Category Archives: HELOC Abuse

Panel finds Greenspan and Bernanke responsible and negligent

A federal inquiry has blamed Greenspan and Bernanke for failing to regulate dangerous financial products that caused a housing bubble and widespread financial meltdown.

Irvine Home Address … 9 SPRING BUCK Irvine, CA 92614

Resale Home Price …… $549,000

Everybody plays the fool sometime

There's no exception to the rule

Listen, baby, it may be factual, may be cruel

I ain't lyin', everybody plays the fool

The Main Ingredient — Everybody Plays the Fool

Nobody is perfect. Everybody plays the fool sometimes. We hope we put people in positions of power who know what they are doing. Sometimes, these people fail, and when they do millions suffer for their arrogance and their ignorance. The sad conclusion of the government commission on the financial crisis concluded the entire ordeal was avoidable. If a few key people in power had made different decisions, we could have averted a housing bubble and the near meltdown of our financial system.

Financial Crisis Was Avoidable, Inquiry Finds


Published: January 25, 2011

WASHINGTON — The 2008 financial crisis was an “avoidable” disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street, according to the conclusions of a federal inquiry.

The commission that investigated the crisis casts a wide net of blame, faulting two administrations, the Federal Reserve and other regulators for permitting a calamitous concoction: shoddy mortgage lending, the excessive packaging and sale of loans to investors and risky bets on securities backed by the loans.

“The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done,” the panel wrote in the report’s conclusions, which were read by The New York Times. “If we accept this notion, it will happen again.”

While the panel, the Financial Crisis Inquiry Commission, accuses several financial institutions of greed, ineptitude or both, some of its gravest conclusions concern government failings, with embarrassing implications for both parties. But the panel was itself divided along partisan lines, which could blunt the impact of its findings.

Many of the conclusions have been widely described, but the synthesis of interviews, documents and testimony, along with its government imprimatur, give the report — to be released on Thursday as a 576-page book — a conclusive sweep and authority.

What is shocking to me is that this report got so much right. Government reports are usually whitewashes of their own ineptitude. This report points out the failings accurately which is rare by government standards.

The commission held 19 days of hearings and interviews with more than 700 witnesses; it has pledged to release a trove of transcripts and other raw material online.

Of the 10 commission members, the six appointed by Democrats endorsed the final report. Three Republican members have prepared a dissent focusing on a narrower set of causes; a fourth Republican, Peter J. Wallison, has his own dissent, calling policies to promote homeownership the major culprit. The panel was hobbled repeatedly by internal divisions and staff turnover.

The majority report finds fault with two Fed chairmen: Alan Greenspan, who led the central bank as the housing bubble expanded, and his successor, Ben S. Bernanke, who did not foresee the crisis but played a crucial role in the response. It criticizes Mr. Greenspan for advocating deregulation and cites a “pivotal failure to stem the flow of toxic mortgages” under his leadership as a “prime example” of negligence.

It also criticizes the Bush administration’s “inconsistent response” to the crisis — allowing Lehman Brothers to collapse in September 2008 after earlier bailing out another bank, Bear Stearns, with Fed help — as having “added to the uncertainty and panic in the financial markets.”

Like Mr. Bernanke, Mr. Bush’s Treasury secretary, Henry M. Paulson Jr., predicted in 2007 — wrongly, it turned out — that the subprime collapse would be contained, the report notes.

Democrats also come under fire. The decision in 2000 to shield the exotic financial instruments known as over-the-counter derivatives from regulation, made during the last year of President Bill Clinton’s term, is called “a key turning point in the march toward the financial crisis.”

That was an Alan Greenspan decision. As head bank regulator, he had the authority to regulate credit default swaps as insurance or allow them to exist in a wild west environment of zero regulation. He chose to allow insurers and hedge funds to concentrate risk to the point that it destabilized the world economy.

Timothy F. Geithner, who was president of the Federal Reserve Bank of New York during the crisis and is now the Treasury secretary, was not unscathed; the report finds that the New York Fed missed signs of trouble at Citigroup and Lehman, though it did not have the main responsibility for overseeing them.

Former and current officials named in the report, as well as financial institutions, declined Tuesday to comment before the report was released.

The report could reignite debate over the influence of Wall Street; it says regulators “lacked the political will” to scrutinize and hold accountable the institutions they were supposed to oversee. The financial industry spent $2.7 billion on lobbying from 1999 to 2008, while individuals and committees affiliated with it made more than $1 billion in campaign contributions.

It wasn't regulator capture that prevented oversight. It was the incompetent leadership of Alan Greenspan. The federal reserve can be viewed as the ultimate form of regulatory capture. The banks have set up their own regulator with the federal reserve that can do whatever it wants. The federal reserve reports to no one. Congress could revoke their charter, but so far, only the Ron Paul fringe has suggested that.

The report does knock down — at least partly — several early theories for the financial crisis. It says the low interest rates brought about by the Fed after the 2001 recession; Fannie Mae and Freddie Mac, the mortgage finance giants; and the “aggressive homeownership goals” set by the government as part of a “philosophy of opportunity” were not major culprits.

Amazing. The report is correct on all counts. Each of the items listed above has been erroneously identified as being causes of the housing bubble, mostly by political operatives posturing for advantage.

On the other hand, the report is harsh on regulators. It finds that the Securities and Exchange Commission failed to require big banks to hold more capital to cushion potential losses and halt risky practices, and that the Fed “neglected its mission.”

Right on. The federal reserve abdicated its responsibility to the collective wisdom of the market. The infallible genius of the herd took prices over the cliff.

It says the Office of the Comptroller of the Currency, which regulates some banks, and the Office of Thrift Supervision, which oversees savings and loans, blocked states from curbing abuses because they were “caught up in turf wars.”

“The crisis was the result of human action and inaction, not of Mother Nature or computer models gone haywire,” the report states. “The captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand and manage evolving risks within a system essential to the well-being of the American public. Theirs was a big miss, not a stumble.”

I know I beat up on Alan Greenspan quite a bit, but let's take a look at the questions he asked and the answers he accepted during the housing bubble, and I think you will see why I hold him in such low regard.

First, it was brought to Greenspan's attention on many occasions that the price-to-income ratio, the price-to-rent ratio, and the aggregate debt-to-income ratio was well outside of historic norms. He surmised this was because the strong economy he engineered was creating many households, and the innovations in the mortgage industry were getting people into homes and boosting the owner-occupancy rate. In short, he was a genius for allowing these other financial geniuses to create such prosperity… or so he thought.

What Greenspan did not do was ask a few simple questions. (1) How can people finance so much money with such a small income? (2) Can borrowers fulfill the terms of these new loans and sustain ownership? (3) What happens if the new innovations in finance fail?

With a little intellectual curiosity from the perspective of new buyers, I believe that any reasonable person could have figured out that prices were built on an unstable base of toxic financing. I am shocked that the head banking regulator, a man with years of education and training and the research budget of the federal reserve behind him, this man could not see the housing bubble. He needs to check his glasses.

The report’s implications may be felt more in the political realm than in public policy. The Dodd-Frank law overhauling the regulation of Wall Street, signed in July, took as its premise the same regulatory deficiencies cited by the commission. But the report is sure to be a factor in the debate over the future of Fannie and Freddie, which have been run by the government since 2008.

Though the report documents questionable practices by mortgage lenders and careless betting by banks, one striking finding is its portrayal of incompetence.

It quotes Citigroup executives conceding that they paid little attention to mortgage-related risks. Executives at the American International Group were found to have been blind to its $79 billion exposure to credit-default swaps, a kind of insurance that was sold to investors seeking protection against a drop in the value of securities backed by home loans. At Merrill Lynch, managers were surprised when seemingly secure mortgage investments suddenly suffered huge losses.

By one measure, for about every $40 in assets, the nation’s five largest investment banks had only $1 in capital to cover losses, meaning that a 3 percent drop in asset values could have wiped out the firm. The banks hid their excessive leverage using derivatives, off-balance-sheet entities and other devices, the report found. The speculative binge was abetted by a giant “shadow banking system” in which the banks relied heavily on short-term debt.

“When the housing and mortgage markets cratered, the lack of transparency, the extraordinary debt loads, the short-term loans and the risky assets all came home to roost,” the report found. “What resulted was panic. We had reaped what we had sown.”

The report, which was heavily shaped by the commission’s chairman, Phil Angelides, is dotted with literary flourishes. It calls credit-rating agencies “cogs in the wheel of financial destruction.” Paraphrasing Shakespeare’s “Julius Caesar,” it states, “The fault lies not in the stars, but in us.”

Of the banks that bought, created, packaged and sold trillions of dollars in mortgage-related securities, it says: “Like Icarus, they never feared flying ever closer to the sun.”

Phil Angelides failed in his bid for governor of California. It looks like he did a great job writing this report for the government commission.

Greenspan and Bernanke were incompetent. A massive housing bubble grow under their watch, and they did nothing. Perhaps our understanding of financial viruses is still primitive, and Greenspan will be pardoned by history for his ignorance. He apologized for his mistaken philosophical beliefs that guided him for 40 years inexorably to the abyss.

Alan Greenspan will be the fool who exposed the folly of the efficient market once and for all. Or will he be the scapegoat for central planning and market manipulation by the federal reserve? Whatever becomes of his legacy, you can now add responsibility for the housing bubble and financial meltdown of 2008.

