Please post your local house search updates, MLS finds, on-topic ideas, and links here.
Monday, July 6, 2009
Subscribe to:
Post Comments (Atom)
Northern Virginia Real Estate Statistics
REAL ESTATE SEARCH
County Assessment Websites
Buy/Sell Without an Agent
Local Real Estate Agents
Housing Economics Blogs
Local Interest
Housing Bubble Links
Eastern Regional Blogs
Western Regional Blogs
- Bakersfield Bubble
- Bay Area Real Estate Blog
- BubbleInfo (N. San Diego)
- Burbed (San Francisco)
- Dr. Housing Bubble (SoCal)
- Patrick.net (San Francisco)
- Portland Housing Blog
- Professor Piggington's Econo-Almanac
- Rancid Truth (Orange County)
- Sacramento Land(ing)
- Seattle Bubble
- SoCal Real Estate Bubble Blog
- Socket Site (San Francisco)
Real Estate Blogs
REAL ESTATE AUCTIONS
62 comments:
I know this isn't really related to this blog at all, but I was entertained by a Walmart commercial I saw this morning. Basically the who comercial said that 94% of its employees have health care, but they will not be happy until the entire country has health care, so they are pushing to have employers pay for national healthcare. At first I was thinking this did not sound like Walmart at all. I then thought for a second and realized they figure they are already paying for most of their employees so forcing their competitors to this will drive the smaller stores out of business.
I just found it a little humorous that they have been vilified for years for not providing for their employees(although they did a better job than most retail stores). Now they will probably be championed for trying to get more people health care when all they are trying to do is get rid of weaker companies...
I know this is California, but just in case there are any troubled borrowers reading this blog but not CR:
LA Times, scammers claiming to help distressed borrowers
Law enforcement officials say the scams are becoming increasingly prevalent, especially in California, where the Department of Real Estate has reported an explosion from 10 open cases a year ago to more than 750 this spring. Nationally, U.S. Atty. Gen. Eric Holder has said that the FBI's "rescue scam" caseload is up 400% from five years ago.
Some schemes advertise with hand-drawn signs on freeway ramps, while others target homeowners by name with carefully forged documents that appear to come from their lender.
The alleged scam artists to whom Castellanos paid more than $5,000 last fall were among the most sophisticated operating in California, authorities said, stymieing investigators with a thicket of bank accounts, 1-800 numbers and wire transfers to Mexico.
housebuyer,
yup, that sounds about right. Don't allow the government to effectively subsidize business by offering health insurance. I think however, that all but the smallest of Walmarts competitors would still have to provide health insurance as small businesses with "too many" employees. Not sure on that.
Actually, depending on what your comparison group is, Wal-Mart did not traditionally do better than their retail competitors on providing health care benefits or other conditions of employment. And some of what they have done has come directly in response to lawsuits they have lost or were about to lose.
I think people have to ask a philosophical question about why the payment for health care in this country should be borne by employees/employers versus by citizens in general, with controls, as it is in other countries ("the government" doesn't pay for anything since its funding must come from taxes etc.). If you are a victim of cancer and can't work, you lose your health care, or if you fear getting sick or have a pre-existing condition, you can't leave an employer and start your own business because you may not get coverage. And anyone can be hit by a drunk driver at any time, so being young and healthy is little protection. We pay more per capita for health care than any other country yet barely rank in the top 40 in health outcomes. The reasons are complex but part of the problem is the problematic way it's financed.
WSJ opinion, lack of skin in the game the real cause of foreclosure
New Evidence on the Foreclosure Crisis
Zero money down, not subprime loans, led to the mortgage meltdown.
By STAN LIEBOWITZ
...
The McDash data allowed me to construct a housing price index at the zip code level and then calculate the current equity position of each homeowner. I was thus able to compare the importance of negative equity to other variables related to foreclosures.
The analysis indicates that, by far, the most important factor related to foreclosures is the extent to which the homeowner now has or ever had positive equity in a home. The accompanying figure shows how important negative equity or a low Loan-To-Value ratio is in explaining foreclosures (homes in foreclosure during December of 2008 generally entered foreclosure in the second half of 2008). A simple statistic can help make the point: although only 12% of homes had negative equity, they comprised 47% of all foreclosures.
Further, because it is difficult to account for second mortgages in this data, my measurement of negative equity and its impact on foreclosures is probably too low, making my estimates conservative.
