Sometimes people thinking outside the box come up with great solutions to difficult problems; however, sometimes people believe they are innovative when they are merely clueless and inept.

Irvine Home Address … 7 PEARLEAF Irvine, CA 92618

Resale Home Price …… $599,900

As I sift and drift through bullshit,

That plagues from day to day,

Would you ever really notice I've gone away?

I'm over the wall,

Over the hill,

Over at your place,

I'm over the safeties,

Over the phone calls,

Over the rage,

What a mistake.

Nickelback — Mistake

Not long ago, I wrote about Government Bureaucrat Recommends Against 30-Year Fixed-Rate Mortgages and Another Ignorant and Misguided Attack on the 30-Year Fixed-Rate Mortgage. Both of those pieces were emtional appeals with poorly reasoned positions. It was apparent from reading them that the authors had an agenda supported by banking interests that would rather see everyone borrow with adjustable rate mortgages at the bottom of the interest rate cycle.

Today's featured article comes from the New York Time's “expert” on mortgages and related issues. Unfortunately, just as the previous two writers did, she wrote an emotional appeal with little substance supporting a dubious agenda. Shame on the New York Times for calling this news.

Housing Doesn’t Need a Crash. It Needs Bold Ideas.

By GRETCHEN MORGENSON

Published: September 11, 2010

WE all know that most of us don’t tackle problems until they’ve morphed into full-blown crises. Think of all those intersections that get stop signs only after a bunch of accidents have occurred.

Better yet, think about the housing market.

Only now, after it has become all too clear that the government’s feeble efforts to “help” troubled homeowners have failed, are people considering more substantive approaches to tackling the mortgage and real estate mess. Unfortunately, it’s taken the ugly specter of a free fall or deep freeze in many real estate markets to get people talking about bolder alternatives.

Wait a moment. She has dressed up her non-problem with plenty of emotional language, but why is this a problem that needs government intervention? Who says this is a “crisis?” Whatever “mess” we have is largely caused by all the government intervention. The “ugly specter of a free fall or deep freeze” is the natural cleansing process of a financial market. Too bad if that is politically unpopular.

One reason the Treasury’s housing programs have caused so much frustration among borrowers — and yielded so few results — is that they seemed intended to safeguard the financial viability of big banks and big lenders at homeowners’ expense.

It isn't that these programs “seemed” intended to benefit banks as the expense of homeowners, the frustration among borrowers is because these programs are intended to benefit banks at the expense of borrowers. The perception of borrowers is accurate, and they should be more than just frustrated, borrowers should be pissed off.

For example, the government — in order, it believed, to protect the financial system from crumbling — has never forced banks to put a realistic valuation on some of the sketchy mortgage loans they still have on their books (like the $400 billion in second mortgages they hold).

All those loans have been accounted for at artificially lofty levels, and have thereby provided bogus padding on balance sheets of banks that own them. Banks’ refusal to write down these loans has made it harder for average borrowers to reduce their mortgage obligations, leaving them in financial distress or limbo and dinging their ability to be the reliable consumers everyone wants them to be.

There is much nonsense in that last sentence. First, she is making a nonexistent connection between the banks refusal to accept write downs and the problems borrowers have with excessive debt. In some fantasy world of borrowers where banks forgive debt, this connection may exist, but in the real world, banks don't reduce borrower's mortgage obligations, borrowers do that by paying off their loans.

Banks refusal to accept write downs has resulted in widespread banking paralysis and lots of squatting, but that is a banking problem not a borrower problem. Borrowers don't really care because they have reduced their indebtedness by simply refusing to pay back the debt. Nothing the banks are doing has any connection to this borrower behavior except perhaps that the banks refusal to foreclose prompted more borrowers to default and eliminate their debt.

While it is true that over-indebted borrowers don't spend and stimulate the economy, widespread debt forgiveness outside of foreclosure is not the solution. What incentive would borrowers have to borrow prudently in the future? She has set up her argument to promote a solution that involves decreasing borrower distress without acknowledging the moral hazard any such effort creates. Borrowers who cannot afford their debt need to go through foreclosure and probably bankruptcy otherwise they will repeat the mistake.

Various proposals are being batted around to address the mortgage morass; one is to do nothing and let real estate markets crash. That way, the argument goes, buyers would snap up bargains and housing prices would stabilize.

Yes, that is the only viable solution to the problem, yet it is the solution everyone works against. Her argument below isn't that letting market prices fall would bring stabilization, her argument is that it will take a while because so many are frozen out of the market.

Yet little about this trillion-dollar problem is so simple. While letting things crash may seem a good idea, there are serious potential complications. Here’s just one: Many lenders and some government agencies bar borrowers who sold their homes for less than the outstanding loan balance — known as a “short sale” — from receiving a new mortgage within a certain period, sometimes a few years.

For example, delinquent borrowers who conducted a short sale are ineligible for a new mortgage insured by the Federal Housing Administration for three years; Fannie Mae blocks such borrowers for at least two years. Private lenders have similar guidelines.

Such rules made sense in normal times, but their current effect is to keep many people out of the market for years. And as home prices have plunged, leaving legions of borrowers underwater on loans, short sales have exploded. CoreLogic, an analytic research firm, estimates that 400,000 short sales are taking place each year.

More can be expected: 68 percent of properties in Nevada are worth less than the outstanding mortgage, CoreLogic said, while half in Arizona and 46 percent in Florida are underwater.

“There is this perception that maybe we should let the market crash and then prices will level off and people will come out and buy,” said Pam Marron, a senior mortgage adviser at the Waterstone Mortgage Corporation near Tampa, Fla. “But where are the buyers going to come from? So many borrowers are underwater and they’re stuck; they can’t buy another home.”

She has devoted a significant block of text to setting up the mortgage waiting period as a bogeyman. The logical conclusion from her problem definition is that we should shorten or eliminate the waiting period to get a new loan after a foreclosure. I addressed this bad idea in Fannie Mae Encourages Strategic Default by Reducing Punishment Time for New Loan. To solve the problem she describes would create an avalanche of accelerated default as every underwater loan owner in America would default and buy a different home at a much lower price.

Despite devoting so much space to making this point, it does nothing to support the argument she makes later. It reads more like a feeble attempt to justify some form of market intervention when none is required.

There is no doubt that real estate and mortgage markets remain deeply dysfunctional in many places. Given that the mess was caused by years of poisonous lending, regulatory inaction and outright fraud — and yes, irresponsible borrowing — this is no surprise. Throw in the complexity of working out loans in mortgage pools whose ownership may be unclear, and the problem seems intractable.