She more than tripled her mortgage

As an example of how lenders at all levels abdicated their responsibilities, the owner of today's featured property was allowed to more than triple her mortgage debt over a nine year period. Doesn't a lender see that a borrower has gone Ponzi? Did anyone care?

  • The owner of today's featured property bought at the bottom of the last cycle. She paid $285,000 on 11/18/1998 using a $185,000 first mortgage and a $100,000 down payment.
  • On 8/6/2001 she opened a HELOC for $35,000.
  • On 4/30/2003 she refinanced with a $266,000 first mortgage. At this point she has spent all but $19,000 of her down payment.
  • On 4/30/2004 she obtained a $150,000 HELOC.
  • On 10/18/2004 she got a HELOC for $250,000.
  • On 11/22/2004 she obtained a $300,000 HELOC.
  • On 2/28/2005 she enlarged the HELOC to $351,450.
  • On 11/28/2006 she refinanced the first mortgage for $564,000 and opens a $70,000 HELOC.
  • On 4/10/2007 she refinanced with a new $564,000 first mortgage.
  • Total mortgage equity withdrawal is $379,000.
  • She quit paying last fall.

Foreclosure Record

Recording Date: 01/19/2011

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 10/18/2010

Document Type: Notice of Default

This woman was given this money because of a few key decisions Alan Greenspan made regarding the regulation of credit default swaps which led to a mispricing of risk and a flood of money rushing into the mortgage market.

Irvine Home Address … 9 SPRING BUCK Irvine, CA 92614

Resale Home Price … $549,000

Home Purchase Price … $285,000

Home Purchase Date …. 11/18/98

Net Gain (Loss) ………. $231,060

Percent Change ………. 81.1%

Annual Appreciation … 5.4%

Cost of Ownership


$549,000 ………. Asking Price

$109,800 ………. 20% Down Conventional

4.84% …………… Mortgage Interest Rate

$439,200 ………. 30-Year Mortgage

$111,614 ………. Income Requirement

$2,315 ………. Monthly Mortgage Payment

$476 ………. Property Tax

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

$92 ………. Homeowners Insurance

$135 ………. Homeowners Association Fees


$3,017 ………. Monthly Cash Outlays

-$393 ………. Tax Savings (% of Interest and Property Tax)

-$544 ………. Equity Hidden in Payment

$204 ………. Lost Income to Down Payment (net of taxes)

$69 ………. Maintenance and Replacement Reserves


$2,353 ………. Monthly Cost of Ownership

Cash Acquisition Demands


$5,490 ………. Furnishing and Move In @1%

$5,490 ………. Closing Costs @1%

$4,392 ………… Interest Points @1% of Loan

$109,800 ………. Down Payment


$125,172 ………. Total Cash Costs

$36,000 ………… Emergency Cash Reserves


$161,172 ………. Total Savings Needed

Property Details for 9 SPRING BUCK Irvine, CA 92614


Beds:: 3

Baths:: 3

Sq. Ft.:: 1571


Lot Size:: 3,024 Sq. Ft.

Property Type:: Residential, Single Family

Style:: Two Level, Cottage

View:: Park/Green Belt

Year Built:: 1980

Community:: Woodbridge

County:: Orange

MLS#:: S645027

Source:: SoCalMLS

Status:: ActiveThis listing is for sale and the sellers are accepting offers.

On Redfin:: 9 days


Desireable three bedroom two and one-half bath Cottage Home inside the Loop away from freeway noise with white picket fence on green belt. This home features crown molding, scraped ceilings, hardwood floors and custom window shutters, cozy fireplace in living room; dining room with chair rail opens into private sideyard; kitchen features gas stove and breakfast counter; family room with ceiling fan; bedrooms have mirrored wardrobe doors; patio has brick trim; spacious 2 car garage; near schools, association parks, pools and tennis courts; convenient to shopping.

Adjustable rate mortgages cause volatility in California house prices

California's real estate market is volatile largely due to the use of adjustable rate mortgages.

Irvine Home Address … 14952 GAINFORD Cir Irvine, CA 92604

Resale Home Price …… $400,000

It's fire… and it's crashing!

It's crashing terrible!

Oh, my! Get out of the way, please!

It's burning and bursting into flames and the…

and it's falling on the mooring mast.

And all the folks agree that this is terrible;

this is the one of the worst catastrophes in the world.

[indecipherable] its flames…

Crashing, oh!

Four- or five-hundred feet into the sky and it…

it's a terrific crash, ladies and gentlemen.

It's smoke, and it's in flames now;

and the frame is crashing to the ground,

not quite to the mooring mast.

Oh, the humanity!

Herbert Morrison — WLS radio

Housing bubbles are catastrophes. Like the Hindenburg or the Titanic, house prices had an aura of invincibility that came crashing down and sunk to an (under)watery grave.

If a mortgage product were to inflate a housing bubble, the pump and hose that primes the first stages are adjustable rate mortgages. These risky products give the market ability to weather interest rate shocks, but they also provide the air that inflates prices 10% to 15% above stable prices set by using fixed-rate mortgages.

Californians pay too much for their houses because many get trapped into adjustable-rate mortgages to borrow as much as possible. It becomes a rite-of-passage that your first purchase requires you to take on a risky loan and stretch to the max so your bank can extract as much money as possible from your working life.

Some wise up to the adjustable-rate mortgage trap, and they either refinance or move to a different home when their financial situation changes. They take with them the equity built up from the frightened masses that came after and inflated neighborhood values.

Adjustable rate mortgages are not a product I like because it forces borrowers to assume interest rate risk. Many people who use adjustable rate mortgages claim they understand interest rate risk, but in the last 30 years, interest rates have done nothing but go down. There has been no consumer risk in holding adjustable-rate paper.

That changes when interest rates hit the bottom of the cycle and begin to rise.

Each adjustment in rate going forward represents a larger cost to the borrower. Everyone stretching today to get into real estate using an adjustable rate mortgage will face an increasing payment without obtaining any appreciation to compensate. It's a lose – lose. Those using fixed rate mortgages with affordable payments can weather any storm.

Adjustable rate mortgages will burn most who use them over the next decade. Those with assumable fixed rate mortgages will fare the best.

Also, for those awaiting the return of HELOC riches, how much of that equity are you going to borrow at 7% when your primary mortgage is 4.5%?

The article that follows is a bit wonkish, but it provides a detailed explanation of how adjustable rate mortgages impact the California real estate market.

The iron grip of ARMs on California real estate

By Bradley Markano • Dec 28th, 2010

This article discusses how the ratio of adjustable rate mortgages (ARMs) to all loans originated in California can be used to determine the health and direction of California’s near-term real estate market.

Data Courtesy of MDA Dataquick, the US Federal Reserve, and Standard and Poor’s

The above charts present two real estate market perspectives on adjustable rate mortgage loan (ARM) volume in California. Both charts track ARM loans as a percentage of all mortgages recorded in California (the blue line), called the arms-to-loans (ATL) ratio. The first chart juxtaposes California’s ATL ratio with the fixed rate mortgage (FRM) rate for the Western Census Region (the green line), while the second chart joins the ATL ratio with the combined monthly tri-city average of low-tier home pricing in San Diego, Los Angeles and San Francisco (the red line).

The ATL ratio is a crucial measure of the relationship between ARMs and FRMs, and can be used to determine probable sales volume and price movements for 12 and 24 months forward (respectively). [For a more detailed look at home pricing in California, see the first tuesday Market Chart, California Tiered Home Pricing.]

In the top chart, notice the collapse of ARM lending after 2006. ARMs went from nearly 80% of the market down to 2%.

ARMs depend on FRM Rates

The availability of purchase-assist money is the single most powerful engine driving price movement in California real estate transactions, as shown by the boom in sales volume and pricing caused by excess funding in the mid-2000s; a phenomenon called the financial accelerator effect. Purchase-assist money is delivered almost exclusively by either ARMs or FRMs (except for the very few buyers who pay cash). [For more information about the financial accelerator, see the May 2010 first tuesday article, Cleaning up after the ruptured housing bubble.]

Because mortgage financing is so dominant in sales transactions, the friction in the movement between the 30-year FRM Rate and the ATL ratio is essential to the understanding of brokers who wish to hazard a prediction of what lies ahead for their real estate market.

Combined in analysis, these two factors – the FRM rate and the ATL ratio – have the power to predict California’s future home sales volume and price movement. Local market conditions, on the other hand, seem to have little influence on sales volume and pricing, since both are controlled by financing trends, which are moved only by the bond market and federal monetary policies. [For a more global review and critique of ARMs, see the March 2010 first tuesday article, The Danger of an ARMs Buildup.]

ARMs Ratio1

The FRM-ATL Connection

30-year FRMs are the most basic and essential form of financing for homebuyers in the real estate market. If FRMs are available at comparatively low rates, and the homebuyer is well-informed (and somewhat rational), the homebuyer will almost always choose the FRM over the much riskier ARM loan.

When ARMs became 80% of the market in 2006, nearly everyone forgot the common sense idea that fixed-rate debt is better. Now that ARMs are nearly extinct, some are lemanting their demise. Good bye and good riddance.

In a normally functioning purchase-assist and refinancing mortgage market, the percentage of ARMs – the ATL ratio – rises and falls only in direct response to changes in FRM rates, in sympathy until friction develops and leads to a deviation in movement between the ATL ratio and FRM rates. Such a deviation is a clear warning of an impending distortion in real estate sales volume and pricing.

