Author Archives: IrvineRenter

Option ARMs Revisited

The Option ARM problem has not gone away. It serves as a testament to the denial of the lending industry, and it is the textbook example of extend, amend and pretend.

11 MILLBRAE Irvine, CA 92602 kitchen

Irvine Home Address … 11 MILLBRAE Irvine, CA 92602
Resale Home Price …… $749,900

{book1}

I know that the prospects weren’t all that good
But they improved, and I’d have thought that you could
Have strived for that something we all have deep inside
Not let it vanish, along with your pride

Now with the aid of your new walking stick
You hobble along through society thick
And look mesmerized by the face of it all
You keep to the gutter in case you fall

Run of the Mill — Judas Priest

Option ARMs revisited

In case anyone thought The ARM Problem had simply gone away due to accelerated defaults, it hasn’t:

Moody’s Links Option ARM, Subprime Performance

By
DIANA GOLOBAY
December 4, 2009 12:46 PM CST

More
than $200bn of outstanding pay-option adjustable-rate mortgages (ARMs)
originated and securitized from ‘04-’07, according to market commentary
by Moody’s Investors Service this week.

This sector shows “dismal” performance, with more than 40% of
borrowers 60 or more days past due on payments. And many of these loans
have yet to experience a recast event, when initial minimum monthly
payments jump as much as 60%, according to sources interviewed by HousingWire for an upcoming issue.

“Even though borrowers with Option ARM loans have the option to make
monthly payments typically lower than the accruing interest on the
loan, many borrowers are choosing a different option–not making any
payment at all.”

Moody’s said the performance is comparable to subprime, despite the
trend of more acute negative equity among Option ARMs than subprime.”

It is not surprising that 40% of Option ARM holders are currently in
default. What is surprising is that there are still $200,000,000,000 in
outstanding Option ARM loans. This is the classic example of kicking
the can down the road, and here is the reason why:

“Negative equity is a key driver of weak performance — as well as a more predictive measure of default than unemployment — particularly among Option ARMs. Modifications would
have to be applied aggressively to have any lasting effect and keep
borrowers paying on their mortgages, Moody’s said.

As I demonstrated in the post Cure Rates, once people go underwater, they are far more likely to default. Lenders are praying the California bubble markets do not get pushed over the edge by a flood of foreclosure inventory, so they are pretending the $108,000,000,000 problem here in California will just go away.

High defaults might be mitigated only by as extreme a method as
principal forgiveness. Moody’s recommended a term extension to 40
years, significant interest rate cuts and some principal forbearance to
keep borrowers’ cash flowing.

In other words, it is hopeless without lenders committing the ultimate sacrilege in lending: forgiving principal:

“There is little hope that most of these [delinquent] borrowers will
start making payments again if no principal is forgiven,” Moody’s said.
“Forbearance does not eliminate the obligation to repay the loan
principal, it only delays it. And many delinquent borrowers are
potentially so far underwater that it would take close to a decade for
them to attain any positive equity in their home.”

The delinquency rate of Option ARMs is expected to rise as a wave of
these loans recasts after the initial payment period, according to
recent market commentary by Standard & Poor’s.

“Option ARMs are the most vulnerable to quick payment increases
because of the low payment options they offer borrowers,” S&P said.
“Upon full recast, option ARM borrowers may experience sudden payment
increases to varying degrees depending on the payment options they
chose to exercise prior to the recast.”

The recasts have not occurred yet, and these loans already have 40% delinquency! How can that be good?

{book4}

As I noted in The Great Housing Bubble:

Equity is made up of several component parts: Initial Equity,
Financing Equity, Inflation Equity, and Speculative Equity. Each of
these components has different characteristics and different forces
that govern how they rise and fall. It is important to understand these
components to make wise decisions on when to buy, how much to buy, and
how to finance it. Failing to understand the dynamics involved can lead
to an equity graph like the one for the peak buyer who purchased at the
wrong time and utilized the wrong terms. Nobody wants to suffer that
fate.

Figure 8: Peak Buyer, No Downpayment, Negative Amortization Loan

The default rates on these loans will reach 100%. The only hope for these borrowers to stay in their properties is a loan modification, and that hope, IMO, is one of a series of Bailouts and False Hopes that ultimately serve no purpose other than to get borrowers to make a few more payments.

