The number of foreclosures will set new records this year, and rates are ten times historic norms. It will take at least three more years to clean up this debris.

Irvine Home Address … 17255 CITRON Irvine, CA 92612

Resale Home Price …… $498,000

walk away and taste the pain

come again some other day

aren't you glad you weren't afraid

funny how the price gets paid

Red Hot Chili Peppers — Taste the Pain

Homes lost to foreclosure on track for 1M in 2010

By ALEX VEIGA (AP) – July 15, 2010

LOS ANGELES — Rosalyn Dalebout rents out space in her home to three tenants, has cut off her phone service and canceled her earthquake and life insurance — all to pay her mortgage every month.

So far, she's one of the lucky ones.

Lucky? Stupid is more like it. Are we supposed to look at this woman as the modern Joan of Arc? Lenders would love for her to be a role model. When she starts turning tricks, then we will know she is serious about keeping the property.

More than 1 million American households are likely to lose their homes to foreclosure this year, as lenders work their way through a huge backlog of borrowers who have fallen behind on their loans.

Nearly 528,000 homes were taken over by lenders in the first six months of the year. If foreclosures continue at that rate, the yearly number would eclipse the more than 900,000 homes repossessed in 2009, RealtyTrac Inc., a foreclosure listing service, said Thursday.

"That would be unprecedented," said Rick Sharga, a senior vice president at RealtyTrac.

Lenders have historically taken over about 100,000 homes a year, he said.

realtors are celebrating "the bottom" yet we have double-digit unemployment and foreclosures occurring at ten times the historic average. Lenders may attempt to meter these properties out to the market, but they certainly have a great deal of inventory to absorb. And despite claims of booming sales, the actual sales rate in Orange County is still well below historic norms.

The surge in foreclosures reflects a crisis that has shown signs of leveling off in recent months but remains a crippling drag on the housing market and the economy.

Many homeowners struggling to make their monthly payments have had little success in negotiating more deals.

That is why many homeowners are walking away from their mortgages. The "deals" they are being offered aren't that great. What these borrowers really want is housing that doesn't cost them anything, and every now and again, they want to have the house give them some free cash. Unless they get that, they aren't going to be satisfied. The housing bubble has created a distorted sense of reality among loan owners.

Dalebout, a manager of a recreation center who lives in the Salt Lake City suburb of Holladay, said her lender has refused to refinance her loan with lower rates and payments.

The monthly payments on her $240,000 mortgage take more than half her salary.

"I'm just running into a lot of brick walls," Dalebout, 58 said.

A 31% DTI often does take more than half of a persons take-home salary because of the tax withholdings and social security. That is why the ridiculous DTIs we saw in the bubble were not sustainable. Once people actually have to start making those payments from their wage income, they can't do it.

Banks seem to be creating two classes of troubled homeowners. Those who are falling behind in their payments are being allowed to stay in their homes longer because lenders are reluctant to add to the glut of foreclosed homes on the market. At the same time, lenders are stepping up repossessions to clear out the backlog of bad loans.

Is that the politically correct way of saying "squatting?"

"The banks are really sort of controlling or managing the dial on how fast these things get processed so they can ultimately manage the inventory of distressed assets on the market," Sharga said.

Sort of controlling? Right now the banking cartel is totally controlling the flow of properties, but like any cartel, its power will wane as the members begin to cheat as they liquidate their holdings.

On average, it takes about 15 months for a home loan to go from being 30 days late to the property being foreclosed and sold, according to Lender Processing Services Inc., which tracks mortgages.

… Sherri Leu of Lino Lakes, a suburb of Minneapolis, is unemployed and stopped receiving unemployment benefits earlier this year.

"I burned up my savings," she said. "The best thing that's going to help me is a job."

This problem will not get any better until the jobs situation improves, and even then, it will only help a few on the fringes. The problem with the credit and housing bubble is that too many people have too much debt and not enough income to service it. Once they have some income when they find a new job doesn't mean they will have enough income to pay off the crushing debt.

The software engineer has been living on what's left of a $120,000 home equity line of credit she took out shortly after she bought her house in 2006.

Leu estimates she's got enough money for another five or six mortgage payments.

Borrowing money to pay the mortgage? Has anyone bothered to point out to this woman that she is living a Ponzi Scheme?

"I might try to put it up for sale," Leu said. "The other option is to let the bank have it, but then I'll end up walking away losing money I put down on the house."

Duh! She already lost the money she put down on the house. She been spending that with her home equity loan. Are people really that stupid?

