Category Archives: WTF

Government Bureaucrat Recommends Against 30-Year Fixed-Rate Mortgages

Some ideas for reforming the mortgage and housing markets are better than others. Recommending borrowers stop using fixed-rate mortgages at the bottom of the interest-rate cycle is a very foolish recommendation.

Irvine Home Address … 28 COLDBROOK Irvine, CA 92604

Resale Home Price …… $1,199,000

Cocaine decisions…

You are a doctor or a lawyer

You got an office with a foyer

And the cocaine decisions that you make today

Will not be discovered till it's over 'n' done

By the customers you hold at bay

Frank Zappa — Cocaine Decisions

The decisions we make today concerning the mortgage and housing markets will have long-lasting ramifications. So far, the policies lenders have been following in cahoots with our government are fostering moral hazard. Now some bureaucrats are trying to undermine the very foundation of prudent borrowing: the 30-year fixed-rate mortgage.

Radical Ideas From a Federal Housing Bureaucrat

By James R. Hagerty

As the chief economist of the Federal Housing Finance Agency, Patrick Lawler … launched a frontal assault on the most sacred element in U.S. housing-policy dogma: the 30-year fixed-rate mortgage loan, providing the right to refinance at any time, with no prepayment penalty. If more members of the audience had been fully awake at this moment, I feel sure that their gasps would have been audible.

The reason people at this event might have gasped is because the 30-year fixed-rate mortgage is a good idea, particularly now at the bottom of the interest rate cycle. The author of this article, James R. Hagerty, obviously disagrees. He is a fool.

Now, Americans are very attached to their 30-year fixed-rate freely prepayable mortgages. They like not having to fuss about the possibility of 28% interest rates in 2032, even though most of us will move or die long before then. They love to refinance every time rates drop and then brag to their neighbors about how much they are saving per month.

Notice the emotional derisiveness in the comments about bragging to the neighbors and the ridiculous overstatement about 28% interest rates after we die. People who managed their risk well by utilizing 30-year fixed-rate mortgages should brag to their neighbors. They were smarter than their neighbors who used adjustable-rate mortgages and assumed interest rate risk. People who use fixed-rate financing can still take advantage of lower interest rates by refinancing, and they lock in protection against higher rates. This is smart.

What they don’t stop to realize often enough is that they are paying a very large price for that privilege– twice.

This is an exaggeration. People do pay a premium for fixed-rate financing, but it isn't a "very large price" as this author erroneously contends.

In the first place, mortgage rates are higher than they otherwise would be. That’s because lenders and mortgage investors must build in protection for the risk that we will prepay and stick them with a lower yield than they were anticipating. Mr. Lawler estimates that Americans pay at least an extra 0.25 to 0.50 percentage point in rates because of this option to prepay without penalty. They also pay another premium-–sometimes a percentage point or two–for having a long-term fixed rate. Over 30 years, that translates into some real money, but no one ever mentions that when bragging to the neighbor.

Notice he slips in another comment about bragging to the neighbors. I suspect this guy has an adjustable-rate mortgage. When interest rates go up and his payments along with them, I wonder if he will feel so smug about his choices. Also, the premiums he stated are a ridiculous exaggeration. Nobody is paying one or two percent more for fixed-rate financing.

In the second place, our nation has created the likes of Fannie, Freddie and the FHA to facilitate these oddball 30-year fixed-rate loans, which aren’t normally provided by the private market.

That statement crosses the line between exaggeration and outright lie. Thirty-year fixed-rate mortgages are not "oddballs" that would not exist if not for the GSEs and the FHA. It may look that way today because there is no market other than what these entities provide, but that is because there is no private market of any kind for mortgages at today's interest rates. If it isn't government insured, it isn't underwritten. These oddball loans have been around for decades, and they are the stable base of a housing market.

For a long while, that seemed like a free lunch. Fannie and Freddie, we were told, were far better able to handle those complex risks than we dumb consumers ever could. But since the government had to rescue Fannie and Freddie in 2008, the taxpayers’ tab for this indigestible lunch has swollen to $145 billion, and it’s still rising. So that’s the second time we’ll pay for our irrational love of American-style mortgages – only this time, we all pay, not just mortgage borrowers.

This guy is saying that the problems with the GSEs are caused by 30-year fixed-rate mortgages. That is a lie, pure and simple. The GSEs got in trouble because they insured and purchased toxic mortgages. It isn't their 30-year fixed-rate mortgages that are causing massive losses. This writer is using lies and emotional exaggerations to support his contention that these loans are bad. It is irresponsible journalism, and he should be ashamed.

Meanwhile, other wealthy nations–notably Canada–do without our kind of mortgages and yet somehow manage to have homeownership rates similar to ours. They do not pretend that there are risk-free ways to buy houses on credit.

Canadians also do not have a mortgage interest deduction, so people are strongly encouraged to pay off debt rather than endlessly add to it and service it. Also, the wise Canadians recently inflated their own housing bubble as people foolishly used low-interest mortgages to bid up prices. The author forgot to mention that.

Mr. Lawler then skewered one of the favorite arguments of those who assert that we need Fannie and Freddie–their ability to borrow money all over the world, drawing in foreigners’ savings to finance ever-larger McMansions (which then need to be filled with Asian gadgets and European gewgaws). But why exactly do we need all of that foreign investment in our mortgages? Mr. Lawler asked: “A good case can be made that we massively over-invest in housing.” Indeed, we might be better off investing any money foreigners lend us in something that would help us sell more of our goods and services to those foreigners so we can hope to pay them back one day.

All too soon, Mr. Lawler’s time was up, but he blurted one last revolutionary chant before resuming his role as a bland bureaucrat: “We can do with a lot less government involvement and still get what we want, just by making some fundamental changes.”

What fundamental changes would those be? The author obviously thinks one of these fundamental changes should be eliminating the 30-year fixed rate mortgage. I think he is a fool.

I proposed this solution:

Loans for the purchase or refinance of residential real estate secured by a mortgage and recorded in the public record are limited by the following parameters based on the borrower’s documented income and general indebtedness and the appraised value of the property at the time of sale or refinance:

1. All payments must be calculated based on a 30-year fixed-rate conventionally-amortizing mortgage regardless of the loan program used. Negative amortization is not permitted.

2. The total debt-to-income ratio for the mortgage loan payment, taxes and insurance cannot exceed 28% of a borrower’s gross income.

3. The total debt-to-income of all debt obligations cannot exceed 36% of a borrower’s gross income.

4. The combined-loan-to-value of mortgage indebtedness cannot exceed 90% of the appraised value of the property or the purchase price, whichever value is smaller except in specially sanctioned government programs.

Any sums loaned in excess of these parameters do not need to be repaid by the borrower and no contractual provision is permitted that can be interpreted as limiting the borrower’s right to exercise this right, make the loan callable or otherwise abridge the mortgage agreement.

That is the kind of fundamental change we would live with.

Scheduled for auction 28 years after purchase

Family homes have historically been a great retirement savings vehicle because people were forced to save through the amortization on their loan. California owners in particular have had opportunity to fund their retirements from an influx of high wage earning buyers driving up home prices. Unfortunately, with the Great Housing Bubble, many owners extracted their retirement savings and spent it.