Top two contributers:
Negative Equity: 285,305 foreclosures
Unemployment since 2008: 183,477 foreclosures
...
If his regression analysis is correct, this bodes poorly for the FHA loans being issued in 2008/2009.
Ace-
I guess rather than saying Walmart provided better benefits I should have said it provided comparable benefits. Other than a few stores(aka costco, wegmens...) retail just doesn't provide great benefits. Walmart was always the villain because it had the most employees and had the largest profit(although by no means a high profit margin).
You also do pose a very interesting question as too who should pay for the nations benefits. Maybe we can just make all MDs and drug companies to work for free that we get our care for free ;)
Tabitha...10367 BEAR CREEK DR went UC! That was the short sale that has been on the market, off the market then back on the market since last year. This is a divorce house I don't know if you looked at it or not. It was listed at 90% of 08. Looks like buyers are finally finding out there is another nice neighborhood besides Ellis Planation.
Cara-
I am actually amazed that only 47% of foreclosures were from people with negative equity. Almost by definition you have to have negative equity to get foreclosed. Otherwise rather than getting kicked out you sell your house pay the bank off and keep the rest. I guess you really need about 10% positive equity to cover costs. Who gets foreclosed when they have a lot of equity???
housebuyer,
In a way that is surprising. But
if you can't pay you can't pay. There's no statement on how much equity the other 53% had. People do go into foreclosure even in normal times. So the fact that Case-Schiller or OFHEO says they "should" have been able to sell their house to get out of the debt, doesn't mean they could or had the motivation to do so.
Checking in after being out of the country for a week... The most striking thing is probably the price bump in case shiller - breaking a 30+ month trend of down MOM. Even the seasonally adjusted index showed a mild price bump.
Housebuyer - good call on this. With the diminishing inventory & incentives adding fuel to the fire, I did expect the rate of loss to diminish, but I did not expect any price increase.
Again, good call...I owe you a coke!
"n a way that is surprising. But
if you can't pay you can't pay. There's no statement on how much equity the other 53% had"
be aware how they calculate equity may not be on a market basis but on a mortgage basis.
If i buy a house wih 20% down i have 20% equity, if the price collapses 33%, i still have from an accounting point of view 20% equity and emotionally i have 20% as investment, but from a pricing point of view i have -13% equity.
I suspect they are just using book calculations to look at foreclosures, not market valuation.
anyone with strong equity sells prior to foreclosure.
pat,
"to construct a housing price index at the zip code level and then calculate the current equity position of each homeowner."
So this was at least attempting to do the market comparison. Whether they did it right is another question.
CRT- Thanks :-D
Cara-
My guess is that the people had very little equity. You are right that in normal times people get foreclosed on, but I would think most do not have a huge equity cushion. If you need to sell your house in a month you will likely get below market prices so add this to 6% commissions you need a decent positive buffer to be able to sell.
I guess my point about the article is that you can't really tell if it is a walk away problem or just that lots of people are losing their jobs, but the people who lose their jobs and have a lot of equity either sell the house or take out a home equity loan which they can use to pay their bills while looking for a job.
housebuyer,
That's the point of a regression analysis. On an individual basis, no you can't tell. But you run a regression to see which factors appear to explain the greatest amount of the variance. So, their bottom line number of 200,000 some foreclosures being due to negative equity is just an estimate of how many households would otherwise not have gone into foreclosure, but for the negative equity position.
My apologies if I'm being pendantic and you already know full well what a regression is.
Cara-
I guess it all depends on what you look as the cause/solution. The regression says people are getting foreclosed because they have negative equity. I was just trying to say instead of looking at it this way you could say the people in the positive equity group are able to avoid foreclosure because they can sell or take out a home equity loan.
Both underlying explanations get to the same result that people with negative equity get foreclosed on at a faster rate. I was just trying to say this doesn't show that people are walking away. It could just say they have no other alternative when disaster hit(job loss/medical issue).
So as you obviously know regression analysis does not causation rather is shows correlations. I pose the cause of the foreclosure is the lack of alternatives when you lose a job and can't get money out of your house.
housebuyer,
Indeed I think we're talking two sides of the same coin. This analysis in no way says that people are choosing to walk away. Being in a negative equity position just left them with no other alternatives. (i.e. my "but for the negative equity" clause).
Financial distress is still the most likely predominant causal factor.