The moral hazard associated with helping troubled borrowers while penalizing responsible ones who didn’t take on outsize risks adds to the difficulties.

All the difficulties she outlines above are very real, but the problems are not intractable. All these problems are resolved by the foreclosure process. The debts are wiped clean, the imprudent borrowers are punished, and moral hazards are avoided — that is why we have foreclosure as part of the system. Just because people may not like the way the system works doesn't mean there is a better system. If the government would stop messing around and either allow or force these foreclosures and write downs to occur, we could get back on solid economic footing and move on.

STILL, there are real, broad economic gains to be had by helping people who are paying their mortgages to remain in their homes.

What the hell is she talking about? People who are paying their mortgages are remaining in their homes. I haven't heard of any borrowers who are current on their payments going into foreclosure, have you?

Figuring out how to reduce their payments can reward responsible borrowers while slowing the vicious spiral of foreclosures, falling home prices and more foreclosures. And it just might help restore people’s confidence in the economy and get them buying again.

OMG! That is the most ridiculous thing I have read in quite a while. How does rewarding responsible borrowers slow the “vicious spiral of foreclosures?” (Notice the emotional language she chose.) Responsible borrowers are not causing foreclosures. Second, what does any of this have to do with consumer confidence?

What she is proposing is that we give these people money in the form of lower payments so they will go spend it. Do we really want to stimulate the economy by giving money to underwater loan owners? I don't. Not even a penny.

With that in mind, let’s recall an idea described in this space on Nov. 16, 2008. As conceived by two Wall Street veterans, Thomas H. Patrick, a co-founder of New Vernon Capital, and Macauley Taylor, principal at Verum Capital, the plan calls for refinancing all the nonprime, performing loans held in privately issued mortgage pools (except for Fannie’s and Freddie’s) at a lower rate.

The mass refinancing could have helped borrowers, while retiring mortgage securities at par and thus helping pension funds, banks and other investors in those pools recover paper losses created when prices plummeted. Fannie Mae and Freddie Mac could have financed the deal with debt.

Now we come to the crux of her idea: take taxpayer money to buy underwater privately-held mortgages at full par value and make investors whole. I can't think of a worse way to waste taxpayer money.

For example, lets say a MBS pool has a $500,000 mortgage on a house that is now worth $400,000. That loan owner cannot refinance, and only the feeble hope of a recovery that is not forthcoming keeps him from accelerating his default. She is proposing that the US Taxpayer pay $500,000 for this loan, write down the interest rate, and pray that the poor schmuck we are “helping” doesn't realize we extended his debt servitude. When borrowers realize they are still hopelessly underwater, they will accelerate their default anyway, and the taxpayer ends up covering the loss — a loss that would otherwise be absorbed by a private investor. Does she really think this will solve the problem borrowers have with benefiting banks at borrower expense?

This is a blatant attempt to shift losses from the private sector to the US taxpayer. This is her “bold idea?”

In the fall of 2008, when Mr. Patrick and Mr. Taylor tried to get traction with their proposal, roughly $1.5 trillion in mortgages sat in these pools. Of that, $1.1 trillion was still performing.

Instead of refinancing those mortgages, however, the Washington powers-that-be hurled $750 billion of taxpayer money into the Troubled Asset Relief Program, which bailed out banks instead.

Do you think investors in MBS pools put her up to this article? After all, they didn't get any of the TARP money because it all went to banks. Since we are bailing out banks from their bad investments, why shouldn't we bail out ordinary stupid investors?

Though one goal was to get banks lending again, it hasn’t happened.

Now, almost two years later, $1.065 trillion of nonprime loans is sloshing around in private mortgage pools, according to CoreLogic’s securities database. While CoreLogic doesn’t report the dollar amount of loans that are performing, it said that as of last June, two-thirds of the 1.6 million loans in those pools were 60 days or more delinquent.

Wow! Two-thirds of a trillion dollars in nonprime loans are delinquent. No wonder MBS pool investors are using Gretchen to pitch their bailout.

That means one-third of the borrowers in these pools are paying their mortgages. But it is likely that many of these people owe more on their loans than their homes are worth and would benefit greatly from an interest-rate cut.

Despite cloaking it as a benefit to borrowers, she is proposing that we save the full market value of the last third of the MBS pools through a government bailout. Who do you think this really benefits?

If Fannie and Freddie bought these loans out of the pools at par and reduced their interest rates, additional foreclosures might be avoided. The only downside to the government would be if some loans it purchased went bad.

The only downside? How many billions in taxpayer dollars will it take to cover this “only downside?” If it isn't that much, perhaps the MBS holders should take the loss. if it is a lot, then the MBS holders should certainly take the loss. What possible justification is there for this kind of MBS bailout?

The benefits of the plan could easily outweigh the risks. Institutions holding these loans would be fully repaid, a lot of borrowers would be helped and additional foreclosures that are so damaging to neighborhoods might be averted.

Let's take these “benefits” one at a time:

• “Institutions holding these loans would be fully repaid.” As a taxpayer, why the hell do I care about institutional losses? Why should I be paying money to cover the losses of professional investors? The idea that even one penny of my tax dollars would go toward this infuriates me.
• “a lot of borrowers would be helped.” How exactly does this happen? The borrower is still underwater. Making his payment affordable doesn't help him, it just makes his debt servitude manageable. What would really help is for him to go through foreclosure and eliminate the debt.
• “additional foreclosures that are so damaging to neighborhoods might be averted.“ This bullshit gets used every time someone wants to promote their latest bailout. Foreclosures have not caused riots, nor have they caused neighborhoods to deteriorate. Foreclosures have lowered property values and made many existing owners unhappy, but their neighborhoods are not “damaged” despite repeated claims that they are.

Every point she makes in summation to support her argument is nonsense.

“Every program that the government has announced was focused on bad credits, but they were trying to fix a hole that is too big,” Mr. Patrick said. “The idea is to try to preserve the decent risks and not let them go bad.”

At the very least, this is a sophisticated and realistic idea that’s still worth considering.

Give me a break. I give her credit; she does know how to polish a turd. This idea is neither sophisticated nor realistic; it is simplistic and stupid. The only beneficiaries are holders of MBS pools of toxic mortgages who will get to offload their crap on the US taxpayer. People considering this idea are not sophisticated; in fact, they are sheeple.

Seriously, do you think Ms. Morgenson is getting paid off, or is she just thick?