  • Today's featured property was purchased on 7/12/1982 for about $400,000 based on the property tax records. The owners original financing is unknown, but it was likely an 80% loan with a 20% down payment.
  • On 12/11/2001 they obtained a $600,000 first mortgage.
  • On 2/4/2003 they refinanced with a $605,000 first mortgage.
  • On 5/3/2004 they opened a $100,000 HELOC.
  • On 3/28/2005 they refinanced with a $743,000 first mortgage.
  • Here is where it gets strange; on 4/3/2007 the refinanced with a $600,000 first mortgage which required them to pay down the first by $143,000.
  • Total property debt is $600,000.
  • Total mortgage equity withdrawal is about $200,000.

According to Foreclosure Radar, these owners defaulted in April, and they are scheduled for auction in August. Since they have about $600,000 in equity, it is safe to assume they will sell prior to their auction or get a loan modification. It may be this is an unemployment problem. For whatever the reason, these owners are being compelled to sell a house they have been living in for almost 30 years under threat of foreclosure.

Twenty-eight years after purchase, and their mortgage has doubled, and they are about to lose their homes. Very foolish, and very sad.

Irvine Home Address … 28 COLDBROOK Irvine, CA 92604

Resale Home Price … $1,199,000

Home Purchase Price … $400,000

Home Purchase Date …. 7/12/1982

Net Gain (Loss) ………. $727,060

Percent Change ………. 181.8%

Annual Appreciation … 4.0%

Cost of Ownership

————————————————-

$1,199,000 ………. Asking Price

$239,800 ………. 20% Down Conventional

4.80% …………… Mortgage Interest Rate

$959,200 ………. 30-Year Mortgage

$242,643 ………. Income Requirement

$5,033 ………. Monthly Mortgage Payment

$1039 ………. Property Tax

$0 ………. Special Taxes and Levies (Mello Roos)

$100 ………. Homeowners Insurance

$73 ………. Homeowners Association Fees

============================================

$6,245 ………. Monthly Cash Outlays

-$1365 ………. Tax Savings (% of Interest and Property Tax)

-$1196 ………. Equity Hidden in Payment

$440 ………. Lost Income to Down Payment (net of taxes)

$150 ………. Maintenance and Replacement Reserves

============================================

$4,273 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$11,990 ………. Furnishing and Move In @1%

$11,990 ………. Closing Costs @1%

$9,592 ………… Interest Points @1% of Loan

$239,800 ………. Down Payment

============================================

$273,372 ………. Total Cash Costs

$65,500 ………… Emergency Cash Reserves

============================================

$338,872 ………. Total Savings Needed

Property Details for 28 COLDBROOK Irvine, CA 92604

——————————————————————————

Beds: 4

Baths: 3 full 1 part baths

Home size: 3,600 sq ft

($333 / sq ft)

Lot Size: 5,665 sq ft

Year Built: 1980

Days on Market: 60

Listing Updated: 40343

MLS Number: S613788

Property Type: Single Family, Residential

Community: Woodbridge

Tract: Gb

——————————————————————————

According to the listing agent, this listing may be a pre-foreclosure or short sale.

Classic home never goes out of style. Good taste, superb craftmanship, prime location combine to create this sought after home in Woodbridge. This beautifully constructed and appointment home is a haven for comfort and family. This home is beautifully remodeled throughout. A generous family room warmed by the brick fireplace, is a place where everyone can relax. Gourmet kitchen features stainless steel appliances, double oven, warmer and walk-in pantry. Den includes a bar with wine room, perfect for entertaining. Bonus room with built-in cabinets, ceiling fan and a balcony. Master Bedroom with plenty of closet space and a private deck with views of peaceful trees, tennis courts and a peek-a-boo view of Woodbrige North Lake, leads to the backyard with a spiral staircase. Enjoy the outdoors with a private pool, spa, fireplace and a built-in BBQ. Enjoy Woodbridge ammenities: two lakes, pools, tennis courts, parks and Lagoon.

Nearly 500 Properties Are Currently Scheduled for Foreclosure Auction In Irvine

The MLS inventory is growing. The pre-foreclosure inventory is growing. And shadow inventory is growing. Will our spring rally fizzle out?

Irvine Home Address … 24 ROSE TRELLIS Irvine, CA 92603

Resale Home Price …… $1,900,000

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Give me no restrictions on what I do or say

Don't speak of tomorrow when it's still today

Leave me to my selfish ways, I'm well enough alone

That is what I tell myself as I stumble home

Derelict across the street in the garbage bin

Looks like he's found something neat judging by his grin

Such a long long way to go, hope I get there soon

Men At Work — No Restrictions

With the restricted inventory condition engineered by the banks, our market is not going to clear any time soon. They may be successful at holding up prices to some degree, but it will take a very long time to work off the overhanging inventory of distressed properties. As this process drags on, more Ponzis will flame out, and the distressed inventory will continue to grow. The housing bust is not over.

Only 650 on the MLS

About 650 homes are for sale on the MLS, and there very few properties in the foreclosure process currently for sale. Many of the short sales are in pre-foreclosure, but most of those in the foreclosure pipeline have already given up. They are squatting and waiting. The number of properties tied up in the foreclosure process exceeds our steadily increasing MLS inventory.

Pre-Foreclosure and Auction inventory continues to rise

According to ForeclosureRadar.com, visible inventory is as follows:

342 Pre-Foreclosure (NOD has been filed)

484 Auction (NOT has been filed)

826 Total Pre-foreclosure and Auction Properties.

Is 826 a big number?

In the last 30 days, the postponements have far exceeded the number of sales. There were 36 properties sold back to the bank, and 9 properties that were sold to third parties. That is 45 properties sold in one month out of an inventory of 826. At that rate of sales, it will take 18 months to clear the inventory.

Foreclosure inventory isn't like MLS inventory that needs three to six months supply available to make a market. Foreclosure inventory should be near zero. The total months to clear foreclosure inventory is usually less than one. The fact that we have over 800 properties in this visible inventory is troubling.

The homebuilders like the Irvine Company are taking advantage of the restricted inventory to sell new homes. As someone whose livelihood depends on the homebuilding industry, I think its great that sales are doing so well. As a consumer, I find it irritating that the reason homebuilding is coming back is because the inventory that should be available on the MLS is tied up by lenders who are allowing everyone to squat. It's really bad in Las Vegas where more than 1,000 new homes were built in a city with 9,000 empty ones.

At least 2,700 in Irvine shadow inventory

Bear in mind that none of these numbers capture the shadow inventory of those who are not paying their mortgage but the banks have not begun the foreclosure process. The latest report is that 8.4% of Orange County mortgage holders are delinquent on their payments. There are about 75,000 homes in Irvine and about 45,000 mortgages. If only 6% of those are delinquent, that amounts to 2,700 homes. If Irvine matches the 8.4% rate of Orange County, then 3,780 homeowners are delinquent The ratio of three to four houses in shadow inventory for each house in pre-foreclosure is about the same as national figures.

At the rate of distressed inventory sales of 45 per month, it will take 60 months to work off this inventory — and that is if we stopped adding to it today.

Eighteen months for visible inventory and sixty months for shadow inventory doesn't sound as bad as it really is because more properties will become distressed as this inventory is worked off. Many more borrowers that currently are not delinquent simply can't afford their homes. Large numbers of Ponzi borrowers are continuing to build their Ponzi debts. Most are resorting to credit cards right now waiting for the HELOC money to come back. It isn't going to. The long term ramifications of shutting down the home ATM is going to be more distressed properties and foreclosures as the Ponzis implode.

