We have at least three years worth of distressed inventory in Orange County, and that assumes we don't add more to it. Despite the rise in the median price, the housing market is not healthy.

Irvine Home Address … 103 AMBIANCE Irvine, CA 92603

Resale Home Price …… $1,375,000

{book1}

So you though you'd like to change the world

Decided to stage a jumble sale

For the poor, for the poor

It's a waste of time if you know what they mean

Try shaking a box in front of the Queen

'Cause her purse is fat and bursting at the seams

It's a waste of time if you know what they mean

Too many hands in too many pockets

Housemartins — Flag Day

Headlines about 8.4% mortgage delinquency rates don't convey the enormity of the disaster. Headlines about rising prices mask the reason for rising prices: withheld inventory. A large number of Orange County homes are going to be sold over the next several years as we liquidate the properties of squatters everywhere.

So how many loan owners in Orange County are failing to make their payments?

Number of OC Homes Delinquent on Mortgage Payments

(Links to source material provided above.)

According to ForeclosureRadar.com, there are 14,214 properties in Orange County with either a Notice of Default or a Notice of Trustee Sale. The ratio of visible to shadow inventory is comparable to national norms.

8.4% of O.C. mortgages 90 days late

Published: June 7, 2010 3:46 p.m.

According to CoreLogic’s latest late-mortgage report, 8.40% of Orange County home-loan borrowers as of April are 90 days-plus late with their house payments. That’s +2.60 percentage points vs. a year ago. Also …

* Compare that change in delinquency rate to the national movement in a year of +2.87 percentage points vs. a year earlier or +3.15 percentage points in California.

* 2.37% of Orange County homes were in the foreclosure process; +0.15 percentage points vs. a year earlier.

* 0.35% of Orange County homes were repossessed by banks as REO (real estate owned); -0.10 percentage points vs. a year earlier.

* Orange County 90-day delinquency rate is -3.20 percentage points vs. the state’s slow-pay rate and -0.50 percentage points vs. national pace

* At right is a table showing how Orange County mortgage troubles compare to state and national payment woes.

If it is "different" in Orange County, if we are wealthier and more financially sophisticated than the rest of the nation, then why is our delinquency rate almost the same as the national average?

And if our delinquency rates are nearly the same as national averages, why are the foreclosure rates and REO rates much lower? Are lenders afraid to foreclose here because they know what it will do to prices?

Is anyone else amazed that lenders are choosing squatting over foreclosure?

At least Orange County isn't the worst, right?

One in 7 U.S. homeowners paying late or in foreclosure

(Reuters) – One in every seven U.S. households with a mortgage ended the first quarter behind on payments or in foreclosure, although a peak in unemployment could mean repayment stress is easing, the Mortgage Bankers Association said on Wednesday.

While the rate of new foreclosure actions has slowed, the stockpile of loans that are seriously delinquent or in foreclosure means a long path to recovery for the U.S. housing market.

"It's like shutting off the oil leak, but you still have a lot of oil in the Gulf to deal with," Jay Brinkmann, the MBA's chief economist, said in an interview.

Interesting analogy…

The analogy breaks down because the pipeline has not been shut off. Delinquencies are still rising, and the pipeline is flowing at full strength.

Loans that are 90 days or more past due or in foreclosure represent a historically high 68 percent of all problem mortgages. High unemployment is overwhelming efforts by lenders to alter loan terms to borrowers.

Looming foreclosures and short-sales "suggest we will have more house price declines where we'll see a bottoming of the price decline very late this year into early next year," said Mark Zandi, chief economist with Moody's Analytics in West Chester, Pennsylvania.

Prices have toppled about 30 percent peak to trough on average but have stabilized in recent months.

"But the good news is that early-stage delinquencies and foreclosures are falling, so we should see a definitive rise in home prices by the spring 2011 selling season," said Zandi.

Give me a break. If we bulldozed about 30,000 homes of delinquent borrowers, perhaps prices may start rising by 2011. Zandi is market cheerleading.

The combination of loans in foreclosure and those that are at least one payment past due declined to 14.01 percent on a non-seasonally adjusted basis from a record 15.02 percent in the fourth quarter, according to the MBA's National Delinquency Survey.

New claims for unemployment insurance in the first quarter were higher than expected, the MBA said, which stymied improvement in the 30-day delinquency rate. The rate has stabilized, Brinkmann said, though "a bad situation that is not getting worse is still bad."

…"Overall, we see a continuation of the pattern of declines in short-term delinquency rates, at least on a non-seasonally adjusted basis, the continued historically high share of delinquencies that are 90 days or more past due, and a leveling off in the pace of foreclosures," Brinkmann said in a statement.

In other words, the amend-pretend-extend dance will continue until we see a reason to stop it.