Sometimes I get the impression that people think their down payment is held in a vault and that they get this money back when they sell the property. The average loan owner has no concept of sunk costs, nor do they understand that home equity has nothing to do with how much money they put into the property.

Assuming the economy doesn't worsen, RealtyTrac's Sharga projects lenders won't work through the backlog of distressed properties until the end of 2013. More than 7.3 million home loans are in some stage of delinquency, according to Lender Processing Services. The fastest-growing group of foreclosures is coming from people who took out conventional fixed-rate loans.

The prospect of lenders taking over more than a million homes this year is likely to push housing values down, experts say. Foreclosed homes are typically sold at steep discounts, lowering the value of surrounding properties.

"The downward pressure from foreclosures will persist and prices will be very weak well into 2012," said Celia Chen, senior director of Moody's Economy.com.

3 More Years Of Pain For Housing

Posted by Jill Schlesinger – July 15, 2010

1 million households are on track to lose their homes this year as the nation continues to dig out of the decade's real estate boom and bust. RealtyTrac reported that while month-over-month and year-over-year foreclosure fillings are decreasing, the nation is on pace to set a record in foreclosure filings (including default notices, auction sales and bank repossessions) this year at 3.2 million. Last year, lenders foreclosed on more than 900,000 homes and the historic average is 100,000 annually.

In the first half of the year, lenders repossessed nearly 528,000 homes and about 1.7 million homeowners got a foreclosure-related warning — that represents one in 78 American homes. The numbers are startling, but this process is necessary after the massive housing and credit booms. As is the case with manias, the aftermath is messy and painful.

Everyone seems to think we can avoid the pain. The common delusion I read in the mainstream media is that once the economy starts to improve that house prices will go back up. There is generally a multi-year gap between the bottom of the employment cycle and the bottom of the foreclosure cycle. It will likely be far worse this time around because so many people couldn't afford their houses even in the good times.

Unfortunately, due to the lengthy process involved in unwinding a bad home investment (versus, say a bad internet stock that takes 5 seconds to sell) the hangover period will persist for some time. RealtyTrac CEO James J. Saccacio said that while the foreclosure problem appears to be improving, we shouldn't be too confident, because "a massive number of distressed properties and underwater loans continues to sit just below the surface, threatening the fragile stability of the housing market."

Housing experts believe that it will take three more years to clear out the overhang of housing. There's a certain symmetry to that notion. From the years between 2000-2006, housing prices nationally doubled and it will likely take the seven years between 2007-2013 to rectify that aberration. Now who said that home prices never drop?

Every realtor in America said home prices never drop. That is what clueless shills do. When this mess is finally cleaned up, they will spin a narrative about how this housing bubble was not foreseeable (Alan Greenspan missed it so everyone did). It will be portrayed as an event that will never occur again. realtors will attempt to dupe the next generation into repeating the mistakes of the past so they can make a few extra dollars.

Another Option ARM implosion

This property was purchased by the previous owner on 7/12/2005 for $545,000. She used a $436,000 Option ARM first mortgage a $54,500 second mortgage and a $54,500 down payment. She imploded in late 2008 and squatted for about 15 months.

Foreclosure Record

Recording Date: 03/05/2010

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

Click here to get Foreclosure Report.

Foreclosure Record

Recording Date: 12/04/2009

Document Type: Notice of Default

The trustee sale flipper will do well

The property was purchased at auction on 4/1/2010 for $386,400. The flipper is looking at a profit in excess of 20%. Even after renovation costs and commissions, they will probably make 12% to 15% on this deal.

If you would like to learn how you can get involved with trustee sales, please contact me at sales@idealhomebrokers.com. Someone has to clean up this mess.

Irvine Home Address … 17255 CITRON Irvine, CA 92612

Resale Home Price … $498,000

Home Purchase Price … $386,400

Home Purchase Date …. 4/1/2010

Net Gain (Loss) ………. $81,720

Percent Change ………. 21.1%

Annual Appreciation … 78.6%

Cost of Ownership

————————————————-

$498,000 ………. Asking Price

$17,430 ………. 3.5% Down FHA Financing

4.61% …………… Mortgage Interest Rate

$480,570 ………. 30-Year Mortgage

$98,586 ………. Income Requirement

$2,466 ………. Monthly Mortgage Payment

$432 ………. Property Tax

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

$42 ………. Homeowners Insurance

$209 ………. Homeowners Association Fees

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

$3,149 ………. Monthly Cash Outlays

-$399 ………. Tax Savings (% of Interest and Property Tax)

-$620 ………. Equity Hidden in Payment

$30 ………. Lost Income to Down Payment (net of taxes)