The interesting part was in relation to the policy answer, which has been to try to reduce DTI. This may allievate current owners financial burdens, but if they experience enough of an income shock it will do nothing to prevent them from losing the home anyway (if they're underwater). The other interesting part was the continuing debunking of the sub-prime demon myth. It's overpaying for the house (relative to sustainable house prices), and over-leveraging for that same house that's causing all the foreclosures now. The sub-prime and Alt-A's (and 100% CLTVs) primarily contributed to the run-up in prices by increasing the amount buyers could bid.
Arkey--
I got that notice in my daily update. Bear Creek is doing well. Will be sure to see what the final numbers are, and if they all actually close, esp. the SS.
i can bet that equity levels are distributed quite tightly around zero for the homes that go into foreclosure, so 47% have small negative equity, 53% small positive equity and this is not enough to cover the costs of sale and late payments owed to the bank that accumulate quite quickly. people do not realize that selling is the best idea, they do not have money to pay the mortgage, get to stressed about income loss, lack of money, etc, hope that miracle happens, it doesn't and then it's too late. also when you get a lot of foreclosures going in certain geography valuation becomes difficult and all that "positive equity" disappears.
Can pay, won't pay
HOUSE prices in America have fallen so far that as many as one in five households have mortgage debt greater than the value of their homes. In a few states, borrowers are not liable for the shortfall between an unpaid loan and the resale value of the home it is secured upon. Even where borrowers are on the hook, lenders often find it too costly to pursue unpaid debts. So some homeowners may be tempted to default and escape the burden of negative equity.
How widespread is this practice? New research* based on a survey of 1,000 homeowners suggests that one in four mortgage defaults are “strategic”—by people who could meet their payments but who choose not to. The main drivers of strategic default are the scale of negative equity, and moral and social considerations. Few would opt to renege on their mortgage if the equity gap were below 10% of their home’s value, the authors find, partly because of the costs of moving. But one in six would bail out if loans were underwater by a half.
Four-fifths think strategic default is wrong. Those in the unethical minority are four times more likely to renege on loans (allowing for other influences) when their negative equity reaches $50,000. But morality has its price. When the equity gap reaches $100,000, “immoral” homeowners are only twice as keen to walk away from their debts as “moral” ones. People under 35 or over 65 are less likely to believe that default is wrong. So are the well-educated.
Anger about bail-outs of banks or carmakers does not weaken the moral barrier to default. But people who live in neighbourhoods where home repossessions are frequent are more likely to welsh on loans. Homeowners who know someone who has defaulted strategically are 82% more likely to say they would do so, too. The likelihood of strategic default rises more quickly once the rate of local home foreclosures reaches a critical level. That hints at a vicious cycle of foreclosures that both depress home prices and weaken the social and economic barriers to further defaults. To break the cycle, policymakers need to address the problem of negative equity, not just unaffordable interest payments.
Link to the study
As to the moral dimension of "walking away" from a negative equity loan:
Doesn't the contract usually say "IF you make your payments on time, and IF you keep up with property taxes and insurance, THEN we will give you the house after 30 years"? And if you do not meet their conditions, they get the house?
Isn't the contract written with an element of risk assumed?
Why can't negative home equity join the list of other catastrophes that lead to your inability to pay, such as unemployment, illness, or other such things?
(Just playing devil's advocate here...interested to hear reasoning...)
Tabitha-
They don't exactly get to keep the house if you don't pay. Equity is still involved here. I am 90% sure that if they take you house, sell it, and get more than your loan plus transaction costs that they give you the difference. Am I wrong?
If this is the case, they give you the equity when it is in your favor so you should give it to them when it is in their favor.
Personally I think FICO should just change their rules so you get penalized for the rest of your life you walk away from debt they think you can pay. I think this is fair, because trying to game the system is a personal belief a person will likely keep their entire life. So if peoples credit scores would be destroyed for the rest of their lives people might be less likely to walk away.
tabitha,
You have a recent loan document, what does it say?
In VA mortgages are recourse, does that somehow change the morality?
It seems to me that it shouldn't, but it does change the legal standing.
