Irvine Housing Blog

“BE THE ONE TO DO YOUR OWN UPGRADES IN THIS VERY DESIERABLE AND OPEN FLOORPLAN.”

For 800K, I shouldn’t have to do any upgrades.  Bought in 1998 for 300K, now wanting 800K.  No housing bubble in Irvine, just keep moving along, nothing to see here!

( makes all the difference )

An interesting path to take when you have two mortgages and the second is completely underwater, is to just stop paying on the second.  The second mortgagee would have to purchase the first in order to foreclose, but that doesn’t provide any value to the second.  So they’ll just sit and wait…

“44 percent of its second mortgages show the homeowner’s overall debt including first mortgages is greater than the price of the home”

“Pay careful attention to that statistic. Forty-four percent of the first mortgages are underwater. When the first mortgage is underwater, the second mortgage has no value.”

Based on the statistic I think your conclusion is off.  The statistic is for total debt not first loans. That is still a lot of garbage on the bank books.

IR,

Do you know who pays the banks/investors the monthly mortgage in the cases when homeowners are squatting?

If nobody is paying, don’t they have to write down as a loss?

IR:  “Very few HELOCs with any balances are first mortgages. While it’s true many who own properties free-and-clear open HELOCs as first mortgages, most of these people don’t use them.”

Actually, I find in Costa Mesa that between 5% and 10% of short sales and REOs are by “owners” who’s tax basis is less than 10% of the sale price (e.g. paid $22k in 1970).  It would be hard to argue that these people did not Heloc the house.

What is the percentage in Irvine?

“If nobody is paying, don’t they have to write down as a loss?”

I think the question would be best answered by a portfolio accountant, but I don’t think you can write the coupon portion of that down as loss… The principal portion can be, but not the interest portion.

Did the comment links change?

I was trying to reply to SJDave but I don’t think it posted.

Anyways… didn’t realize Dave moved to San Jose, must have been a nice tech job to take you out of the desert and into NorCal, a place probably worse than Irvine when it comes to RE prices.

So I take it you won’t be buying that 2/2 in AZ anymore? Good luck in your new spot.

“The losses on second mortgage and HELOCs are staggering.”

IR, so against shareholders equity of 222BN, these “staggering” loses are going to equate to 2.8% for BOFA huh?

These staggering 2nd lien loses of under 3% of shareholder equity are clearly the reason that BAC is trading at 44% of NET TANGIBLE BV.

I expected deeper analysis than just out of context attention grabbing headlines.

It must be hard coming up with material on a daily basis on top of your real world responsibilities but feels like some posts are clearly below your standards in terms of analysis beyond just the headline.

Thanks for your blog, I read the headlines everday. It’s been a long time since I’ve commented.

I did a search of Refdin on 92620 and found 45 homes with 4 or more bedrooms recently sold with an average price of $800,000, so the property seems priced right.

In my blog article, As A Default Of Greece Nears, Are Leaders Considering Nationalization Of European Banks? which I will be posting tonight, I relate that Bloomberg reports European Banks May Face Forced Recapitalization, Welt Says. European governments are considering setting banks a deadline for boosting their capital levels, the German newspaper Die Welt said, citing an unidentified person involved in the negotiations. Under the plan, governments would force banks to accept public funds to increase their capital after the deadline has expired, the newspaper said today. For a public-funding guarantee to calm markets, European Union countries would have to act jointly, the newspaper cited the person as saying. While there is no agreement on the proposal at this time, a decision may be taken within the next two weeks, the newspaper cited unidentified people involved in the negotiations as saying.

And The European Systemic Risk Board relates Jean Cluade Trichet says The crisis has reached a systemic dimension.

If banks are nationalized in Europe, might banks in the US be nationalized as well.

An inquiring mind asks when banks are nationalized, will properties be marked-to-market, and if so will the banks take a loss on the property? Will second mortgages be written off?  Irvine renter relates, Forty-four percent of the first mortgages are underwater. When the first mortgage is underwater, the second mortgage has no value.  And an inquiring mind asks, if banks are nationalized, Will the amount on second mortgages be written off?

Irvine Renter also relates, Without a dramatic increase in home prices, strategic default will eventually expose these loans as worthless. An inquring mind asks as well, if the banks are nationalized, will pressure be place on non-paying loan owners to settle up, or move out?

Irvine HO -

Whoah… when did AZDave move to San Jose?

Been north of you about a month now.

Must have found some nice tech job.

Yup, never thought I would move to California but it appears that we all have our price.

I think prices there are more outrageous than Irvine.

Yup.  Rent here is almost 3x what I was paying in Scottsdale.

So I guess you aren’t buying that 2/2 in AZ anymore.

I’m still watching the Scottsdale dreamhouse incase I want to become a snowbird some day.  Prices are in the 280’s now - getting closer and closer to my 250K max.

Good luck in your new spot… but NorCal is probably a big change from the desert.

Thank you.  Yes, it’s way different versus AZ.  The weather is awesome though.

So far, it has been a great move.  Ironically, The Irvine Company is my landlord.  Spent a lot of time looking at places and theirs was by far the best even if it is more expensive.

Come on this is too good to be true.

AzDavid moved to an even more forever gonna be expensive place than Irvine and now is renting from the Irvine Co.?

This is hilarious but please tell me this is fake?  He is paying 3 time AZ rent at the Irvine Company LOL

PR -

This is hilarious but please tell me this is fake?

Nope.  Completely real.

He is paying 3 time AZ rent at the Irvine Company LOL

Have to give credit where credit is due.  The community that I went with is by far nicer than the majority of places I looked at.

David congratulations.  You’d have to agree there is no recession in the Market you are in, it’s hot.