In the interim, we sit and wait.

Washington Mutual's Garbage

Below is a sample of one defunct lender's toxic waste. The first two properties account for over $10,000,000 in bad loans. Do you see why they are in no hurry to foreclose?

89 CANYON CRK 5/26/2010 $ 5,200,000 WASHINGTON MUTUAL BK FA
41 GOLDEN EAGLE 6/7/2010 $ 4,860,000 WASHINGTON MUTUAL BK FA
27 STARVIEW 7/7/2010 $ 2,240,000 WASHINGTON MUTUAL BK FA
8144 SCHOLARSHIP 6/2/2010 $ 1,674,282 WASHINGTON MUTUAL BK FA
11 GAVIOTA 5/27/2010 $ 1,260,000 WASHINGTON MUTUAL BK FA
3131 MICHELSON DR 1702 6/3/2010 $ 1,226,600 WASHINGTON MUTUAL BK FA
3141 MICHELSON DR 1402 5/27/2010 $ 1,000,000 WASHINGTON MUTUAL BK FA
28 CRIMSON ROSE 5/27/2010 $ 1,000,000 WASHINGTON MUTUAL BK FA
10 FIGARO 6/2/2010 $ 880,000 WASHINGTON MUTUAL BK FA
55 MIDNIGHT SKY 6/21/2010 $ 867,000 WASHINGTON MUTUAL BK FA
78 DOVECREST 5/28/2010 $ 815,000 WASHINGTON MUTUAL BK FA
61 DOVECREEK 6/28/2010 $ 760,000 WASHINGTON MUTUAL BK FA
26 DINUBA 6/10/2010 $ 744,000 WASHINGTON MUTUAL BK FA
89 LAMPLIGHTER 7/7/2010 $ 737,112 WASHINGTON MUTUAL BK FA
37 LAKEVIEW 54 5/21/2010 $ 682,500 WASHINGTON MUTUAL BK FA
6 CEDARSPRING 7/2/2010 $ 650,000 WASHINGTON MUTUAL BK FA
16 ARBORSIDE 5/25/2010 $ 643,700 WASHINGTON MUTUAL BK FA
2251 WATERMARKE PL 5/26/2010 $ 639,000 WASHINGTON MUTUAL BK FA
4911 KAREN ANN LN 6/2/2010 $ 638,250 WASHINGTON MUTUAL BK FA
196 WILD LILAC 6/14/2010 $ 608,000 WASHINGTON MUTUAL BK FA
4082 GERMAINDER WAY 6/18/2010 $ 594,000 WASHINGTON MUTUAL BK FA
14 SHENANDOAH 6/3/2010 $ 560,000 WASHINGTON MUTUAL BK FA
4056 WILLIWAW DR 6/3/2010 $ 550,000 WASHINGTON MUTUAL BK FA
17 MONTE CARLO 5/26/2010 $ 548,000 WASHINGTON MUTUAL BK FA
62 FRINGE TREE 6/17/2010 $ 536,750 WASHINGTON MUTUAL BK FA
35 WONDERLAND 5/26/2010 $ 534,000 WASHINGTON MUTUAL BK FA
4092 ESCUDERO DR 5/28/2010 $ 487,500 WASHINGTON MUTUAL BK FA
14 BLUEBELL 6/10/2010 $ 486,500 WASHINGTON MUTUAL BK FA
5 FASANO 6/7/2010 $ 420,000 WASHINGTON MUTUAL BK FA
4391 BERMUDA CIR 5/27/2010 $ 417,000 WASHINGTON MUTUAL BK FA
42 GILLMAN ST 6/7/2010 $ 416,500 WASHINGTON MUTUAL BK FA
14601 LOFTY ST 5/24/2010 $ 398,000 WASHINGTON MUTUAL BK FA
212 GREENMOOR 94 6/14/2010 $ 397,500 WASHINGTON MUTUAL BK FA
396 MONROE 190 5/24/2010 $ 390,000 WASHINGTON MUTUAL BK FA
132 OVAL RD 2 6/11/2010 $ 384,000 WASHINGTON MUTUAL BK FA
17 LAKEPINES 5/24/2010 $ 365,600 WASHINGTON MUTUAL BK FA
437 RIDGEWAY 5/24/2010 $ 315,000 WASHINGTON MUTUAL BK FA
10 LAKEPINES 5/20/2010 $ 286,780 WASHINGTON MUTUAL BK FA
87 ROCKWOOD 47 6/29/2010 $ 272,000 WASHINGTON MUTUAL BK FA
4 MAGELLAN AISLE 5/25/2010 $ 260,000 WASHINGTON MUTUAL BK FA
147 STREAMWOOD 6/21/2010 $ 200,240 WASHINGTON MUTUAL BK FA
406 ORANGE BLOSSOM 121 6/10/2010 $ 182,500 WASHINGTON MUTUAL BK FA

If any of you thought Irvine was immune, think again. All the households in the list above are squatters. Are any of your neighbors in there?

Prime mortgages going bust at an alarming rate

By KEVIN G. HALL

Aftershocks from the nation's financial crisis continue rumbling through the housing sector as fixed-rate mortgages held by the safest borrowers accounted for nearly 37 percent of new foreclosures during the first three months of this year, the Mortgage Bankers Association reported Wednesday.

Additionally, more than one in 10 homeowners were behind on their mortgage payments in the first quarter – a record, the association said. That's up from 9.47 percent in the last three months of 2009.

Prime loans, those made to the safest borrowers with the highest credit scores, account for almost 66 percent of outstanding U.S. mortgages, so their rising foreclosure numbers are troubling.

"People with higher scores are defaulting at rates we have not seen in the past," said Jay Brinkmann, the chief economist for the trade group.

I always get a kick out of industry insiders that act surprised. We have all known this problem was going to wipe out the alt-a and prime borrowers. It is only a matter of time.

If you have been paying attention to the news on delinquencies, for the last 3 years, this number has gotten worse month after month, and it shows no signs of peaking. Yet while the delinquency rates continues to climb, we get reports about declining default notices or declining foreclosure rates. Those rates become rather meaningless as long as the delinquency rate keeps climbing. The differential just adds to shadow inventory.

It is becoming obvious that shadow inventory is the only answer lenders have to the problem. They screw around with foreclosure statistics, and they allow a great deal of squatting. The result of their amend-pretend-extend is a restricted inventory condition supporting current pricing. I believe this is a cartel arrangement doomed to collapse. We will see.

The slide into foreclosure of the strongest borrowers is partly a function of the nation's unemployment rate, which is now 9.9 percent. The Great Recession has mowed down white-collar and blue-collar workers alike.

I would like to caution people against making a strong correlation between unemployment and delinquency. Unemployment is certainly making matters worse, but most of these people would have defaulted anyway in time. Unemployment simply accelerates the process.

The danger in this correlation is the false belief that an improvement in employment will bring about an improvement in the delinquency rate. It won't. Most delinquent borrowers couldn't afford their mortgages when they were fully employed. If they go back to full employment, they still won't be able to afford the mortgage.

In the first quarter, almost 21 percent of foreclosure starts were for adjustable-rate mortgages held by credit-worthy borrowers. Fixed and adjustable-rate prime mortgages combined accounted for more than 57 percent of all new foreclosures.

The MBA's data also showed that more than 6 percent of fixed-rated prime mortgages were delinquent from January to March and more than 13 percent of all homeowners with adjustable-rate prime mortgages were behind on payments.