$62 ………. Maintenance and Replacement Reserves

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

$2,222 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$4,980 ………. Furnishing and Move In @1%

$4,980 ………. Closing Costs @1%

$4,806 ………… Interest Points @1% of Loan

$17,430 ………. Down Payment

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

$32,196 ………. Total Cash Costs

$34,000 ………… Emergency Cash Reserves

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

$66,196 ………. Total Savings Needed

Property Details for 17255 CITRON Irvine, CA 92612

——————————————————————————

Beds: 2

Baths: 2 baths

Home size: 1,224 sq ft

($407 / sq ft)

Lot Size: 1,500 sq ft

Year Built: 1974

Days on Market: 29

Listing Updated: 40368

MLS Number: S620822

Property Type: Condominium, Residential

Community: University Park

Tract: Tr

——————————————————————————

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

This property is in backup or contingent offer status.

INCREDIBLE OPPORTUNITY!! QUIET INNER TRACT LOCATION, SINGLE LEVEL TOWNHOME. This home just had a $50K remodel and is totally turnkey. It has never been lived in since the remodel. The complete kitchen remodel will be the pride of your at home gourmet with its new stainless steel appliances, breakfast bar, Italian tile floor, new sink, new fixtures, custom hard wood cabinets, and granite counters. The home has new raised panel doors, 6' base boards, new casings, cozy travertine fireplace, new light fixtures, and new carpet throughout. The bathrooms are completely remodeled including new sinks, granite counters, and new oil rubbed bronze fixtures. The ceilings have been scraped, new base boards, crown moulding, and new designer paint throughout. Alluring back yard is freshly landscaped. Large 2 car garage has epoxy coat floors and space for storage. STOP LOOKING THIS IS THE ONE!

INCREDIBLE OPPORTUNITY!! STOP LOOKING THIS IS THE ONE!

Beyond the fact that this is in ALL CAPS, does either one of these phrases convey any meaning? Why do realtors write this crap. It was a waste of a second of my life to read it. It will not influence my decision to see this property, nor will it influence anyone else. I wish they would just stop.

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

A petty crook in Montana tried to steal real estate owned by a bank. He's not much different than many participants in the housing market here in California. His real crime was failing to fill out a mortgage loan application first.

Irvine Home Address … 14541 GUAMA Ave Irvine, CA 92606

Resale Home Price …… $749,000

Somewhere high in the desert near a curtain of blue

A sane man skirts under the wind

But down here in the city of limelights

The fans of Santa Ana are withering

And you can't deny the living is easy

If you never look behind the scenery

Bad Religion — Los Angeles Is Burning

Real estate is religion in California. Home price appreciation is the one area where all Californians share the same faith. Faith in the ability of their fellow man to push prices ever higher. Faith in lenders to provide an endless pool of borrowed money. Faith in lenders not to foreclose when they decide to quit paying their mortgages.

Borrowers everywhere are not paying their mortgages and squatting. These people signed loan documents promising to repay a loan which prompted a bank to buy a house for the borrower and allow them to occupy it. Right now, the borrowers are living in that house, they are not making their promised payments, and the bank is not exercising it's right to call a public auction and force them out.

Historically, squatters have lived in houses they were not paying for just as the delinquent borrowers are doing today. In the past, squatters simply moved in and skipped the step where they sign loan documents and get the bank to buy the house for them. Today's squatters added the participation of the lender, but the end result is the same: people are living in houses they do not own and they are not paying for them either through rent or through repayment of a home loan.

I find it ironic that people who squat with traditional methods are being arrested whereas those who squat with permission of the bank are being assisted by our own government. With a little creativity, one squatter has taken possession of a number of properties, attempted to get HELOC money, and rented one of them out for a positive cashflow — very positive considering he didn't pay for it. Although he is a criminal being prosecuted, he isn't much different than the thousands of California squatters and land barons operating across California. I will let you decide whose theft is more sophisticated.

Man claims ‘Yahweh’ sold him a foreclosed home

Wilson convicted of stealing Montana house by removing ‘for sale’ signs, changing locks

7/14/2010 10:07:16 AM ET

POLSON, Mont. — A Lake County jury convicted a transient of stealing a house in foreclosure by removing "for sale" signs, changing the locks and filing strange paperwork with the county claiming he purchased the house from Yahweh.

Stealing a house by filing strange paperwork? Isn't that what every liar loan applicant did during the housing bubble? People all over California filled out strange paperwork full of half-truths and outright lies about their income. We sold homes to transients and anyone else with a pulse. I'm sure many of those buyers thought it was a gift from God. Why should this guy be jailed for it if we are letting slide all those other people here in California who did the same thing?