11 MILLBRAE Irvine, CA 92602 kitchen

Irvine Home Address … 11 MILLBRAE Irvine, CA 92602

Resale Home Price … $749,900

Income Requirement ……. $154,568
Downpayment Needed … $149,980
20% Down Conventional

Home Purchase Price … $750,000
Home Purchase Date …. 12/28/2004

Net Gain (Loss) ………. $(45,094)
Percent Change ………. 0.0%
Annual Appreciation … 0.0%

Mortgage Interest Rate ………. 4.96%
Monthly Mortgage Payment … $3,206
Monthly Cash Outlays ………… $4,220
Monthly Cost of Ownership … $3,160

Property Details for 11 MILLBRAE Irvine, CA 92602

Beds 4
Baths 2 full 1 part baths
Size 2,477 sq ft
($303 / sq ft)
Lot Size 2,502 sq ft
Year Built 2001
Days on Market 4
Listing Updated 12/2/2009
MLS Number S597447
Property Type Single Family, Residential
Community Northpark
Tract Othr

According to the listing agent, this listing is a bank owned (foreclosed) property.

Gorgeous Property in Prestigious North park. Beautiful home has Gourmet kitchen w/granite counters & stone backsplash. Huge Master Bedroom w/Fireplace and Retreat Room. Jacuzzi Tub in Master Bathroom. Lower level has tile flooring thru-out with the exception of vinyl in the laundry room. Custom Plantation Shutters & Vertical Blinds. Front patio and a small fenced, private rear yard. 2-Car Garaged. Guard gated community. Walk to Association Amenities-Pools, Spas, Parks, Gazebos, Award Winning Schools & Shopping/Restaurants.

I am convinced that Californian’s really believe that a mortgage is something people work to manage its growth. Mortgages are supposed to get smaller; people are supposed to pay them off. Even the “treading water” mindset of interest-only rests at the cusp of a Ponzi Scheme, but doesn’t cross the line. Day after day I find people who have increased their mortgages; some by a lot, and some by a little, but everyone is doing it. It isn’t hard to see why houses are so desirable.

The previous owner of today’s REO managed to obtain a $720,000 first mortgage and a $90,000 HELOC in January of 2007. That didn’t work out so well for the lender…

Foreclosure Record
Recording Date: 10/15/2009
Document Type: Notice of Sale (aka Notice of Trustee’s Sale)

Foreclosure Record
Recording Date: 07/07/2009
Document Type: Notice of Default

(People with access to property records will get the joke about Jeopardy.)

Deep Peace

The Lakes in Northwood is ground-zero for Irvine foreclosures. Despite the beating prices in this old condo development are taking, the design of the property and grounds is quite good.

43 LAKEPINES Irvine, CA 92620 kitchen

Irvine Home Address … 43 LAKEPINES Irvine, CA 92620
Resale Home Price …… $349,900

{book1}

Deep peace
Of a running wave to you
Deep peace
Of the flowing air to you
Deep peace
Of the quiet earth to you
Deep peace
Of the shining stars to you
Deep peace
Of the gentle night to you
Moon and stars
Pour their healing light on you
Deep peace to you

Deep Peace — Bill Douglas

Some people want a property in the middle of the action, and some people want a property where they can relax and be at peace. The challenge for designers of exterior spaces is creating places of beauty with limited space and and it harmony with what are often undesirable buildings. The more urban a setting is, the more difficult the task becomes.

The Lakes is an old condo development, but the designers did try to make a good land plan with nice exterior spaces. Contrast this development with most garden-style apartment complexes with straight lines of buildings surrounded by a sea of parking. Having designed many of these myself, I can tell you that developers operate by arranging parking, access roads and building footprints to obtain maximum density. If there happens to be any irregular triangular spaces (there always is), the land plan is considered inefficient, and special care must be taken to wring out every available square inch for development purposes, within constraints set forth by the approving body.

The Lakes Irvine California

The land plan of The Lakes (above) at first glance looks like a chaos of poorly arranged buildings. Couldn’t they have straightened out the buildings at the top? Isn’t there a more efficient way to arrange those awkward buildings in the middle? The answer to both is “yes,” but the real issue is how does it feel on the ground. By breaking up long lines of building edges (like the ugliness along Irvine Boulevard on the lower left) the experience on the ground is much improved.