California – the most populous state, which accounts for more than 13 percent of all U.S. mortgages – seems to have turned a corner in housing problems. It held 21 percent of all foreclosure starts during the first quarter of 2009 but only 14.5 percent in the first quarter of 2010.

Before we celebrate the improvement, consider what this statistic measures: the delinquency market share. California delinquencies are still rising, but other states are rising even faster. Our loss of delinquency market share isn't because borrowers here stopped going delinquent.

…One potentially troubling trend emerged: foreclosure starts rising in states that aren't commonly viewed as housing-bubble states. Washington state posted the largest increase in foreclosure starts overall in 2010's first quarter versus a year earlier, followed by Maryland, Oregon and Georgia. Washington state also posted the largest rise in foreclosure starts that involved prime and subprime adjustable-rate mortgages.

In another troubling trend, 42 states and the District of Colombia saw increased foreclosure starts for homes that were carrying FHA loans, which are considered among the safest. Only nine states, including Alaska and Idaho, saw foreclosure starts for FHA loans fall.

The rise in prime-mortgage foreclosures is important in the context of the sweeping revamp of financial regulation that's moving through Congress. Big financial institutions are trying to defeat a provision that would require them to retain 5 percent of the mortgages that they underwrite or sell into a secondary market to be packaged into mortgage bonds. They argue that they shouldn't have to do this for prime fixed-rate loans, but the latest data show that these loans aren't immune to delinquency and foreclosure.

Why would lenders resist a regulation to keep 5% of their mortgages in their portfolio unless they wanted to underwrite bad loans? The whole point of having a secondary market was to allow free movement of capital, not to allow banks to become origination machines with no responsibility, which seems to be what they want.

The data also suggest that the Obama administration's efforts to reverse the rate of delinquencies and foreclosures haven't been effective. The Treasury Department reported Monday that lenders or loan servicers had permanently modified only 68,000 mortgages in April, while more than 277,000 modification offers were canceled and presumed to be back on foreclosure tracks.

"It is jolting to see the persistence of the foreclosure epidemic," Michael Calhoun, the president of the Durham, N.C.-based Center for Responsible Lending, said in a statement.

It's only jolting to those who didn't expect this to go on so long. I have consistently maintained that loan modification programs have no chance of success other than to give borrowers false hope and get them to make a few more payments. The amend-pretend-extend policy has caused this crisis to drag on much longer than it should have.

HELOCs are a girl's best friend

Sometimes, I really wish I would have lied and levered myself into a $1,000,000+ home. The banks are not foreclosing on anyone over the conforming limit. Of the 36 properties that went back to the bank in Irvine over the last 30 days, only one of them was over $800,000 (it was a penthouse in the North Korea Towers). Of the nine properties that were sold to third parties, the most expensive was $700,000. The banks know there is no market outside of the GSEs and the FHA, so everyone who has defaulted on a jumbo loan is being allowed to squat.

The owner of today's featured property is like many other high-end Ponzis. She has taken enough money out of the walls to support an opulent lifestyle, and now she is squatting.

  • This property was purchased on 12/16/2004 for $1,293,000. The owner used a $969,650 first mortgage and a $323,350 down payment.
  • On 1/19/2005 she got a $129,000 HELOC.
  • On 7/19/2005 she refinanced with a $1,200,000 first mortgage.
  • On 9/28/2005 she opened a $195,000 HELOC.
  • On 5/1/2006 she obtained a $282,800 stand-alone second.
  • Then on 7/14/2006 she refinanced with a $1,499,900 Option ARM with a 1.85% teaser rate and a $189,000 HELOC.
  • Total property debt is $1,688,900.
  • Total mortgage equity withdrawal is $719,250.
  • Total squatting is at least 15 months.

Foreclosure Record

Recording Date: 08/31/2009

Document Type: Notice of Sale (aka Notice of Trustee's Sale)

Click here to get Foreclosure Report.

Foreclosure Record

Recording Date: 05/21/2009

Document Type: Notice of Default

You have to admire the thinking of these Ponzis. After extracting nearly three-quarters of a million dollars and squatting for more than a year, she lists the house at a WTF asking price hoping someone will step up and pay off her debts.

Any takers?

Irvine Home Address … 24 ROSE TRELLIS Irvine, CA 92603

Resale Home Price … $1,900,000

Home Purchase Price … $1,293,000

Home Purchase Date …. 12/16/2004

Net Gain (Loss) ………. $493,000

Percent Change ………. 46.9%

Annual Appreciation … 7.1%

Cost of Ownership

————————————————-

$1,900,000 ………. Asking Price

$380,000 ………. 20% Down Conventional

4.94% …………… Mortgage Interest Rate

$1,520,000 ………. 30-Year Mortgage

$390,731 ………. Income Requirement

$8,104 ………. Monthly Mortgage Payment

$1647 ………. Property Tax

$375 ………. Special Taxes and Levies (Mello Roos)

$158 ………. Homeowners Insurance

$410 ………. Homeowners Association Fees

============================================

$10,694 ………. Monthly Cash Outlays

-$1614 ………. Tax Savings (% of Interest and Property Tax)

-$1847 ………. Equity Hidden in Payment

$726 ………. Lost Income to Down Payment (net of taxes)

$238 ………. Maintenance and Replacement Reserves

============================================

$8,197 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$19,000 ………. Furnishing and Move In @1%

$19,000 ………. Closing Costs @1%

$15,200 ………… Interest Points @1% of Loan

$380,000 ………. Down Payment

============================================

$433,200 ………. Total Cash Costs

$125,600 ………… Emergency Cash Reserves

============================================

$558,800 ………. Total Savings Needed

Property Details for 24 ROSE TRELLIS Irvine, CA 92603

——————————————————————————

Beds: 3

Baths: 3 full 1 part baths

Home size: 2,650 sq ft

($717 / sq ft)

Lot Size: 6,139 sq ft

Year Built: 2004

Days on Market: 6

Listing Updated: 40316

MLS Number: S617693

Property Type: Single Family, Residential

Tract: Ledg

——————————————————————————

This home features a unique Casita with it's own entrance and it's own full bathroom. Custom Goumet kitchen along with custom hardscape and salt water pool.

The realtor couldn't spell gourmet properly….

I hope you have enjoyed this week, and thank you for reading the Irvine Housing Blog: astutely observing the Irvine home market and combating California Kool-Aid since 2006.

Have a great weekend,

Irvine Renter

IHB News 5-8-2010

Apparently the high end of the market never declined in price. Today's featured property was purchased at the peak, but it has appreciated since then. WTF?

Irvine Home Address … 66 FANLIGHT Irvine, CA 92620

Resale Home Price …… $1,680,000

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But what a fool believes he sees

No wise man has the power to reason away

What seems to be

Is always better than nothing

And nothing at all keeps sending him …

Doobie Brothers — What a Fool Believes

Real Estate Boom Phrases That Went Bust

The way we talk about real estate has changed dramatically in the last few years as the collective sentiment has shifted from euphoria to panic. No one would dare to say "the only way is up" or "the easy money is in flipping" anymore. Here are a few other phrases that once seemed just as true.

  • "Location doesn't matter."

    Housing was appreciating so rapidly in seemingly every market that some people thought that no matter where you bought, you'd soon make a fortune.

