The California Association of realtors has cherry-picked a few positive stories about working with realtors and assembled them in a new advertising campaign.

Irvine Home Address … 2 RHODE Is Irvine, CA 92606

Resale Home Price …… $836,900

You know I look into the mirror see myself and then

I always often say… “Hot damn I'm great”

Poor Righteous Teachers — Hot Damn I'm Great

Anyone who has ever done any self promotion knows how difficult it can be. The little voices of doubt inside work to keep you down. “You're not that good.” “You don't know what you're doing.” “You can't succeed.” When those voices become a paralyzing distraction, you need to go look in the mirror and say, “Hot damn, I'm great.”

California realtors have launched a new promotional campaign. To judge by the videos they produce, you would think they are great. And some are, but many are not. I always enjoy a little parody to remind us of the dark side.

Calif. Realtors Launch Testimonial Campaign

by Tanya Irwin, Thursday, August 25, 2011, 5:04 PM

The California Association of Realtors is launching an integrated campaign that features testimonials from satisfied consumers.

The effort, from Philadelphia-based Red Tettemer + Partners, marks a change in strategy for the association with creative that is much more “consumer inclusive and conversational.” Spending is under $2 million.

Titled “Champions of Home,” the campaign was created in direct response to the economically challenged real estate market, to show consumers they can rely on their realtor.

realtors can be relied on to make self-serving statements they hope will generate a commission. Otherwise known as “bullshit,” the art of telling prospects whatever they want to hear is openly encouraged by realtor associations and taught at realtor sponsored seminars.

The multiplatform manipulative campaign features homeowners in California, telling their individual stories of buying and selling homes and how their realtors helped conquer the process.

We have seen exactly how realtors help their clients conquer the process. realtors voyeuristically listen in on private conversations and manipulate their client's emotions to cajole prospects into buying properties many of them can't afford. Remember Suzanne?

The stories focus on everything from short sales to epic tales of paperwork and highlight realtors as experienced professionals guiding them toward closing. The campaign targets first-time homebuyers and sellers in California.

Media includes cable TV heavy in major California markets including Los Angeles, San Francisco and San Diego, and will include HGTV, AEN and Bravo Networks within “House Hunters,” “Sell this House,” “Design Star,” “Property Virgins” and “Million Dollar Listing.”

Traffic radio will air across 17 markets and more than 145 stations. Online display will blanket the state of California. There will also be a number of social media efforts, primarily focused on Facebook and Twitter. All areas will drive to a microsite, Champions of Home.

With the high page rank of IHB on Google, after this post gets indexed, whenever someone searches for Champions of Home, this post will likely be at the top of the list — even above the CAr site. ~~ giggles to self ~~

The Facebook and Twitter elements will roll out throughout September at facebook.com/CAREALTORS, twitter.com/#!/CAREALTORS and ChampionsofHome.com.

The association launched its first consumer advertising initiative in 1997 to raise awareness in terms of differentiating association members from non-member real estate agents.

CAr should be pleased. I am helping them differentiate realtors from people like myself who are non-member real estate agents.

That first campaign was specifically focused on brand differentiation, says Anne Framroze, vice president, California Association of Realtors. “We then moved to new campaign creative in 2007, when we partnered with Campbell-Ewald,” she says. “This campaign focused primarily on the value of homeownership, and the value of working with a realtor.” That effort aired from 2007 until last year, on TV, radio, and online.

The latest effort represents an entirely new direction given its focus on featuring real consumers speaking directly and from the heart — without the aid of scripts — about the home-buying and home-selling process, she says.

“We realize that in today's socially networked environment, focusing less on what we want to promote and more on what the public has to say is the best way to connect with consumers who have the capacity to access a variety of information via a multitude of channels,” Framroze tells Marketing Daily. “We want to be as authentic as possible, and we anticipate that this type of campaign strategy will continue to build virally and organically, and ultimately will resonate best across a broad spectrum of home buyers and sellers who might see themselves in similar situations.”

Actually their strategy is a good one. The problem is with the product.

Since Google will pick up this post, and many people will find it by accident, today would be a good day for anyone wanting to share their realtor horror stories in the astute observations. I look forward to reading them.

Thanks for the $268,000

Today's featured property is dull by Irvine standards. The Ponzis who owned this house only escaped with their $143,000 down payment plus $125,000 of the bank's money, a small take by Irvine standards. Of course, this is more than a full year wages for most people, but it seems like pocket change compared to the really bad cases I have profiled here.

• The property was purchased on 5/23/2003 for $715,000. The owners used a $572,000 first mortgage and a $143,000 down payment.
• They opened a HELOC for $100,000 on 7/16/2004.
• On 6/21/2005 they obtained a $185,000 stand-alone second.
• On 3/13/2007 they refinanced with a $840,000 first mortgage. Apparently, they couldn't afford the payments.

Foreclosure Record

Recording Date: 02/28/2011

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 08/16/2010

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 05/05/2010

Document Type: Notice of Default

The property was taken back by the bank on 4/5/2011 after at least 14 months of squatting. The bank paid $751,500 at auction, and they believe they can get $836,000. With no Mello Roos and low interest rates, the cost of ownership for an owner-occupant us just under $3,000 per month. Despite the high price, that's probably not far from rental parity.

This property is a test case for lenders. This is the highest priced REO in Irvine. Lenders have many more properties more expensive than this one they are holding vacant until they believe a market exists to sell into. Right now they don't believe there is much of a high end market. They are right.

——————————————————————————————————————————————-

This property is available for sale via the MLS.