U.S. national unemployment, which hovers just below 10 percent, is forcing more homeowners to default in states other than those most hurt in the initial foreclosure tidal wave spawned by high-risk loans. Joblessness and wage cuts kept boosting defaults on prime, fixed-rate loans, or relatively safe mortgages made to borrowers with high credit quality.

… "Some might take comfort from the apparent topping out in the number of foreclosures started, but the inventory of foreclosures continues to rise — in other words, this headwind will linger," said Tom Porcelli, senior economist at RBC Capital Markets in New York.

Thanks for telling us how to take comfort from this terrible data.

Get it through your thick skulls people…

There is no cause for alarm from these problems, I have it from a reliable source that everything here will be all right. Orange County is different:

You're kidding yourself if you think prices are going to drop even more. We have already hit the bottom. I don't understand why "potential homebuyers" are under the assumption that there is going to be some sort of "correction." Get it through your thick skulls people…..right now is seriously the time to buy. I am not saying this as a Realtor but as a person with common sense.

Don't get me wrong, many areas of the US will continue to face declining RE markets, but not Orange County.

I am not saying this as a Realtor but as a person with common sense? Is he demeaning realtors or people with common sense? I can't tell. Would it have been better for him to say it as a Realtor? Would that have made his statement more believable?

JP Morgan Chase gets crushed

Today's imploding Ponzi stripped his equity as it appeared just like many others at the time.

• This property was purchased on 6/10/2004 for $1,205,500. The owner used a $964,350 first mortgage and a $241,150 down payment.
• On 9/17/2004 he opened a HELOC for $100,000.
• On 6/12/2006 he obtained a $500,000 HELOC.
• On 7/6/2007 he refinanced the first mortgage for $1,350,000 and got a $50,500 HELOC.
• On 9/25/2007 JP Morgan Chase extended him a HELOC for $270,000.
• Total property debt is $1,620,000
• Total mortgage equity withdrawal is $655,650.
• Total squatting time was less than a year.

Foreclosure Record

Recording Date: 02/23/2010

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 08/12/2009

Document Type: Notice of Default

Luther Burbank Savings bought this property at foreclosure on 3/29/2010 for $1,457,000 which was the full amount of the deed plus missed payments and expenses. Notice these miscellaneous charges added up to $107,000. The value and cost of squatting is very high on these jumbo loan properties.

Irvine Home Address … 103 AMBIANCE Irvine, CA 92603

Resale Home Price … $1,375,000

Home Purchase Price … $1,205,500

Home Purchase Date …. 6/10/2004

Net Gain (Loss) ………. $87,000

Percent Change ………. 14.1%

Annual Appreciation … 2.1%

Cost of Ownership

————————————————-

$1,375,000 ………. Asking Price

$275,000 ………. 20% Down Conventional

4.84% …………… Mortgage Interest Rate

$1,100,000 ………. 30-Year Mortgage

$279,544 ………. Income Requirement

$5,798 ………. Monthly Mortgage Payment

$1192 ………. Property Tax

$225 ………. Special Taxes and Levies (Mello Roos)

$115 ………. Homeowners Insurance

$235 ………. Homeowners Association Fees

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

$7,564 ………. Monthly Cash Outlays

-$1463 ………. Tax Savings (% of Interest and Property Tax)

-$1361 ………. Equity Hidden in Payment

$510 ………. Lost Income to Down Payment (net of taxes)

$172 ………. Maintenance and Replacement Reserves

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

$5,422 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$13,750 ………. Furnishing and Move In @1%

$13,750 ………. Closing Costs @1%

$11,000 ………… Interest Points @1% of Loan

$275,000 ………. Down Payment

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

$313,500 ………. Total Cash Costs

$83,100 ………… Emergency Cash Reserves

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

$396,600 ………. Total Savings Needed

Property Details for 103 AMBIANCE Irvine, CA 92603

——————————————————————————

Beds: 4

Baths: 3 full 2 part baths

Home size: 3,500 sq ft

($393 / sq ft)

Lot Size: 6,674 sq ft

Year Built: 2005

Days on Market: 36

Listing Updated: 40312

MLS Number: P734152

Property Type: Single Family, Residential

Community: Quail Hill

Tract: Sien

——————————————————————————

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

This property is in backup or contingent offer status.

OPEN HOUSE SAT MAY 8 FROM 1 TO 4…Absolutely gorgeous highly upgraded home situated in prime location at the end of a cul de sac iin the wonderful community of Quail Hill. Spectacular back yard with spa, fireplace and outdoor fireplace. The casita which could be another bedroom and bath was turned into a fabulous wine room. Beautiful kitchen with granite, amazing master suite, this home has it all. Simply fabulous from the curb to the outdoor grounds and everything inbetween. Not your typical bank owned property.

Not your typical bank owned property? LOL. Yes, only because banks are not foreclosing on properties like these and kicking out the squatters.