In my understanding as someone who doesn't have loan documents, the mortgage is a loan of money for which they put a lien on your house. The house is yours. It's just a question of how much money do you owe the bank. If you are in a non-recourse loan, the bank agreed to take the house as collateral for the loan in case you couldn't pay it back. The taxes and insurance you're required to pay is to protect the value of that underlying collateral, which you are using to secure the debt. In cases of rising home prices, you can still choose foreclosure, and if the bank sells your home for more than the amount of the loan and all back payments then they are probably obligated to pay you the rest, maybe, maybe not, not sure on that legal point. There's probably terminolgy that relates to how the debt is released.
In any case your contractual obligation is to the money, not the house. You put the house up as collateral in order to get the money to buy it.
So, I would say that the moral and contractual obligation is to pay back as much of the principle of the loan as you possibly can. I'm not sure the how enters in at all.
Is breaking contracts immoral? It's not good for your future business and financial plans, because you are showing that you don't always live up to your obligations, but I'm not sure that's the same thing.
A more illuminating question might be, does the american public view it as a moral question? And that's what the economist article is trying to get at. It appears as if there's a threshold of underwaterness which American's view as your lot in life because you signed the contract, but beneath which it becomes strictly a financial decision.
I think this may have more to do with the long-term costs of reduced credit, wieghed against the long-term costs of paying way too much on a mortgage. Or the potential brevity of the under-waterness, and potential for long-term gain.
housebuyer,
FICO scores don't include incomes, so how would they know if you could pay it or not?
Though I like the idea of certain things being permanently included on your credit report. Heck, I'd prefer it if loans I paid off years ago remain around forever.
FYI the market manipulations I have spoken about, as well as the "tsunami" that may or may not be heading our way:
Hundres of thousands of foreclosed homes are hidden from the market's eye.
There is a "phantom inventory" in the United States housing industry, hidden from the eyes of analysts and investors, and distorting the market's landscape.
Steven Hagenbuckle, managing principal at TerraCap Partners, a distressed real estate private equity fund, expects to see the beginning of the release of the phantom inventory in the next 90 to 180 days, though the inventory influx will come in different waves throughout the country.
"For these families, Burke is their corner of suburban bliss, a community so complete that they rarely venture more than a mile or two beyond their homes. "
from contrarian's link.
Hehehehe, I feel so parochial.
tabitha,
contracts are supposed to be entered into in "good faith"; that is, the intent to perform as specified in the contract. for a borrower, this means paying according to contract terms (in the correct amount and on time). not paying is not a "choice" under the contract, it is an event of default. foreclosure is merely the remedy in the event of default.
Cara-
Although Fico does not include income they can often get a good guess at income based on spending habits. The do know the amount and any change in the amount of debt/spending on all of your credit cards. If you are staying current on all of your credit cards and walk away from the house something is fishy.
On the other hand if your credit card debt has increased significantly and you have missed payments and walk away from your house most likely your income is down...
This obviously is by no means perfect, but this with some other information they have may be close enough. They can always put the burden on you to show them that you weren't just walking away.
cara
I'll assume the equity calculations are at least as reasonable as Case-Shiller or any Fed paper.
I knew one guy who was being foreclosed on back in 2002, his business was failing and he found himself just flailing.
Now, in his case, he had some equity but lacked cash to pretty the place up so it showed like sh#t.
also if you lack better then 10% equity, it may just be easier to let it foreclose. The sales cost, the cost of cleaning up, the energy required, unless, you are really motivated, it's hard to handle.
I suspect the people with positive equity who go into foreclosure have medical issues, job losses, have developed addiction problems, etc...
Did anyone ever see "House of Sand and Fog". Jennifer Connoly is a recovering alcoholic who loses her house to a tax sale. I suspect people with high equity levels in foreclosure have some tragic condition going on.
Certainly we need to run a regression analysis to look for the percentage of people with negative equity who go onto to foreclosure, if it is quite high, we may be able to say "80% of people with negative equity greater then -10% go on to foreclosure" while X% of people with an income loss or medical issue go to foreclosure.
I suspect it's quite high, if you listen to Elizabeth Warren.
housebuyer,
I don't know, that just seems like opening themselves up for a huge can of litigation.
Having the same duration for all debts and paid loans of a given type would not incur any such wrath, so I would say that they could just chose to keep on file any debt that was either a mortgage or over X amount. Why not have the house you paid off 10 years ago on your FICO report, how would that hurt you?
