Fannie Mae and Freddie Mac are aggressively liquidating their REO

The GSEs are picking up the pace of liquidations by offering incentives and lowering prices. The banking cartel who is still withholding inventory will be left with devalued REO.

Irvine Home Address … 30 SPARROWHAWK Irvine, CA 92604

Resale Home Price …… $361,900

Just take me as I am,

or have nothing at all.

Mary J. Blige — Take Me As I Am

Last September I noted the GSEs were expediting their foreclosures and REO sales and this behavior was going to threaten the banking cartel. The GSEs are still at it, and they are undercutting bank REO pricing to sell their inventory. Take the property as is, or take nothing at all.

Foreclosures for sale, all homes sold as is

By Kenneth R. Harney, Friday, June 24, 8:21 AM

Looking for a deal where the home seller pledges in advance to contribute potentially thousands of dollars to your closing costs? If so, check out the summer sale terms available from two of the largest and most motivated sellers of foreclosed homes in the country: Fannie Mae and Freddie Mac.

You may know the companies for their troubled mortgage businesses or the financial foibles that pushed them into the control of federal conservators in 2008. But the flip side of those problems is that they now have massive numbers of properties taken back through foreclosures.

Fannie Mae had 153,549 of them at the end of the first quarter. Freddie Mac owned 65,174. That’s nearly 220,000 houses for which they need to quickly find new owners, or they’ll rack up even bigger losses for taxpayers.

The GSEs are not engaging in amend-extend-pretend. They don't have to. Since they are now under government conservatorship, they don't have to worry about maintaining financial ratios or preserving capital. They are already broke, and the losses already absorbed are more than double the accumulated profit they earned in the years prior to the government takeover. The GSEs still have a huge shadow inventory, but once they decide to foreclose, they take the property back and sell it immediately. They are the most active market sellers pushing prices lower across America.

The mandate of the GSEs was to provide affordable housing to lower and middle income Americans. They are succeeding brilliantly. By liquidating their REO, they are doing more to make housing affordable than any stupid loan program they attempted over the last forty years.

To move that bulging inventory, both companies have begun time-limited sales campaigns with significant incentives for new owner-occupant purchasers — no investors allowed — and even extra cash for the real estate agents who bring buyers to the table.

Fannie and Freddie both are offering to pay up to 3.5 percent of the price of the house toward buyers’ closing costs, plus they’ll hand over a bonus of $1,200 to participating real estate agents. Fannie’s program covers properties on which contracts are accepted and close no later than Oct. 31. Freddie’s sale requires contracts no later than July 31 and closings by Sept. 30.

Many buyers of GSE properties use FHA loans requiring only 3.5% down. Fannie Mae even has it's own low-money-down program. With the GSEs covering all other closing costs, they are getting those buyers with only the absolute minimum down payment.

Fannie’s program even offers mortgage money to help finance these purchases, sometimes with as little as a 3 percent down payment. The company also has what it calls a “renovation mortgage” option that provides additional mortgage amounts to cover fix-ups.

Freddie does not offer special mortgage financing for buyers during the sale period, but has other inducements, including two-year home warranties and 30 percent discounts on appliances.

All the foreclosed properties are listed with photos and descriptions at either (Fannie) or (Freddie). On those sites, you can search by price, local markets, Zip codes and entire states. Featured offerings on HomePath recently included:

• A six-bedroom, five-bath house in Littleton, Colo., with 4,990 square feet of space. Asking price: $424,900.

• A two-bedroom apartment with 1,164 square feet in Las Vegas for $43,999.

• A $184,900 two-bedroom, one-bath home in Long Beach, Calif.

• A four-bedroom, two-bath house in Brentwood, Md. Asking price: $65,000.