The Lakes Irvine California birds eye

If you look at the arrangement of buildings and the resulting greenspaces, you see ample room for pools and other water features. Also, the additional spacing between units gives a greater sense of privacy that encourages people to actually use the spaces they are provided. When you look at the exterior space pictured in the listing, it looks like a nice location to sit and enjoy the beautiful surroundings.

Perhaps the beauty of these grounds will comfort the underwater homedebtors there; perhaps not.

43 LAKEPINES Irvine, CA 92620 kitchen

Irvine Home Address … 43 LAKEPINES Irvine, CA 92620

Resale Home Price … $349,900

Income Requirement ……. $72,121
Downpayment Needed … $12,247
3.5% Down FHA Financing

Home Purchase Price … $436,000
Home Purchase Date …. 3/7/2006

Net Gain (Loss) ………. $(107,094)
Percent Change ………. -19.7%
Annual Appreciation … -5.8%

Mortgage Interest Rate ………. 4.96%
Monthly Mortgage Payment … $1,804
Monthly Cash Outlays ………… $2,430
Monthly Cost of Ownership … $1,740

Property Details for 43 LAKEPINES Irvine, CA 92620

Beds 2
Baths 1 full 2 part baths
Size 1,204 sq ft
($291 / sq ft)
Lot Size n/a
Year Built 1977
Days on Market 4
Listing Updated 11/30/2009
MLS Number S597487
Property Type Condominium, Residential
Community Northwood
Tract Lk

According to the listing agent, this listing is a bank owned (foreclosed) property.

Great Bank Owned Condo located in desirable Northwood Location in Irvine. Unit has a back patio off the stream that runs through complex, allowing you to sit and relax. The unit also features custom ceramic tile flooring downstairs, living room with fireplace, recessed lighting, white appliances including refrigerator-washer-dryer, white tile on kitchen counters, 6-panel doors, carpet upstairs, 2 bedrooms stairs with 1.75 bathrooms upstairs, 1/2 bath downstairs, unit appears to have been painted recently… Good condition, turn key, ready to move in. The unit is also located close to Northwood High School, shopping, dining and entertainment. The complex includes 2 pools, tennis facilities, stream running throughout.

One of the interesting features of this property is the owner, the FEDERAL NATIONAL MORTGAGE ASSOCIATION. The GSEs do not have much exposure to Irvine because much of it was financed at amounts much larger than the conforming limit.

The owner refinanced this property on 04/03/2007 for $364,000. As you may recall, the GSEs were not responsible for the housing bubble, and their late entry into subprime mortgages and the lowering of lending standards was a response to the loss of market share they experienced when CDOs took over. This loan was one of those stupid ones they bought in reaction to the runaway market of the bubble. Now is when they pay for their mistakes — or to be more accurate — we will pay for their mistakes.

Foreclosure Record
Recording Date: 10/05/2009
Document Type: Notice of Sale (aka Notice of Trustee’s Sale)

Foreclosure Record
Recording Date: 06/30/2009
Document Type: Notice of Default

Most of the loss is being absorbed by the owner and the second mortgage. The owner put about $45,000 down, and there was a second for about that much; the remainder will be covered by the US Taxpayer.

Will the Federal Reserve Take Over?

The Federal Reserve currently controls mortgage interest rates through its direct purchase of Agency debt. Now that we have given the Federal Reserve this ability, are they going to keep it?

6 LAKEVIEW 73 Irvine, CA 92604 kitchen

Irvine Home Address … 6 LAKEVIEW 73 Irvine, CA 92604
Resale Home Price …… $700,000

{book1}

Tear down these walls for me
Stop me from going underYou are the only one who knows
I’m holding back

It’s not too late for me
To keep from sinking further
I’m trying to find my way out
Tear down these walls for me now

These Walls — Dream Theater

Today, I want to start with a simple question: What would it be like if everyone in California won the lottery at the same time?

There was a scene in the movie Bruce Almighty where Jim Carry’s character is given the power of God, and with it the commensurate responsibility to answer prayers. In frustration, he answers “yes” to everyone. In the next scene you hear people lamenting how they won the lottery and had to split it with so many people very little was gained.