    It's hard now to believe that anyone was promoting such a myth. After all, even people who claim to know nothing about real estate can rattle off the famous adage, "location, location, location." More than anything else, where a home is located determines its long-term value. A state-of-the-art kitchen can quickly become outdated, but a nice part of town can remain that way for generations.

    Even some places that seemed like great locations turned out to be terrible bets. Stephen Smith reported in an American RadioWorks documentary that Las Vegas went from having job growth four times the national average and attracting 4,000 to 5,000 new residents a month to being dubbed "Foreclosure City."

  • "You don't need a down payment."

    Traditionally, the purpose of a down payment is to reduce the bank's lending risk. It shows that the borrower has enough self-discipline to save up 20% of the purchase price of a home.

    More importantly, it means that the borrower is likely to keep making his mortgage payments even when times are tough because he has already put a lot of his own money into the house.

    When banks started giving people mortgages that didn't require a down payment, buying a home started to feel more like leasing an apartment. Even owners with fixed-rate mortgages had little home equity since most of the mortgage payment for the first few years is interest.

    When housing prices dropped, owners started sending jingle mail to their lenders. So what if they could still afford the monthly payments? It didn't make logical sense to keep paying for a depreciating asset that they owned so little of, borrowers reasoned. The sting of a credit score ruined by foreclosure wouldn't last as long as the burn of paying $500,000 for a $300,000 home.

    The lack of down payment is also one reason why so many homeowners ended up underwater. If you purchase a home for $200,000 with no down payment and the market value of your house drops to $160,000, you can't sell the house because you can't pay off the mortgage (unless you have $40,000 sitting in the bank). If you purchase a home for $200,000 with a 20% down payment and the market value drops to $160,000, you still have the option to sell at a loss. Most people who didn't make down payments didn't have money in the bank, though, and when they needed to get out of their homes, they were forced into credit-damaging short sales and foreclosures instead of having the option to sell.

  • "You can refinance before your rate goes up."

    How many people who took out adjustable-rate mortgages (ARMs) heard this line? But since prices were headed nowhere but up, many people, especially subprime borrowers, assumed that in the three or five years before their ARMs reset, they would be able to improve their credit enough to qualify for a fixed-rate mortgage or see their home appreciate so much that they would have no trouble refinancing. Another reason many people took out ARMs and other risky mortgages was because they planned to flip the house and wanted to spend as little as possible on mortgage payments in the meantime.

    When the real estate market crashed, people went underwater and couldn't sell their homes for enough to pay back the money they owed on the mortgage. Not only did they become trapped with the home, they became trapped with an unpredictable and generally much higher housing payment. Because of the poor economy, many of these people also lost their jobs, making it nearly impossible to pay the mortgage.

  • "Just get a home-equity loan."

    During the boom, money trees were suddenly sprouting up in people's backyards in the form of home equity loans (also known as second mortgages) and home equity lines of credit. Homeowners were able to take advantage of the appreciation in their home's value to borrow money – lots of money. Whatever you wanted to pay for, whether it was your kids' college educations or a new kitchen, the home equity loan was the answer.

    Unfortunately, the collateral for these loans is the home itself. Even people who bought homes at reasonable prices and had affordable mortgage payments got sucked into the housing crisis when they borrowed money based on what would soon become unrealistic values for their homes. The loans they took out reduced the equity they had built up and increased their monthly payments. Many people who borrowed against their home equity ended up in the same position as people who took out bad mortgages or mortgages they couldn't really afford.

The Bottom Line

The next time we find ourselves in an asset bubble – and there will be a next time – perhaps the lessons we've learned from the housing crisis will cause us to consider what we hear and say a little more carefully.

Writer's Corner

I want to wish my wife and my mother a happy mother's day. Thank you for all you do.

Housing Bubble News from Patrick.net

Fri May 7 2010

Freddie Mac asks U.S. for $10 billion as losses pile up (washingtonpost.com)

Republicans seek vote on future of Fannie, Freddie (reuters.com)

Obama Backs Financial Reform Except Where It's Needed Most (Mish)

President Obama's Cooper Union speech and the Goldman case (nypress.com)

Cronyism and gambling of financial sector (doctorhousingbubble.com)

Stock market trouble, Fed impotent (patrick.net)

Greece bailout just the beginning? (edition.cnn.com)

Land rezoned for 800,000 more houses than needed in Ireland (independent.ie)

As England Votes, Economic Clouds Hover (nytimes.com)

Bailed out homebuilders collect fat paychecks (reuters.com)

Big mystery is economists' failure to see housing bubble (interest.co.nz)

Was It Really a Bubble? (Economist still in denial!) (economix.blogs.nytimes.com)

ML-Implode Wins Reversal In Court Case; Re-Posts Censored Materials (blog.ml-implode.com)

Prior restraint (en.wikipedia.org)

Real Estate Rescue Scammers Tortured (laweekly.com)

Va. launching portable housing for aging relatives (washingtonpost.com)

Free Trial of the Landlord's Bargain Finder


Thu May 6 2010

You Would Have to Be Fool to Buy a House Now (theaffordablemortgagedepression.com)

Foreclosure is hitting well-off families, too (moremoney.blogs.money.cnn.com)

Drowning in mortgage debt (money.cnn.com)

Mortgage interest deduction not healthy for housing market (cnbc.com)

US Government Now 96.5% of the Mortgage Market (smirkingchimp.com)

Rich farmers get most cash (news.yahoo.com)

What Washington Needs To Learn From Greece (finance.yahoo.com)

Budgets full of pain (theautomaticearth.blogspot.com)

Congress members bet on fall in stocks (finance.yahoo.com)

Oakland California Bankrupt (Mish)

Massive bank fraud still unacknowledged (dailybail.com)

Disorganization at Banks Causing Mistaken Foreclosures (propublica.org)

The Fed: Bubble spotting (economist.com)

Fed transcripts stoke debate on rates (goupstate.com)

Mortgages Could Be Free If Interest Rates Were High Enough (PDF – Vince Loughnane) book cover

Red flags over China's hot property market (business.asiaone.com)

Don't fall victim to a lying house seller Amy Hoak's House Economics (marketwatch.com)

Property Forum now includes street view, prices, rents (patrick.net)


Wed May 5 2010

Why aren't Fannie and Freddie in Reform Bill? (voices.washingtonpost.com)

Geithner: Housing Reform To Come AFTER Wealthy Get Their Money Out (imarketnews.com)

Fed Privately Lobbies Senate to Kill Audit; What You Can Do! (Mish)

Ron Paul: I Think They're Going To Destroy The Dollar! (youtube.com)

Six Degrees of Leverage (old but good – makingsenseofmyworld)

Australia's Central Bank Signals Higher Bar for Rate Increases (bloomberg.com)

Australia poised to lift interest rates for 3rd month running (smh.com.au)

Mortgage Bond Spreads at Widest in Five Months (bloomberg.com)

Billionaire says "Vote For Me, I Shorted Your House" (blogs.wsj.com)

What if other businesses were like Goldman? (salon.com)

30,000 people a month can pay their mortgage but choose not to (doctorhousingbubble.com)

San Clemente takes back house seized in deed scheme (ocregister.com)

Volcker Says U.S. Unemployment Will Be Too High for Too Long (bloomberg.com)

Plunge in state revenue dashes hopes of an easy budget fix (latimes.com)

Anger brews over tax appeal fee (lansner.freedomblogging.com)

Small bungalows made American dream of house ownership possible (latimes.com)

Jay's Tiny House Tour (youtube.com)