The following are properties in Irvine:

3131 Watermarke Pl, Irvine, CA 92612

30 Sparrowhawk, Irvine, CA 92604

20 Lakepines, Irvine, CA 92620

134 Echo Run # 48, Irvine, CA 92614

1428 Scholarship, Irvine, CA 92612

14 Idyllwild, Irvine, CA 92602

The following are properties in Irvine:

2233 MARTIN #315 Irvine, CA 92612

377 HUNTINGTON Irvine, CA 92620

The summer clearance sales are part of rapidly accelerating efforts by both companies to get ahead of the tidal waves of foreclosures flowing into their portfolios in recent months. During the first quarter, Fannie Mae acquired 53,549 properties. However, during the same period, it managed to sell 62,814 houses — a record number that produced a net outflow.

Freddie Mac also sold more foreclosures than it took in during the first quarter, acquiring 24,709 homes while selling 31,628. In some parts of the country, Freddie’s offerings are even generating multiple bids on houses, said Brad German, the company’s spokesman.

Both companies are targeting only buyers who plan to live in the homes — rather than non-occupant investors who want to flip them or rent them out — as part of a larger neighborhood real estate stabilization effort.

If the GSEs were to open bidding to investors, they would undoubtedly get lambasted for not encouraging owner occupancy. The cost of that government policy is enormous because on many of the properties in their portfolio, there aren't many owners who want to occupy them. As a result, the GSEs discount their properties far more than they should, and they end up pushing home values much lower.

I don't oppose their policy. There are plenty of non GSE properties to invest in, but if the GSEs were truly concerned with getting the best price for their REO, they wouldn't be excluding anyone from the buyer pool. The recovery they are not obtaining is being covered by taxpayers. As a result, we are all contributing to the good deals obtained by the few owner occupants buying today.

The contribution of up to 3.5 percent of the sale price toward the buyers’ closing costs can be substantial. On a $200,000 house, the buyers could receive $7,000 toward their closing expenses, which might determine whether they can afford to buy.

Combine that with additional incentives, such as favorable financing or warranties, and the total package can look extremely attractive to first-time and moderate-income purchasers.

Are there downsides or restrictions for would-be buyers on either HomePath or HomeSteps? Absolutely. Top of the list: Keep in mind that these are foreclosed properties, and some of them have been abused by previous occupants. Fannie and Freddie both do repairs to bring houses up to what they believe are marketable standards, but don’t be surprised to find that they are not in pristine condition.

Second, though foreclosures do generally sell for less than non-distressed houses, you need to understand that both Fannie and Freddie are in the business of maximizing returns on assets. Do not assume that the listing prices are deep-discount giveaways. Be diligent in comparing prices and values before bidding, and negotiate just as you would with any other real estate purchase.

From what I have observed pulling comps on closed sales, the GSEs are making deep-discount giveaways. Anyone looking to be an owner-occupant on a lower cost property should look at the GSE portfolio. These must-sell properties are the best deals in the market today. And given the huge shadow inventory the GSEs have not begun to process, the deals will only get better.

Federal shadow housing inventory is getting bigger

Posted by Tracy Alloway on Jun 21 12:20.

A housing milestone, of sorts.

Federally-backed loans already make up a majority of the mortgages classified as ‘seriously delinquent’ in the US financial system. In other words, there are more soured loans held or backed by the US’s giant GSEs — Fannie Mae and Freddie Mac — plus the Federal Housing Administration (FHA), than those held by banks and in private-label securitisations.

But when it comes to Real Estate Owned (REO) property, some reckon the federal share of so-called shadow housing inventory (foreclosed properties) looks set to surpass the private sector’s too.

Here’s Goldman Sachs, including economists Alec Phillips and Jan Hatzius:

The federal share of REO property is also rising. For 1Q, RealtyTrac estimates that total REO property held by lenders totaled 872,000. Of this, we know from monthly or quarterly financial statements that Fannie Mae, Freddie Mac, and the FHA hold roughly 300,000 of these properties on their books, and that this inventory has been rising by more than total REO inventories over the last year. Over the next few quarters, the federally backed entities are likely to see their inventories of REO property become a larger share of the total. The chart below shows the accumulation of REO property by the GSEs and FHA, which was on a trend to overtake private sector activity until it declined in 4Q, most likely due to legal irregularities in foreclosure processing (the chart relies on filings from the federal entities and assuming that the difference between this number and total REO filings reported by RealtyTrac are related to private label securities or bank portfolios).