Please contact Shevy Akason, #01836707

949.769.1599

sales@idealhomebrokers.com

Irvine House Address … 2 RHODE Is Irvine, CA 92606

Resale House Price …… $836,900

Beds: 4

Baths: 2

Sq. Ft.: 2944

$284/SF

Property Type: Residential, Single Family

Style: Two Level, Contemporary

Year Built: 1998

Community: Walnut

County: Orange

MLS#: S664624

Source: SoCalMLS

Status: Active

On Redfin: 58 days

——————————————————————————

BANK OWNED beautiful home in the gated community of Harvard Square. 4 bedrooms all with walk in closets, all bedrooms are up, Huge Master with massive walk-in closet, dressing area in master bath, Hardwood floors in entry, living, dining, kitchen, family room. New carpet upstairs in all bedrooms. and Beautiful wide open Kitchen with huge walk in pantry. Custom landscaping in oversized backyard with custom patio dining area. Fireplace in family room and living room. Just Freshly painted and brand new carpet.

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Proprietary IHB commentary and analysis

Resale Home Price …… $836,900

House Purchase Price … $715,000

House Purchase Date …. 5/23/2003

Net Gain (Loss) ………. $71,686

Percent Change ………. 10.0%

Annual Appreciation … 1.9%

Cost of Home Ownership

————————————————-

$836,900 ………. Asking Price

$167,380 ………. 20% Down Conventional

4.19% …………… Mortgage Interest Rate

$669,520 ………. 30-Year Mortgage

$166,135 ………. Income Requirement

$3,270 ………. Monthly Mortgage Payment

$725 ………. Property Tax (@1.04%)

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

$174 ………. Homeowners Insurance (@ 0.25%)

$0 ………. Private Mortgage Insurance

$122 ………. Homeowners Association Fees

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

$4,292 ………. Monthly Cash Outlays

-$766 ………. Tax Savings (% of Interest and Property Tax)

-$932 ………. Equity Hidden in Payment (Amortization)

$250 ………. Lost Income to Down Payment (net of taxes)

$125 ………. Maintenance and Replacement Reserves

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

$2,968 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$8,369 ………. Furnishing and Move In @1%

$8,369 ………. Closing Costs @1%

$6,695 ………… Interest Points @1% of Loan

$167,380 ………. Down Payment

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

$190,813 ………. Total Cash Costs

$45,500 ………… Emergency Cash Reserves

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

$236,313 ………. Total Savings Needed

——————————————————————————————————————————————————-

realtors successfully lobbied for passage of SB 458 which forces banks to increase their losses by writing off debts in a short sale, then they lobbied the banks to perform more short sales by speeding up the process.

Irvine Home Address … 12 GOLDBLUFF Irvine, CA 92604

Resale Home Price …… $620,000

It cuts both ways, we're in too deep for sorry alibis

Can't have regrets or even question why

We can't say goodbye

Because it cuts both ways

Gloria Estefan — Cuts Both Ways

I like it when lenders pay a price for what happened in the housing bubble. They unleashed a Ponzi scheme, and if they don't experience the pain of that failure, they will repeat their mistakes. California has passed a new law that increases the pain on the banks. Kudos.

With lobbying from CAr, the State of California passed a debt forgiveness law that says a borrower is fully released from all debts related to mortgage once the short sale is agreed upon. When the realtor association does something I agree with — like preventing the debt slavery of an entire generation — I like what they lobbied for despite my past disagreements with them.

Without some kind of debt forgiveness, the people who live in our neighborhoods will owe hundreds of thousands of dollars in zombie debt collection for years. (This issue is one of the reasons for civil unrest in Spain.) This will drain the local economy of resources, and it will drain the emotions of the people facing zombie debts. As with any kind of debt forgiveness, moral hazard can be a problem if borrowers don't come to believe they made a mistake.

I like this law despite the fact it creates moral hazard because its a greater moral tragedy to sentence these people to debt servitude and being hounded by zombie debt collectors. This law could also be titled the “Death to Zombie Collection Act.” The passage of this law may prevent bankruptcies because the borrowers won't need bankruptcy in order to eliminate this one debt problem. Otherwise creditworthy borrowers will be able to obtain new debt, and the enormous loan losses get washed away. The increased disposable income will boost the local economy.

Nevada will be the test case for what widespread debt purging can do for a local economy. The $70,000 single-family detached homes I sell in Las Vegas have monthly payments of about $300 per month. Even if you are a minimum wage worker, you can afford a house payment on a single-family detached home. Once this purging is done, the average wage earner will spend a smaller percentage of their income on housing than any area of the country. I believe this excess spending power will stimulate the local economy greatly — most of it will end up in the casinos.

Californian's who sell their house through a short sale will now enjoy the increased disposable income of debt purging. I believe this will boost the California economy.

Gov. signs SB 458 into law

July 15, 2011

CALIFORNIA ASSOCIATION OF REALTORS® applauds Gov. Brown on signing SB 458 into law

LOS ANGELES (July 15) – The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) applauds Gov. Jerry Brown on signing SB 458 (Corbett) into law. SB 458 extends the protections of SB 931 (2010), to ensure that any lender that agrees to a short sale must accept the agreed upon short sale payment as payment in full of the outstanding balance of all loans.

Under previous law (SB 931 of 2010), a first mortgage holder could accept an agreed-upon short sale payment as full payment for the outstanding balance of the loan, but unfortunately, the rule did not apply to junior lien holders. SB 458 extends the protections of SB 931 to junior liens.

“The signing of this bill is a victory for California homeowners who have been forced to short sell their home only to find that the lender will pursue them after the short sale closes, and demand an additional payment to subsidize the difference,” said C.A.R. President Beth L. Peerce. “SB 458 brings closure and certainty to the short sale process and ensures that once a lender has agreed to accept a short sale payment on a property, all lienholders – those in first position and in junior positions – will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property.”

SB 458 contains an urgency clause making it effective upon signing.

Now that the SB 458 is law, short sales are more effective at purging debt than foreclosures. People still tend to walk away from their debts in foreclosure, but that doesn't mean the debt is fully extinguished, just much more difficult to collect. From now on, those people who go through a short sale will no longer face the harassing calls of zombie debt collectors.