These pictures are pretty. The wet concrete is wet enough to create some good reflections.

.

Properties in second-home communities are falling into foreclosure at high rates. Unlike Irvine where a substitute buyer may be active in the market, second-home markets cannot be supported by the local population making a fraction of the money the original owners make.

Irvine Home Address … 12 HARTFORD Irvine, CA 92604

Resale Home Price …… $299,000

{book1}

It was 1989 my thoughts were short my hair was long

Caught somewhere between a boy and man,

She was 17 and she was far from in-between

It was summertime in Northern Michigan

Splashing through the sandbar, talking by the campfire,

It's the simple things in life like when and where

We didn't have no Internet but man I never will forget

The way the moon light shined upon her hair

Kid Rock — All Summer Long

I grew up in a small town in Wisconsin named Friendship. Isn't that a great name for a sleepy, rural community? I am going back there two weeks from today to recharge at Friendship Lake and climb the Friendship Mound, my spiritual home.

Do you see the rock face in the photos? That is the face of the Friendship Mount that looks down on the small community of 698 people. In my will, my final request is for my ashes to be released to the breeze on that rock.

I have always been attached to this place. In my quest to abandon my own attachments, this one has been very difficult to let go. I moved away when I was 11, back at 18, away again at 21. Whenever I think about "home," this community is what comes to my mind.

Have you ever spun donuts in your car on a frozen lake? Sat in an ice shanty drinking beer and pretending to fish?

Have you ever walked for miles through the woods without seeing civilization? Or met up with a curious deer?

I find that if I am away too long, I forget what is real. I lose my connection to the simple things in life that matter. I get too busy to stop and feel the ecstatic joy of being alive.

When I go back, the sun rises at about 5:00 AM and sets about 9:00 PM leaving many hours of sunlight to fill the day. Summer in the Northwoods is a very special time.

Life is slow in Friendship, Wisconsin. Nothing of import happens there, no big decisions are made, and the wheels of commerce barely turn, which is why I live here in Irvine rather than there in my tiny home town.

Some day, I will likely own property in Friendship. Unlike the equity locusts of the housing bubble, I don't plan to take the money out of the equity of my primary residence to do it. That mistake was common in the housing bubble as baby boomers flush with equity invaded towns like Friendship and drove property values sky high. Now that the bills are coming due, many people are simply not paying them and allowing their lake homes to go into foreclosure.

A quiet foreclosure trend in Minnesota: lake homes

Recession discourages buyers as cabin prices, sales drop

Getting the chance to sell a lake home in northern Minnesota was once a cause for celebration among real estate agents.

"Now, it's like, 'Oh, no, another lake shore listing,' " said Kay Bowman, a real estate agent with Century 21 Land of Lakes in Grand Rapids.

A few years ago, prices for lake homes were climbing at double-digit rates as buyers seemed convinced that all cabins in the land of 10,000 lakes soon would be gone. Sellers at the time also could count on demand from buyers who tapped equity from primary residences in the Twin Cities or elsewhere to finance a purchase up north.

But nowadays, selling a lake home is no day at the beach. Vacation home prices have fallen, buyers are waiting for bargains, and bank foreclosures — once unheard of on certain lakes — dot the shorelines, providing low-price competition for other sellers.

One of every 10 vacation homes purchased nationally in 2009 was in foreclosure, the highest such rate in five years, according to the National Association of Realtors. Real estate agents say there's a similar trend in Minnesota, although they point out that foreclosures aren't the only reason for slow sales at the lake.

"It's consumer confidence — sales are down for almost all big nonessential purchases," said Mike Peller, president of the Duluth Area Association of Realtors.

"We are down approximately 40 percent in values since 2007," said Marc Kuhnley, an agent in the Brainerd Lakes area with Edina Realty. "Of course, that 40 percent isn't off a true value — it's off of a false value that was driven by the market."

This reporter and the quoted Realtor seem to get it: there was a housing bubble.

… Five years ago, people buying lake homes had plenty of equity in their first home to draw on, Swierczek pointed out. Plus, buyers were more confident about their own financial health, as well as that of the housing market.

That's all changed.

… A report this spring from Minneapolis-based HousingLink suggests bank foreclosures were making appearances lakeside. Several counties in cabin country were among those with the biggest jump in bank foreclosures between the first quarters of 2009 and 2010.

For example, Lake County — the picturesque home to Two Harbors, Split Rock Lighthouse and miles of pristine Lake Superior shoreline — saw a 650 percent jump in bank foreclosures in the first quarter, according to HousingLink.

The rate of increase is much more dramatic than the actual numbers, since the county's foreclosure count jumped from just 2 to 15. Still, county officials say vacation homes now are among the mix of bank foreclosures in an area that had just two properties repossessed by banks during all of 2000.