Now, Goldman reckons the government could use its newly-acquired shadow inventory in a couple ways — one of which, notably, is to help prop up house prices by not doing anything with it, really.

So far, the GSEs are not withholding inventory from the market. If prices continue to crater, they may change their minds, but for now, REO is being cleared out as fast as it comes in.

Here’s Goldman again:

As the GSEs and FHA begin to take on a larger and larger share of seriously delinquent loans and, ultimately, foreclosed properties, how policymakers approach the operations of these entities could become an important factor for home prices, since these entities could in theory be used to hold supply off of the market in an effort to support prices. As shown in the chart below, distressed property sales appear to be weighing on home prices, with solid gains over the last couple of months in the CoreLogic HPI that excludes distressed sales, compared with weakness in the index that includes them.

However, the federally backed entities have not shown much sign of trying to hold properties back from the market. The FHA may be particularly constrained by costs, since it has been trying to raise its capital level after concerns last year that it would fall below required minimums. But the Treasury is providing temporarily open-ended financial support to the GSEs, so they do not have the same constraint. (though the administration would probably prefer to avoid further losses at the GSEs if possible). Despite federal support, the GSEs have not made any significant new attempts to hold supply off the market.

Indeed, Goldman says the first quarter of this year was the first since 2009 that the GSEs and FHA acted as a combined net supplier of foreclosed properties to the market. They expect the agencies to assume ownership of as many as 180,000 properties per quarter, or 700,000 over the next year.

Which would mean — if the federal entities decide to keep selling as they’ve been doing so far — there would be a whopping 30 per cent increase in the number of properties feeding into the market.

We’ll say it again – the supply! The supply!

Here comes the REO

Ever since the housing bust became headline news, housing bears have been predicting a flood of inventory that would push prices lower. Lenders successfully withheld product from many markets, and the GSEs were not foreclosing in earnest for several years as they attempted various loan modification programs. With the complete and utter failure of all loan modification programs, the GSEs are now shifting toward foreclosure processing. The lenders who are attempting to withhold product are going to sit and watch as the GSEs devalue the holdings of lenders and make them wish they hadn't waited.

Irvine is an unusual market. Relatively little of our inventory was financed by the GSEs because our price points were generally above the conforming limit during the bubble. Some will take that to mean that Irvine will escape the problems of GSE liquidation. Not true. As the GSEs liquidate their properties in nearby communities and lower prices there, the substitution effect will steal buyers away from Irvine. That will lower sales rates even more, and the few must-sell properties that come to market will push prices lower. In other words, the GSEs will cut the Irvine market down at the knees. The price correction will take longer, but it will still occur, just as we are seeing now.

Conservative revisionist history

One of the more annoying lies to come from the housing bubble is the revisionist history the conservatives in the Republican party have been peddling concerning the role of the GSEs. The GSEs did not inflate the housing bubble:

The worst junk mortgages that inflated the housing bubble to extraordinary levels were not bought and securitized by Fannie and Freddie, they were securitized by Citigroup, Merrill Lynch, Goldman Sachs, Lehman and the other private investment banks. These investment banks gobbled up the worst subprime and Alt-A garbage that sleaze operations like Ameriquest and Countrywide pushed on homebuyers.

The trillions of dollars that the geniuses at the private investment banks funneled into the housing market were the force that inflated the bubble to its 2006 peaks. Fannie and Freddie were followers in this story, jumping into the subprime and Alt-A market in 2005 to try to maintain market share. They were not the leaders.

Conservatives are peddling the lie about the GSEs because they want to see them dismantled. I agree with their policy ideas. The GSEs should be dismantled, but not because they inflated the housing bubble. The GSEs are no longer necessary. We have a robust secondary market for securitized loans without the GSEs. At this point, the GSEs are being used to keep mortgage interest rates low through their explicit government guarantee. The government has no place assuming the risk of private enterprise — and pay the billions in losses — and for that reason, the GSEs should be eliminated.