As the top chart vividly indicates, observed rises in FRM rates tend to lead to increases in ARM volume, the normal situation. The reasons are intuitive, since ARMs allow borrowers to obtain more funding when the FRM rate increases (sellers refuse to lower their prices in response to FRM rates, so buyers are forced to either lower their standard of living or obtain a higher amount of funding).

Note that this normal dynamic is not present in a market laden with distressed properties. If affordability declines in a normal market, buyers often foolishly adjust by taking out ARM loans since sellers rarely come down on price. However, since so much of our current inventory is distressed, for this inventory to clear, prices must come down to whatever price level borrowers can obtain. In other words, it is different this time.

For instance, the number of ARMs jumped dramatically when FRM rates were raised in 1988, 1994 and 1999. Prices never moved down, as the ARM supported sellers’ demands by delivering more money than the buyers would otherwise be qualified to borrow.

It is useful to think of ARMs as bridge loans, spanning gaps in the availability of purchase money when FRM rates rise. Any rise in FRM rates immediately reduces the buyer’s purchasing power, since lenders do not permit buyers to make loan payments higher than 31% of their income. Higher interest rates always mean lower principal amounts are available to borrow. [For more on the influence of rates upon the buyer’s ability to get financing, see the first tuesday Market Chart, Buyer Purchasing Power.]

This is the point I have been making for months now. Lower borrowing amounts when coupled with excessive must-sell inventor leads to lower prices.

When FRM rates rise, ARMs tend to keep prices from falling. Unfortunately, ARMs originated in excess will quickly cause prices to rise during periods of flat or declining FRM rates. ARM financing permits sellers to raise prices beyond what buyers would otherwise be able to pay. Increased availability of funds from ARMs help stabilize the market in a time of temporarily high FRM rates, but they can just as quickly lead to a home pricing bubble and a potential market crash when the ATL ratio is running contrary to the FRM rate movement as occurred in 1993 and 2002.

ARMs are the cause of volatility in California's housing market. The Option ARM was the culprit that inflated the Great Housing Bubble because it allowed huge principal values with tiny payments. The same payment can finance two or more times the loan amount with an Option ARM as compared to a FRM.

In the past, ARMs in healthy markets have generally made up approximately 20% to 40% of the home loan market, while the remainder is made up of FRM loans. If the ATL ratio exceeds 40%, which normally happens when FRM rates rise too high, it is a sign of instability in the financing market, and forebodes potential problems for homeowners and homebuyers in the near future – weaker sales volume and home prices.

Forecasting the future

With FRM rate movements in mind, it is possible to forecast the future of sales volume and sales price trends by comparing FRM rates with movement in the ATL ratio. To do so, take a close look at the correlation from year to year between FRM rates and the ATL ratio on the first chart above.

Ordinarily, the ATL ratio rises and falls in tandem with FRM rates, roughly following it in a stable and nearly parallel relationship. However, this stable relationship can and does sometimes fail when external factors cause the ATL to move contrary the FRM rate. Such external factors may include:

  • increases in jumbo loan demand;
  • rapid shifts in demographic demands to buy or sell;
  • too much or too little construction activity; or
  • changes in government regulations on homeownership or mortgage financing.

You can develop an understanding of what will be the real estate sales volume for the next 12 months, and sales price movement for a full 24 months by following any failure in ATL/FRM relationship.

In the real estate market, home sales volume tends to rise and fall in a cyclical fashion corresponding to economic recessions (represented above by gray vertical bars on the charts) and booms. Home prices change primarily due to prior changes in sales volume, although the pricing inertia generated by rising sales volume tends to continue for 8 to 12 months after home sales volume reaches its apex (this delayed change in pricing, which is particular to SFR property, is referred to as the sticky pricing phenomenon). [For a more thorough analysis of sticky pricing, see the first tuesday December 2009 article, The Flat Line Recovery: A Side-Effect of Sticky Housing Prices.]

To make an accurate and well-informed prediction of home sales volume and pricing in California, the only figures you need are the ATL ratio and the FRM rate for the past 12 months. When these two figures fail to move in tandem during the prior 12 months, the friction between them is predictive of the extent of the change in sales volume and pricing trends in future months. Which direction the trend will take depends upon whether the two rates become more closely aligned or more distant.

It is unnecessary to look to any information other than the correlation between the ATL ratio and the FRM rate for forecasting the next 12 months of sales volume and 24 months of pricing. All other factors either reflect the ATL and FRM rates, or are directly caused by the fluctuations in those rates. For instance, while the volume of notices of default (NODs) and trustee’s deeds (TDs) may appear to have an influence on price movement at the moment of analysis, in fact NOD/TD volume is merely a manifestation of prior price movements which are dictated by FRM and ATL frictions. [For more information on NODs in the current market, see the first tuesday Market Chart, NODs and Trustee’s Deeds.]

When the ATL ratio parallels the movement of FRM rates, both sales volume and prices will remain fairly constant in the future. This is the definition of a normal market: looking forward, readers can safely predict that neither a measurable boom in pricing nor a recession will take place in the two years following such conditions.

Instead, sales volume will continue much the same as at present for at least 12 months, and prices will remain reasonably steady, adjusting upward at approximately the rate of inflation in the consumer price index (CPI) for a longer period, another 6 to 12 months. [For the most current CPI figures, see the first tuesday Rates Page.]

However, any sustained period (12 months or more) in which the two factors are at odds with one another, as demonstrated by a widening or narrowing of the space between the two lines on the ATL/FRM chart, discloses a hazardous abnormality in the home financing market. Any such abnormality establishes a divergent trend going forward in real estate sales and pricing. Examples of such divergences are elucidated below.

I have used the loosly defined term “normal” market on many occassions. The definition above is a good one, if a bit technical.

Historical trends

To get a clear idea of the power of FRM rates and the ATL ratio to predict action in the real estate market, take a look at these illustrative instances:

1. Between 1996 and 2002, the ATL ratio moved in approximate synchronicity with FRM rates, in an example of the ideal lending conditions on the market. Thanks to stable and sane loan demands by homebuyers and homeowners, real estate prices rose at a slow and sustainable rate for the duration of this period.

2. Beginning in 2002, FRM rates dropped continuously for two years. In the meantime, the ATL ratio began to rise, thanks to deregulation of lenders and Wall Street Bankers which allowed them to push for increased use of ARM loans and the concurrent rise in asset prices. The unnatural rise in ARMs led to excessive home price increases, which continued to rise for one to two years even after a return to standard ATL/FRM synchronicity (the ATL ratio peaked in early 2005, but home pricing did not reach its apex until one year later).

3. Between 2005 and 2009, FRM rates remained flat, but the ATL ratio reversed course and dropped significantly. The declining ATL ratio, coupled with a flat FRM, presaged an inevitable decline in housing prices, and a similar drop in the amount of money available for homebuyers and homeowners to borrow. In short, the dropping ATL ratio (without a drop in FRM rates) was both a symptom and a cause of the catastrophic Great Recession. Lenders dropped FRM rates further, in early 2009, but the ATL ratio responded by dropping to almost zero, a condition that exists at the end of 2010.

The authors contention is backed up by the data. Although this indicator and explanation are hard to follow, it makes sense that sudden changes in financing behavior, particularly the use of risky ARM loans, will lead to market volatility and instability.

The current market

As of October 2010, adjustable rate mortgages (ARMs) made up only 5% of mortgage market originations statewide, compared to 77% at the height of the Millennium Boom (for comparison, the peak national rate was only 36% ARMs). This 5% ATL is very low, yet it is higher than the bottom of 2% in May 2009, and continues a downward trend from an ATL ratio of 6.5% in May 2010.

Both the ATL ratio and the FRM rates are bouncing around at about the same level, with the ATL ratio literally bumping along on the bottom (as it cannot go lower than zero). Yes, the FRM is artificially low and will move around depending on the effectiveness of Fed and congressional stimulus at end of 2010 which will take effect throughout 2011, but that is not the issue.

The ATL/FRM relationship has remained relatively normal for the past year, after a logical bounce at the end of 2009. Sales volume is thus likely to remain constant or drop over the next 12 months, and the same is true of prices for the next 18 to 24 months from now. Buyers need not expect any changes in market conditions until mid- to late 2012. Government programs to encourage ownership, or to create pre-foreclosure workout sessions, will not significantly alter this situation. It will change only if buyers return to the streets intent on scarfing up real estate.

History also helps us to predict how ARMs will behave at the end of a real estate recession. Historically, recessions have led to a restabilization of the ATL ratio between 20 to 40% levels, typically following the FRM rate closely for three to five years following the recession’s end. This rule is not absolute, however; most recently, the period of 2001 to 2004 violated this condition (due to government efforts to artificially bolster the homeownership rate in the US from 64% to 70%, at the expense of homebuyers who were financially unprepared for homeownership).

As the gatekeepers to real estate, brokers and their agents need to know the shift in mortgage preferences among homebuyers from fixed rate mortgage (FRM) to ARM financing in the absence of increased FRM rates means the real estate market is destabilizing.

ARMs are not a stable loan product, and although 20% to 40% may typically be present, that only means 20% to 40% of the buyers are taking foolish risks and remaining market participants must deal with it. The presence of ARMs is not helpful, but the product doesn't totally destabilize the market while ratios are in that range and prices are rising.

With insight to apply this information, they will be able to provide better advice to both sellers and homebuyers.

The author is assuming agents care enough to convey truthful information even when they have it. My observation is that agents don't care about the truth unless it is helpful in generating a commission.

