not notices of default or other lates), to get rid of?  anyway, it’s a lot.

Are these GSE-owned homes really @ a good price? Most 4/3 SFRs in LA county are in Lancaster or Palmdale for $200k+?

IR,

I disagree that the Republicans are lying about the GSEs. While the GSEs may not have STARTED giving out the lowest-end mortgages, they played a huge role in creating and maintaining the bubble. The role of the GSEs in the market was huge. Without them, the bubble would have fizzled out much earlier, and without having reached its huge size.

I saw the GSEs buying up all the bad loans. The GSEs weren’t innovators, they were the parking lot where all the bad loans were sent to keep the money flowing. Maybe that wasn’t how it worked early on, but by 2006-2007 the GSEs were backing up the bubble in a big way. Bad loans were still being made, and re-sold to GSEs, using GSE programs, as late as fall 2007, months after all the other banks stopped making bad loans.

I think if the GSEs hadn’t existed, the bubble would not have lasted as long as it did or been as big as it was. Yes, the bubble was 1st created by sleazy investing packages being sold primarily to foreigners, but the GSEs played a role far beyond their actual involvement, by making the housing market look government-insured and warping perceptions of risk.

i see the Homepath Fannie/ Freddie Homes as another tax break/ clever or not so clever way to keep propping prices . Homepath will pay up to 3.5% of home sale for closing costs. on a 250,000 USD home that is close to $9,000. it is another bailout. same thing, different day.

http://blogs.wsj.com/developments/2011/06/24/gop-infighting-surfaces-on-mortgage-giants/

I think people are misunderstanding what good GSEs can potentially do, while emphasizing the liquidity that can be provided elsewhere.  Whether you break up the two GSEs into 5, but still allow unlimited gov’t guarantee of their debt/MBSs, you have only renamed the entities.  There need to be basic principles.  (1) Limit their scope.  95% of all mortgages in 2009 were Fannie/Freddie/FHA/VA.  They are not needed for every mortgage (95% is effectively every mortgage). (2) Limit their assistance to where it is really needed.  Do we need taxpayers subsidizing $700k mortgages on nearly million dollar CA homes? (3) Use the GSEs to improve overall underwriting standards.

To (3), many who claim to be anti-GSE and anti-government involvement don’t want better underwriting.  I heard an ad yesterday by the NaR saying they were for ‘sensible mortgage regulation reform’, OK.  The GSE’s can start by just improving documentation and recording.  Cross check income statements with tax returns.

To get the rest done, you need a combination of lowering the conforming limit, and lowered percentage of the sale price the GSE can loan.  You could do 90% financing if the originator takes a 10-20% 2nd loan, and the GSE is at 70-80% LTV.  Force the originator to keep that loan on their book.  Fine heavily, but also FORBID them from new GSE business if they don’t comply.  The shutting out of new business will be a much worse penalty than any fine.

Want to finance 800k out of a $1M transaction?  Let the GSE’s hold $250k or so of the debt, in the senior position, and let the rest go jumbo.  You would provide a degree of liquidity, could enforce your standards, but provide a very limited subsidy to the highest priced homebuyers.

They could do all these things today, and not adversely impact the housing market.  But, there are some strong entrenched interests that either don’t want reform (want to go back to ‘fog a mirror, get a loan’), or are so ideologically opposed (they think) to gov involvement, they will hold out for complete dismantlement - which would adversely impact housing.  How much focus is this getting with the debt ceiling kabuki on center stage?