The folly of the GSEs is apparent in properties like today's featured property. The GSEs came in at the end of a long series of Ponzi borrowing and bought an Option ARM the former owners took out. As Dean Baker noted in the quote above, they were followers in the story, and they bought loans like this one in 2005 to maintain market share. In other words, they gambled with money they didn't have and now you and I are paying for it.

Regular housing ATM users (HELOC addicts)

  • The owner of today's featured property paid $171,500 on 2/4/2000. They used a $162,925 first mortgage and a $8,575 down payment.
  • On 12/5/2000, less than a year after buying the property, they pulled out their first $35,000+ in mortgage equity withdrawal with a new $199,138 first mortgage. They went Ponzi.
  • On 10/15/2001, less than a year after their first big payday, they pulled out another $15,000+ with a $215,847 first mortgage.
  • On 6/7/2002, less than 9 months later, they refinanced with a $209,600 first mortgage and a $52,400 second mortgage which gave them another $35,000+ cash infusion.
  • On 7/10/2003 they were back for $25,000+ more obtaining a $275,500 first mortgage.
  • On 6/18/20004 they refinanced with a $290,500 first mortgage. They only got $15,000+ on that year's trip to the housing ATM. I imagine they were disappointed.
  • On 7/27/2005 they obtained an Option ARM with a 1.37% teaser rate for $337,500. The $45,000+ they got in 2005 must have made them feel better after the poor take from 2004. This was the loan Fannie Mae bought.
  • On 12/6/2007 they went back for one final trip to the ATM and obtained a $37,187 HELOC.
  • Total property debt was $374,687 plus negative amortization.
  • Total mortgage equity withdrawal was $211,762.

We joke about the housing ATM, but it was very real for loan owners during the housing bubble. These people went back for income supplementation every year. They would still be doing it today if it weren't for the collapse of the housing bubble.

How many people in California want to buy a house because they think they will be able to do what these people did? With the government now insuring nearly the entire housing market, if we allow this behavior to resurface, all taxpayers will be subsidizing this theft.

Irvine House Address … 30 SPARROWHAWK Irvine, CA 92604

Resale House Price …… $361,900

House Purchase Price … $171,500

House Purchase Date …. 2/4/2000

Net Gain (Loss) ………. $168,686

Percent Change ………. 98.4%

Annual Appreciation … 6.5%

Cost of House Ownership


$361,900 ………. Asking Price

$12,667 ………. 3.5% Down FHA Financing

4.49% …………… Mortgage Interest Rate

$349,234 ………. 30-Year Mortgage

$75,747 ………. Income Requirement

$1,767 ………. Monthly Mortgage Payment

$314 ………. Property Tax (@1.04%)

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

$75 ………. Homeowners Insurance (@ 0.25%)

$402 ………. Private Mortgage Insurance

$310 ………. Homeowners Association Fees


$2,868 ………. Monthly Cash Outlays

-$284 ………. Tax Savings (% of Interest and Property Tax)

-$461 ………. Equity Hidden in Payment (Amortization)

$21 ………. Lost Income to Down Payment (net of taxes)

$65 ………. Maintenance and Replacement Reserves


$2,210 ………. Monthly Cost of Ownership

Cash Acquisition Demands


$3,619 ………. Furnishing and Move In @1%

$3,619 ………. Closing Costs @1%

$3,492 ………… Interest Points @1% of Loan

$12,667 ………. Down Payment


$23,397 ………. Total Cash Costs

$33,800 ………… Emergency Cash Reserves


$57,197 ………. Total Savings Needed

Property Details for 30 SPARROWHAWK Irvine, CA 92604


Beds: 3

Baths: 2

Sq. Ft.: 1240


Property Type: Residential, Condominium

Style: Two Level

Year Built: 1900

Community: 0

County: Orange

MLS#: F11061161

Source: CRISNet

Status: Active


End unit condo in excellent community. This 3 bedroom + 1.5 bathroom home occupies approx. 1220 sq. ft. and includes kitchen with appliances. Outside brick patio with cover. Tile downstairs with carpet upstairs. Upstairs bedrooms include mirrored closets. Community includes tennis court, green belts with pool/spa and playground for kids.