HELOCs are bad for your financial health

What lesson do you think Californians have learned about HELOCs?

1. HELOCs are bad and using them often leads to foreclosure.
2. HELOCs are great because they provide free money you don't have to pay back.

From what I have observed about human nature, some will learn lesson 1 (the right answer), but with the plethora of bailouts offered up to loan owners, most will learn lesson number 2, and our housing market is now doomed to be ruled by Ponzis.

• Today's featured property was purchased on 11/9/2004 for $615,000. The owners used a $491.920 first mortgage and a 123,080 down payment.
• On 8/17/2005 they refinanced the first mortgage for the same amount.
• On 3/13/2007 they obtained a $168,800 HELOC from Washington Mutual.
• On 3/19/2007 they obtained a $250,000 HELOC from Bank of America.
• Does anyone smell mortgage fraud here? This couple processed HELOC applications at two banks simultaneously, and the applications were approved within days of one another. You have to assume they took out all the money. Why else would you get two HELOCs from two different banks at the same time?
• Total property debt was $909,920.
• Total mortgage equity withdrawal was $418,000 assuming they withdrew all the money from both HELOCs.
• They didn't get to squat long. I suspect the banks expedited the foreclosure process because of the mortgage fraud.

Foreclosure Record

Recording Date: 06/24/2010

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 03/23/2010

Document Type: Notice of Default

The property was purchased at auction on 8/11/2010.

Irvine Home Address … 7 PEARLEAF Irvine, CA 92618

Resale Home Price … $599,900

Home Purchase Price … $615,000

Home Purchase Date …. 11/9/2004

Net Gain (Loss) ………. $(51,094)

Percent Change ………. -8.3%

Annual Appreciation … -0.4%

Cost of Ownership

————————————————-

$599,900 ………. Asking Price

$119,980 ………. 20% Down Conventional

4.36% …………… Mortgage Interest Rate

$479,920 ………. 30-Year Mortgage

$115,325 ………. Income Requirement

$2,392 ………. Monthly Mortgage Payment

$520 ………. Property Tax

$150 ………. Special Taxes and Levies (Mello Roos)

$50 ………. Homeowners Insurance

$75 ………. Homeowners Association Fees

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

$3,187 ………. Monthly Cash Outlays

-$396 ………. Tax Savings (% of Interest and Property Tax)

-$648 ………. Equity Hidden in Payment

$191 ………. Lost Income to Down Payment (net of taxes)

$75 ………. Maintenance and Replacement Reserves

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

$2,408 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$5,999 ………. Furnishing and Move In @1%

$5,999 ………. Closing Costs @1%

$4,799 ………… Interest Points @1% of Loan

$119,980 ………. Down Payment

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

$136,777 ………. Total Cash Costs

$36,900 ………… Emergency Cash Reserves

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

$173,677 ………. Total Savings Needed

Property Details for 7 PEARLEAF Irvine, CA 92618

——————————————————————————

Beds: 3

Baths: 2 full 1 part baths

Home size: 1,750 sq ft

($357 / sq ft)

Lot Size: n/a

Year Built: 2000

Days on Market: 30

Listing Updated: 40415

MLS Number: S628875

Property Type: Condominium, Residential

Community: Oak Creek

Tract: Acac

——————————————————————————

NEWER DETACHED SINGLE FAMILY HOME IN BEAUTIFUL NEIGHBORHOOD WITH POOL AND SPA. GREAT FLOORPLAN: GARAGE AND GUEST SUITE AT GROUND LEVEL. LIVING ROOM WITH FIREPLACE, OPEN TO DINING ROOM AND KITCHEN – WITH WHITE CABINETS AND BREAKFAST BAR – ON SECOND LEVEL, ALONG WITH INSIDE LAUNDRY ROOM WITH CABINETS AND SECOND BEDROOM AND BATHROOM; THE TOP LEVEL IS A MASTER SUITE WITH ADJACENT SITTING ROOM OR OFFICE AND A LARGE MASTER BATHROOM WITH SEPARATE TUB AND SHOWER AND WALK-IN CLOSET. NEW CARPET; TILE FLOORING IN DINING ROOM, KITCHEN, LAUNDRY ROOM AND BATHROOMS; SMOOTH CEILINGS; RECESSED LIGHTING. LARGE PATIO; READY TO MOVE IN.

realtors already have a powerful political lobby, but they recently instituted a required member fee to pay for increased lobbying efforts. One more reason I will never join their organization.

Irvine Home Address … 18 GATEWOOD Irvine, CA 92604

Resale Home Price …… $349,999

This is your 5 minute warning

Burn all of your classified documents

And if cooler heads don't prevail

First strike from a political dead man

Megadeth — Blackmail the Universe

California Realtors to Pay Political Assessment

by Bob Hunt — September 7, 2010

When the 2011 dues billing cycle comes around a few months from now, members of the California Association of realtors® (CAr) will see a new assessment of $49 in addition to their regular dues. Labeled the "realtor® Action Assessment" (rAA), its purpose is to raise funds for CAr political activities. The assessment is not optional, although individuals will have a choice as to which way their $49 is to be directed. (1) It can go to CAr political action committees which provide funding support for candidates, or (2) it can go the general fund for political purposes such as "education and mobilizing members on issues of importance to the real estate industry and not to specific candidates."

Lobbyists are supposed to educate legislators about the impacts proposed legislation will have on a certain constituency so the legislator can make a sound decision based on facts… at least that is how it is supposed to work. In the real world, lobbyists most often "educate" candidates on how much money they donated to their campaigns during the last cycle and how much they will likely donate to their political opponents if they act contrary to their constituency's wishes. In short, lobbyists are extortionists.

The California Association of realtors like the National Association of realtors has a political action committee that employs lobbyists to educate politicians at every level of government. Usually, these activities are funded by optional donations to the PAC. Not anymore. Now the CAr is forcing members to pay a fee to fund their lobbying efforts.

Just about every California realtor® is aware of the fact that legislative activity constantly affects the real estate business. Moreover, most know that it is only because of CAr's involvement that the business hasn't been even more negatively affected than has been experienced.

That is not true. The realtor lobby supported the tax credits and other market props that have reduced sales rates by keeping price artificially inflated. This has greatly reduced realtor income and negatively impacted its members.

In the past year alone, CAr has influenced legislation on topics ranging from deficiency judgments to income tax withholding for independent contractors to point-of-sale retrofit requirements that would have drastically increased the cost of selling a home. The list goes on and on.