The combination of kool aid intoxication and lender greed results in access to appreciation through HELOCs and a near-lottery payoff for every homeowner in California. It is as widespread as everyone winning the lottery except: no dilution. In fact, it is the nearly the opposite of dilution — the activities of a few borrowers bidding up prices provides wealth for every homeowner in the area.

The Federal Reserve could make prices go up. They have already artificially increased affordability by 20% or more by lowing interest rates a full point below market value. If the Federal Reserve wanted prices to go up, there is no limit to how low they could take mortgage interest rates. It might be tempting if the Federal Reserve had a reason to do so.

If appreciation returns to California, and if lenders and investors repeat previous mistakes (give away HELOCs like crack to an addict), then the economic stimulus will be huge — It was last time — homeowners borrowed and spent their futures believing tomorrow would never come; it didn’t. People defaulted on HELOC debt and faced no restitution or retribution.

For those of us who did not participate in the bubble, our perception of events and the incentives of the system matters. We know from observation that next time we will face few consequences, and we will be bailed out if it gets really bad. This will change borrower behavior — our behavior — and not for the better.

Federal Reserve induced appreciation is moral hazard leading to a larger Ponzi Scheme.

{book4}

I don’t think our legislators really comprehend the problem. Government financing is a massive Ponzi Scheme, so even if regulators were to recognize the oft ambiguous signs of a Ponzi Scheme credit bubble, I doubt anything would be done. Legislators do not see bubbles as a danger, and they do see economic expansion as a societal good, so if a housing bubble grows the economy, regulators will usually go along for the ride and wait to point fingers and affix blame later.

I have proposed solutions for Preventing the Next Housing Bubble, but anything that limits the ability of lenders to push debt service thresholds higher will be met with fierce resistance. The government does not mind seeing 40% or more of the incomes of its
citizens go toward debt service — the Finance Oligarchs have plenty of
lobbying money with so much of your income going toward their
profitability. Will they use this power to take over? Haven’t they already?

Federal Reserve as God

I am becoming more and more concerned that we will go the road of inflating another bubble to stimulate the economy. What would happen if the FED took mortgage interest rates down to 3%? Since they are the buyer of all GSE debt, they can pay as much as they want and drive rates as low as they want.

What if the Federal Reserve kept control of the real estate market permanently through setting mortgage interest rates? Any time we need to stimulate the economy, the FED can lower mortgage interest rates which will (1) increase prices, (2) increase borrowing and (3) provide stimulus through HELOC spending. When the FED wants to cool the economy down, they can (1) raise mortgage interest rates, (2) decrease borrowing (and appreciation) and (3) reduce the HELOC stimulus to the economy.

Mortgage interest rates can be controlled independently of the Federal Funds Rate (within some constraints) giving the Federal Reserve another tool for managing our economy besides setting the Federal Funds Rate. The “wealth effect” of real estate has proven it can stimulate consumer spending in a recession.

Hmmm….

I don’t know about you, but I think the Federal Reserve with that much power is a bit scary. I also fear that is where we are going. Isn’t the argument I laid out for giving the Federal Reserve permanent control of mortgage interest rates compelling to legislators? The idea has the short term benefit of economic expansion, and any problem — like the fact it is a Ponzi Scheme — can be pushed to a later date. when the Ponzi Scheme does finally blow up, there are plenty of opportunity to blame someone else. It is the perfect solution for a politico.

6 LAKEVIEW 73 Irvine, CA 92604 kitchen

Irvine Home Address … 6 LAKEVIEW 73 Irvine, CA 92604

Resale Home Price … $700,000

Income Requirement ……. $144,283
Downpayment Needed … $140,000
20% Down Conventional

Home Purchase Price … $689,000
Home Purchase Date …. 9/16/2003

Net Gain (Loss) ………. $(31,000)
Percent Change ………. 1.6%
Annual Appreciation … 0.2%

Mortgage Interest Rate ………. 4.96%
Monthly Mortgage Payment … $2,993
Monthly Cash Outlays ………… $4,090
Monthly Cost of Ownership … $3,100

Property Details for 6 LAKEVIEW 73 Irvine, CA 92604

Beds 3
Baths 2 full 1 part baths
Size 2,366 sq ft
($296 / sq ft)
Lot Size n/a
Year Built 1977
Days on Market 3
Listing Updated 12/3/2009
MLS Number P712738
Property Type Single Family, Residential
Community Woodbridge
Tract Al