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53 thoughts on “Fannie Mae and Freddie Mac are aggressively liquidating their REO

    1. brianguy

      I agree! surprising, not even IR caught onto this one (such an easy target).

      too bad they took the luxurious matching fridge from the ugly kitchen though. sorry incompetent listing agent, I’ll have to subtract $1000 from my meager bid.

  1. newbie2008

    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.

    1. Dumbass Sinan Ozyol

      “A representative for Citigroup said the bank was ‘outraged’ by Foster’s alleged actions.”

      That’s right…banks are supposed to steal from people, not the other way around.

      How can Citigroup really be surprised by this? After all, Foster is BANKER! Duh! One of them….

  2. Woodbury Renter

    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.

    1. IrvineRenter

      I hope I have written enough stories both supporting and decrying conservatives and liberals that I am not taken as a partisan.

      On this particular issue, the Conservatives have the rhetoric wrong — and it is only the Conservatives who are floating the GSE responsibility meme. I support the policy they want implemented, but I think their method is wrong. There are better arguments to make in favor of getting rid of the GSEs, and by continually making an incorrect partisan attack, IMO, they undermine their own efforts to get rid of the GSEs.

      1. Soapboxhothead

        Politics aside … I think we can all agree there is plenty of blame to go around for this unprecedented fraud from greedy loan-holders to greedy banksters and governmental enabling.

        What distresses me is how precious little accountability has been meted out. The greatest coordinated theft in history has occurred yet to the best of my knowledge, not one single person has gone to jail for their participation.

        (Bernie Madoff doesn’t count … he was a good old fashioned, garden variety ponzi schemer)

  3. mat masters

    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……………

    1. IrvineRenter

      Yes, these truly are the best deals in the market for owner occupants. The GSEs will often fix them up to pass FHA standards, whereas most bank REO is in poor condition.

  4. Jack

    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.

    1. Soapboxhothead

      I couldn’t agree more!

      It seems to me the whole system has been engineered to:
      a) ensure the banking cartel keeps as much loot as possible
      b) home-debtors are locked into overpriced homes and servicing the loan forever
      c) the average renting schmoe gets screwed again AND stuck with the tab

      What mystifies me is why they think this will continue to work when all evidence is to the contrary. I think we’ve established there were no paradigm shifts and go figure, valuation is and will always be pinned to what the populace can actually afford. Turns out we really can’t print money. More importantly, the policy makers seemed to have completely ignored the idea that if you just let the system “flush”, you’d return housing to affordable levels where people would have disposable income again. People spend, products sell, jobs returns, economy improves and grows again. It’s all about the jobs.

      But no, all they care about are the banks and making sure they don’t fail. So we keep kicking the can down the road and as long as this continues so will the slow, painful downward slide and we’ll never fully recover. The caveat here of course would be if the corporations and banks who are sitting on the cash pile decide to share and incomes increase markedly … NAH, who am I kidding?!

  5. Soapboxhothead

    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!

    1. IrvineRenter

      The statistics on delinquency are between 8% and 10% of mortgage holders are not making their payments. Only about 3% are officially in “default” by virtue of receiving a notice. Those who are delinquent (not making payments) but haven’t received an official notice are shadow inventory.

      What has lenders really concerned is that between 25% and 50% of mortgage holders are either underwater or effectively underwater (unable to sell and meet their obligations), and if that group starts to strategically default in large numbers, the delinquency rate could go much higher.

      Also, keep in mind that a 10% default rate if sustained for a long time may represent 50% of mortgage holders as the 10% is constantly changing. The 10% who were delinquent in 2008 are not the same 10% who are delinquent today. Foreclosure clears out some of the delinquency and new ones are added.

      1. awgee

        The default rate published by various sources is the percentage reported by the banks as defaulting. Being that the banks are lying about everything else, YES EVERYTHING else, I have my suspicions that the default numbers are underreported and probably grossly underreported.