Banks won't have a buyer for their extinguished short-sale zombie debt, so the write-offs will increase. The larger losses will make lenders more willing to foreclose and keep their zombie debt on life support. Passage of this law should cause banks to shift away from short sales in California and move to foreclosure roulette to select a quota of kills from the herd.

Short sale negotiations will now be much more difficult for banks because they don't have the threat of lingering debt to hold over the borrower. If the borrower doesn't agree, the bank has no leverage to force them to. The borrower can escape the debt fully in short sale or take their chances after a foreclosure — chances which usually work out in their favor.

The realtor association that applauded the short sale law is now demanding the banks close more short sales. That's a knife that cuts both ways: lenders take bigger losses and realtors make more money.

CAR chastises lenders over short sales

by LIZ ENOCHS — Thursday, August 25th, 2011, 12:26 am

The California Association of Realtors Wednesday delivered a public reprimand to the nation’s top mortgage lenders and servicers over their handling of short sales.

In letters to JPMorgan Chase, Citigroup, Bank of America and Wells Fargo, the association charges the lenders with failing to respond to borrowers’ short-sale requests within a reasonable time frame, dragging their feet on processing files and miring incomplete files in excessive red tape, among other things.

Short sale negotiations are never going to be easy because the loan loss severities are so large that banks can't take the pain. This survival pressure is forcing banks to make unreasonable demands on borrowers which is causing most short sales to die a slow death. The whole negotiation is a big game of poker, and the foreclosure deadline is the river card — the default option when the two parties can't agree on a settlement over the house debt.

“As public attention continues to be focused on the real estate industry in hopes of signs of a housing recovery, we trust you’ll agree that change in your short-sale process is critical,” said CAR President Beth Peerce in the letter.

Actually, no. I see nothing critical about expediting short sales. The MLS can't absorb a fraction of the distressed properties in the system, so lenders could shift 100% to foreclosure and 0% short sales, and the only difference would be the process for disposal on the MLS: bank REO or CAr short sale listing.

realtors really shouldn't care either. There willl be a sale on the MLS eventually. It will either be a short sale, or it will be an REO listing or a flipper listing. No matter how it gets on the MLS, the final disposition to a stable buyer will generate a sales commission.

The association said the communiqué is a response to increasing difficulty among real estate agents in closing short sales, which it says will be a part of the California real estate landscape for years to come.

Is this issue merely realtor whining about the difficulty with short sales? Get over it, and get the job done.

The letter outlines a series of recommendations for actions lenders should undertake to allow short sales to run more smoothly and aid in the housing market recovery.

“We believe banks, investors, homeowners and real estate professionals all have a common interest in conducting these transactions expeditiously and efficiently,” said Peerce in her communication to lenders. “The housing market recovery is in everyone’s best interests, and your urgent focus on these issues will help achieve that end.”

I agree that expediting the transition from unstable owners to stable ones is key to the market recovery. I don't agree with the contention that expediting short sales is a superior method.

JP Morgan spokesman countered that the bank is now processing 5,000 short sales a month. “That is a significant amount,” the source tells HousingWire. “We know that short sales are important to the market and that is why we are doing so many.”

Citigroup also pointed out that it has had a specialized short sales group for a number of years. “In 2009 senior management increased our focus on potential short sales, recognizing that they may be the best solution for some borrowers,” said spokesman Mark Rodgers. “The unit employs short sales specialists who are able to expedite the short sales process.”

Write to Liz Enochs.

I don't think the bank is too worried about whether or not a short sale is better for the borrower. They are interested in whether or not it is better for the bank.

Basically, anyone with assets is probably better off trying to negotiate a short sale. Lenders are going to want borrowers to make an effort to pay them back by selling some of their valueable stuff. If borrowers won't do this, it's in the lender's best interest to sue them and take it as settlement for the debt. If borrowers with assets go through a foreclosure, the lender could also sue to recover, and the losses are more severe. Fortunately for most borrowers, lenders rarely attempt to collect on debt detached from the property in a foreclosure.

Does it really take 639 days for a bank to make a decision?

The owner of todays featured property bought on 4/26/2005 for $675,000. This near peak purchase was financed with a $540,000 first mortgage and a $72,101 second mortgage, and a $62,988 down payment. They didn't refinance, but falling prices have left them underwater. The stopped paying the mortage back in mid 2009, and they have been negotiatiing a short sale ever since.

Foreclosure Record

Recording Date: 07/05/2011

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 06/23/2010

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 10/21/2009

Document Type: Notice of Default

WTF is taking the bank so long?

How does it take 639 days to make a decision?

——————————————————————————————————————————————-

This property is available for sale via the MLS.

Please contact Shevy Akason, #01836707

949.769.1599

sales@idealhomebrokers.com

Irvine House Address … 12 GOLDBLUFF Irvine, CA 92604

Resale House Price …… $620,000

Beds: 3

Baths: 2

Sq. Ft.: 1686

$368/SF

Property Type: Residential, Single Family

Style: One Level, Other

Year Built: 1975

Community: El Camino Real

County: Orange

MLS#: S597099

Source: SoCalMLS

Status: Active

On Redfin: 639 days

——————————————————————————

Beautiful one story home located conveniently in a cul-de-sac in the heart of OC. Highly upgraded with hardwood floors and remodeled kitchenn that feautres stainless steel sink and stone countertops. It is walking distance to award winning Irvine Unified School District schools. NO MELLO ROOS! Very Low HOA Dues. Newer roof, larger yard, seperate atrium area and two car roll up garage. SHORT SALE APPROVED!!!