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

Huge 2,366 sq ft beauty gated home! 3 BR plus office (can convert to a 4th BR). Steps to the lake and desirable lakes in popular Woodbridge. Gated community. Partial Lake views from kitchen, entry and bedroom. Take an evening stroll around the lake in the safest city in the U.S. Lovely 3 bedroom condominium plus bonus gorgeous wall-to-wall cherry wood office (with its own entrance) with lots of views throughout and tons of UPGRADES! Crown molding, granite countertops, real ‘waterfall’ as you enter the home which can be used as koi pond or enjoy its serenity. An entertainer’s delight. Gorgeous interior with crown molding throughout. Lots of open space. This home is huge and has the feel of a SFR. Remodeled bathrooms, office. Hugest garage on the block with above storage in garage. Lagoon, beaches and tennis courts nearby. This model rarely on the market! Walk to Woodbridge Theatre nearby, or Toy Store or Candy Store. This is definitely a ‘dream‘ location and home unlike any other!

Personally, I would very much like to live near either of the lakes in Woodbridge; although, the north lake is my favorite of the two due to the complete shorline walking trail. If I lived in this neighborhood, I would probably go for a walk around the lake each evening, get to know its moods and rhythms. It is one of the few suburban places where you can get a touch of nature; albeit a planned and civilized touch of nature.

The owner’s of today’s featured property had been paying down the conventionally amortized first mortgage, but is looks as if the $150,000 stand-alone second was too much for them.

Foreclosure Record
Recording Date: 11/09/2009
Document Type: Notice of Default

It is possible the owners are having problems with unemployment, and I expect we will see more listings where there is no apparent reason for default. Unemployment is high, and despite the recent one-month decline, we will likely not see a peak in unemployment until mid to late 2010, and it will take years afterward before the unemployment foreclosures are washed through the system.

Thank you from the IHB

I want to thank you for signing up for our newsletter and our get-to-know-you email program. Although this is the final email in the series, you will continue to receive the IHB newsletter which will keep you abreast of community events, real estate market conditions and our current listings.

The goal of this program is to make you comfortable with the IHB, to introduce you to the key company personnel, and prepare you for the next stage in the process. Shevy and I are here to serve. You can contact us anytime with questions, concerns or comments.

Larry@idealhomebrokers.com

Shevy@idealhomebrokers.com

In conclusion we would like to review the reasons why Ideal Home Brokers is the best choice for meeting your real estate brokerage needs.

Why should buyers use Ideal Home Brokers?

One of the most important features you can find in an agent is the ability to make you feel comfortable with the process. In order to be fully at ease, (1) you must know your agent is extremely knowledgeable on residential real estate, (2) you must trust your agent is looking out for your best interests, (3) you must rely on your agent to be honest and dependable, and (4) although it may sound trivial, you must like the agent you work with. Without all four of those characteristics, you will not be comfortable with the sales process, and you will not have a good experience.

After introducing ourselves and showing how you can access the great educational resources our on website, I trust that we have established our expertise on real estate. While writing for the Irvine Housing Blog, I publicly predicted the crash of housing prices when the rest of the real estate community was telling its customers prices would rise forever. You can expect superior market analysis, and you can trust us to tell you the truth. You will find few in the industry with our depth of knowledge on the subject.

Shevy and I consistently warned people of the dangers of buying during the price decline and encouraged people to rent rather than buy. We have always looked out for the best interests of clients rather than trying to manipulate clients into buying and put them into dire financial straits just to generate a commission (which is what many others did). We want you to buy the right house at the right time so you have a comfortable place to live and enough money left over to enjoy your life.

Honesty and dependability can only be established over time. I have been writing for the Irvine Housing Blog since February of 2007. Since that time, I have created a detailed account of my views of the market, and I have established my character with my daily readers. Shevy is not as well known but in the year I spent getting to know him before launching Ideal Home Brokers, he established his character with me. As you get to know him, you will see he is an honorable man committed to helping you find your ideal home.

Likability is always an intangible. Much of makes someone amiable is based on their character, but much is based on charm and feelings of warmth and well being you get when you spend time with someone. Some people like us, and some do not, but you will not know for sure until you meet us. We look forward to it meeting you to discuss your real estate adventure.