      2. Soapboxhothead


        For my purposes, I’m not as concerned about who’s rec’d actual NOD’s but more about those who, for a variety of reasons, have chosen to stop paying for their housing. Clearly they will eventually appear on the record as banks (possibly) shift their efforts into high gear and start the legal process of actually throwing squatters out.

        It’s my opinion that 25-50% of loan-holders that are effectively underwater will either strategically default or will be pushed into default. We all know from personal experience just how tough it can be to “catch up” on payments once you lag behind …especially when we’re talking about thousand of dollars.

        As I mentioned, my neighbor and I have had several discussions on this topic as he is as interested in buying as I am but has lamented the persistently high (delusional) asking prices. I’ve counseled him to remain patient and bide his time, prices still have downward pressure. I’ve bolstered my argument with shadow inventory, loan restrictions and my opinion that a good many in OC are not making their loan payments, squatting in their homes and getting away with it thru a convergence of factors well documented here. He had no idea … just kept looking around at the WTF asking prices and wondering how he was ever going to afford a modest home in OC. What mystified him was how people were affording these homes. I told him they weren’t … it just looked that way. (Hence my question above)

        Many here, including IR have done me a great service in educating me on these topics and helping me to make informed choices and convincing me to remain patient. The market will come to us. I feel like I’m paying it forward and helping to educate my neighbor. He’s a good man with two small kids and I want to see him succeed for himself and his family. THAT is a sterling example of what this blog means. Keep that in mind when you suffer the slings and arrows of those who have a vested interest in silencing you. Thank you.

  6. Dumbass Sinan Ozyol

    “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.

  7. LA Renter

    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?

    1. wheresthebeef

      I am not an expert at Ladera real estate, but there is no way in hell rent for a 599K house is 3900/month. You need to shop around because I think your number is off my over a $1000/month.

      As far as buying in Ladera goes. Sounds like your parents are providing the minimum down payment. What if prices continue to slide lower? Are you willing to stay in that house over a decade so defaulting won’t be an option? I would highly recommend using a bigger down payment…but that’s just me.

    2. Sheila

      I’m not an expert on Ladera either, but those numbers seem way off compared to what I’ve been seeing in the general area. Are you sure they’re accurate?

      1. LA Renter

        We plan on staying in the house for over a decade, if possible. I suppose you never know what life throws at you, but ideally, we just won’t move again. We definitely aren’t looking at the house as an investment at this point: just a place to live. I just figure if the cost to rent is similar to rent, why not just purchase?

        See below to a link of all the available rentals in Ladera:;=&cust;(mtype)=rlse&xml=1&minprice;=&maxprice;=&cu=USD&minsurface;=&maxsurface;=&minbedroom;=&cust;(garage)=&minbathroom;=&minlsurface;=&maxlsurface;=&c_mrci=50041213816&cust1;(d)=&cust;(zipcode)=&cust;(year-built)=&cust;(type)=&rpp=15&B1=Search

        You’ll see that even a 2300 sq ft house is being offered at $3700.

        22 BOWER Lane, LADERA RANCH is comprable to the house we’re interested in purchasing:

        Same plan, same tract.

        1. wheresthebeef

          That still seems way too high. Most of these rentals are probably people upsidedown and these fantasy wishing prices. Like I said, I am no expert at Ladera RE. I will tell you this, for 4K per month, you can rent a really nice 3000+ sq ft home in Laguna Niguel in a gated community with all the amenities and some stellar views. These homes sell for 1M+. I just can’t see how a Ladera tract home that sells for 599K can rent for that much.

          Do you absolutely need a house today? Why not rent a 2 bedroom condo/apartment in Ladera for a year or two and save some money for a down payment. That should be around 2K/month. I think it’s a forgone conclusion that prices aren’t going up anytime soon in OC (especially Ladera), chances are we’ll still see price declines.

          1. LA Renter

            We do not absolutely need a house today. We were thinking of renting in Irvine for a year to see what the market does. Looks like we can get a 2000 sq ft condo for about $3000. Am I completely off on this as well? My husband works in Newport Beach, so it would cut on commuting costs (especially tolls.)