——————————————————————————————————————————————-

Proprietary IHB commentary and analysis

Resale Home Price …… $620,000

House Purchase Price … $675,000

House Purchase Date …. 4/26/2005

Net Gain (Loss) ………. ($92,200)

Percent Change ………. -13.7%

Annual Appreciation … -1.3%

Cost of Home Ownership

————————————————-

$620,000 ………. Asking Price

$124,000 ………. 20% Down Conventional

4.19% …………… Mortgage Interest Rate

$496,000 ………. 30-Year Mortgage

$121,321 ………. Income Requirement

$2,423 ………. Monthly Mortgage Payment

$537 ………. Property Tax (@1.04%)

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

$129 ………. Homeowners Insurance (@ 0.25%)

$0 ………. Private Mortgage Insurance

$45 ………. Homeowners Association Fees

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

$3,134 ………. Monthly Cash Outlays

-$397 ………. Tax Savings (% of Interest and Property Tax)

-$691 ………. Equity Hidden in Payment (Amortization)

$185 ………. Lost Income to Down Payment (net of taxes)

$98 ………. Maintenance and Replacement Reserves

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

$2,329 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$6,200 ………. Furnishing and Move In @1%

$6,200 ………. Closing Costs @1%

$4,960 ………… Interest Points @1% of Loan

$124,000 ………. Down Payment

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

$141,360 ………. Total Cash Costs

$35,700 ………… Emergency Cash Reserves

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

$177,060 ………. Total Savings Needed

——————————————————————————————————————————————————-

Im not sure why, but I found this site amusing: realtors in cars.

Becky Buck in Virginia Beach, Virginia… Thank you, baby…

Unemployment from the weak economy and strategic default from the double dip in home prices have contributed to rising mortgage delinquency rates reversing a two-year downward trend.

Irvine Home Address … 3922 CLAREMONT St Irvine, CA 92614

Resale Home Price …… $425,000

Then

There was a dream

When you said we would be free

But now is the time

To be real

Bagman honey

Bagman sugar

Stone Temple Pilots — Bagman

Nobody wants to end up the bagman holding property. The last buyers in a housing bubble are by definition, bagholders. Many of those people are opting out through strategic default. As they do, delinquency rates are starting to rise again.

A low delinquency rate is a precursor to a healthy housing market which appreciates at the rate of wage inflation. Since peaking in January of 2010, mortgage delinquency rates have generally been falling. Over the last few months, what looks like a statistical blip is turning into an alarming rise in delinquency rates.

Delinquent loans on the rise again, a grim sign for housing

August 22, 2011

It's an ominous sign for housing. The percentage of homeowners who have missed at least one mortgage payment has risen for the second straight quarter, the Mortgage Bankers Assn. says.

Officials at the trade group expressed concern Monday that the sluggish economy may be creating another group of distressed borrowers.

“It is clear that the downward trend we saw through most of 2010 has stopped,” the Mortgage Bankers Assn.'s chief economist, Jay Brinkmann, said in a news release.

The second-quarter delinquency rate for loans on one- to four-unit residential properties increased to 8.44% of all U.S. mortgages as of June 30, up from 8.32% on March 31 and 8.25% on Dec 31.

But not all the news was bad, the trade group said Monday in its quarterly release on soured loans. Long-term delinquencies — those with three or more missed payments — were still declining.

The long-term delinquency rate is totally dependent upon foreclosures to clear them out. Expect this number to creep up as well since lenders are slowing foreclosures.

And the percentage of homes on which foreclosure proceedings began during the quarter was 0.96%, which is down slightly from the levels seen during the first quarter of this year and the final quarter of 2010.

Still, “mortgage delinquencies are no longer improving, and are now showing some signs of worsening.”

From 1995 to 2005, delinquency rates hovered between 4% and 5.5%. The implosion of the Ponzi scheme caused delinquency rates to double from mid 2007 to early 2010. A combination of better underwriting standards and foreclosures has reduced the delinquency rate to its still-elevated levels. Mortgage delinquency rates need to fall below 5.5% and stay there.

Most of the borrowers who are delinquent on their mortgages will ultimately face foreclosure. Loan modifications have failed to help borrowers sustain ownership, but it has succeeded in allowing lenders to kick the can down the road and foreclose later. With redefault rates between 50% and 75%, the delinquency rate will not go down by borrowers curing their loans, it will only go down by lenders stepping up their foreclosures. Unfortunately, lenders have been slowing their rate of foreclosure which will serve to drag out this process.

Imagine the owners in default as water in the pool. The only effective method of draining the pool is through the foreclosure pipeline. As lenders reduce the flow of foreclosures, they fail to bring down the rate of delinquency. Further, when a house price double-dip and economic weakness causes more delinquencies, lenders fall even further behind.

It isn't until both delinquency rates and foreclosure rates fall back to their historic norms and the resulting REO is liquidated that the housing market will truly be stable. Right now, we are heading the wrong direction.

“You Ugly” isn't quite so ugly anymore

Today's featured property was first featured in the September 2007 post, You Ugly. Apparently the buyer from 2008 was a kool aid buyer who also defaulted on his mortgage. I profiled that fiasco in March of 2010 in Market slices first wave of knife catchers.

The property was purchased on 2/28/2008 for $458,500. The owner used a $412,650 first mortgage and a $45,850 down payment. It appears he paid for less than one year before giving up:

Foreclosure Record

Recording Date: 02/11/2010

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 04/01/2009

Document Type: Notice of Default

The lender, HIGH TECH LENDING INC, danced for ten months before deciding to push this owner out.

The latest owner fixed the property up. There isn't much that can be done with the negatives of the location, but at least the inside is much nicer than it was in 2007.

At $425,000, this is one of the lowest priced detached 3/2s in Irvine. The cost of ownership is less than $2,200 for an owner-occupant using FHA financing. Like 3742 CLAREMONT Irvine, CA 92614 profiled earlier this week, the house backs onto the Culverdale Wilderness Park — the polluted greenbelt adjoining interstate 405. Apparently lenders are clearing out their REO on this street as they continue to hold their desirable properties and liquidate their garbage.