Year-to-date in 2010, Lake County has conducted 30 foreclosure sales.

… In the Brainerd Lakes area, banks are involved in about two of every five sales of waterfront property, whether by way of foreclosure or a short sale, estimated Marc Kuhnley, the Edina Realty agent. The listings have helped push prices downward — particularly at the spendy end of the market.

A lake home in the Brainerd Lakes area originally listed for nearly $1.7 million sold after two years on the market for $999,000, Kuhnley said. Another home originally listed for nearly $1.8 million is now down to about $1.3 million after three years on the market.

"Currently, there are 80 lake properties over $1 million dollars on the market up here," Kuhnley said. Homes in that price bracket are selling at a rate of about six per year, he added, so it could take a long time to burn through the supply.

It will take a long time locally to absorb the jumbo loan properties. It will take forever to sell them in communities where none of the local wage earners can afford them.

"We are seeing a lot more bank-owned properties in the Brainerd Lakes area market, which is predominately lakeshore homes that are second residences," said Terry Pederson, an agent with Re/Max Lakes Area Realty in Crosslake. "If you're a buyer, it couldn't be a better time."

That's bullshit. Prices will come down much more in these markets. This housing market has to go from being the repository of free money of mortgage equity withdrawal to buyers who must now make two payments. That probably a 90% reduction in the potential buyer pool.

… "People aren't coming up here to buy," she said. "So, you have this great volume of homes that we didn't used to see. If you could list something on the lakeshore, you used to say, 'Oh, great, I have a lakeshore listing.' "

… Nearby sellers get the point.

"It is very slow," said Thomas Bloomquist, an Itasca County resident who is trying to sell a four-bedroom home with 200 feet of shoreline along a small lake in rural Grand Rapids. This year marks the third consecutive spring that Bloomquist's home has been on the market, with a current list price of $279,000.

Bloomquist works as a foreclosure prevention counselor with a nonprofit group in Duluth, so he knows that federal efforts to prevent foreclosures are focused only on primary residences.

A foreclosure prevention counselor who is underwater and listing a second home at a WTF listing price? That is funny.

It's understandable, he added, since a second home or cabin is "not a real need; it's a want."

… "With the collateral damage from employment losses and so many households down to one wage earner," he said, "that luxury of having the second home just isn't there."

Christopher Snowbeck can be reached at 651-228-5479.

Did she go buy a second home?

The owner of todays featured property paid $127,000 back in 1994, and she only borrowed $70,650 to do it. She completely ignored the housing bubble until on 5/9/2005 she refinanced with a $200,000 first mortgage. What do you think she needed the money for? Whatever she did, it is costing her this condo.

Foreclosure Record

Recording Date: 05/20/2010

Document Type: Notice of Default

Irvine Home Address … 12 HARTFORD Irvine, CA 92604

Resale Home Price … $299,000

Home Purchase Price … $127,000

Home Purchase Date …. 2/10/1994

Net Gain (Loss) ………. $154,060

Percent Change ………. 135.4%

Annual Appreciation … 5.2%

Cost of Ownership

————————————————-

$299,000 ………. Asking Price

$10,465 ………. 3.5% Down FHA Financing

4.91% …………… Mortgage Interest Rate

$288,535 ………. 30-Year Mortgage

$61,278 ………. Income Requirement

$1,533 ………. Monthly Mortgage Payment

$259 ………. Property Tax

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

$25 ………. Homeowners Insurance

$273 ………. Homeowners Association Fees

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

$2,090 ………. Monthly Cash Outlays

-$144 ………. Tax Savings (% of Interest and Property Tax)

-$352 ………. Equity Hidden in Payment

$20 ………. Lost Income to Down Payment (net of taxes)

$37 ………. Maintenance and Replacement Reserves

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

$1,651 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$2,990 ………. Furnishing and Move In @1%

$2,990 ………. Closing Costs @1%

$2,885 ………… Interest Points @1% of Loan

$10,465 ………. Down Payment

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

$19,330 ………. Total Cash Costs

$25,300 ………… Emergency Cash Reserves

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

$44,630 ………. Total Savings Needed

Property Details for 12 HARTFORD Irvine, CA 92604

——————————————————————————

Beds: 2

Baths: 1 full 1 part baths

Home size: 1,000 sq ft

($299 / sq ft)

Lot Size: n/a

Year Built: 1977

Days on Market: 17

Listing Updated: 40318

MLS Number: P735817

Property Type: Condominium, Residential

Community: El Camino Real

Tract: Hp

——————————————————————————

This lovely townhouse style end unit has it all!!!! There are two large bedrooms upstairs with a walk in closet, has laminate floors downstairs, eating area kitchen,spacious patio, spearate laundry room,view of greenbelt from upstair bedroom, close to pool, and playground.

spearate? Do you think the realtor used enough exclamation points?

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