In addition to our superior real estate expertise, we add significant value to the sales experience. Based on the work developed for the IHB, we provide detailed property profiles. We supply a report showing (1) recent sales comps, (2) maximum cashflow value, (3) rental parity value (with rental comps) (4) cashflow investor value, and (5) the complete cost of ownership. To our knowledge nobody else is delivering this service.

As a buyer, wouldn’t you like to have an objective and accurate report on what the property is worth and what it will cost you to own it? I would.

As a seller, wouldn’t you like to have a realistic view of the market and establish what your house will really sell for? I would.

Why should sellers list with us? We reach buyers.

Perhaps you know a local listing agent. They frequently walk through neighborhoods knocking on doors trying to get homeowners to list their properties with them. Listing agents get to know many potential sellers, but how many buyers do they meet? Very few. Most listing agents rely on the multiple listing services (MLS) to sell the property for them. A listing agent is not going to gain exposure to your property beyond the MLS. The IHB does.

If you are a seller, and if you want exposure to many buyers, the listing must be where buyers will find them. The readers of the IHB are overwhelmingly potential buyers, and there are a great many of them.

So how many potential buyers are we talking about?

Most of the readers of the IHB are from Irvine or the surrounding areas (although I did get an email from a reader in the Czech Republic). Most readers are interested in Irvine real estate, or they would not be at the Irvine Housing Blog. Here are some interesting statistics for you (as of Summer 2009):

4,750 average daily visitors

2,500 bookmarked visitors (daily readers)

2,950 readers via daily RSS feed

What other medium has the promise to deliver your listing to more potential buyers than the IHB? No broker reaches more buyers outside of the MLS than the IHB.

Do a Google search for Irvine Real Estate; that is what your buyers would be looking for. You will find the IHB (and the article on me in the OC Register) near the top of the list. Do any Google search you can think of concerning Irvine housing, and we will be on the first page.

Other reasons to list with the IHB

We reach more buyers than anyone else. That is reason enough to list with us, but there are other factors to consider as well.

Although your listing will reach many potential buyers on the IHB, it will also be listed on the MLS. This is a very important medium for advertising your property, and it is not used well by many other brokers. When you read these property descriptions at the IHB, doesn’t it make you cringe? Wouldn’t you be ashamed if your property were presented this poorly? Let us present your property in the best possible way. Every property has positives. We will write a nice description without the exaggerations, flower adjectives and realtorspeak, and we will photograph your property with enough high-quality pictures to display it well. Next to the profile on the IHB, the MLS listing is the most important advertising vehicle for your property. It must be presented properly in both locations.

We will also show you what your property is worth based on current comps to help you price it to sell. If you do not agree, or if you want to list at a price well over comparable sales, we may take your listing, but we will also be returning to you ever couple of weeks to reduce the price until you meet the market. An overmarket price wastes everyone’s time, as it does not result in a sale. If you list at a price near comparable sales, you will be eligible for your unique “IHB Buzz” sales campaign. We will list your property solely on the IHB for one week to generate pre-sales interest before listing it on the MLS. IHB buyers are keen to get a good deal on an exclusive offering, and the property may sell even before reaching the MLS.

Larry Roberts — Irvine Housing Blog

Credentials:

Master of Science in Land Development – Texas A&M University 1994

Bachelors of Science – University of Wisconsin at Stevens Point 1992

Primary writer for the Irvine Housing Blog

Author of The Great Housing Bubble

I have been involved with real estate my entire career. Come work with me. I am here to help.

Shevy Akason — Ideal Home Brokers

Credentials:

Bachelor of Arts- Claremont Mckenna College 2003

Real Estate investor since 2004

Academic All American- NDSCS 2001

Associates Degree- NDSCS- Business Administration 2001

Shevy works closely with both buyers and sellers to help them meet their objectives. He is committed to reliable personal service. He is here to assist you.

This is the last in a series of automated emails you will receive from us. You will continue to receive our newsletters with information on community events, market trends, and current listings.

Thank you again for allowing us the opportunity to present ourselves to you through this program. We look forward to working with you.

Sincerely,

Larry Roberts

When you are ready…

sales@idealhomebrokers.com

By the way, we encourage you to share these emails with friends. They can sign up for this email marketing course at https://www.irvinehousingblog.com/ and http://www.idealhomebrokers.com/.