The Realtors®' legislative agenda is supported in three ways: through direct member involvement, by the lobbying efforts of CAr's legislative staff in Sacramento, and by the election of legislators who are disposed to have a favorable attitude to the business, tax, property rights, and land use issues that realtors® care about. All of these things cost money; and the election of legislators is what costs the most.

realtors pump much money into campaigns of politicians so that these politicians will owe them favorable legislation. If a politician were already favorably disposed to agree with the CAr, this arrangement would be symbiotic, but since most politicians are whores, the political donations are payoffs to buy votes on legislation.

This is not a partisan issue. At both the national and the (California) state level, realtor® PAC funds are pretty evenly distributed between the parties. Many people have the perception that realtor issues tend to be on the Republican side, but this is not so. In the current state legislative session, 6 CAr-sponsored bills are being carried by Democrats, 2 by Republicans.

It's comforting to know that both Democrats and Republicans are equally corrupt.

It is practically a self-evident truth that CAr needs to raise more political-purpose money than it has currently been able to generate through strictly volunteer programs. The economic toll taken by the market downturn has been evident in this area as well as the more familiar ones. In the past six years voluntary participation in political-purpose fundraising has dropped from 37% of the membership to 20%. The amount of funds raised in 2009 was down approximately 50% from 2006. Once among the top 10 PACs in the state of California, CAr is now ranked number 37.

If donations are down, isn't that a sign that the political action committee is failing? If they were doing good work wouldn't their members be making more money and wouldn't they also be willing to donate money to the cause?

When people donate to charities, they do so because they believe in the work of that charity. If the charity is not doing good work, then donors withhold their money. Isn't that the way it is supposed to work? What makes political action committees any different? Why does the CAr think they have the right to force their members to put money toward something they don't believe in and do not support?

The realtor® Action Assessment was adopted by CAr's Board of Directors at their June meetings in Sacramento. Details about it have been on the web site car.org, and electronic newsletter notification has been sent to the members. No one should be surprised when the dues billing statements go out at the turn of the year. Inevitably, though, some will be.

No just will many members be surprised, many won't pay it, and if push comes to shove, many will chose to leave the organization rather than be forced to donate money to a political action committee that arguably does a poor job at serving the needs of its members and the broader society.

Zero percent down equity stripper in action

The previous owner was a classic Ponzi who extracted whatever the banks were willing to give him. When you look at what this guy did, it is astonishing that lenders allowed and encouraged this.

• This property was purchased for $350,000 on 1/28/2004. The owner used a $280,000 first mortgage, a $70,000 second mortgage, and a $0 down payment.
• On 3/7/2005 he refinanced with a $292,000 first mortgage. It's possible he paid off the second at this point, but it was most likely subordinated.
• On 1/17/2007 he refinanced with a $366,000 Option ARM first mortgage with a 2.3% teaser rate. He only extracted $16,000, but considering he put nothing down, it was all free money.
• He quit paying in early 2009, but this servicer moved quickly, so he did not get much squatting time.

Foreclosure Record

Recording Date: 11/09/2009

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 08/06/2009

Document Type: Notice of Default

The bank bought the property at auction on 12/7/2009, and they sat on it for almost 10 months before they sold it to our current flipper.

It pays to know the right people

The flipper (who is also the realtor) on this property bought it directly from Deutsche Bank National Trust Company. It was never advertised on the MLS. People with cash and the right connections can get deals like this — assuming you think the the price he paid was good. I don't think he will get this asking price, but his margin is fat enough to lower it plenty and still make money. I wonder if this realtor's political connections helped him get this deal?

Irvine Home Address … 18 GATEWOOD Irvine, CA 92604

Resale Home Price … $349,999

Home Purchase Price … $262,500

Home Purchase Date …. 8/29/2010

Net Gain (Loss) ………. $66,499

Percent Change ………. 25.3%

Annual Appreciation … 400.0%

Cost of Ownership

————————————————-

$349,999 ………. Asking Price

$70,000 ………. 20% Down Conventional

4.34% …………… Mortgage Interest Rate

$279,999 ………. 30-Year Mortgage

$67,125 ………. Income Requirement

$1,392 ………. Monthly Mortgage Payment

$303 ………. Property Tax

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

$29 ………. Homeowners Insurance

$312 ………. Homeowners Association Fees

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

$2,037 ………. Monthly Cash Outlays

-$132 ………. Tax Savings (% of Interest and Property Tax)

-$380 ………. Equity Hidden in Payment

$110 ………. Lost Income to Down Payment (net of taxes)

$44 ………. Maintenance and Replacement Reserves

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

$1,680 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$3,500 ………. Furnishing and Move In @1%

$3,500 ………. Closing Costs @1%

$2,800 ………… Interest Points @1% of Loan

$70,000 ………. Down Payment

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

$79,800 ………. Total Cash Costs

$25,700 ………… Emergency Cash Reserves

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

$105,500 ………. Total Savings Needed

Property Details for 18 GATEWOOD Irvine, CA 92604

——————————————————————————

Beds: 2

Baths: 1 full 1 part baths

Home size: 1,110 sq ft

($315 / sq ft)

Lot Size: 1,350 sq ft

Year Built: 1977

Days on Market: 16

Listing Updated: 40422

MLS Number: S629915

Property Type: Condominium, Residential

Community: Woodbridge

Tract: Othr

——————————————————————————

Magnificant Irvine Woodbridge 2 Story Condo. This quietly located condominium features two large bedrooms, a highly upgraded kitchen with stainless steel appliances and contemporary interior finishes. This home is turnkey, distinquished and nice, nice, nice!Seller is Motivated so submitt your best offer!!!

Magnificant? distinquished? submitt?

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

The end of the banking cartel is being signaled by coordinated efforts at a variety of governmental agencies to expedite the foreclosure liquidation process.

Irvine Home Address … 10 EXETER 11 Irvine, CA 92612

Resale Home Price …… $379,000

You know it all by heart

Why are you standing in one place?

Born to blossom, bloom to perish

your moment will run out

What you waiting for?

What you waiting for?

(What you waiting for)

Take a chance you stupid ho,

Take a chance you stupid ho

Gwen Stefani — What You Waiting For?

Last week I wrote about The Upcoming Collapse of the Banking Cartel. In that post, I noted that as soon as the parties to the cartel begin to feel some urgency to liquidate their holdings that the cartel would crumble. The only thing sustaining prices are current levels is the limited availability of product. Once enough product hits the market in a salable form (short sales are still a very slow process), prices will begin to fall.