——————————————————————————————————————————————-

This property is available for sale via the MLS.

Please contact Shevy Akason, #01836707

949.769.1599

sales@idealhomebrokers.com

Irvine House Address … 3922 CLAREMONT St Irvine, CA 92614

Resale House Price …… $425,000

Beds: 3

Baths: 2

Sq. Ft.: 1075

$395/SF

Property Type: Residential, Single Family

Style: One Level, Traditional

Year Built: 1971

Community: Westpark

County: Orange

MLS#: P788300

Source: SoCalMLS

Status: Active

On Redfin: 42 days

——————————————————————————

Property has fresh paint, new carpet, new appliances and its ready for move in! Highlights include newer dual paned windows throughout, generous open floorplan with vaulted ceilings at family room, separate kitchen eating area, three spacious bedrooms, large open backyard with shed, brick paver driveway and its a rare single story!

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Proprietary IHB commentary and analysis

Resale Home Price …… $425,000

House Purchase Price … $458,500

House Purchase Date …. 2/8/2008

Net Gain (Loss) ………. ($59,000)

Percent Change ………. -12.9%

Annual Appreciation … -2.1%

Cost of Home Ownership

————————————————-

$425,000 ………. Asking Price

$14,875 ………. 3.5% Down FHA Financing

4.19% …………… Mortgage Interest Rate

$410,125 ………. 30-Year Mortgage

$115,421 ………. Income Requirement

$2,003 ………. Monthly Mortgage Payment

$368 ………. Property Tax (@1.04%)

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

$89 ………. Homeowners Insurance (@ 0.25%)

$472 ………. Private Mortgage Insurance

$50 ………. Homeowners Association Fees

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

$2,982 ………. Monthly Cash Outlays

-$315 ………. Tax Savings (% of Interest and Property Tax)

-$571 ………. Equity Hidden in Payment (Amortization)

$22 ………. Lost Income to Down Payment (net of taxes)

$73 ………. Maintenance and Replacement Reserves

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

$2,191 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$4,250 ………. Furnishing and Move In @1%

$4,250 ………. Closing Costs @1%

$4,101 ………… Interest Points @1% of Loan

$14,875 ………. Down Payment

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

$27,476 ………. Total Cash Costs

$33,500 ………… Emergency Cash Reserves

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

$60,976 ………. Total Savings Needed

——————————————————————————————————————————————————

I want to thank everyone who attended last night's first-time homebuyer presentation. It was a pleasure meeting all of you. Anyone who wants to share their feedback can email me at sales@idealhomebrokers.com, or post your astute observations below.

We will be doing another presentation at the end of September and we plan on doing these monthly at the Intercap Lending location (9401 Jeronimo, Suite 200, Irvine, CA 92618).

If 64% of Americans don't have enough liquid savings for a down payment, they don't have a 3.5% down payment for an FHA loan either. Where are tomorrow's buyers going to come from?

Irvine Home Address … 180 GREENMOOR Irvine, CA 92614

Resale Home Price …… $232,800

I would give everything just for a taste

Everything's here, all out of place

Losing my memory, saving my face

KT Tunstall — Saving My Face

Last month I posed the question, “How are tomorrow’s buyers going to come up with a 20% down payment?” With the overhang of consumer debt and the lingering aftermath of the Great Recession, personal savings rate, at about 5%, are still well below the average of the last 50 years.

Realistically, your average would-be home owner is not going to save up 20% on their own.

The path to ownership and the property ladder

With a return to sane lending standards, most borrowers will obtain their down payment in the traditional manner — they will buy an FHA home and wait until it has gone up in value 20% or more.

Without a 20% down payment, borrowers need to pay private mortgage insurance or an FHA premium. This added cost of borrowing comes directly out of money available to make a payment. In a super-low interest rate environment like today's every dollar that comes out of the payment reduces the mortgage amount significantly. In fact, many of the properties I profile on the IHB are below rental parity for conventional buyers but above rental parity for FHA buyers.

Most people won't save 20% for a down payment from their wage income. It's too hard. Most people don't have the stomach for austerity high savings rates requires. It's far easier to buy a house and wait for it to increase in value.

Once the market bottoms, borrowers will have to wait five to seven years before appreciation adds enough value and amortization pays down the loan enough for them to sell their house and obtain a check after commissions large enough to serve as a 20% down payment on the next property.

By then, most borrowers will also be making more money as they will have progressed in their careers. The accumulated down payment from prior ownership equity and the increased borrowing power of a higher salary allow most buyers the luxury of bidding higher and moving up to a nicer property. That's the way the housing ladder really works.

Many times we have seen large down payments lost in the bubble deflation, but this money was most often a parlay bet with the appreciation of a prior sale. Very few people actually save the full amount a down payment from their wage income to buy property using 20% down.

The broken rungs

Borrowers climbing the property ladder face new challenges to accumulating the equity needed for a move-up. The biggest challenge is their own self discipline. Far too many borrowers avail themselves of the savings in their houses by taking out HELOCs to liberate their equity. Spent equity is not available to put down on a move-up property. Increased earnings is not enough. Without the 20% down payment, move ups are a smaller step than they should be.

The second major challenge to the move-up market is the ongoing decline in low end properties. If equity is disappearing rather than accumulating, move-up buyers are trapped in their starter homes. For the move-up market to function, low-end prices need to appreciate. It's only when these buyers have 20% down payments that the next level up the property ladder has significant buyer support.

Contrary to popular media fiction, there is not a hoard of buyers sitting on the sidelines waiting to deploy their 20% down payments. The reality is the buyer pool is largely broke. Their savings was wiped out in the housing collapse or the stock market crash (or both). Even those who missed those two fiascoes likely have their money sitting in bonds or CDs with yields south of 3%. The money is relatively safe, but it isn't earning much.