ARMs and the dysfunctional real estate market

While an ATL of up to 40% indicates a healthy home sales market, we wish to clarify that ARMs are almost never beneficial to the individual homebuyer, and are in fact largely (if not totally) responsible for the Great Recession in the real estate market.

The weaknesses of the real estate market revealed by the recent Millennium Boom (and the associated Great Recession) are tied inextricably to the prevalence of ARM originations during that period. Without ARMs, introduced in 1982 by authority of the US Treasury, the world of real estate would not be in its present dire condition. Financing the purchase of any type of real estate with ARMs points to several key instabilities in a momentum environment of increasing sales volume:

  1. Homebuyers are over-anxious. Over-anxious homebuyers who cannot finance the purchase of homes with stable long-term FRM loans will make the myopic decision to resort to ARMs in order to get into the home immediately, even though this choice entails greatly over-extending their future finances. They are not being told, nor do they themselves properly consider, the true cost of ARM loans when short-term rates increase — as they invariably and often dramatically do in normal business cycles of recession and recovery. This overheating of the real estate market — its weakness — creates a breeding ground for speculators and ever more ARM borrowing.
  2. Speculators have a large presence in the market. ARMs provide a free lunch for flippers: rates are cheap with minimum cash flow requirements in the short term, providing speculators with enough time to get in, wait for prices to go up — the rush delivered by a momentum-based market — and then sell, hoping all the time to take a profit. ARMs also lower origination costs: a great incentive for speculators.
  3. Home prices are unnaturally inflated. As more speculators enter the market to suck out their share of rising equities, they bid up property without any need to consider the fundamentals of real estate valuation, and over-inflation of housing prices ensues.

All of these conditions point to a most financially pernicious condition: the asset bubble. Thus, whenever ARM loans — sometimes referred to as zero-ability-to-pay (ZAP) loans — inconsistently rise in popularity compared to movement in the FRM rate (as indicated by an aberrant increase in the ATL ratio and a flat or dropping FRM rate),

This is a brilliant insight. ARMs equal instability. The more ARMs dominate the market, the more unstable that market is and the deeper the potential correction.

it should raise a massive red flag in the face of industry professionals. Such a rise in ARMs means that the Federal Reserve (the Fed) will soon need to slam on the brakes of the speeding real estate market before the new bubble implodes.

If only real estate professionals cared enough to send a warning. Few in the industry would argue against a bubble when so many are making so much from its inflation. Besides, as I can attest, any such warnings will be largely ignored anyway. People are going to do what they are going to do, often irrespective of the information made available to them.

The Fed accomplishes this primarily by raising short-term rates, which determine ARM origination costs and rates, and by raising reserve requirements for private banks to discourage lending in the overheating real estate market. The Fed’s measures, in turn, result in upward payment adjustments on ARMs that discourage new purchases and put current homeowners at risk of loss by sale or by foreclosure.

The advice below is some of the best I have come across. Do you think anyone in the real estate industry is actually telling thier customers stuff like this:

Knowledge brokers can use

The old joke in lending is that when a borrower opts for an ARM loan, lenders not only get an ARM off the borrower, but eventually his leg, as well. The industry has long been aware of what borrowers cannot seem to take to heart: ARMs are great only for the lenders who gladly take the fees and for speculators who don’t care about long-term ownership or market stability.

Agents need to counsel their buyers not to succumb to the toxic ARM. Brokers and agents who keep a close eye on the ATL will have the knowledge(and as fiduciaries, the duty) to provide the warning bells to their clients by supplying up-to-date information and their opinions about the potential direction of ARM rates and the prices of real estate.

As ARMs become more popular during this recovery, as they will, potential buyers will become more confident. Faced with these conditions, prospective homebuyers will find it increasingly difficult to compete with their ARM-using peers, and will opt to use ARMs once more in spite of the untenable risk they present.

This is my greatest concern with the way properties are being released. Everyone will end up in an ARM. If every new buyer is forced to stretch to the max in order to make up for the bad debts at the banks, everyone still ends up paying a huge loan ownership tax to the banks. I don't feel like putting the maximum allowable DTI toward a house less comfortable than my rental for the privilege of paying huge interest payments in hopes of future appreciation. Forget it.

These buyers must be told that there is no wisdom in mortgaging their future financial solvency for what will amount to a short-term tenancy when they can no longer make mortgage payments on their ARM. The mistake of an ARM purchase will only be compounded by the fact the new owner has most likely paid too high a price, since ARMs are only useful when homes become unavailable at FRM rates.

The high purchase price, unfortunately, makes it impossible for the buyer to resell and recover any equity when things turn sour at the end of the virtuous cycle. Able, informed buyers drive speculators away, giving sellers a fair price for their properties and brokers and agents a stable income.

Routine house spender

Finding a loan owner with a quarter million dollars worth of HELOC abuse is routine. It has little impact any more. I am still astonished by how common these borrowers are. You wouldn't think all of them borrowed over $100K. They did.

  • This house was purchased on 9/22/2000 for $265,000. The owner used a $251,750 first mortgage and a $13,250 down payment.
  • On 4/12/2004 he refinanced with a $315,000 first mortgage.
  • On 9/16/2004 he refinanced again for $381,500.
  • On 3/30/2005 he opened a stand-alone second for $50,000.
  • On 1/5/2006 he refinanced the stand-alone second for $50,000 and obtained a $20,000 HELOC.
  • On 8/16/1006 he refinanced with a $119,100 stand-alone second mortgage.
  • Total property debt is $500,600.
  • Total mortgage equity withdrawal is $248,850.
  • Total squatting time two years and counting.

Foreclosure Record

Recording Date: 09/15/2010

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 06/25/2009

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 03/20/2009

Document Type: Notice of Default

This owner made it through all of 2009 and 2010 without making a payment. It appears he is still living there.

Irvine Home Address … 14952 GAINFORD Cir Irvine, CA 92604

Resale Home Price … $400,000

Home Purchase Price … $265,000

Home Purchase Date …. 9/22/2000

Net Gain (Loss) ………. $111,000

Percent Change ………. 41.9%

Annual Appreciation … 3.9%

Cost of Ownership


$400,000 ………. Asking Price

$14,000 ………. 3.5% Down FHA Financing

5.07% …………… Mortgage Interest Rate

$386,000 ………. 30-Year Mortgage

$83,485 ………. Income Requirement

$2,089 ………. Monthly Mortgage Payment

$347 ………. Property Tax

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

$67 ………. Homeowners Insurance

$0 ………. Homeowners Association Fees


$2,502 ………. Monthly Cash Outlays

-$346 ………. Tax Savings (% of Interest and Property Tax)

-$458 ………. Equity Hidden in Payment

$28 ………. Lost Income to Down Payment (net of taxes)

$50 ………. Maintenance and Replacement Reserves


$1,776 ………. Monthly Cost of Ownership

Cash Acquisition Demands


$4,000 ………. Furnishing and Move In @1%

$4,000 ………. Closing Costs @1%

$3,860 ………… Interest Points @1% of Loan

$14,000 ………. Down Payment


$25,860 ………. Total Cash Costs

$27,200 ………… Emergency Cash Reserves


$53,060 ………. Total Savings Needed

Property Details for 14952 GAINFORD Cir Irvine, CA 92604


Beds: : 3

Baths: : 2

Sq. Ft.: : 1112

Lot Size: : 5,096 Sq. Ft.

Property Type:: Residential, Single Family

Style:: One Level, Other

View:: Faces Northwest

Year Built: : 1971

Community: : El Camino Real

County: : Orange

MLS#: : S632589


Come see this exquisite property in the El Camino Real area of Irvine! Property is a detached home close to 1200 sq feet and has a lot size of 5000 sq feet with a nice spacious backyard. Kitchen, Dining area, and Bathrooms were recently remodeled with new countertops and cabinetary in some areas. Some new additions to the house include a new fence in the back yard, new roof, crown molding in the master bedroom, vaulted ceilings in the living room, and laminate flooring in the family room and new tile in the kitchen. Best of all, no HOA or Mello Roos fees!

Robo-signing scandal creates more false hopes among squatters

Some loan owners delayed their mortgage default on the false hope that the robo-signing scandal might net them a free house.

Irvine Home Address … 92 AGOSTINO Irvine, CA 92614

Resale Home Price …… $449,900

I make a rich woman beg, I'll make a good woman steal

I'll make an old woman blush, and make a young girl squeal

I wanna be yours pretty baby, yours and yours alone

I'm here to tell ya honey, that I'm bad to the bone




Bad to the bone

George Thorogood — Bad To The Bone

Denial and the desire to be rescued runs deep in our culture. From our religious traditions to popular television, everyone has a sob story and some reason why they need to be relieved of the responsibility for their actions. Back in March of 2008, I wrote about Bailouts and False Hopes:

One of the more interesting phenomenon observed during the bubble was the perpetuation of denial with rumors of homeowner bailouts. Many homeowners held out hope that if they could just keep current on their mortgage long enough, the government would come to their rescue in the form of a mandated bailout program. Part of this fantasy was not just that people could keep their homes, but that they could keep living their lifestyle as they did during the bubble. What few seemed to realize was any government bailout program would be designed to benefit the lenders by keeping borrowers in a perpetual state of indentured servitude. With all their money going toward debt service payments, little was going to be left over to live a life.