Given how much effort and resources the government has put into market stabilization, it is surprising that the FDIC, the GSEs and the FHA are leading the movement to liquidate properties and bring down the banking cartel.

FDIC sells another $760 million in REO

Jon Prior — September 3, 2010

Mariner Real Estate Management (MREM), a real estate investment and management firm based in Kansas, closed a deal to acquire a $760 million portfolio of residential and commercial loans and REO properties from the Federal Deposit Insurance Corp. (FDIC).

MREM is part of Mariner Holdings, a $7 billion wealth and asset management company. The portfolio includes roughly 1,100 loans and properties from 20 banks the FDIC has taken into receivership. The properties are located across 24 states.

Earlier in August, the FDIC sold a similar $1.7 billion portfolio to PMO Loan Acquisition Venture, a partnership of other investment firms. If bank failures continue, the amount of REO held by the FDIC would increase. Those banks insured by the FDIC currently hold $49.2 billion worth of REO, a 45% increase from a year ago.

This problem is enormous. Even selling a billion dollars in REO a month, the FDIC is going to take four years to dispose of the REO it currently has, and since they are getting more REO through failed bank takeovers, the actual inventory they will need to dispose of is much larger.

Most people don't understand absorption rates. Buyers at various price points are limited by their incomes. Once the available buyers at a certain income level are satisfied, the only way to move more product is to lower prices and expand the buyer pool. When absorption rates are as low as they are now, lenders will either hold properties forever, or they will need to lower prices to get rid of it.

In this most recent deal, MREM acquired a 40% managing member interest for roughly $52 million in a company created by the FDIC to hold all of its loans and REO assets recovered from failed banks. The FDIC will keep the other 60% interest in the company.

MREM tapped Cohen Financial, based in Chicago, to handle the asset management services for the deal. Cohen provides loan servicing and asset management services to third parties.

“We are very pleased to partner with the FDIC on this important transaction,” said Marty Bicknell, CEO of Mariner, in a press statement. “Together with Cohen Financial, we can offer the FDIC the best asset management solutions for this portfolio.”

Tim Mazzetti, a partner and executive vice president at Cohen Financial said his company has been preparing for an opportunity like this for some time.

“We have been building out our platform over the past four years to be in a position to take on such a large and diversified pool of performing, sub- and nonperforming assets in an efficient and cost effective manner,” Mazzetti said.

"Taking on" a portfolio of nonperforming assets is code for "liquidation." These guys are going to keep what cashflows and liquidate the rest.

One of the barriers to liquidation is the write downs required by "solvent" banks (we all know most of them are not solvent). A huge problem within the GSE portfolios is that the services of delinquent loans are intentionally delaying foreclosure when the parent bank holds the second mortgage.

For example, let's say the Bank of America is the servicer on a delinquent first mortgage. Their servicer agreement with the GSEs lays out a procedure to mitigate losses for the GSE portfolio. If there is no second mortgage, servicers will generally follow these procedures to the letter, and in the end, most properties end up in foreclosure. However, if Bank of America is the servicer, and they also hold the second mortgage, they do not follow standard procedure because the resulting foreclosure will cause them to lose most or all of the value in the second mortgage.

This servicing arrangement creates an enormous conflict of interest. The easiest solution would be to bar servicers from working on loans where they have a junior lien position, but that isn't what the GSEs are doing. In their first tentative steps toward dealing with this huge conflict of interest, the GSEs are going to start charging servicers who fail to properly follow their loss mitigation procedures.

Fannie Mae gets tougher on mortgage servicers

By Al Yoon — Wed Sep 1, 2010

(Reuters) – Fannie Mae (FNMA.OB), the largest provider of funding for U.S. residential mortgages, will begin demanding compensation from mortgage servicing companies that fail to properly handle troubled mortgage loans, the company announced late on Tuesday.

The government-controlled company also said it may begin conducting reviews of loan files, processes and procedures used by the servicers, in another sign it is growing impatient with the firms that collect and distribute homeowners' payments.

Mortgage servicers have come under intense scrutiny as they have struggled with record delinquencies and foreclosures. Their efforts to ease payments on loans to avert default have fallen short in many cases, playing some role in disappointing results of a federal program to refinance or modify mortgages.

"A compensatory fee not only compensates Fannie Mae for damages but also emphasizes the importance placed on a particular aspect of a servicer's performance," Fannie Mae said in an announcement to servicers.

"In some cases, a compensatory fee will relate to the action a servicer took, or failed to take, in handling a specific mortgage loan," it said.

Fees will be applied in various instances, including failure to provide access to records and delays on completing foreclosures and selling foreclosed properties.

These comments are aimed directly at the practice of avoiding foreclosure on properties that have second mortgages on the servicer's books. That is the primary reason a servicer fails to foreclose and dispose in a timely manner.

More aggressive action by mortgage servicers could help ease burdens on Fannie Mae, whose losses on loans it guarantees or owns forced it into regulator's hands in September 2008. It has required some $86 billion in taxpayer funds since then.

Fannie Mae, which uses hundreds of servicers, did not specify any that might have prompted the announcement but has identified rising stress at the firms. A spokeswoman declined to comment beyond the announcement.

"The growth in the number of delinquent loans on their books of business may negatively affect the ability of these counterparties to continue to meet their obligations to us in the future," Fannie Mae said in its quarterly filing with the Securities and Exchange Commission last month.

If the GSEs are not forced to back down from this policy due to pressure from lenders, this change in policy and incentives will signal the end of the banking cartel because this will push product on the market whether or not the market is capable of absorbing it. That will push prices down.

Are there cashflow properties in Irvine?

Of course the answer to that question is "it depends." I would say no; the prices are too high relative to the income stream it produces. I have a personal test I believe in to test a cashflow property. The capitalization rate must be at least 30% higher than the cost of fixed-rate mortgage debt. Under those circumstances, leverage boosts returns and the cashflow from the property itself makes the payments. That is an investment that you would keep irrespective of what happens to the resale price because you are obtaining a good cash-on-cash return.

The only reason people invest in real estate in Orange County at these prices is because they believe (1) Orange County is a safe haven where prices cannot go down relative to rents and incomes, or (2) they are betting that we will inflate another housing bubble, and they will get to benefit from that appreciation. Note that the belief in option 2 is self fulfilling: those that believe it can happen make it happen. The disease mechanism is in place, and all it takes to release the kool aid virus is for lenders permit loan programs with lending standards that do not amortize loans with payments based on a reasonable percentage of wage income — or worse yet like interest-only or Option ARMs, that do not amortize at all. The lack of amortization in the prevalent loan programs in the market is a sure sign of Ponzi borrowing and a housing bubble.