Without the requisite down payments, sales volumes will continue to be very weak, and as the major source of funding for mortgages with less than 20% down, the FHA will have a very large market share for the foreseeable future, despite the onerous cost of its insurance.

Besides the chart of personal savings rates above, there is survey evidence that backs up my contention borrowers simply don't have the savings necessary to buy houses.

Most Americans can't afford $1,000 emergency expense

Jessica Dickler, On Wednesday August 10, 2011, 1:40 pm EDT

When the unexpected strikes, most Americans aren't prepared to pay for it.

A majority, or 64%, of Americans don't have enough cash on hand to handle a $1,000 emergency expense, according to a survey by the National Foundation for Credit Counseling, or NFCC, released on Wednesday.

Only 36% said they would tap their rainy day funds for an emergency. The rest of the 2,700 people polled said that they would have to go to other extremes to cover an unexpected expense, such as borrowing money or taking out a cash advance on a credit card.

Most people take the view that credit cards are emergency savings. It's one of the reasons credit card write-offs are so large now. Many people during the recession relied on their credit cards to maintain their entitlements. When the emergency turned into chronic unemployment or loss of income, the credit card debt grew out of control, and many have opted not to pay them.

“It's alarming,” said Gail Cunningham, a spokeswoman for the Washington, DC-based non-profit. “For consumers who live paycheck to paycheck — having spent tomorrow's money — an unplanned expense can truly put them in financial distress,” she noted.

That's the case for Allyson Curtis, 35. “I think about it every day,” she said.

Curtis was unemployed for only three months last year, but in that time she accumulated $5,000 in credit card debt that she's now struggling to pay down.

Do you think that $5,000 in debt was to pay for food, water, and shelter? How many indulgent entitlements were included in the bill?

In the case of an emergency, Curtis said she would likely postpone other payments and pile on additional debt.

In other words, she would go Ponzi.

She is already putting off $450 in dental work and a car inspection due to a crack in her windshield, which will cost $300 to replace, she said.

Many respondents, 17%, said they would borrow money from friends or family. Another 17% said they would neglect other financial obligations — like a credit card bill or mortgage payment — in order to free up some funds.

It must be horrifying for bankers to realize so many view mortgage payments as optional, like Peggy Tanous of OC Housewives fame who got a boob job instead of paying her mortgage.

Budgeting for an emergency fund

Alternatively, 12% of the respondents said they would have to sell or pawn some assets to come up with $1,000 and 9% said they would need to take out a loan. Another 9% said they would get a cash advance from a credit card, according to the NFCC.

Cunningham finds that particularly troubling. Neglecting other debt obligations — or worse piling on more debt — “really exacerbates the problem,” she said.

An earlier study by the same organization found that 30% of Americans have zero dollars in non-retirement savings. A separate study by the National Bureau of Economic Research found that 50% of Americans would struggle to come up with $2,000 in a pinch.

Annndd it's gone….

Cost of ownership lower than the 00s

Very low interest rates certainly do make properties less expensive to own. Today's featured property is priced to reflect 3.4% annual appreciation. That is about the rate of wage growth in Irvine. The property was purchased in 1999 which was before prices got ridiculous in the housing bubble.

The monthly cost of ownership for these owners back in 1999 would have been similar to the cost of ownership today with most of the modest increase in price being compensated by the enormous reduction in borrowing costs. In fact, most of the appreciation in this property could be attributed to declining borrowing costs rather than increasing area wages. If Bernanke holds to his promise to keep rates low for at least two more years, condo prices will likely bottom soon, if they haven't already.

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This property is available for sale via the MLS.

Please contact Shevy Akason, #01836707

949.769.1599

sales@idealhomebrokers.com

Irvine House Address … 180 GREENMOOR Irvine, CA 92614

Resale House Price …… $232,800

Beds: 2

Baths: 1

Sq. Ft.: 889

$262/SF

Property Type: Residential, Single Family

Style: Two Level, Other

Year Built: 1985

Community: Woodbridge

County: Orange

MLS#: S669455

Source: SoCalMLS

Status: Active

On Redfin: 3 days

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WONDERFUL OPPORTUNITY. RESORT STYLE LIVING IN WOODBRIDGE. CLOSE TO UCI. EASY ACCESS TO 405 AND 5 FREEWAYS. BLUE RIBBON SCHOOLS. CLOSE TO SOUTH LAKE. BRAND NEW CARPET.

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Proprietary IHB commentary and analysis

Resale Home Price …… $232,800

House Purchase Price … $156,500

House Purchase Date …. 11/24/1999

Net Gain (Loss) ………. $62,332

Percent Change ………. 39.8%

Annual Appreciation … 3.4%

Cost of Home Ownership

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$232,800 ………. Asking Price

$8,148 ………. 3.5% Down FHA Financing

4.19% …………… Mortgage Interest Rate

$224,652 ………. 30-Year Mortgage

$71,492 ………. Income Requirement

$1,097 ………. Monthly Mortgage Payment

$202 ………. Property Tax (@1.04%)

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

$48 ………. Homeowners Insurance (@ 0.25%)

$258 ………. Private Mortgage Insurance

$241 ………. Homeowners Association Fees

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

$1,847 ………. Monthly Cash Outlays

-$173 ………. Tax Savings (% of Interest and Property Tax)

-$313 ………. Equity Hidden in Payment (Amortization)

$12 ………. Lost Income to Down Payment (net of taxes)

$49 ………. Maintenance and Replacement Reserves

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

$1,423 ………. Monthly Cost of Ownership

Cash Acquisition Demands

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$2,328 ………. Furnishing and Move In @1%

$2,328 ………. Closing Costs @1%

$2,247 ………… Interest Points @1% of Loan

$8,148 ………. Down Payment

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

$15,051 ………. Total Cash Costs

$21,800 ………… Emergency Cash Reserves

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

$36,851 ………. Total Savings Needed

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Tonight we will deliver our first-time homebuyer's presentation. Admission is free and open to everyone.