Jurors deliberated for less than an hour Tuesday morning before convicting Brent Arthur Wilson of theft, deceptive practices and tampering with public records or information. He faces up to 30 years in prison when he is sentenced Aug. 19.

The professor under whom I first studied real estate law also taught a course at the nearby penitentiary. He relayed the story of one convict who forged the signature of the previous owner on a purchase and sale agreement deeding the property to the criminal, and then the criminal recorded it. For anyone doing a title search, the criminal would have looked like the legal owner because he was present in an unbroken chain of title.

The fool in Montana made the mistake of purchasing the house from Yahweh who did not appear on the chain of title. Perhaps he can argue all property rights come from God, but unless God is on title, He does not own the property.

Wilson was charged in February after Polson real estate agent Ed McCurdy investigated the removal of "for sale" signs from a $380,000 house he was selling on behalf of a lender in August 2009.

Further investigation found Wilson tried to use the house as collateral for a $125,000 loan he sought from a Missoula financial institution.

I love this guy. He buys the home from God and immediate applies for a HELOC. His mistake was doing this in Montana where it stands out as unusual. If he had pulled this trick in California, we would have been viewed as just another homeowner.

Prosecutor Jessica Cole-Hodgkinson told the jury Monday that authorities found journals belonging to Wilson that detailed a plan to steal up to 100 homes in foreclosure.

It would be more accurate to say the guy had plans to acquire 100 homes just like California land barons. He was thinking like a land baron. Many people during the real estate bubble acquired multiple properties using liar loans, 100% financing and Option ARMs. Since these "legal" land barons lied on loan applications, didn't put any of their own money into the deal, didn't make payments that covered the interest on the debt, and walked away when the investment went bad, it is difficult to distinguish the their behavior from the lunatic in Montana. Land Barons did this because they believed prices would go up, and they would get HELOCs to fuel unlimited consumer spending. I don't see where this guy in Montana's thinking is out of the ordinary.

Cole-Hodgkinson asked Lake County sheriff's detective Rick Lenz to read several entries from journals.

"The prospect of claiming and fulfilling my 100-title vision is growing stronger," read one. "Took down one of two Realtor signs," says another entry. "The other needs a tool to dig it up."

Everyone should have such a strong vision of their future. I imagine people forming funds to buy real estate (not that I would know anything about that) have vision boards with hundreds of properties representing their real estate empire. This kind of creative visualization is a powerful tool. This guy should be complimented as a visionary.

Many of the journal entries appear to be addressed to "the creator, Yahweh."

Don't others pray for their dreams to come true? This guy did more than just pray — he took action. He did more than most when presented with a great opportunity. He should be commended as a role model.

"Wow. You surely have blessed me with some wonderful opportunities," Lenz read from the journals, which referred to a property with a "million-dollar value" that "seems to be waiting for me to claim it. Wow on wow."

This guy should have walked around some of the bubble subdivisions in California. There are opportunities everywhere with so many vacant homes, many of which lenders don't keep good track of.

Wilson refused attempts by District Judge Kim Christopher to appoint legal counsel for him. He didn't participate in his trial and offered no defense. He read from an IRS document Monday and was reading the Bible during Tuesday's court session.

Authorities have said they believe Wilson tried to claim ownership of at least two more houses, one he was living in and one he was renting out, but he has not been charged in those cases.

So he purloined a property and rented it out. That is very common here in California among delinquent land barons. There are thousands of properties where a renter is paying a land baron who is not paying their mortgage. As long as the property was owned for more than one year, it isn't classified as rent skimming despite the fact it looks a great deal like theft. With banks refusing to foreclose, renters are undoubtedly aiding theft by land barons everywhere.

A court-ordered mental health evaluation found Wilson fit to stand trial.

There shouldn't be any question about his sanity. If we were to find this man insane, we would have to lock up most of the kool-aid intoxicated fools here in California whose religion is real estate. They are just as insane, just as crooked as this nut in Montana, but we don't think twice about their transgressions.

When you boil this case down to its essence, there is only one difference between this guy who blatantly stole the property from the bank and hundreds of thousands of similar thieves here in California: he didn't sign a loan document. That is really the only difference.

If this Montana man had gone through a loan process and obtained bank approval, he could keep the house he did not pay for just as the plethora of squatters are doing all over the nation. The only real distinction between this insane man and the pitiful masses squatting in their McMansions is the process they went through to obtain the property. At least this guy has the defense of being insane. The masses of squatters are just thieves with no defense. They were calculating and sane — unless you consider kool aid intoxication as a form of mass insanity, and you think their debts should be forgiven.