Properties like this one, even at 4.34% interest rates are at best cashflow neutral. Owning it doesn't set and investor back, and they might make a few extra bucks in positive cashflow, but the reason someone is buying this property is because they believe prices are going to go back up and they will benefit from the appreciation or lack of depreciation. I believe this is the wrong place to put money at the wrong time, but I could be wrong. I have no doubt California borrowers and buyers will certainly try to push house prices higher.

The owner facing short sale on this property paid $529,000 on 10/11/2005. He used a $423,200 Option ARM with a 1.37% teaser rate and a $105,800 down payment. He got a HELOC on 11/6/2006 for $75,625 and may have recovered some of his down payment. He hasn't paid his mortgage this year.

Foreclosure Record

Recording Date: 06/28/2010

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 03/10/2010

Document Type: Notice of Default

Irvine Home Address … 10 EXETER 11 Irvine, CA 92612

Resale Home Price … $379,000

Home Purchase Price … $529,000

Home Purchase Date …. 10/11/2005

Net Gain (Loss) ………. $(172,740)

Percent Change ………. -32.7%

Annual Appreciation … -6.6%

Cost of Ownership

————————————————-

$379,000 ………. Asking Price

$75,800 ………. 20% Down Conventional

4.34% …………… Mortgage Interest Rate

$303,200 ………. 30-Year Mortgage

$72,687 ………. Income Requirement

$1,508 ………. Monthly Mortgage Payment

$328 ………. Property Tax

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

$32 ………. Homeowners Insurance

$190 ………. Homeowners Association Fees

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

$2,058 ………. Monthly Cash Outlays

-$249 ………. Tax Savings (% of Interest and Property Tax)

-$411 ………. Equity Hidden in Payment

$120 ………. Lost Income to Down Payment (net of taxes)

$47 ………. Maintenance and Replacement Reserves

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

$1,564 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$3,790 ………. Furnishing and Move In @1%

$3,790 ………. Closing Costs @1%

$3,032 ………… Interest Points @1% of Loan

$75,800 ………. Down Payment

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

$86,412 ………. Total Cash Costs

$23,900 ………… Emergency Cash Reserves

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

$110,312 ………. Total Savings Needed

Property Details for 10 EXETER 11 Irvine, CA 92612

——————————————————————————

Beds: 2

Baths: 3 baths

Home size: 1,344 sq ft

($282 / sq ft)

Lot Size: n/a

Year Built: 1981

Days on Market: 3

Listing Updated: 40423

MLS Number: 10475961

Property Type: Condominium, Townhouse, Residential

Community: University Town Center

Tract: 0

——————————————————————————

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

Well maintained condo located near UCI, Hardwood floor in livingroom with granite counter top kitchen. Plantation shutter throughout. This is a short sale.

Government efforts to prop up the market have only served to reduce sales volumes and eliminate an important component of the move up market.

Irvine Home Address … 4 HAGGERSTON AISLE Irvine, CA 92603

Resale Home Price …… $749,000

Some folks drive the bears out of the wilderness

Some to see a bear would pay a fee

Me, I just bear up to my bewildered best

And some folks even see the bear in me

So meet a bear and take him out to lunch with you

And even though your friends may stop and stare

Just remember that's a bear there in the bunch with you

And they just don't come no better than a bear

Lyle Lovett — Bears

Every Green Bay Packer fan in Wisconsin knows how to keep bears out of their yard. Put up a goalpost, and bears won't go anywhere near it. (Sorry, Chicago Bears fans. Maybe your offense won't be so pathetic this year.)

Being bearish on housing in California over the last several years has largely put me out of sync with the collective kool aid view of unbridled bullishness. Of course, I had the luxury of being right while the bulls were wrong, and I have made many new friends since I began writing about it.

As we get closer to the bottom, I see markets like Las Vegas that excite me greatly and make me very bullish on owning real estate. If prices fall a little lower here, I might even get lukewarm on Orange County. Lukewarm is probably as bullish as I will get here unless we see a real catastrophe like they had in Las Vegas.

The Bears and the State of Housing

By DAVID LEONHARDT

Published: September 7, 2010

Of all the uncertainties in our halting economic recovery, the housing market may be the most confusing of all.

That's a nice opening, but there really isn't much confusion about it. Prices are too high, and government meddling has caused prices to remain too high. The only confusion is caused by the intentional obfuscation of those who don't want to reveal this simple truth.

At times, real estate seems to be in the early stages of a severe double dip. Home sales plunged in July, and some analysts are now predicting that the market will struggle for years, if not decades.

Others argue that the worst is over. As Karl Case, the eminent real estate economist (and the Case in the Case-Shiller price index), recently wrote, “Buying a house now can make a lot of sense.”

Beware the hidden assumptions and what is not being said. Karl Case made a broader argument for home ownership, he was not saying people should buy because the bottom is in and rapid appreciation is coming back.

I can’t claim to clear up all the uncertainty. But I do want to suggest a framework for figuring out whether you lean bearish or less bearish: do you believe that housing is a luxury good and that societies spend more on it as they get richer? Or do you think it’s more like food, clothing and other staples that account for an ever smaller share of consumer spending over time?

If you believe housing resembles a luxury good, then you’ll end up thinking house prices will rise nearly as fast as incomes in the long run and that houses today aren’t terribly overvalued. If housing is a staple, though, prices will rise more slowly — with general inflation, as food tends to.

The difference between these two views ends up being huge, and it’s become the subject of an intriguing debate.

His argument here is not clearly defined. During the bubble, people actually argued that people were putting more income toward housing because it was a great investment. That argument has been thoroughly defeated, so now the argument is being framed as a choice between spending the same percentage of income as past generations — what the author calls luxury good spending — and putting less income toward housing as we do with consumer staples. As he has framed the argument, I agree with his contention that people will tend to put the same amount toward housing; therefore, housing prices should rise with wage inflation.

After digging into it, I come down closer to the luxury good side, which is to say the less bearish one. To me, housing does not rank with unemployment, the trade deficit, the budget deficit or consumer debt as one of the economy’s biggest problems. But you may disagree.

Yes, I am going to disagree. It isn't that those other items are not important, but both unemployment and consumer debt are related to the housing market. Most of the unemployment is in the real estate sector, and HELOC abuse is at the core of California's debt addiction.