All of these plans had benefits and drawbacks. One of the first problems was to clearly define who should be “bailed out.” The thought of bailing out speculators was not palatable to anyone except perhaps the speculators themselves, but with regular families behaving like speculators, separating the wheat from the chaff was not an easy task. If a family exaggerated their income to obtain more house than they could afford in hopes of capturing appreciation, did they deserve a bailout? The credit crisis that popped the Great Housing Bubble was one of solvency, and there was no way to effectively restructure payments when a borrower could not afford to pay the interest on the debt, and this was a very common circumstance. None of the bailout programs did much for those with stated-income (liar) loans, negative amortization loans, and others who are unable to make the payments, and since this was a significant portion of the housing inventory, none of these plans had any real hope of stopping the fall of prices in the housing market.

It has been nearly three years since I wrote that, and every few months, there is another loan modification program, proposed bailout, or some other news issue that gives debtors false hope. The latest has been the robo-signer controversy.

So far, politicians on the Left have used this issue to try to pander for votes with populist appeals of innocent homeowner versus the evil banking machine. The banks were happy to go along if it made a few loan owners make a few more payments in the false hope that may may get their debts forgiven. And as we will see today, attorneys have already found a way to exploit the issue to make a few dollars on the false hope of the masses.

Fannie and Freddie give green light to resume sales of foreclosures

by CHRISTINE RICCIARDI — Monday, November 29th, 2010, 1:35 pm

Fannie Mae and Freddie Mac gave real estate agents the green light to resume selling foreclosed homes, after suspending the process as the robo-signing debacle unfolded the past two months.

Freddie told agents in a memo last week to "resume all normal sales activity," as the government-sponsored enterprise will "resume marketing, sales and disposing of assets previously placed 'on hold.'"

Fannie Mae told its real estate agents "to proceed with scheduling and holding the closings" of sales of homes with mortgages owned or backed by the GSE.

The green light is unambiguous. No special conditions or circumstances allowing delay. Foreclose as quickly as possible.

The mortgage-finance giants initially enacted a moratorium on sales of foreclosed properties because servicers were allegedly signing affidavits either without prior knowledge of the case or without a notary present — a phenomenon that became known as robo-signing.

Many other lenders, including Ally Financial, JPMorgan Chase and Bank of America, issued foreclosure moratoriums that have since been lifted.

Bank of America started refiling new affidavits Oct. 25. A spokesperson for JPMorgan Chase said they have not started refiling and will do so state-by-state. The process should take three to four months.

Ally Financial said it will move forward with a foreclosure in the 23 judicial states when it has reviewed and remediated the affidavit. Cook County, Ill., restarted foreclosure evictions two weeks ago.

Both Fannie Mae and Freddie Mac recently pulled their existing foreclosures cases from one Florida-based firm at the center of the robo-signing scandal, The Law Offices of David J. Stern.

David Stern already made a fortune, and the pullout by the GSEs is more for press relations than anything else. As scandalous details emerge, this issue will re-appear now and again over the next few months, but with exception of the articles promising more false hope, this issue is behind us.

Robo-signing scandal overrated?

By: Liz Farmer 12/09/10 12:05 PM

A foreclosures expert says that the national investigation into the robo-signing scandal, in which lenders blazed through thousands of foreclosure filings without reading them, is so far not yielding any results that would give people their homes back.

The definition of false hope: people are not getting their houses back, nor are they getting any principal reductions.

Rick Sharga, CEO of RealtyTrac, a foreclosure tracking firm, said the investigation by state attorneys general will likely result in fines against mortgage servicers and even some criminal prosecution. But the bottom line for homeowners who have lost their homes is the same.

"We've seen very little fallout in the way of forseclosures … being overturned," Sharga said. "There's not a single case where a home that has already sold has been overturned."

The 50 states and the District are participating in the investigation into illegally filed foreclosures.

Reporters have been scouring the nation looking for the victims of robo-signer, and so far, nothing. Sometimes people forget that the reason robo-signer is after these debtors is because the debtors are not making payments on the loan for the money they used to buy the house they are squatting in. Borrowers used the bank's money, and now that they can't pay the bank back, the bank wants to take the house purchased with the bank's money. That's how the system works.

Money Talks: Foreclosure Rip-Off

by Stacy Johnson — Posted: 12.10.2010 at 7:35 AM

Some look at a foreclosure and all they see is someone who borrowed money they didn't repay.

The homeowner is the bad guy, the bank is the victim.

It's more nuanced than that black-and-white view. Clearly, a foreclosure is a process against a borrower who did not repay the money they borrowed. If lenders didn't have ability to get their money back, there would be no lending. Whether these people are good or bad is beside the point. The borrower needs to either repay the money or give up the house pledged as security to the loan.

A foreclosure defense lawyer, however, sees it differently.

It isn't the way most people think it is in terms of "Oh, these people haven't paid their mortgage."

These people were sucked into a horrible deals buying ARMs that they never should have been able to put into.

I grow tired of this nonsense. Lenders Are More Culpable than Borrowers because lenders should only extend loans to those capable of repayment. The greater responsibility of lenders in this mess does not relieve borrowers of their responsibilities, nor does it entitle them to special rights not extended to them by law or by contract.

Why is it when someone wants to screw the banks, they justify it by making borrowers blameless and the lenders the epitome of evil?


Because the conscience was out of the deal.

Peter Tickten's firm is defending more than 3,000 foreclosures.

His goal?

Using things like lost paperwork and robo-signing to get a a mortgage wiped out so the homeowner never has to pay it back.

It doesn't happen often, but it does happen.

No, it doesn't happen ever.

As it turns out, however, the fees some of these lawyers are charging may send some homeowners seeking a defense from their defense lawyers.

Can you think of a worse example of preying on someone's false hope?

Because this lawyer has pioneered a new fee structure: 40% of any mortgage reduction he achieves.

Say you've got a 200,000 mortgage and it gets dismissed: you never have to pay it back.

The fee will be 40% of $200,000: $80,000.

Where does a consumer in foreclosure come up with $80,000?

Why, with a mortgage, of course.

OMG! Who is going to give the borrower this mortgage? Will the attorney lien the property and put the loan owner on a new payment plan? This attorney is trying to crowd out the lender and become the recipient of the borrowers home payment income stream.

And that leaves only one question.

How can a lawyer possibly justify a fee like this?

"If I do that in a case where you lose your leg and I get a million dollars for you, I get 40% of that.

So if I do the same thing in a case where I save you a million dollars on the mortgage on your home, I should be able to get the same amount."

Mr. Tickten said his fee is negotiable and he'd never foreclose on a homeowner to collect it.

But still it seems like when it comes to foreclosures, even when you win you lose.

He would never foreclose on a homeowner to collect? How nice of him. No, if you fail to pay him, he will put a judgement lien on the property — a lien that will be in first position after the mortgage is wiped out — and he can wait until the property sells. Most likely he won't need to wait that long because eventually the former loan owner will want to get access to their newfound equity, and in order to get a new loan, the judgment will need to be paid off first.

Should this owner be given his home?

The owner of today's featured property is a HELOC abuser. He could probably make the argument that he was "sucked in" by unscrupulous mortgage brokers to take out a loan he never should have been given.

Does that mean we should forgive his debt?

Should this house remain in the hands of someone who made a stupid financial mistake at the expense of a new owner buying under today's stricter terms?

Existing loan owners — particularly the stupid ones who over borrowed — are crowding out new buyers. Any of you looking to buy today have to pay higher prices than you should because banks are keeping loan owners and squatters in houses they can't afford. This inventory is being held off the market to screw you, and the higher price you will pay is going to pay the debts of someone who over-borrowed and couldn't afford their house.

  • This property was purchased on 5/13/1994 for $225,000. The owner used a $213,700 first mortgage and a $11,300 down payment.
  • On 12/20/1999 he refinanced with a $215,200 first mortgage.
  • On 2/13/2003 he refinanced with a $280,000 first mortgage.
  • On 10/1/2003 he refinanced with a $310,000 first mortgage.
  • On 1/18/2005 he obtained a $150,000 HELOC.
  • On 7/31/2006 he refinanced with a $417,000 first mortgage, and he got a $150,000 HELOC.
  • Total property debt is $567,000. He more than doubled his mortgage during the time he owned the property.
  • Total mortgage equity withdrawal is $353,300.
  • He recently received his NOD.

Foreclosure Record

Recording Date: 09/13/2010

Document Type: Notice of Default

Let's say this guy gets his loan balance forgiven due to the robo-signer problem. Would that be a good thing? Should borrowers like this be given a pass?

If they are giving away houses, I'll take two.