I hope to see you there.

In an effort to stop the double dip from getting worse, lenders are slowing foreclosure activity nationwide. Their efforts will delay the market bottom and extend squatting benefits.

Irvine Home Address … 219 TALL OAK Irvine, CA 92603

Resale Home Price …… $550,525

Now if you're feelin' kinda low 'bout the dues you've been paying

Future's coming much too slow

And you wanna run but somehow you just keep on stayin'

Can't decide on which way to go

I understand about indecision

But I don't care if I get behind

People livin' in competition

All I want is to have my peace of mind.

Boston — Peace of Mind

Do you ever find yourself getting impatient with the way lenders have dragged out the housing crash? I do. It isn't merely that I want to see lower house prices as those are prevalent across most of the country. I want to see the economic wounds heal. That isn't going to happen until lenders foreclose on all the delinquent mortgage squatters and resell the resulting REO.

While we wait for lenders to do what needs to be done, the homebuilding industry remains in the doldrums, lending remains at anemic levels, and overall economic activity is feeble. None of that will change until our zombie banks are put out of their misery and recapitalized. In the meantime, lenders are slowing foreclosures and dragging out the economic morass. Academics in the United States used to criticize Japan for the way they dealt with this same problem in the 1990s. We are going down the same path.

U.S. Foreclosure Activity Falls to 44-Month Lows in July; Artificially Slowed by Banks

Posted by Michael Gerrity 08/11/11 8:00 AM EST

According to RealtyTrac's U.S. Foreclosure Market Report for July 2011, foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 212,764 U.S. properties in July, a 4 percent decrease from June and a 35 percent decrease from July 2010. The report also shows one in every 611 U.S. housing units with a foreclosure filing during the month of July.

Foreclosures are essential to the economic recovery. There is little debate that the housing market will not clear and house prices will not enjoy sustained appreciation until the foreclosure backlog is cleared out. As long as shadow inventory or REO inventory is present, lenders will sell into any rally thus stopping it cold.

The fact that lenders are slowing the rate of foreclosure simply means the bottom is being pushed back further in time. Also, since the delinquency rate is still very high, a slowdown in foreclosure rates means more and more people are squatting for longer periods of time.

“July foreclosure activity dropped 35 percent from a year ago, marking the 10th straight month of year-over-year decreases in foreclosure activity and the lowest monthly total since November 2007,” said James J. Saccacio, chief executive officer of RealtyTrac.

“This string of decreases was initially triggered by the robo-signing controversy back in October 2010, which forced lenders to substantially slow the pace of foreclosing, but the downward trend in foreclosure activity has now taken on a life of its own.

This should be no surprise to IHB readers. I have long contended that robo-signer was merely a ruse, the excuse-of-the-day, to delay foreclosures and avoid writing down more bad loans. Lenders will continue this behavior as long as they believe there is no buyer demand to sell into. Eventually, lenders will realize the buyer demand they are waiting for will never materialize. When they do, they will capitulate and sell for whatever they can get.

It appears that the foreclosure processing delays, combined with the smorgasbord of national and state-level foreclosure prevention efforts — including loan modifications, lender-borrower mediations and mortgage payment assistance for the unemployed —may be allowing more distressed homeowners to stave off foreclosure.

No, it is allowing more delinquent mortgage squatters to stay in homes that should be resold to those who are willing and able to pay for them.

“Unfortunately, the falloff in foreclosures is not based on a robust recovery in the housing market but on short-term interventions and delays that will extend the current housing market woes into 2012 and beyond,” Saccacio continued.

Yes, the slowdown in foreclosure activity will delay the bottom and allow more squatting.

“A stabilizing economy and improving job market are the long-term keys to a housing market recovery.”

Persistent unemployment is an ongoing drain to the economy and to the housing market.

Foreclosure Activity by Type

Default notices (NOD, LIS) were filed for the first time on a total of 59,516 U.S. properties in July, a 7 percent decrease from the previous month and a 39 percent decrease from July 2010. July's default notice total was 58 percent below the monthly peak of 142,064 default notices in April 2009.

Foreclosure auctions (NTS, NFS) were scheduled for 85,419 U.S. properties in July, a decrease of 5 percent from June and a decrease of 37 percent from July 2010. July's foreclosure auction total hit a 36-month low and was 46 percent below the monthly peak of 158,105 scheduled auctions in March 2010.

Lenders repossessed a total of 67,829 properties (REO) in July, a 1 percent decrease from the previous month and a 27 percent decrease from July 2010. The July REO total was 34 percent below the monthly peak of 102,134 bank repossessions in September 2010.

As i noted in a previous post, the dramatic declines are almost exclusively in judicial foreclosure states.

Nevada, California, Arizona post top state foreclosure rates

Nevada posted the nation's highest state foreclosure rate for the 55th straight month in July, with one in every 115 housing units receiving a foreclosure filing during the month. A total of 9,930 Nevada properties had a foreclosure filing in July, a 1 percent decrease from the previous month and a 28 percent decrease from July 2010.

Nevada also boasts one of the largest action postponement and cancelation percentages of any state. Locally, about 87% of auctions are delayed or canceled, but in Nevada the number is closer to 95%. It's a classic example of kicking the can down the road.

Despite a 16 percent year-over-year decrease in foreclosure activity, California registered the nation's second highest state foreclosure rate in July, with one in every 239 housing units with a foreclosure filing during the month.