Welcome to SurvivaBall: Promotional Program (survivaball.com)


Tue May 4 2010

Low Interest Rates – As Destructive as Usury? (old but good – makingsenseofmyworld)

Greenspan Wanted Housing-Bubble Dissent Kept Secret (huffingtonpost.com)

The bubble makers (network.nationalpost.com)

What the Federal Reserve should have done (washingtonpost.com)

Was There A Plan to Blow Up The Economy? (informationclearinghouse.info)

Despite 2009 restrictions, mortgage and appraisal fraud spiked (washingtonpost.com)

How Widespread Mortgage Fraud Toppled the U.S. Housing Market (realestatechannel.com)

Banks Buying Treasuries Instead Of Lending (bloomberg.com)

Housing market will implode, warns Edward Chancellor (perthnow.com.au)

House price implosion claims ridiculous, says Australian economist (heraldsun.com.au)

China May Crash in Next 9 to 12 Months, Faber Says (bloomberg.com)

China State Media On Corruption and Cooling Off The Real Estate Market (sinocism.com)

The sky's the limit for Israel housing bubble (jpost.com)

Goldman Fraud Case: The Only Email Worth Reading (fool.com)

Sen. Dodd's financial bill ignores Fannie and Freddie (knoxnews.com)

Senate Financial Bill Misguided, Some Academics Say (dealbook.blogs.nytimes.com)

Foreclosure Bargains Hurt by Chinese Drywall (pbs.org)

Ethics of Real Estate Strategic Default (biggerpockets.com)

The Morality of Strategic Default (PDF – patrick.net)

Long-Awaited Baby Boomer Die-Off To Begin Soon, Experts Say (theonion.com)


Mon May 3 2010

Foreclosures mounting in wealthier neighborhoods (ocregister.com)

Foreclosure Woes Loom As Housing Stimulus Ends (npr.org)

House Buyer Tax Credit Costly Failure (realestatechannel.com)

Tax dollars siphoned as credits go unchecked (azcentral.com)

Buy vs Rent Takedown (bayarearealestatetrends.com)

Buy Real Estate Now or Wait? (buygoldandsilversafely.com)

How financial reform could kill the ratings agency business (money.cnn.com)

The U.S. Needs Real Financial Reform (forbes.com)

"Brown Chip" Investing; Bubble Pricing in Vancouver (Mish)

Empty new houses in Ireland should be sold at low price, not demolished (news.bbc.co.uk)

Australian Housing bubble to burst? History says 'yes' (smh.com.au)

Limits to Australia's housing bubble (anz.theoildrum.com)

America Needs to Get Over Its House Passion (theatlantic.com)

The hidden costs of houseownership (latimes.com)

Housebuyers still don't research mortgages (bizjournals.com)

Suddenly, bank account was gone (ajc.com)

Gosh, no one could have forseen the housing crash! (patrick.net)

Power, Transparency and Debt (theautomaticearth.blogspot.com)

The trillion-dollar fraud: Why is the Fed so opposed to being audited? (salon.com)

Small-time counterfeiter had room overlooking BIG counterfeiter (latimes.com)

Bought at the peak

This couple bought at the peak, yet their house has appreciated while the market has collapsed around them. If the greater fool steps up and buys this property, this family has hit the lottery.

Irvine Home Address … 66 FANLIGHT Irvine, CA 92620

Resale Home Price … $1,680,000

Home Purchase Price … $1,415,500

Home Purchase Date …. 9/6/2006

Net Gain (Loss) ………. $163,700

Percent Change ………. 18.7%

Annual Appreciation … 4.6%

Cost of Ownership

————————————————-

$1,680,000 ………. Asking Price

$336,000 ………. 20% Down Conventional

5.07% …………… Mortgage Interest Rate

$1,344,000 ………. 30-Year Mortgage

$350,638 ………. Income Requirement

$7,272 ………. Monthly Mortgage Payment

$1456 ………. Property Tax

$417 ………. Special Taxes and Levies (Mello Roos)

$140 ………. Homeowners Insurance

$105 ………. Homeowners Association Fees

============================================

$9,390 ………. Monthly Cash Outlays

-$1591 ………. Tax Savings (% of Interest and Property Tax)

-$1594 ………. Equity Hidden in Payment

$666 ………. Lost Income to Down Payment (net of taxes)

$210 ………. Maintenance and Replacement Reserves

============================================

$7,082 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$16,800 ………. Furnishing and Move In @1%

$16,800 ………. Closing Costs @1%

$13,440 ………… Interest Points @1% of Loan

$336,000 ………. Down Payment

============================================

$383,040 ………. Total Cash Costs

$108,500 ………… Emergency Cash Reserves

============================================

$491,540 ………. Total Savings Needed

Property Details for 66 FANLIGHT Irvine, CA 92620

——————————————————————————

Beds: 5

Baths: 3 full 1 part baths

Home size: 3,541 sq ft

($474 / sq ft)

Lot Size: 5,007 sq ft

Year Built: 2006

Days on Market: 3

Listing Updated: 40304

MLS Number: S615843

Property Type: Single Family, Residential

Tract: Wdmf

——————————————————————————

Honey Stop the car!!! Fanastic quiet corner cul-de-sac location. Amazing custom fine cabinetry throughout. The attention to detail is unchallenged, from the curb to the back yard. This is a custom home with over $200,000 in upgrades. Gourmet stainless kitchen/42' cooktop with six gas burners/2 convection ovens microwave refrigerator, Island, Great Room/custom fireplace/built-in TV/surround sound. Formal Dining Room. One bedroom down/3/4 custom shower. Mastersuite, Jacuzzi tub mirrors/custom walk in closets/custom shower++3 bedrooms up. Two of the bedrooms have the jack & jill bathroom. One bedroom is a small master/private full bath/walk in closet ++loft/custom 3 station desk. Travertine,carpet,shutters, Baseboards, Crown Molding, canned lights, house is wired with Cat-5e Data wire, Low-E dual glazed windows, 75 gal. water heater, inside laundry room upstairs, finished garage, cabinets, energy efficient throughout, custom low maintance landscape, near award winning Woodbury elementary.

Squatting Laguna Beach Style

Squatting is usually a problem we associate with the indigent; however, many pretenders are hold up in opulent properties. Today we look at one such property in Laguna Beach, California.

Irvine Home Address … 150 Cress St Laguna Beach, CA 92651

Resale Home Price …… $5,990,000

{adsense-ir}

{book1}

Love, Love, Love

Love, American Style,

Truer than the Red, White and Blue.

Love, American Style,

That's me and you.

And on a star spangled night my love, (My love come to me).

You can rest you head on my shoulder.

Out by the dawn's early light, my love

I will defend your right to try.

Love, American Style,

That's me and you.

Charles Fox & Arnold Margolin — Love, American Style

I hear that jingle in my head whenever I profile the lifestyles of the pretending-to-be rich and famous. We Americans have a unique style, and Californians and their debt pathologies are fascinating. Last weekend we looked at Squatting Newport Coast Style, and today will drive down the coast a few miles and look at a beautiful ocean-view property in the heart of the action.

I love this property. If I thought I could squat there for a year and a half, I would do it. It is an oversized lot in a prime location. Have you ever been to K'ya? If you are standing on the rooftop deck, you are looking down on this property.