Irvine Home Address … 92 AGOSTINO Irvine, CA 92614

Resale Home Price … $449,900

Home Purchase Price … $225,000

Home Purchase Date …. 5/13/1994

Net Gain (Loss) ………. $197,906

Percent Change ………. 88.0%

Annual Appreciation … 4.2%

Cost of Ownership


$449,900 ………. Asking Price

$15,747 ………. 3.5% Down FHA Financing

4.87% …………… Mortgage Interest Rate

$434,154 ………. 30-Year Mortgage

$91,782 ………. Income Requirement

$2,296 ………. Monthly Mortgage Payment

$390 ………. Property Tax

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

$75 ………. Homeowners Insurance

$308 ………. Homeowners Association Fees


$3,069 ………. Monthly Cash Outlays

-$377 ………. Tax Savings (% of Interest and Property Tax)

-$534 ………. Equity Hidden in Payment

$29 ………. Lost Income to Down Payment (net of taxes)

$56 ………. Maintenance and Replacement Reserves


$2,244 ………. Monthly Cost of Ownership

Cash Acquisition Demands


$4,499 ………. Furnishing and Move In @1%

$4,499 ………. Closing Costs @1%

$4,342 ………… Interest Points @1% of Loan

$15,747 ………. Down Payment


$29,086 ………. Total Cash Costs

$34,300 ………… Emergency Cash Reserves


$63,386 ………. Total Savings Needed

Property Details for 92 AGOSTINO Irvine, CA 92614


Beds: 3

Baths: 2 full 1 part baths

Home size: 1,597 sq ft

($282 / sq ft)

Lot Size: n/a

Year Built: 1989

Days on Market: 6

Listing Updated: 40521

MLS Number: S641019

Property Type: Condominium, Residential

Community: Westpark

Tract: Lp


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

Feels like a single family home!! — Largest floorplan in Las Palmas Community with private enclosed entry, 2 car-attached garage with storage, inside laundry and easy access to community parks, pools, tennis courts, and bike paths. This open floorplan has cathedral ceilings, spacious kitchen with plenty of counter space and serving bar into dining room, mirrored wall and fireplace in living room, dining room access to large patio with spanish pavers and built in bbq. Conveniently located near UC Irvine, Irvine business district, 405 fwy and John Wayne Airport. Enjoy the convenience of Irvine, award winning schools, and a 5 star lifestyle in Westpark!

The New Age of the Tiny House

The era of sprawling McMansions is over. The beast is extinct. Austerity is the newest fashion in real estate. Welcome to the dawning of the age of the tiny house.

Irvine Home Address … 187 BRIARWOOD Irvine, CA 92604

Resale Home Price …… $249,900

When the moon is in the Seventh House

And Jupiter aligns with Mars

Then peace will guide the planets

And love will steer the stars

This is the dawning of the Age of Aquarius

The Age of Aquarius

Aquarius! Aquarius!

Harmony and understanding

Sympathy and trust abounding

No more falsehoods or derisions

Golden living dreams of visions

Mystic crystal revelation

And the mind's true liberation

Aquarius! Aquarius!

5th Dimension — Aquarius / Let The Sunshine In

There is a simple truth that underlies our overly complex existence. The clutter of our daily lives weighs on us like layers of heavy emotion and pressing attachments.

There is a purity to living simply: daily exercise and meditation and surroundings free from clutter and distraction. Monastics have known this for centuries.

Now, with the collapse of the housing bubble and the upheaval to families caused by foreclosure, many are seeking an alternate way of life. A life with a much cozier house….

Tiny house movement thrives amid real estate bust

Associated Press — 11/29/2010

GRATON, Calif. (AP) — As Americans downsize in the aftermath of a colossal real estate bust, at least one tiny corner of the housing market appears to be thriving.

To save money or simplify their lives, a small but growing number of Americans are buying or building homes that could fit inside many people's living rooms, according to entrepreneurs in the small house industry.

Some put these wheeled homes in their backyards to use as offices, studios or extra bedrooms. Others use them as mobile vacation homes they can park in the woods. But the most intrepid of the tiny house owners live in them full-time, paring down their possessions and often living off the grid.

"It's very un-American in the sense that living small means consuming less," said Jay Shafer, 46, co-founder of the Small House Society, sitting on the porch of his wooden cabin in California wine country. "Living in a small house like this really entails knowing what you need to be happy and getting rid of everything else."

Why Do Buddhists Avoid Attachment? "In nonattachment, on the other hand, there’s unity. There’s unity because there’s nothing to attach to. If you have unified with the whole universe, there’s nothing outside of you, so the notion of attachment becomes absurd. Who will attach to what?"

Because we think we have intrinsic existence within our skin, and what's outside our skin is "everything else," that we go through life grabbing for one thing after another to make us feel safe, or to make us happy."

Shafer, author of "The Small House Book," built the 89-square-foot house himself a decade ago and lived in it full-time until his son was born last year. Inside a space the size of an ice cream truck, he has a kitchen with gas stove and sink, bathroom with shower, two-seater porch, bedroom loft and a "great room" where he can work and entertain — as long as he doesn't invite more than a couple guests.

He and his family now live in relatively sprawling 500-square foot home next to the tiny one.

Shafer, co-owner of the Tumbleweed Tiny House Company, designs and builds miniature homes with a minimalist style that prizes quality over quantity and makes sure no cubic inch goes to waste. Most can be hooked up to public utilities. The houses, which pack a range of amenities in spaces smaller than some people's closets, are sold for $40,000 to $50,000 ready-made, but cost half as much if you build it yourself.

It sounds like a cross between a mobile home, a motor home, and a log cabin.

Tumbleweed's business has grown significantly since the housing crisis began, Shafer said. He now sells about 50 blueprints, which cost $400 to $1,000 each, a year, up from 10 five years ago. The eight workshops he teaches around the country each year attract 40 participants on average, he said.

"People's reasons for living small vary a lot, but there seems to be a common thread of sustainability," Shafer said. "A lot of people don't want to use many more resources or put out more emissions than they have to."

Compared to trailers, these little houses are built with higher-quality materials, better insulation and eye-catching design. But they still have wheels that make them portable — and allow owners to get around housing regulations for stationary homes.

Since the housing crisis and recession began, interest in tiny homes has grown dramatically among young people and retiring Baby Boomers, said Kent Griswold, who runs the Tiny House Blog, which attracts 5,000 to 7,000 visitors a day.

"In the last couple years, the idea's really taken off," Griswold said. "There's been a huge interest in people downsizing and there are a lot of young people who don't want to be tied down with a huge mortgage and want to build their own space."

Everyone here in Irvine still wants to be tied down to a huge mortgage.

Gregory Johnson, who co-founded the Small House Society with Shafer, said the online community now has about 1,800 subscribers, up from about 300 five years ago. Most of them live in their small houses full-time and swap tips on living simple and small.

Johnson, 46, who works as a computer consultant at the University of Iowa, said dozens of companies specializing small houses have popped up around the country over the past few years.

Before he got married, Johnson lived for six years in a small cabin he built himself and he wrote a book called "Put Your Life on a Diet: Lessons Learned from Living in 140 Square Feet."

Austerity is one thing, but I think these people take it a bit too far.

"You start to peel away the things that are unnecessary," said Johnson, who now lives in a studio apartment with his wife. "It helps you define your priorities with regard to your material things."

Northern California's Sonoma County has become a mini-mecca for the tiny house industry, with an assortment of new businesses launching over the last few years.

Stephen Marshall, 63, worked as a building contractor for three decades before the real estate market tanked three years ago. That's when he jumped into the tiny house business, starting Petaluma-based Little House On The Trailer.

I enjoy reading about entrepreneurs who found a way to make a new living in real estate. Kudos to Mr. Marshall.

His company builds and sells small houses that can serve as stand-alone homes equipped with bathrooms and kitchens, and others he calls "A Room of One's Own" that can be used as a home office or extra bedroom. Many of his customers are looking for extra space to accommodate an aging parent or adult children who are returning home, he said.

The adult children coming home to a 150 SF detached house ought to motivate them to get a job and rent a nicer place. It must be quite a fall from entitlement to downsize that much.

He said his small houses, which sell for $20,000 to $50,000, are much cheaper than building a home addition and can be resold when the extra space is no longer needed. His company has sold 16 houses this year and aims to sell 20 next year.

"The business is growing as the public becomes aware of this possibility," Marshall said. "A lot of families are moving in with one another. A lot of young people can't afford to move out. There's just a lot of economic pressure to find an alternative way to provide for people's housing needs."

Tiny House Movement Thrives

by Kent Griswold on November 30th, 2010

A couple of months ago Terence Chea from the Associated Press contacted me wanting to do a story about the tiny house movement. Terence wanted some local examples of tiny house builders so I put him in contact with Jay Shafer and Stephen Marshall. I also gave him Gregory Johnson of Small House Society contact information. Terence than arranged to come out and interview and video tape us at different locations.

Yesterday the Associated Press published the story with Jay Shafer and Tumbleweed as the top story. He than went on to quote Gregory and myself and closed with Stephen Marshall and Little House on the Trailer. The article went live yesterday and than spread almost virally across the web. Below you will see the story highlighted on

The good news is that there has been a huge spike in interest and traffic to our websites and blogs. I had triple the traffic yesterday and if you tried to get to the blog you found it extremely slow. Many more people have discovered the idea of tiny houses. I have been asked to be interviewed on two radio broadcasts and more requests are coming in. You can read the Associated Press article here.

Congratulations, Kent, on your 15 minutes of fame. If you write well about something people find compelling, the word gets out. Nice job.

Demand for McMansions is eternal

Despite the high hopes of tree huggers everywhere, there will always be a demand for McMansions. If they become scarce, demand will be more intense and prices will be higher as the highest wage earners bid up prices with available financing terms.

The simple truth is that people want to live in big detached homes. I want to live in a big detached home. I will settle for whatever I can afford, but I will always prefer a big detached home to a small condo at a transit stop. And so does everyone else. The green movement can't change human nature.

For those who are looking for the simple life in Irvine, today's featured property is about as close as you can get.

Zero down equity surfer

Once the housing market became a blatant and obvious Ponzi Scheme, many posers bought properties with no money down and extracted and spent appreciation as it appeared. Why not? Banks were giving out free money — actually they were more than giving it away, they pushing money on people. All the neighbors were taking it — as illustrated here daily — so it shouldn't be surprising that taking free money became a component of their lifestyle spending. Today we have one such equity surfer. He got as much equity as he could, and now he is discarding the empty shell.

