Irvine Housing Blog

After walking away from 5 properties, I was issued 1099s for 3 on which I ended up owing less than 4K on over 650K in mortgage debt.  But the last two properties remain in limbo. 

I am sure I will be pursued by the bank as punishment for squatting and fighting to a standstill the foreclosure on my primary residence. 

But, sheeeeeeeet I needed to to “make other housing arrangements”.  I will just have to make my payments pursuant to the Chapter 13 bankruptcy. 

I blame myself, I was stupid.  But I am not sad or remorseful.  I actually feel pretty damn lucky I wasn’t born in a county with a debtor’s prison. 

The 5 years of 1000 per month payments I will likely have to make, pales in comparison to the nearly 1.1 million I would have been on the hook for had I stayed and paid.  I see it as one big-assed cramdown!

I definitely don’t lose any sleep over this shit.  Life goes on, and in 10 years no one will even care or rememember.

The term Zombie debt is a symptom of how poorly informed many borrowers are.  When you go to closing and slide the check (or checks) over the desk, you walk away owning a property.  Making your monthly payments is not part of the process of buying your house because you already own it.  Making your payments is the fulfilment of contractual obligations of a loan you have agreed to accept.  The loan is secured by the property in nearly all cases and the forfeiture of the security might not be entirely sufficient to release the borrower from debt depending on the particulars of the specific contract and the law.  The term Zombie makes it appear that fine folks are being pursued by debts they don’t owe.  Banks and servicers have acted badly in many cases and made many flat-out mistakes, but many people, paticularly those who borrowed beyond a purchase-money loan, are going to end up owing some residual debt after they lose their house and that debt is as legitmate as their credit card or student loans.  Again, you don’t pay your mortgage to buy a house; you pay your mortgage to extinguish a debt.

What bugs me about this article, and what has always bugged me about housing in FL (where a lot of this story is centered) is the degree of people just gambling on housing - fully enabled by banks.  Banks lent to people buying multiple properties without being more stringent with their underwriting.  How much down do you think Julia Ingham put on the new properties she hoped to flip?  Maybe 10%.  Think 10% down is a good idea for a non-owner occupant?  Did the bank care that this is what the borrower was doing?

I’ve posted numerous times linking to a Calculated Risk story about the insane percentage of home & especially condo sales that were going to non-owner-occupants.  Some people say we need to go to 20% down for mortgages.  If you’re going to require that for owner-occupied homes, what would you require for investment properties?  I’d say at least 30-40%.  Take out the specuvestors fueled by 0-10% DPs, and the over 100% equity HELOC’ers and the bubble isn’t nearly what it became.  Those are very easy requirements to install - do it through the GSE’s and FDIC.

When you sign a contract to purchase a home or car, you don’t OWN a thing. If you OWNED it you would have the TITLE free and clear. You agree to service the debt until you OWN it.

You don’t own your car until it’s paid off, the bank does.

You don’t own your home until it’s paid off, the bank does.

As the 1st poster so clearly..CLEARLY posted, you can simply file Chapter 13 to absolve the debt. Credit Card debt and home mortgage debt WILL be subject to Chapter 13, student loan debt cannot be discharged in ANY circumstance. All debt is not equal, and the ones throwing the moral judgments seem to be the LEAST educated, golly gee, ain’t that a surprise. Hey, maybe GOD caused all these foreclosures as a judgment against the U.S. and our moral collapse…..

Martin Feldstein pushing mass principal reductions in the NY Times:

“...To halt the fall in house prices, the government should reduce mortgage principal when it exceeds 110 percent of the home value. About 11 million of the nearly 15 million homes that are “underwater” are in this category. If everyone eligible participated, the one-time cost would be under $350 billion…”

On a purely self-interested basis, that sounds good to me!  Until I got to this part:

“...And in exchange for this reduction in principal, the borrower would have to accept that the new mortgage had full recourse — in other words, the government could go after the borrower’s other assets if he defaulted on the home…”

So taxpayers will only write-down my mortgage to 110% LTV?  In order to refi, I’d still have to write a big check, and then the loan would be full recourse?  This is the same problem all of these “solutions” have encountered - they’re already hard to swallow because they’re rewarding certain mortgage holders at the expense of others, and then they’re not quite attrative enough to get any meaningful participation from the limited set of qualified mortgage holders.

http://www.nytimes.com/2011/10/13/opinion/how-to-stop-the-drop-in-home-values.html?_r=2&ref=opinion&pagewanted=print

next housing bubble in california(i bet we see another one in the next 20 years), i’m going to load up on property with interest-only loans.

the upside is huge and there is little downside.

If the article is accurately written, Ms. Ingham paid $10,000 for 4 investment properties. Not necessarily evenly divided among them, but on average just $2.5k. I doubt that is anywhere close to 10% down.

The story is about would-be flippers buying multiple properties and a guy in trouble over his second home. Tough luck, but they still have their primary residences. Not everyone is going to be able to get away from their own folly in similarly comfortable circumstances.

It might be instructive to have a post on the exact situation in California, given that’s where Irvine is located (but not where I’m located ).

Isn’t there a significant difference between most Purchase Mortages and refinances/HELOC’s, both in legal obligations and lender options?

KRON4 had an awesome report today on an abandoned house turning into a toxic wastedump in Antioch.

http://yfrog.com/nxm6suj

A few more drums of waste and the bank can have its own Superfund site.

LOL! Once again another butt-ugly house. What is it with Orange Co. developers?

2 observations.
- This might be a second opportunity for this site to save some people a lot of money and trouble.  If short sellers and foreclosure targets learn to take the extra step of bankruptcy they might come out much better in future years.

- How do I find a public company that deals in debt collection?  That is a growth industry for sure, And I’d like to get me some of that action.  Vulture time.