The property boasts unobstructed ocean views:

It has a great office for writing blog posts:

The master bedroom is beautiful, and even the crappers are nice:

You don't need the K'ya party deck when you have your own:

Delusional to the end

You can buy this property for a little over double what the owner paid in 2005. Did prices double since 2005? Can prices really go from $750,000 to $5,990,000 in 14 years?

I am astonished that people come to believe this is possible. This guy should be hiding his face in shame.

I can imagine the conversations between this freeloader and the lender:

Freeloader: "I will pay you as soon as I sell the property. The market is a bit soft right now, as you know."

Lender: "Our comps show this property would resale for about $2,500,000. Isn't your $5,990,000 asking price unrealistic?"

Freeloader: "Laguna Beach is different. Prices only go up here. Look how much it went up between 1997 and 2005."

Lender: "That was a housing bubble, and you are the bagholder. Your loans are recourse, and we will go after your assets if you don't pay us back."

Freeloader: "Give me some time and prices will recover."

Lender: "How much time do you need?"

Freeloader: "As long as it takes for prices to come back. Besides, if you foreclose now, I am insolvent, and it would be your fault. When I filled out the loan documents, I stated my income based on anticipated home-price appreciation. You are removing my income."

Lender: "Appreciation is not income. Besides, we can foreclose and make that income. We want your wage income."

Freeloader: "That was never part of the deal."

Property History for 150 Cress St

Date Event Price Appreciation
Nov 13, 2009 Listed $5,990,000
Jun 02, 2005 Sold (Public Records) $2,900,000 14.9%/yr
Oct 22, 1999 Sold (Public Records) $1,333,000 36.3%/yr
Dec 12, 1997 Sold (Public Records) $750,000

HELOC abuse

As you may have guessed, even with the near-peak purchase, this owner still managed to milk a few hundred thousand dollars out of the property before he resorted to squatting.

  • The property was purchased on 6/2/2005 for $2,900,000. The owner used a $1,885,000 first mortgage, a $145,000 HELOC, and a $870,000 down payment.
  • On 6/15/2006 he opened a HELOC for $910,743.
  • On 8/28/2006 he refinanced with a $2,870,000 Option ARM courtesy of Washington Mutual.
  • On 9/27/2006 WAMU gave him a $500,000 HELOC.
  • Total property debt is $3,370,000.
  • Total mortgage equity withdrawal is $1,340,000 including his substantial down payment.
  • He still extracted $470,000 of the bank's money.

When Chase bought WAMU, their losses on the WAMU portfolio were subject to a backstop agreement. If the losses are large enough on the portfolio, the US taxpayer — you — will pick up the tab.

If you knew you were paying for it, you might have stopped in and had a drink on yourself rather than go to K'ya and pay for it. That is for the little people.

Squatting

If it isn't bad enough that this guy walked away with hundreds of thousands of dollars in money you will end up paying for, he is still there! He has been squatting without a payment since late 2008!

Foreclosure Record

Recording Date: 08/03/2009

Document Type: Notice of Sale (aka Notice of Trustee's Sale)

Foreclosure Record

Recording Date: 04/30/2009

Document Type: Notice of Default

He may have paid through January of 2009, but with has slow as lenders are to foreclose, what makes you think they were timely when filing their NOD?

This owner has been squatting for well over a year, and the dance continues. The sale is scheduled for May 7. Will they postpone again to dance more? If so, you should be invited to the party; you are paying for it.

What do we usually associate with squatting?

Most squatters don't do quite as well as our Laguna Beach squatter.

Historically, squatting has been looked down upon, and squatters do not live in relative luxury.

Only in America would we permit squatters to live in luxury beachfront mansions.

Irvine Home Address … 150 Cress St Laguna Beach, CA 92651

Resale Home Price … $5,990,000

Home Purchase Price … $2,900,000

Home Purchase Date …. 6/2/2005

Net Gain (Loss) ………. $2,730,600

Percent Change ………. 106.6%

Annual Appreciation … 14.8%

Cost of Ownership

————————————————-

$5,990,000 ………. Asking Price

$1,198,000 ………. 20% Down Conventional

5.11% …………… Mortgage Interest Rate

$4,792,000 ………. 30-Year Mortgage

$1,255,867 ………. Income Requirement

$26,048 ………. Monthly Mortgage Payment

$5191 ………. Property Tax

$0 ………. Special Taxes and Levies (Mello Roos)

$499 ………. Homeowners Insurance

$0 ………. Homeowners Association Fees

============================================

$31,738 ………. Monthly Cash Outlays

-$2646 ………. Tax Savings (% of Interest and Property Tax)

-$5642 ………. Equity Hidden in Payment

$2403 ………. Lost Income to Down Payment (net of taxes)

$749 ………. Maintenance and Replacement Reserves

============================================

$26,602 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$59,900 ………. Furnishing and Move In @1%

$59,900 ………. Closing Costs @1%

$47,920 ………… Interest Points @1% of Loan

$1,198,000 ………. Down Payment

============================================

$1,365,720 ………. Total Cash Costs

$407,700 ………… Emergency Cash Reserves

============================================

$1,773,420 ………. Total Savings Needed

Property Details for 150 Cress St Laguna Beach, CA 92651

——————————————————————————

Beds:: 8

Baths:: 0006

Sq. Ft.:: 3300

$1,815

Lot Size:: 7,200 Acres

Year Built:: 2007

Days on Market: 106

MLS#:: 20932446

Property Type:: Residential, Detached, Single Family

Community: Laguna Beach

——————————————————————————

Dazzling, best in class, posh family compound consisting of 3 villas nestled on prime, oceanfront location in world-famous Laguna Beach. Luxuriously appointed, featuring exotic and imported fixtures, marble, granite & rich woods. High-tech touches include individual HVAC systems, high-speed internet & flat screen tv's. Each kitchen is designed for gourmet cooking. Outdoor spaces include 4 fire pits, terraces & a bar/dining counter.

I hope you have enjoyed this week, and thank you for reading the Irvine Housing Blog: astutely observing the Irvine home market and combating California Kool-Aid since 2006.

Have a great weekend,

Irvine Renter

IHB News 3-20-2010

Today's featured property is a Woodbridge dreamer hoping to cash out in our re-inflated housing bubble.

Irvine Home Address … 23 EMERALD Irvine, CA 92614

Resale Home Price …… $1,125,000

{adsense-ir}

{book1}

I'll speak a little louder

I'll even shout

You know that I'm proud

And I can't get the words out

Oh I…

I want to be with you everywhere

Oh I…

I want to be with you everywhere

(Wanna be with you everywhere)

Fleetwood Mac — Everywhere

IHB News

The Irvine Housing Blog saw tremendous reader traffic this week. Four posts were picked up by Patrick.net:

Swiss Central Bank Openly Discourages Mortgage Lending (irvinehousingblog.com)

Why Do Struggling Houseowners Keep Paying Their Mortgages? (irvinehousingblog.com)

Responsible House Owners Are Hurt by Irresponsible Loan Owners (irvinehousingblog.com)

One Defaulting Owner's Free Ride: Three Years and Counting (irvinehousingblog.com)

Calculated Risk also made us a feature of the post: Squatter Stimulus: No Mortgage Payment for Three Years and Counting.

Where does IHBs traffic come from?

The numbers below are from IP addresses Clicky can identify their locations. The raw numbers do not mean much, but you get some idea of the geographic concentration of our readers.

Below is a graphic of the last 500 visitors taken on Friday evening.