            We have two kids, need an attached garage, 3 bedrooms, and in unit laundry in a great area. Even the apartments in Ladera with this criteria go for about 2800.

          2. CDM renter

            LA Renter – you should check out the Flower streets in Corona del Mar. Seroiusly, just drive/walk up and down the streets over there. You can get a nice place (very close to the water and your husbands work in Newport) for 4K a month (maybe less).

          3. SF Mikey

            Wow rents seem really expensive in the OC. I currently rent a detached house in San Francisco for $2,000 a month. The home is relatively small ~ 1,400 sq feet but is in great condition with a large yard / lot in a good neighborhood. At the height of the frenzy back in 2006/2007 this house probably would have sold for more than $900K now it would probably go in the high 700s. If I had to pay $3,000 or more a month for rent then I’d seriously reconsider Rent vs Buy scenario.

          4. Soapboxhothead

            I’d sit on your downpayment and wait it out at least another year… especially if you’re interested in Ladera or the outlying areas. You may have noticed my discussion above on people not making their payments … it’s my opinion a great deal of those people reside right where you’re looking. Much of Ladera Ranch and RSM were built during the housing run-up hence it’s likely they are still very much overpriced and have more room to fall.

            Those squatters will eventually get tossed out and those homes will sooner or later come onto the market. Patience is the key.

            For what it’s worth, I’d look away from Irvine if you plan to rent. There are many nice areas surrounding Irvine including Mission Viejo, Aliso Viejo, Lake Forest-Foothill Ranch, Tustin and Orange. Many of these areas contain housing built prior to 2000, hence likely more affordable.

            I think with a little diligence you could find something to rent for a year that would suit your needs and come in $1000 short of the $3900 you’re willing to pay.

            Just my two cents. Good luck and welcome to OC!

          5. wheresthebeef

            Thanks for the additional info. I’m not sure how old your kids are, so school districts might make a big difference. Since your husband works in Newport, you can rent a decent 3 bed/2bath house (with all the things you mentioned) in many cities for around 2500/month. Try looking in Huntington Beach, Costa Mesa, Mission Viejo, Aliso Viejo, etc.

            Like I said, $4000/month is a lot for a rental in OC. For that kind of coin, you can get really NICE places in some premium OC locations.

            The beauty about renting is that it’s temporary and today it allows you to save money for the eventual house. Renting for a year or two (and saving money) is good bet in this market.

          6. LA Renter

            Thank you for all the suggestions. I think we’ll wait it out a year. Maybe we just need to get out there and walk the blocks, because I’m not seeing any 2500 house rentals in decent areas in OC on the MLS.

          7. wheresthebeef

            I’m not sure about looking on the MLS for rentals. As bad as it might seem, try Craigslist. You’ll be surprised what’s out there.

            Like you said, you need to spend an afternoon driving around and seeing a bunch of places. Walk the neighborhood and talk to neighbors, that’s the best info you can get.

            Good luck.

          8. CDM renter

            LA Renter – hardly anyone in Corona del Mar lists their home on the MLS or any other place. Most of the owners simply post a sign out in front of the property. I haven’t been over in the Flower streets for a while, but I would guess that,if you walked them this weekend, you would have 5-10 leads on properties that fit what you are looking for.

          9. wheresthebeef

            I just did a quick search on Craiglist for Huntington Beach rentals between $2400 and $2700/month. There were probably over 20 places that came up and most looked pretty decent.

          10. LA Renter

            My daughter is about a year and a half and I have a newborn. We were mainly attracted to Ladera because of the great amenities like the parks, waterpark, skatepark, pools, etc. The internet is also included in the HOA, so it seems like a good deal for $223. The taxes are ridiculous, but at least it’s deductible.

            I’ve never been to Corona del Mar. I’ll have my husband check it out this week during his lunch break. Thanks again for all the suggestions.

          11. Planet Reality

            Ladera Ranch is practically the antithesis of CDM life. Actually Huntington Beach is probably even more the antithesis. There’s always great input from the peanut gallery.

          12. Planet Reality

            Now the poor husband will have to look on his lunch breaks when the wife is going to hate that highway community versus her fantasies of Ladera. I feel bad for the dude.