No one doubts that prices rose roughly with incomes from 1970 to 2000. The issue is whether that period was an exception. Housing bears like Barry Ritholtz, an investment researcher and popular blogger, say it was. The government was adding new tax breaks for homeownership, and interest rates were falling. These trends won’t repeat themselves, the bears say.

As evidence, they can point to a historical data series collected by Mr. Case’s longtime collaborator, Robert Shiller. It suggests that house prices rose no faster than inflation for much of the last century.

The bears are right on every count. The government has stimulated the housing market to the degree possible, and couple that with falling interest rates, and you have a recipe for a once-in-a-generation boost in home prices.

The pattern makes some intuitive sense, too. As people become richer, they spend a shrinking share of their income on the basics. Think of it this way: someone who gets a big raise doesn’t usually spend it on groceries. You can see how shelter seems as if it might also qualify as a staple and, like food, would account for a shrinking share of consumer spending over time. In that case, house prices should rise at about the same rate as general inflation and well below incomes.

That isn't going to happen. Even if kool aid were totally purged from our collective consciousness, people will put the maximum amount lenders allowed toward housing. People like and want nice houses, and they will pay what is necessary to get them.

Here’s the scary thing, at least for homeowners: if this view is correct, house prices may still be overvalued by something like 30 percent. That’s roughly the gap between average household income growth and inflation over the last generation.

It’s also the overvaluation suggested by Mr. Shiller’s historical index. Today, it is around 130, which is way down from the 2006 bubble peak of 203. But it’s still far above the 1890 to 1970 average of 94.

In effect, the bears are arguing that housing was in a multidecade bubble and has now entered a multidecade slump.

He is making a bearish argument I have never heard a housing bear make — and I read them all. As a society, we are not going to suddenly start putting less and less toward housing. That just isn't going to happen. However, the Case-Shiller index will eventually make its way back to its historic relationship with inflation. The only reason we are temporarily stalled at 130 nationally is because we have record low interest rates which makes high prices somewhat affordable. We may be entering a multidecade period of lowered appreciation, but we are not likely to repeat the Japanese experience and witness 15 years of nominal price decreases.

The second, less bearish group of economists doesn’t buy this. This group includes Mr. Case, Mark Zandi of Moody’s Analytics and Tom Lawler, a Virginia economist who forecast the end of the housing boom before many others did. They say they believe that house prices rise nearly as fast, if not quite as fast, as incomes, and that real estate is no longer in a bubble.

Wait a minute. First, nobody forecast the bottom before the NAr. They forecast it every few months. Second, Tom Lawler is not some kind of forecasting genius, he is a guy who made a bad prediction who was made temporarily right by government interference in the market. Further, if his analysis says that housing prices are now in line with incomes, his analysis is faulty for most markets.

This side can also make a case based on history. Mr. Case points out that all pre-1970 housing statistics are suspect. By necessity, Mr. Shiller’s oft-cited historical index is a patchwork that relies on several sources, like Labor Department surveys. These sources happen to paint a more negative picture of past house prices than some other data.

Is Karl Case throwing Robert Shiller under the bus?

For example, the Census Bureau has been asking people since 1940 how much they think their houses are worth, as Mr. Lawler noted in one of his newsletters. The answers suggest that house values rose faster than general inflation — and about as fast as incomes — not just from 1970 to 2000, but from 1940 to 1970, as well.

Likewise, Mr. Case has dug up sales records for houses in the Boston area that were built in the late 19th century and are still around. The records show prices rising 2.5 percentage points a year faster than inflation, which is just about what income has done.

IMO, this shows how much we have understated our measures of inflation. Notice the hidden assumption here is that our measures of wage inflation has been accurate. Further, the character and desirability of the neighborhood may have changed significantly over time as well. House prices track wage inflation very closely over the long term.

Perhaps most persuasive is a statistic that Mr. Shiller sent me when I asked him about this debate. It shows that the share of consumer spending — and, by extension, of income — devoted to housing has not fallen over time. It has hovered around 14 or 15 percent for the last 60 years. The share of spending devoted to food, by contrast, has dropped to 13 percent, from 25 percent.

Yes, that is a very convincing argument. We spend the same percentage of income on housing over time.

These numbers make a pretty strong argument that the post-1970 period is not one long aberration. As societies get richer, they do spend more and more on housing.

No, that is not what the data shows. That sounds like bubble talk. We may spend more nominal dollars, but as a percentage of income, the expenditure is remarkably consistent. His statement sounds like we are spending more as a percentage of income, and that is not accurate.

Some of this spending, Mr. Shiller notes, comes in the form of bigger, more expensive houses. These houses don’t do anything to lift the value of a smaller, older house — which is what matters to individual homeowners. But McMansions are not the only factor.

To see this, you can look at the share of consumer spending devoted to things inside houses, like furniture. As with houses, they have become fancier. But they haven’t become so much fancier that they make up anywhere near as large a share of consumer spending today as in the past. That’s a strong clue that the upgrading of houses themselves isn’t enough to explain the increased spending on housing.

What is? The value of the underlying land. Those Boston-area houses that Mr. Case studied did not change much over time. Yet their value did.

For a house whose location has any value — in a major city or a nearby suburb, where a builder can’t simply put up a similar house down the street — the land is a big part of the equation. Over time, Mr. Zandi says, the value of that land should grow almost as fast as the local area’s economic output or, in other words, with incomes.

I don't think this guy understands that land value is a residual effect. Land value doesn't make prices go up. Prices going up increases land value. Changes in land value are always the result or the effect of changes in price. It is never the other way around.

The best advice for homeowners and would-be buyers may be to think of a house not as an investment, first and foremost, but as a place to live. If there is a good chance you will move in the next three years or so, you should probably rent. The hassles of buying and the one-time costs are just too big. Plus, house prices are not low in most places today.

Shevy and I tell people this every day. We have killed deals and talked many people out of buying because they were planning to move.

The ratio of median house price to income is about 3.4, compared with a prebubble average of about 3.2. Given the economy’s weak condition and the still high number of foreclosures, prices may well fall more in the next year or two. They look especially high in places where rents are comparatively cheap, like San Diego and San Francisco. And maybe income growth will remain weak for years, holding down home-price growth.

Those statements are all true as well. Notice he specifically called out some of our California markets where it is still much cheaper to rent.

But if you can imagine staying much longer than a few years, you should take some comfort in the fact that the bubble seems mostly deflated. Sometime soon, prices should begin rising again. They may not quite keep up with incomes, but they will probably outpace the price of food and clothing.

Now, if only it were possible to be as sanguine about the economy’s other problems.