  • This property was purchased on 5/15/2003 for $240,000. The owner used a $192,000 first mortgage, a $48,000 second mortgage, and a $0 down payment.
  • On 3/15/2004 he obtained a $25,000 HELOC.
  • On 4/1/2004 he refinanced with a $243,500 first mortgage.
  • On 4/29/2005 he obtained a $40,000 HELOC.
  • On 7/12/2005 he refinanced with a $285,639 first mortgage.
  • On 8/6/2006 he obtained a $122,000 HELOC.
  • Total property debt (assuming maxed out HELOC) is $407,639.
  • Total mortgage equity withdrawal was $167,639.

The return on investment is infinite when there is no investment.

Irvine Home Address … 187 BRIARWOOD Irvine, CA 92604

Resale Home Price … $249,900

Home Purchase Price … $240,000

Home Purchase Date …. 5/15/2003

Net Gain (Loss) ………. $(5,094)

Percent Change ………. -2.1%

Annual Appreciation … 0.5%

Cost of Ownership


$249,900 ………. Asking Price

$8,747 ………. 3.5% Down FHA Financing

4.55% …………… Mortgage Interest Rate

$241,154 ………. 30-Year Mortgage

$49,126 ………. Income Requirement

$1,229 ………. Monthly Mortgage Payment

$217 ………. Property Tax

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

$42 ………. Homeowners Insurance

$385 ………. Homeowners Association Fees


$1,872 ………. Monthly Cash Outlays

-$113 ………. Tax Savings (% of Interest and Property Tax)

-$315 ………. Equity Hidden in Payment

$15 ………. Lost Income to Down Payment (net of taxes)

$31 ………. Maintenance and Replacement Reserves


$1,491 ………. Monthly Cost of Ownership

Cash Acquisition Demands


$2,499 ………. Furnishing and Move In @1%

$2,499 ………. Closing Costs @1%

$2,412 ………… Interest Points @1% of Loan

$8,747 ………. Down Payment


$16,156 ………. Total Cash Costs

$22,800 ………… Emergency Cash Reserves


$38,956 ………. Total Savings Needed

Property Details for 187 BRIARWOOD Irvine, CA 92604


Beds: 2

Baths: 1 bath

Home size: 921 sq ft

($271 / sq ft)

Lot Size: n/a

Year Built: 1978

Days on Market: 93

Listing Updated: 40499

MLS Number: K10096853

Property Type: Condominium, Residential

Community: West Irvine

Tract: Cc


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






Foreclosures are essential to the economic recovery

Some housing advocates claime that foreclosures are a problem. In reality, they are essential to the economic recovery.

Irvine Home Address … 13 SPRING BUCK Irvine, CA 92614

Resale Home Price …… $749,000

I ain't got a fever got a permanent disease

It'll take more than a doctor to prescribe a remedy

I got lots of money but it isn't what I need

Gonna take more than a shot to get this poison out of me

Bon Jovi — Bad Medicine

Well meaning people are often wrong. The foreclosure process — essential to the cleansing of consumer debt and the recovery of the housing market — is very painful for the families that must endure it. Many on the left of the political spectrum are pandering to the masses facing foreclosure and proposing policies that would remove the negative consequence of foreclosure for those who over borrowed. Unfortunately, removing these consequences is the essence of moral hazard: if people don't experience consequences of their foolish actions, they tend to repeat the mistake.

John Taylor: Foreclosures Are the Mortal Enemy to Economic Recovery

Lori Ann LaRocco — Monday, 29 Nov 2010 — (edited for brevity)

The foreclosure crisis still divides us into two camps. There are those who believe that foreclosing rapidly on homes subject to defaulted mortgages is vital to clearing the market. Others believe we should do everything we can to keep people in their homes, urging loan modifications to forestall foreclosures.

Obviously, I am in the group that favors rapidly clearing the market. As long as the debt on real estate is excessive and capital is tied up in non-performing assets, the economy will suffer. It's really that simple. The solution is equally simple: foreclose on delinquent borrowers wiping out the debt and extract the remaining capital value. With the excess debt removed, borrowers can use their wage income to buy goods and services rather than giving it to the bank. When the mis-allocated capital is returned to the market, new investment will be spurred in areas where capital is most needed. Right now, we don't need more real estate.

John Taylor, President and CEO of the National Community Reinvestment Coalition, falls solidly in the latter camp. Taylor would like to see widespread mortgage modifications that would allow homeowners in danger of defaulting to keep their homes. Taylor is on the board of directors of the Rainbow/PUSH Coalition and the Leadership Conference for Civil Rights. He has also served on the Consumer Advisory Council of the Federal Reserve Bank Board, The Fannie Mae Housing Impact Division as well as The Freddie Mac Housing Advisory Board. He is extremely passionate on why his idea is the right choice to help turn around the real estate market.

Despite the repeated failure of every loan modification program, people continue to advocate them. These programs are a complete failure. Even the worst government programs are usually touted as a qualified success among its advocates. Nobody thinks loan modification programs have been a success, yet we still have people clamoring for them. I suppose if it is the only solution available that suits an agenda, people will support it even when it is a proven failure.

LL: There has been so much overleveraging in the real estate industry and lower interest rates can only help so much, what needs to get done with this new Congress looking at Financial Reform with Fannie and Freddie because they have not been address yet.

JT: You are absolutely right. It's kind of like pumping plasma into a patient while the patient is still bleeding. We need to stanch the foreclosure crisis first.

How is the government supposed to solve the foreclosure crisis without injecting more money?

So the government has to get serious about this problem. The Administration’s voluntary approach to foreclosure prevention has probably done as much as it can possibly do, and even by their standards has not done enough.

They have to step up the pressure now to achieve better results. The Federal Housing Administration (FHA) and Fannie and Freddie are the only securitizers in town now until the private market comes back; , they ought to be able to get banks and servicers willing to cooperate and modify these loans heading to foreclosure.

It must be done. Because it is absolutely going to slow down any type of economic recovery if we have the eleven million more foreclosures projected by Wall Street analysts; if they go through, it’s going to triple the number of foreclosures we’ve experienced. How is that going to help the economy?

It will help the recovery because it will eliminate the excessive property debt of millions of over-extended borrowers. When borrowers have excessive home debt, the excess comes directly out of disposable income. Since consumer spending is such an important component of the economy, the excess interest payments are a direct financial drain.

This is the key point advocates of loan modifications fail to recognize. The banks don't want to see it because purging debt costs them money. Advocates on the left don't want to see it because purging debt requires foreclosure.

So you have to put on the table the idea of taking as many of these troubled loans as possible and putting the homeowners in sustainable, modified loans, that are based on their ability to pay. Banks should have made these kinds of loans, which the homeowner could actually pay back, in the first place.

Yes, banks shouldn't have made stupid loans to begin with. Foreclosure and its associated losses are essential to provide consequences to the banks for their foolishness to ensure this doesn't happen again.

LL: But what about the millions of people who purchased homes they could afford? Why should people be allowed to stay in homes they had no business buying in the first place, because they were way out of their price tag?

JT: Was it a massive, malfeasant, greedy, lending industry that caused the problem or was it stupid consumers who should have known better? I think the evidence overwhelmingly supports the former conclusion.

Yes, Lenders Are More Culpable than Borrowers, but so what? Both parties need to endure the consequences of their decisions. Just because one party is more to blame than another doesn't mean the less blameworthy participant gets a pass.

But that doesn't matter anymore; we don’t have time for that debate.

WFT? We have plenty of time for a debate. It isn't a debate this fool wants to have because he knows his position is weak and he doesn't want to face the stronger arguments on the other side. Interesting debating technique; win by claiming there is not time for debate.

The question now is what do we do to stop the foreclosures that are killing our economy by a thousand cuts, a hundred fold, every month.

Foreclosures are the mortal enemy to economic recovery. We can keep on pumping money into the system to create liquidity for banks and in the market, but it’s simply not going to succeed until they plug the hole at the bottom of the well!

Each word above is complete nonsense. First, foreclosures are not killing our economy, they are curing it. Second, foreclosures are not a hole at the bottom of the well. We are not leaking liquidity. Money is flowing in to the housing market at very low interest rates in an attempt to limit losses on the oversized loans of the bubble.

So what has the Administration done to stem foreclosures? They have put in place a voluntary program, which has done roughly half a million permanent modifications since the program began, but there's been three and a half million foreclosures during the same time period and seven million foreclosure filings.

That kind of performance earns merits a failing grade by any one's standards.

Since the program had no chance of success when it was initiated, and since its real purpose was to create a false hope among borrowers to induce them into making a few more payments, many banking and government interests consider this program a success.

So what do federal officials need to do? They need to stop carrying their hat in hand when dealing with Wall Street; The government can pound these guys, and they have all the leverage they need by merit of the fact that the banks can't do business without them. I hear people critical about the government’s role in the private lending sector; but without the government we don't have a housing market right now. Without the government there is no Fed window and bond issuance and the liquidity they create. Without the government there is no securitization. Wall Street isn't doing these things; there is almost no private label securitization happening.

You know, all these banks are sitting on loans heading into foreclosure because the banks that hold the second liens are refusing to modify; the banks that hold the second liens are expecting the first lien holders will take the entire hit, and they’ll get paid out at 100%. Well these banks holding the second liens need to be taken to task, because they are holding up a lot of modifications.