They can also sign up below:

IHB News 12-5-2009

I hope you are enjoying your weekend. i have a condo for you to look at… from a few different angles….

195 TAROCCO Irvine, CA 92618

Irvine Home Address … 195 TAROCCO Irvine, CA 92618
Resale Home Price …… $320,000

{book1}

never cared for what they do
never cared for what they know
but I know

So close, no matter how far
Couldn’t be much more from the heart
Forever trusting who we are
and nothing else matters

Nothing Else Matters — Metallica

Housing Bubble News from Patrick.net

The Real Cost Of California Houseownership (doctorhousingbubble.com)
Vegas vacant land prices tumble 50% (lvrj.com)
Mind paying your neighbor’s mortgage for him? (theautomaticearth.blogspot.com)
Bair Weighs Loan Principal Cuts to Fight Foreclosure (bloomberg.com)
What the FHA’s New Criteria Mean for Housing (usnews.com)

U.S. housing market meltdown not over yet (reuters.com)
House buyers may have to lay out more cash for FHA mortgages (latimes.com)
Is “Helping Houseowners” Washingtonspeak for Bailing Out Banks? (ourfuture.org)

Las Vegas House Prices Fall 34% on Foreclosure Sales (bloomberg.com)
English central banker calls for ‘bubble tax’ on houses (telegraph.co.uk)

The housing speculators return (blogs.reuters.com)
Readers weigh in on walking away from a mortgage (azstarnet.com)
Soros: Major Bloodletting Ahead (moneynews.newsmax.com)
The Next Bubble to Burst: Commercial Real Estate (gather.com)

Housing Bubble News

What Caused The Financial Crisis?

Atlantic Online – Daniel Indiviglio – ‎Nov 30, 2009‎

Narrative 1: It was the fault of the government, which encouraged a massive housing bubble and mishandled the ensuing crisis. …

Bernanke Forgot About His Role In Causing the Great Recession

TPMCafé (blog) – Dean Baker – ‎Nov 29, 2009‎

It is worth quickly explaining why a collapsed housing bubble leads to a recession, since the policy people responsible for this disaster have done so much …

Maybe its the new tasty kool aid the Federal Reserve is serving up? Are you ready for homedebtor’s prison?

195 TAROCCO Irvine, CA 92618

Irvine Home Address … 195 TAROCCO Irvine, CA 92618

Resale Home Price … $320,000

Income Requirement ……. $65,958
Downpayment Needed … $11,200
3.5% Down FHA Financing

Home Purchase Price … $186,000
Home Purchase Date …. 7/20/2001

Net Gain (Loss) ………. $114,800
Percent Change ………. 72.0%
Annual Appreciation … 6.2%

Mortgage Interest Rate ………. 4.96%
Monthly Mortgage Payment … $1,650
Monthly Cash Outlays ………… $2,320
Monthly Cost of Ownership … $1,880

Property Details for 195 TAROCCO Irvine, CA 92618

Beds 2
Baths 1 full 1 part baths
Size 951 sq ft
($336 / sq ft)
Lot Size n/a
Year Built 1983
Days on Market 3
Listing Updated 11/24/2009
MLS Number P712200
Property Type Condominium, Residential
Community Orangetree

Tract Othr

lite-brite

DESIRABLE LOWER UNIT WITH A PRIVATE PATIO AND GREEN BELT
NEARBY.LARGE MAIN LIVING AREA. INSIDE LAUNDRY UNIT. STORAGE UNIT IN THE
PATIO AREA. LIGHT AND BRIGHT WITH THE MASTER BEDROOM OPENING TO
THE PATIO.COMMUNITY POOL AND SPA. WALKING DISTANCE TO IRVINE VALLEY
COLLEGE. WASHER AND DRYER INCLUDED

ALL CAP

Does it seem reasonable that a low end condo would appreciate 6.2% a
year since 2001? The affordability based on payments looks much better
on this one, but this $220,000 condo is elevated to $320,000 thanks to
the Federal Reserve.

We all know interest rates are artificially low, and buying under
those conditions is likely to result in being underwater for 3-5 years
while this disaster plays itself out. Do you want to be in a condo in
Orangetree for a decade? I heard they are opening a new condo
development in San Francisco…