With exception of the beach communities in California and their high-end cousins, the bubble is mostly deflated. There are only two kinds of markets in a bubble bust: (1) those where prices have crashed, and (2) those where prices have not crashed yet.

How the government props weakened the market and delayed the recovery

When prices go down, the first segment of the market to disappear is the move-up market; or to be more specific, that segment of the market that must sell their own home to buy another. Over the last four years very few sales have taken place where the buyer's offer was contingent upon selling an existing home. This key move-up component of the market is absent when prices are moving lower, partly because there is less equity to move and owners submerge, but mostly because sellers refuse to accept an offer they know is going to be mired in the buyer's feeble attempts to sell their property at above market prices to pay for the next property. Unemployment gets much of the blame for our anemic sales rates, but the lack of a contingent-upon-sale market accounts for much of the malaise as well.

When the government and lenders tried to engineer a bottom, stories began to surface about the resurgence of a move-up market where buyers already had equity from their purchases at the bottom they were moving into the next house. Of course, these stories were nonsense, but this component of the market is necessary for normal function, so everyone involved in engineering a bottom (Obama administration, Federal Reserve, NAr, NAHB, and so on) was eager to tout the equity gains from those who bought at their illusory bottom.

The fact is that house prices have not appreciated enough since the engineered bottom to cover the commission on a resale. Further, sellers are still not accepting offers where the sale is contingent on the buyer's sale. That segment of the move-up market is still dead.

Since prices are still too high, and since the contingent-sale move-up market is dead, the market is weaker than is should be, and rather than bottoming this winter — which it likely would have without all the intervention — the market is poised to sputter for another two or three years while it gropes for a bottom built almost entirely upon first-time homebuyers.

If the powers-that-be had done nothing, prices would almost certainly be lower today, and the market picture would look very grim (think Las Vegas), but the market always looks the worst at the bottom. It's only through widespread market despair that we find a true bottom. The sooner we reach bottom, the sooner the contingent-sale market recovers and the sooner the whole market regains its strength and vigor.

Everyone who supported the government props was wrong. Of course, none of them will admit it, and few will even recognize the truth, but meddling in the market clearly has made matters worse, and it cost us billions in taxpayer dollars as well.

A Grade D HELOC abuser

In the post HELOC Abuse Grading System, I described a Grade D HELOC Abuser this way:

The transition between a grade C and a grade D is somewhat subjective, but it is hinged to an idea; once borrowers start knowingly increasing their loan balance to spend appreciation as a matter of habit, once they start expecting appreciation and HELOC money as a reliable source of income, they have moved from what some may consider legitimate use of HELOCs to Ponzi Scheme financing and ultimately a foreclosure implosion. This Ponzi borrowing limit is an invisible threshold borrowers do not realize they have crossed, but once they accept using debt to pay debt as a concept, they have crossed over to the Dark Side.

The top of the range of D graded HELOC abusers is the limit of each borrowers self delusion when it comes to how much appreciation they feel comfortable spending without losing their homes. People who earn a D still planned to keep their homes, they were merely misguided by their own ignorance and the incessant Siren's Song of kool aid intoxication. These are the sheeple; like the rats St. Patrick cast into the sea, each borrower followed the Piper to their underwater mortgage and a watery foreclosure.

This particular owner has managed to avoid foreclosure, mostly due to the fact that he bought in an area where the banks decided squatting was preferable to lowering prices.

• This property was purchased on 8/29/1997 for $308,000. The owner used a $246,300 first mortgage and a $61,700 down payment. He waited a few years to get his down payment back and start down the road to HELOC abuse.
• On 8/14/2001 he obtained a $75,000 HELOC.
• On 4/18/2003 he refinanced with a $340,000 first mortgage, and he got a $50,000 HELOC.
• On 7/18/2005 he refinanced the first mortgage for $425,000 and obtained a $50,000 HELOC.
• On 2/20/2007 he got an Option ARM for $491,000.
• Total mortgage equity withdrawal is $244,700.

He still stands to walk away with a check for about $150,000 after paying off the debt.

You have to figure he will do this again in his next house, if he is given the chance.

Irvine Home Address … 4 HAGGERSTON AISLE Irvine, CA 92603

Resale Home Price … $749,000

Home Purchase Price … $308,000

Home Purchase Date …. 8/29/1997

Net Gain (Loss) ………. $396,060

Percent Change ………. 128.6%

Annual Appreciation … 6.6%

Cost of Ownership

————————————————-

$749,000 ………. Asking Price

$149,800 ………. 20% Down Conventional

4.34% …………… Mortgage Interest Rate

$599,200 ………. 30-Year Mortgage

$143,648 ………. Income Requirement

$2,979 ………. Monthly Mortgage Payment

$649 ………. Property Tax

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

$62 ………. Homeowners Insurance

$448 ………. Homeowners Association Fees

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

$4,139 ………. Monthly Cash Outlays

-$704 ………. Tax Savings (% of Interest and Property Tax)

-$812 ………. Equity Hidden in Payment

$236 ………. Lost Income to Down Payment (net of taxes)

$94 ………. Maintenance and Replacement Reserves

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

$2,953 ………. 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

$45,200 ………… Emergency Cash Reserves

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

$215,972 ………. Total Savings Needed

Property Details for 4 HAGGERSTON AISLE Irvine, CA 92603

——————————————————————————

Beds:: 3

Baths:: 3

Sq. Ft.:: 2045

$0,366

Lot Size:: –

Property Type:: Residential, Condominium

Style:: Two Level, Traditional

Year Built:: 1991

Community:: Turtle Rock

County:: Orange

MLS#:: S631397

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

——————————————————————————

Welcome to a quiet & private location within the newest townhome community in Turtle Rock. This popular floorplan hasn't been available for sale in 4 years! Fabulous $50,000 remodeled kitchen is at the heart of this home and has been designed by a chef – redesigned space includes maple cabinetry w/ custom pulls, lots of deep, full extension drawers, dual pantries, granite counters w/ stainless steel trim, Viking gas cooktop, built-in Sub-zero frig, double ovens, wine refrigerator-it's impressive. Soaring ceilings and fireplace in living room. Separate dining room with access to outdoor patio. Separate family room open to kitchen. Master suite w/ private balcony and soaring ceilings, walk-in closet w/ organizers, bright master bath. Upstairs loft which could be used for a home office/study/reading area, and second bedrooms each with volume ceilings. It's light and bright. Steps away from community pool and nearby park. Tucked away in the hills of Turtle Rock yet 10 min. close to it all!