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“More than half of the jumbos analyzed by Moody’s ... are underwater”
i shouldn’t be, but i’m surprised by how high that number is.
1 out of 2 jumbo’s are underwater.
A lot of people either bought or refinanced at the peak. It’s the only explanation.
“More than half of the jumbos analyzed by Moody’s ... are underwater”
I wonder if this takes into consideration all the 2nd’s and HELOC’s?
“Lenders are little better than drug pushers hanging out at the discharge door of a rehab center. They don’t want the credit addicted to get away, so they make their product available when people are vulnerable”.
That was the whole plan, the vast majority of the Public just can’t see it.
The big Institutions and Private Investors will buy Property at massive discounts, rent them out to distressed Families who’s alternative will be to live on the streets, then make them pay for these Properties via rent.
Even People I used to have a great deal of respect for are partaking in this appaling practice…
Profiting from People’s misery
So providing rental homes to people who would otherwise be sleeping in the street is taking advantage of them and ripping them off?
I just ripped off a distressed family who used to make $2,200 a month payments by charging them $1,000 per month to stay in the same house.
I sleep well at night.
“So providing rental homes to people who would otherwise be sleeping in the street is taking advantage of them and ripping them off”?
That is obviously a rhetorical question.
“I just ripped off a distressed family who used to make $2,200 a month payments by charging them $1,000 per month to stay in the same house”.
Thank you for proving my point.
“I sleep well at night”
Taking your point to its outer reach, anyone who sells anything that is not necessary, is profiteering from someone else’s stupidity, lack of sophistication, misery, etc.
making money = evil
...ripping them off…
Does this thinking extend to the stock market?
If I see good value in a stock @ $10 and the next day this very same stock rises to $22, am I “ripping off” some poor individual who sold to me @$10 yesterday?
This must be satire.
Please let this be satire.
I assure you it is not. Some people truly think that anybody who makes money is ripping somebody else off.
“Borrowers with jumbo loans—most of Irvine—are most likely to strategically default a recent study shows.”
Most of Irvine? Where is the data that supports that claim?
From what I remember, many of Irvine sales are all or large cash downs so to say “most of Irvine” borrowers have jumbo loans is a bit misleading.
And isn’t the Option Arm Monster dead? Haven’t most of those loans already converted to fixed, been loan modded, foreclosed on or remain carried by people who *can* afford them?
Like that Tsunami of Shadow Inventory… I’m not sure what type of impact OARM recasts are going to have anymore.
The median loan for most of 2004-2008 was over $417,000 which by definition puts at least half the loans in Irvine into jumbo loan status.
Further, if you notice, very few of our foreclosures have been GSE or FHA homes because that financing was not as prevalent. The segment of the market where these loans were most common (the under $500,000 peak price segment) is the part of the market which has shown most weakness because the government has been foreclosing and pushing people out. Most of the delinquent mortgage squatters in Irvine have jumbo loans.
The median being over $417k does not mean “most of Irvine”... maybe “at least half”. I think you’re word-smithing a bit here.
And “most of the delinquent mortgage squatters in Irvine have jumbo loans” does not equal “Borrowers with jumbo loans—most of Irvine” either.
#occupyJumboLoans
Anecdotal evidence, but, I have two neighbors who bought at the same time as me in 2007, who are just now “moving” because their 5-year interest-only piggyback mortgages are about to reset to fully-amortizing payments.
Perspective:
Is that in Irvine?
Did they just say “moving”, or did they elaborate?
Yes, this is in Irvine. I put “moving” in quotes because that’s literally what they’ve done, but that’s after months of not paying their mortgage and trying to short sell their homes.
If you get a chance to ask them (and if you think it’s appropriate), find out why they moved out before the foreclosure auction. I always wonder why people don’t squat until the last minute. I suspect it’s because they want closure and want to move on with their lives, but I don’t know for sure.
That’s exactly it. They’re annoyed at the short sale process. Cleaning-up the house for showings isn’t fun. Finding prospective rental homes and then losing them when multiple short sales fall through is frustrating. It’s not fun always talking about it with friends and family. Those are the sentiments I’ve heard.
Thanks. I always like to confirm what I believe to be true if I can.
We have neighbors who moved out immediately when they received notice that their loan mod request had been denied. Then they moved back in after the first short sale offer fell through, probably 6 or 7 months later.
When I asked about moving out and back in they said they didn’t realize they could stay until they contacted an attorney. I think there are people who don’t realize they can game the system.
Last I heard they had been granted a loan mod and were going to try and keep the house, although they admitted finances were still really tight.
I think there are people out there who don’t
IR:
It would be great if you could chase moving trucks around Irvine for a couple months and interview the people moving out.
Might be an interesting chapter on homeloaner psychology for the second edition of your book.
Seems like the only way to get that kind of info is to ask for it. I haven’t seen much in the local newspaper or online about the reasons and perceptions involved in foreclosure.
It is interesting how often emotions win out over pure financial logic. It did in our house. We bought.
@awgee
Truth. Can’t even convince the wife to rent even if it’s a bigger house, nicer area and a lower payment.
Valid points, all. And then there is the school question for families. Finding a house in your school district (or a good alternative) at the right time to prove residency means moving early or being homeless for a time.
Anyone with their wits about them and a few dollars in their pocket will choose the former. We left a lot of money on the table when we left our (jumbo’d, underwater) house, but on the other hand we’re six months to a year closer to being able to buy again. This time at the true bottom, or close enough.
Would the sales price of this house be considered at Rental Parity?
Would a typical investor view the Monthly Cash Outlays or the Monthly Cost of Ownership figure?
An investor would focus more on the monthly cash outlays because and investor is trying to make a profit. An owner-occupant would look at the monthly cost of ownership figure because it most accurately captures the true cost comparable to a rental.
“Flip This House”: Investor Speculation and the Housing Bubble
I’ve been posting this type of idea for at least 2 years, usually linking to CalculatedRisk
Is it a shame that it’s taken 6 years for the Fed to notice the explosion in second home sales, or reassuring that they finally get it?
FICO Enhances Ability to Predict Strategic Mortgage Defaults
http://www.fico.com/en/Company/News/Pages/04-21-2011.aspx
Jumbo loans require jumbo income to make the payments. Perhaps some people who made the good income before (ex. stock options, bonuses, sales commisions, small business profits, etc) no longer do so and can’t afford the same lifestyle anymore.
Also, job loss. If you have to move for the new job - you have to move.
Susan, NBR: Is the S&P downgrade a wake-up call for the Euro zone?
Bob Doll, BlackRock: Well, there’s been lots of wake-ups calls.