With one in every 273 housing units with a foreclosure filing, Arizona posted the nation's third highest state foreclosure rate, after holding the No. 2 spot for seven straight months ending in June. A 39 percent month-over-month drop in REO activity pulled Arizona's total foreclosure activity in July down 25 percent from the previous month and down 38 percent from July 2010.

Other states with foreclosure rates ranking among the top 10 were Georgia, Utah, Florida, Michigan, Idaho, Illinois and Wisconsin.

10 states account for more than 70 percent of U.S. total

10 states accounted for 73 percent of U.S. foreclosure activity in July, led by California, where 56,193 properties had a foreclosure filing during the month — up 4 percent from the previous month but still down 16 percent from July 2010. Initial default notices in California were down 6 percent from the previous month, but REOs increased on a month-over-month basis for the second straight month and scheduled auctions were up 11 percent from the previous month. …

Foreclosure activity spikes in some hard-hit cities

Las Vegas continued to post the nation's highest foreclosure rate among metropolitan areas with a population of 200,000 or more, with one in every 99 housing units with a foreclosure filing in July.

But spiking foreclosure activity in some of the other cities with foreclosure rates in the top 20 narrowed the gap between those cities and Las Vegas. Seven of the cities in the top 10 and 14 of the cities in the top 20 posted monthly increases in foreclosure activity.

Foreclosure activity in the Stockton, California metro area increased 57 percent from June to July, giving it the nation's second highest metro foreclosure rate — one in every 124 housing units with a foreclosure filing during the month. Stockton foreclosure activity in July was still down 7 percent from July 2010.

With one in every 140 housing units with a foreclosure filing, the Vallejo-Fairfield, Calif., metro area posted the nation's fourth highest metro foreclosure rate in July thanks in part to a 33 percent month-over-month increase in foreclosure activity.

Foreclosure activity increased 83 percent on a month-over-month basis in the Naples-Marco Island, Fla., metro area, which posted the nation's 15th highest metro foreclosure rage, and foreclosure activity was up 60 percent on a month-over-month basis in the Ocala, Fla., metro area, which posted the nation's 17th highest metro foreclosure rate.

I find it interesting that lenders are continuing to push through foreclosures at a high rate in the hardest hit areas. To me this is a clear sign of capitulation. In Las Vegas, they have given up on trying to support prices. They are selling for whatever they can get for their properties — which isn't very much.

In over their heads from the start

There were a whole group of borrowers during the housing bubble who bought houses they had no business being in. Many imported down payments from a previous bubble property sale, and many used 100% financing. Most of these borrowers could never afford the property with the sane underwriting standards we require today.

• The previous owners of today's featured REO paid $627,000 on 9/15/2004. They used a $500,000 first mortgage and a $127,000 down payment.
• A scant four months later, they refinanced with a $510,000 Option ARM and obtained a $197,000 HELOC.
• If they maxed out the HELOC, they regained their down payment plus obtained $80,000 in HELOC booty.
• The stopped paying in August of 2008 at the latest and managed to squat for over two and one half years.

Foreclosure Record

Recording Date: 05/06/2010

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 03/12/2009

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 12/09/2008

Document Type: Notice of Default

The bank owns this property now, the former owners lost their down payment (or HELOCed and spent it) and now their credit is trashed.

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This property is available for sale via the MLS.

Please contact Shevy Akason, #01836707

949.769.1599

sales@idealhomebrokers.com

Irvine House Address … 219 TALL OAK Irvine, CA 92603

Resale House Price …… $550,525

Beds: 3

Baths: 3

Sq. Ft.: 1600

$344/SF

Property Type: Residential, Condominium

Style: 3+ Levels, Contemporary

View: City Lights, Hills, Mountain, Peek-A-Boo, Yes

Year Built: 2004

Community: Quail Hill

County: Orange

MLS#: S664118

Source: SoCalMLS

On Redfin: 56 days

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HUGE REDUCTION! Excellent corner location across from the park and pool. Vantage point views – panoramic of city lights and mountains. Modern style Tri Level with 3 bedrooms (one lower level and two on third level) with 3.5 baths. Each bedroom has access to full bath, while guests have access to 1/2 bath on main floor (2nd). Balcony with BBQ gas line, large wrap around side yard for entertaining. Walking distance to Alderwood Basics Plus school and Association Amenities – Pools, gym, parks, etc.

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Proprietary IHB commentary and analysis

Resale Home Price …… $550,525

House Purchase Price … $627,000

House Purchase Date …. 9/15/2004

Net Gain (Loss) ………. ($109,507)

Percent Change ………. -17.5%

Annual Appreciation … -1.9%

Cost of Home Ownership

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$550,525 ………. Asking Price

$110,105 ………. 20% Down Conventional

4.19% …………… Mortgage Interest Rate

$440,420 ………. 30-Year Mortgage

$120,515 ………. Income Requirement

$2,151 ………. Monthly Mortgage Payment

$477 ………. Property Tax (@1.04%)

$183 ………. Special Taxes and Levies (Mello Roos)

$115 ………. Homeowners Insurance (@ 0.25%)

$0 ………. Private Mortgage Insurance

$187 ………. Homeowners Association Fees

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

$3,113 ………. Monthly Cash Outlays

-$353 ………. Tax Savings (% of Interest and Property Tax)

-$613 ………. Equity Hidden in Payment (Amortization)

$165 ………. Lost Income to Down Payment (net of taxes)

$89 ………. Maintenance and Replacement Reserves

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

$2,401 ………. Monthly Cost of Ownership

Cash Acquisition Demands

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$5,505 ………. Furnishing and Move In @1%

$5,505 ………. Closing Costs @1%

$4,404 ………… Interest Points @1% of Loan

$110,105 ………. Down Payment

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$125,520 ………. Total Cash Costs

$36,800 ………… Emergency Cash Reserves

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

$162,320 ………. Total Savings Needed

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