Jack Otremba

When I lived in Florida, I became very close friends with Chris and Sharon Otremba. Two years ago, they nearly lost their first child as he was born prematurely at a birth weight of one pound one ounce. He was given a 10% chance of survival.

Over the last two years, I have been following this story closely. It is difficult to imagine what it is like to have your baby undergo multiple life-threatening surgeries and accept a difficult prognosis of future problems. This family knows love like few others.

Jack recently celebrated his second birthday, and he keeps defying the odds. As he continues to grow and develop, his prognosis continues to improve as well. He is poised to live a normal life but with a unique life story.

Link to Video on Jack Otremba.

Matthew John Gilmer

Since I brought up babies, I also want to congratulate my cousin Kathryn and her husband Steve who announced the delivery of their first child on March 16th. My Aunt Pat needs to master emailing photos….

Housing Bubble News from Patrick.net

US House Prices Decline 1.9% in January (calculatedriskblog.com)

6 SoCal Houses Showing the Continued California Housing Correction (doctorhousingbubble.com)

Florida foreclosures create logjam in courts (miamiherald.com)

Phoenix real estate agent pleads guilty in fraud scheme (abc15.com)

KB House ex-CEO tried to keep stock option scheme secret (latimes.com)

Lessons learned from 25 years of forecasting the US economy (emerginvest.com)

Greenspan On The Housing Bubble: Not My Fault (npr.org)

Former Soviet Union to blame for housing bubble: Greenspan (financialpost.com)

Federal Reserve Wants To Eliminate Reserve Requirements Completely? (theeconomiccollapseblog.com)

Unusual Admission that National Debt Will Never Be Paid (thenation.com)

Land tax can reduce other taxes (kansascity.com)

Who is prospering from Prop 13? Commercial landlords. (almanacnews.com)

More houseowners are opting for 'strategic defaults' (latimes.com)

More owners opt to walk and leave mortgages behind (azcentral.com)

Free house for any deliquent CA mortgage owner (patrick.net)

Houseowner associations block guests (orlandosentinel.com)

Alameda land-use ruling could lower cost of a house in CA (sfgate.com)

How to lose $222 million in real estate (lansner.freedomblogging.com)

US mortgage demand tepid even as loan rates sink (reuters.com)

Artificially Low Interest Rates Pump Up Asset Prices (pbs.org)

Fed System Designed to Punish Savers and Encourage Debt (mybudget360.com)

The Fed To Stop Buying Mortgages? (curiouscapitalist.blogs.time.com)

Housing Market Sure to Double-Dip (cnbc.com)

US Mortgage delinquencies at historic highs (moremoney.blogs.money.cnn.com)

Orange County Feb. bankruptcies highest for the decade (jan.freedomblogging.com)

Winners and losers if inflation skyrockets (finance.yahoo.com)

Misconceptions about Money and Velocity (Mish)

Foreclosure starts up nearly 20 percent in California (centralvalleybusinesstimes.com)

Central Valleys Stanislaus County tops for mortgage fraud (modbee.com)

Ex-NY bank president first accused of TARP fraud (reuters.com)

Is it time for Canadians to bottom fish for US real estate? (montrealgazette.com)

Avalanche of Maturing Junk Bonds Looms for Markets (nytimes.com)

Moodys Warns U.S. Debt Could Test Triple-A Rating (nytimes.com)

It's Official: The US Housing Downturn Has Resumed in Earnest (huffingtonpost.com)

New round of foreclosures threatens housing market (washingtonpost.com)

Houseowners take cash for keys to escape debt (msnbc.msn.com)

How Strategic Default Could Save Our Economy (blog.youwalkaway.com)

Something From Nothing (Mish)

Realtors lie about when to buy (mobile.nytimes.com)

The Foreclosure Shadow Market Grows (motherjones.com)

Kern County, CA Property Value Per Sqft Back to 2002 (kerndata.com)

Wall Street: Inside the Collapse (cbsnews.com)

Planet Money Tracks Its Very Own Toxic Asset (npr.org)

Rental investors braving a dismal apartment market (latimes.com)

The Going Gets Tougher For Borrowers (nytimes.com)

FHA challenged on projected risk to taxpayers (washingtonpost.com)

The higher the price range, the worse the market (ocregister.com)

$35 million house assessed at $3.2 million (lagunahomes.freedomblogging.com)

Nicolas Cage: One-Man Real Estate Bubble (nbcnewyork.com)

Irvine Home Address … 23 EMERALD Irvine, CA 92614

Resale Home Price … $1,125,000

Home Purchase Price … $650,000

Home Purchase Date …. 8/13/1993

Net Gain (Loss) ………. $407,500

Percent Change ………. 73.1%

Annual Appreciation … 3.3%

Cost of Ownership

————————————————-

$1,125,000 ………. Asking Price

$225,000 ………. 20% Down Conventional

5.00% …………… Mortgage Interest Rate

$900,000 ………. 30-Year Mortgage

$232,942 ………. Income Requirement

$4,831 ………. Monthly Mortgage Payment

$975 ………. Property Tax

$0 ………. Special Taxes and Levies (Mello Roos)

$94 ………. Homeowners Insurance

$80 ………. Homeowners Association Fees

============================================

$5,980 ………. Monthly Cash Outlays

-$1323 ………. Tax Savings (% of Interest and Property Tax)

-$1081 ………. Equity Hidden in Payment

$438 ………. Lost Income to Down Payment (net of taxes)

$141 ………. Maintenance and Replacement Reserves

============================================

$4,154 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$11,250 ………. Furnishing and Move In @1%

$11,250 ………. Closing Costs @1%

$9,000 ………… Interest Points @1% of Loan

$225,000 ………. Down Payment

============================================

$256,500 ………. Total Cash Costs

$63,600 ………… Emergency Cash Reserves

============================================

$320,100 ………. Total Savings Needed

Property Details for 23 EMERALD Irvine, CA 92614

——————————————————————————

4 Beds

3 full 1 part baths Baths

3,070 sq ft Home size

($366 / sq ft)

5,000 sq ft Lot Size

Year Built 1984

5 Days on Market

MLS Number U10001082

Single Family, Residential Property Type

Woodbridge Community

Tract L2

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Turn Key,Remodeled and Expanded with approx.3,070 sf In desirable Woodbridge, Landing II tract. Huge Great Room w/custom Granite Fireplace,New Built in Cabinets,65' Pioneer Elite TV,is open to Kitchen and Large Eating Area Combo,French Doors & Windows.Gourmet Kitchen with Granite Counters,Custom Cabinets,Stainless Oven & Microwave,Meile Dishwasher,Reverse Osmosis. Hardwood flors,Plantation Shutters.Vaulted ceilings in Sunken Living Room.Formal Dining Room.Custom Crown Moldings,Chair Rails & Paint.Lake view Master Suite,dual sided fireplace,2 walk in closets,built in bookshelves. Separate Laundry room,washer&dryer included.Dual AC's,wired for Security System,Tankless Hot water heater,built in garage cabinets.Beautifully hardscaped w/built in BBQ,Putting green in back yard (no house backing up to this).Low tax rate (1.03544%),No Mello Roos!Among Highest Rated Schools in CA.Assoc has 23 pools,2 tennis clubs,2 lakes,bike & walking trails,parks.

I think this is cool. Of course, I get weak around nice built-in bookshelves:

Guys, do you have this much stuff? Perhaps I am too Spartan.