These people squatted a long time

• This property was purchased on 5/29/203 for $475,000. The owners used a $322,700 first mortgage, a $100,000 second mortgage, and a $52,300 down payment.
• On 2/3/2005 they refinanced with a $623,000 first mortgage from Ameriquest.
• On 3/16/2006 they were given a $100,000 HELOC by Wells Fargo. Since the first and second mortgages were from different lenders, the first mortgage holder had no problem blowing out Wells Fargo — after a long period of squatting.
• Total squatting time is at least 27 months.

Foreclosure Record

Recording Date: 03/03/2010

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 11/30/2009

Document Type: Notice of Default

Foreclosure Record

Recording Date: 02/19/2009

Document Type: Notice of Rescission

Foreclosure Record

Recording Date: 11/14/2008

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 08/06/2008

Document Type: Notice of Default

This looks like a failed loan modification, so the US taxpayer will end up paying for the loss.

Of course, the taxpayer's loss is a flipper's gain. The house was purchased for $610,500 at auction, and after some renovation work, it is being offered for $749,000. With as ridiculous as the price is, with 4.61% interest rates, the monthly cost of ownership of $2,671 is near rental parity.

Irvine Home Address … 14541 GUAMA Ave Irvine, CA 92606

Resale Home Price … $749,000

Home Purchase Price … $610,500

Home Purchase Date …. 3/23/2010

Net Gain (Loss) ………. $93,560

Percent Change ………. 15.3%

Annual Appreciation … 62.9%

Cost of Ownership

————————————————-

$749,000 ………. Asking Price

$149,800 ………. 20% Down Conventional

4.61% …………… Mortgage Interest Rate

$599,200 ………. 30-Year Mortgage

$148,276 ………. Income Requirement

$3,075 ………. Monthly Mortgage Payment

$649 ………. Property Tax

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

$62 ………. Homeowners Insurance

$43 ………. Homeowners Association Fees

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

$3,830 ………. Monthly Cash Outlays

-$738 ………. Tax Savings (% of Interest and Property Tax)

-$773 ………. Equity Hidden in Payment

$259 ………. Lost Income to Down Payment (net of taxes)

$94 ………. Maintenance and Replacement Reserves

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

$2,671 ………. 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

$40,900 ………… Emergency Cash Reserves

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

$211,672 ………. Total Savings Needed

Property Details for 14541 GUAMA Ave Irvine, CA 92606

——————————————————————————

Beds: 4

Baths: 1 full 2 part baths

Home size: 2,327 sq ft

($322 / sq ft)

Lot Size: 5,000 sq ft

Year Built: 1971

Days on Market: 64

Listing Updated: 40338

MLS Number: S616253

Property Type: Single Family, Residential

Community: Walnut

Tract: Cp

——————————————————————————

Gorgeous remodeled home in College Park. Four bedrooms & one spacious bonus room. Recessed lights throughout. Crown moldings & ceiling fans. Granite countertop & stainless steel appliance. Pre-wired surround sound speakers in family room. Newly-built fireplace with BBQ in the backyard. Within walking distance of school & park.

Flip with moderate profits… maybe

The renovation on this property looks extensive. After they lower the price to sell it and pay commissions and renovation costs, the flipper will likely make 6%-8% on the deal. Not bad, but not great. It doesn't look like they will get their asking price as it has been active for over 60 days without a price reduction.

IMO, they overpaid at auction. The opening bid was $510,000, and it was bid up $100,500. With comps closer to $710,000, it shouldn't have been bid up quite so high. The flipper as probably expecting a massive spring rally to make an extra 5%. It isn't happening for him.

Lenders worry about accelerated or strategic default because their behavior encourages it. As lenders allow more borrowers to live for free, more borrowers will opt to do so.

Irvine Home Address … 24 PISMO Bch Irvine, CA 92602

Resale Home Price …… $1,499,000

Think what that money could bring

I'd buy everything

Clean out Vivienne Westwood

In my Galliano gown

No, wouldn't just have one hood

A Hollywood mansion if I could

Please book me first-class to my fancy house in London town

Gwen Stefani — Rich Girl

The rich posers can't be content with just one home. A Hollywood mansion and a flat in London would be great, particularly if they were going up in value and you could get a HELOC to spend the appreciation. It works great until lenders take away the punch bowl.

Biggest Defaulters on Mortgages Are the Rich