          13. Planet Reality

            At least he’ll know where to find a mediocre bachelor pad if he ever needs to live in OC as an old single guy and try to be somewhat happening on a pathetic half street of pch. 2BR upper back street unit, living large.

          14. LA Renter

            Poor husband? Hardly. He’s pickier than I am, which is why he’d go look and not me.

            What’s a “highway community?”

          15. LA Renter

            That’s a great price. My husband and I lived up north for a bit in 2008. We were renting a 800 sq ft condo in Oakland for 1600. Granted, it was a “luxury condo” but it was basically a 1 bedroom apartment with a nice lobby. Still, it was in Oakland…which is why we moved back to LA.

          16. Planet Reality

            The main street of CDM is pacific coast highway.

            If you are renting in LA now I could understand your desire to be as far from that as possible. Ladera fits that desire well. I think your rents are off, you should be able to rent a $599k house in Ladera for $3000 a month. With a more normal 20% down payment and low interest rates at or below rental parity.

          17. LA Renter

            Well, if you can find a 2500-2700 sq ft house in Ladera for $3000, let me know. I’d even take a decent 2000 sq ft house for $3000 at this point. The only ones available at the moment have really dysfunctional floor plans. As I said, most of the attached condos are being leased (quickly) at around that price. If I’m going to live in a attached home, I’ll live in Irvine.

          18. wheresthebeef

            LA Renter, don’t pay too much attention to Planet Reality. He/she is the village idiot on this site.

            Sounds like you are not too familiar with OC. You need to come down and take a look. Every city is different and has pluses and minuses…some more than other.

            While Ladera is nice, I personally couldn’t live there if you paid me. It’s too planned and too plasticky. The traffic in and out during rush hour can be BAD and the summers can be hot (especially compared to the beach communities). But it’s a great place for kids and being around others that have kids. My 2 cents.

          19. brianguy

            or (believe it or not) the newspaper classifieds for a few good high-end rental listings (I consider anything over 3000 to be near the high end). but yes definitely check Craigslist first, for an idea of what your price range will get you. but if public schools are your primary concern, Irvine is nearly impossible to beat. however, Tustin USD is also very good.

          20. brianguy

            one other option if you can’t find something you like in your price range in Ladera (seems slightly far fetched, but it’s what you said earlier), then just rent in Irvine. later when you’re ready to buy then you could buy in Ladera. you’ll definitely find something really nice in either of those areas, which are similar, in the 2200-2500 range. plus Ladera is not closer to Newport than Irvine is.

            further, since you’re accustomed to condos, you could get a large condo to cut down on price and easily sock away at least $1000 / mo to add to your eventual down payment in a year. home prices still haven’t found their bottom, so waiting it out seems best.

          21. LA Renter

            Thanks, brianguy. I checked craigslist, but it seems as though it has turned into a platform for realtors to hound people in by reposting other realtors’ MLS listings. I think I have managed to find 1 house listed on there by a current renter/actual owner.

            I’ll check out the newspaper. I’m assuming people would list their ads in the OC Register?

          22. Planet Reality

            The OC is very expensive for renting houses but look on the bright side it’s not as bad as LA premium areas. Houses in premium LA areas rent for much more.

  8. newbie2008

    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.

  9. brianguy

    “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.

  10. Ryan

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

    1. DarthFerret

      I wouldn’t consider Lancaster/Palmdale as comps for anywhere in Orange County. Travel time to jobs and population centers is a big factor, and weather and beach access are other big factors. If you work in Lancaster/Palmdale, then great, but I know of several people that commute from there to the San Fernando Valley and even downtown L.A. It’s got great access to dirt biking areas, but if you want to get to the beach or just some cooler temps, then it’s a long, nasty drive.

      Comps for Lancaster/Palmdale would probably be Moreno Valley, Temecula, and Victorville. Weather in those areas is also more in line with what you’d experience in Lancaster/Palmdale.


  11. irvine_lawguy


    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.

  12. Rana

    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.

  13. winstongator

    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?

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