Despite the exaggeration about the 100% payout, his observation is correct; second mortgage holders are holding up both loan modifications and short sales. The second has no value. The only strength they have in the negotiation for short sale or loan modification is the ability to say no. Therefore, they say no quite often. The cramdown of second mortgages this gentleman advocates is why we have foreclosure. Second mortgages are converted from debt secured by real estate to unsecured debt similar to a credit card in a foreclosure.

Also, what are Fannie and Freddie waiting for? The government holds tremendous regulatory authority over them; but government officials says they can’t tell them what to do, even though the government says no not really, Fannie and Freddie that they are just in conservatorship. and we can’t tell them what to do. That's just not true. The government is in the position to tell Fannie and Freddie to refinance hundreds of thousands of loans tomorrow, but Fannie and Freddie and the administration are looking at their bottom line so they are charging extra fees above the private market on anything that has any type of risk in it. Fannie and Freddie have not reduced the principal on one single mortgage.

Halleluia! Not one penny of my tax dollars should go toward paying down the mortgage of a HELOC abuser.

They have done half of what the banks are doing. We said from the beginning, to Secretary Paulson and then Geithner, that the foreclosure crisis can’t be resolved by the voluntary participation of the banks.

You can't keep on sweetening the pie and expect them to do the right thing. The truth of the matter is that when push comes to shove the banks have no choice because the government has the ability to say to banks that if they want to do business with the government, including the Federal Reserve, FHA and the GSEs, they must cooperate and restructure these loans. If that had been done, some investors would have had to take some losses; but they are losing now at a very slow rate, prolonging the problem.

Yes, we should have nationalized the banks back in 2008, wiped out the shareholders, given haircuts to the bondholders, and started over. If we had done that, we would be past this crisis today.

The government should use the money they earned from TARP and purchase hundreds of thousands of loans at a discount—at a discount because they are not worth what they once were—and then recycle them into good, permanent, sustainable loans. Where people lost their jobs and can't afford their homes, other solutions are necessary. And abandoned properties should be foreclosed on and the properties should be put back on the market.

But we’re not seeing practical solutions to the foreclosure crisis pursued. It seems to me people are just throwing up their arms, letting everything go down and saying if we don't get through all these foreclosures we will never see a bottom. I think its a terrible way to get through all this, and it will undermine our economy for years to come.

Wrong! The people he characterizes as "throwing up their arms" are really sitting on their hands and doing the right thing. Fix the Housing Market: Let Home Prices Fall

LL: What you are proposing is extremely unpopular. How do you convince Americans this is the way to go to help the industry heal?

JT: People have a right to be mad, but they shouldn’t be mad at 17 million plus homeowners that have either gone into foreclosure or are heading there. Seventeen million homeowners can’t all be stupid and greedy and wrong.

No, they can't all be stupid and greedy, but as I have pointed out day after day, many of them were stupid and greedy, and you can't bail out anyone without significant moral hazards. Why is it necessary for 100% of the people facing foreclosure to be stupid and greedy in order to resist loan modifications and principal reduction? If 50% were stupid and greedy, do we want to reward that 50%?

The behavior of the industry is what changed; the financial services sector tricked and trapped these people, without the proper oversight to rein in their irresponsible lending practices.

The old predatory lending justification: people were tricked and trapped. If they were, they were tricked and trapped by their greed and stupidity.

Should people have known better? Yes. But the industry was rigged to push through these loans and convince people they could afford to do it. But again, it’s too late to rehash these tired debates.

No, it is not too late to rehash a debate in which the author is clearly wrong. The reason we have those debates is because policy advocates like this guy push for the wrong solutions. People should have known better than to take out Option ARMs, and they bear some responsibility for their actions.

If we do not respond to the foreclosure crisis now, we can guarantee the pain that will be felt by most of the people in this country. Families facing foreclosure don’t want a handout, they just want reasonable help.

Bullshit, they want a handout. They want principal reduction to get through the crisis, and when house prices start going back up, they want the free money of mortgage equity withdrawal.

In fact, most of the people that got bad loans, perhaps 90 percent of them, are still paying on that sub-prime loan. Some of them have just simply fallen behind.

If we don't do restructure their loans and keep people in their homes, property values will drop and everyone will be impacted who owns a home. We need to share the pain now, because otherwise it will affect us more broadly.

Why do homeowner losses need to be shared with the rest of us? As a renter who chose not to participate in the madness, I don't want to share in paying the bills of HELOC abusing Ponzis.

Many people might think well, gee, if these homeowners had been smart they should have gotten the loan I got.

Yes, Responsible Homeowners are NOT Losing Their Homes.

Well that loan was not available to them because the system was rigged to push people into higher cost loans. Why? Because brokers and lenders got their fees and earnings that were connected to convincing people to take out more expensive mortgages with predatory terms and conditions. That's what was wrong.

You can sit there and say the people should have known better, and call that the moral hazard. Or, you can recognize the real moral hazard here was allowing an industry to prepay upon a substantial portion of the home-owning public, to give them loans with terms and conditions the lenders knew were not sustainable.

Why does it have to be either one position or the other? People should have known better, and if we bail them out, it does create moral hazard. This is the same for the individual or for the lending industry as a whole. Both parties need to feel the pain of their collective bad decisions.

The moral dilemma then is do you put the burden on the people affected, while the banks are allowed to continue with their business? With the exception of investment products, when other other consumer product goes bad, the burden is put on the manufacturer, not the consumer.

Giving borrowers a pass is not the answer. No matter how you cloak it, any bailout that does not have the borrower endure the consequences of their mistakes is going to result in moral hazard and continued bad behavior among borrowers and bankers.

A bountiful harvest

Many people go to the home equity piggy bank each year. Some do this because they can't control their spending, so they must borrow more each year to pay off their credit cards. Some add to their mortgage debt because they believe it is free money they won't have to repay. A few likely knew it was a Ponzi Scheme and gamed the system because the banks were stupid enough to let them.

The owner of today's featured property went to the ATM machine periodically. I have no way of knowing what they did with the money, but it certainly appears as if this money was used to supplement their lifestyle spending. I wonder how well they are adjusting to a life without their own ATM machine?

  • The owners paid $179,000 on 4/28/1998. Their original mortgage information is not available.
  • On 6/23/1997 they refinanced with a $192,000 first mortgage. Even during the last bust these owners managed to increase their mortgage and extract some spending money.
  • On 2/25/1998 they refinanced with a $217,000 first mortgage.
  • On 7/31/2001 they refinanced with a $220,000 first mortgage.
  • On 5/15/2002 they refinanced with a $234,000 first mortgage.
  • On 11/5/2002 they refinanced with a $247,000 first mortgage.
  • On 1/31/2003 they refinanced with a $270,000 first mortgage.
  • On 6/1/2004 they obtained a $65,000 HELOC.
  • On 2/8/2006 they refinanced with a $410,000 first mortgage.
  • Total mortgage equity withdrawal is at least $232,000.

Irvine Home Address … 13 SPRING BUCK Irvine, CA 92614

Resale Home Price … $749,000

Home Purchase Price … $179,000

Home Purchase Date …. 4/28/1988

Net Gain (Loss) ………. $525,060

Percent Change ………. 293.3%

Annual Appreciation … 6.4%

Cost of Ownership


$749,000 ………. Asking Price

$149,800 ………. 20% Down Conventional

4.55% …………… Mortgage Interest Rate

$599,200 ………. 30-Year Mortgage

$147,241 ………. Income Requirement

$3,054 ………. Monthly Mortgage Payment

$649 ………. Property Tax

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

$125 ………. Homeowners Insurance

$135 ………. Homeowners Association Fees


$3,963 ………. Monthly Cash Outlays

-$730 ………. Tax Savings (% of Interest and Property Tax)

-$782 ………. Equity Hidden in Payment

$254 ………. Lost Income to Down Payment (net of taxes)

$94 ………. Maintenance and Replacement Reserves


$2,798 ………. Monthly Cost of Ownership

Cash Acquisition Demands


$7,490 ………. Furnishing and Move In @1%

$7,490 ………. Closing Costs @1%

$5,992 ………… Interest Points @1% of Loan

$149,800 ………. Down Payment


$170,772 ………. Total Cash Costs

$42,800 ………… Emergency Cash Reserves


$213,572 ………. Total Savings Needed

Property Details for 13 SPRING BUCK Irvine, CA 92614


Beds: 4

Baths: 3 full 1 part baths

Home size: 2,451 sq ft

($306 / sq ft)

Lot Size: 3,024 sq ft

Year Built: 1980

Days on Market: 76

Listing Updated: 40455

MLS Number: S632378

Property Type: Single Family, Residential

Community: Woodbridge

Tract: Ch


This is a One of a Kind Custom Home in Woodbridge Cottages – Totally remodeled in 1995. 2 Master Bedrooms, one upstairs and the other downstairs and very private. Chef's Kitchen with Granite Counters and Stainless Steel Appliances. Great Room set up includes Family Room, Dining Room and Kitchen all open to each other. Walk In Closet in Upstairs MBR and Recessed Lighting Throughout. Dual Zone A/C and Ceiling Fans Create a Comfortable, Energy Efficient Home. Extra Large Upstairs Laundry Room has Additional Storage. Large Patio with a Built In BBQ on One Side of Home – Storage or a Dog Run on the Other. Walking distance to Shopping, Parks & Award Winning Irvine Schools. No Mello Roos. Standard Sale. This is a Must See!

Totally remodeled in 1995? That was 15 years ago. It probably needs updating again.