But this solution seems quite draconian and puritanical. Then again creditors don't have to chose to care about those aspects of the report, they are free to use the credit report as they see fit to assess your credit-worthiness, they're not obligated to use FICO. Of course, that's not entirely true if the GSE's are the only buyers of MBSs, and they mandate a certain FICO score, which wouldn't be all that different than what happened to the ratings agencies...
I think the walk a-wayers will be easy to spot when or if they apply for another home loan. I think an explantion or hardship case would have to be presented and a walker couldn't or wouldn't be able to explain the foreclosure other than a walk away; ie no job loss..work history, no long term illnes, again work history; divorce; no papers.
Arkey- I agree this may be the better place to spot the walk-awayers
Cara-
I am not saying that they will do this, I was just saying it would be nice if they legally could and had the data available to do it.
I really don't like that somehow people were able to get away with using housing a speculative investment, that makes them rigch if it goes up, but they only lose the down payment if it goes down. Particularly since the downpayment was often 0%.
Arkey,
Good point, and this is actually what does happen so long as the foreclosure is still on the record. (memories of Tanta...)
Lord knows these people have hurt me..finacially..with the taxes I will be paying and the loss of value on my home but I'm not so sure I want them to suffer financial hell forever, 10 years maybe but not forever. Its generally a 2 income family, divorce is rampant so why should a previous foreclosure in a previous marriage hurt you forever. Lots of people made stupid decisions some of them military because it was marketted to thme as a good way to own and sell when your 4 year tour was up..I'm just saying..lots of people got snookered and it started at the highest level of government when they created the nimja loans to begin with.
Arkey-
I am not saying that I want them to suffer financial hell because I think they deserve it or they hurt me in someway.
Instead I just think that they are larger risk to banks. Someone who walks away because they treat the property as in investment would more likely do so in the future, because I have to imagine walking away gets easier not harder the more times you do it.
So the lower credit score just ensures that when they want to buy they need to put more money down and pay a higher interest rate to compensate the bank.
I agree that often it is not their fault due to divorce... but I am pretty sure that it is easier to talk your way out of marks on your credit score if there is a valid reason like divorce.
Housebuyer.I hope you are right about the splaining stuff. I'm a old woman..almost 56..and I think most of these "buyers" are just younguns that left the nest to soon without a ma and pa close by to reach right and slap the dog crap out of them or until they realize NOBODY that works for a living should pop a million bucks for a trac house.......
"Contrarian said...
It is analogous to my example with you not too long ago of 'cause and effect' on the same subject when you asked why dumping money in the pipeline will not prevent deflation."
Contrarian, the more interesting thing I think is when Tice is asked about Mark Faber's assertion that (thanks to excessive govt printing) prices will not go down further in nominal terms. Tice's response was:
"He could be right"
Now, he went on to explain all the reasons he thinks Faber is not right, and thats fine, the point is, he said it is a possibility (not a probability, but a possibility).
This goes in direct conflict with your view of the wave which says deflation cannot be stopped no way no how. In your view massive deflation is a 100% certainty. Tice disagrees with you and acknowledges it is a "possibility". Even if it is a 1% possibility, that is the intellectually honest answer, and it looks like Tice understands that.
By the way, he also quotes Sir john templeton to say home prices could go down 50%.
As you noted, and as I have seen it appears Templeton said prices could go down 90%.
Why then did Tice say 50% when 90% was the quote? Could it be that he believes only 50% down is the bottom?
Thank you all for your thoughtful comments about walking away.
My friends who are more than 50% underwater still have not made a decision about what to do. Their #1 reason for doing nothing is they feel they have a moral obligation to pay back their loan as it is--a constantly resetting ARM on an almost $500K balance for a house worth maybe $250K. Their current rate is costing them half of their take-home pay, and it will most likely be much higher at the next reset, due to interest rates being about a point higher than they were at the last reset.
Married to an attorney, I am generally of the "you signed it, right?" mindset, but there are so many sad stories out there, it's hard to hold the line...
"Having the same duration for all debts and paid loans of a given type would not incur any such wrath, so I would say that they could just chose to keep on file any debt that was either a mortgage or over X amount. Why not have the house you paid off 10 years ago on your FICO report, how would that hurt you? "
that paid off mortgage shows up as not having rent.
Tabitha-
I am pretty sure they should be ok for the next reset. Most resets are not based on 30 year rates, but instead are based on short term rates. Usually they use Libor or the fed funds rate. Both of these rates track each other very closely during normal times so it is not that important which one is used. These rates are still as low as they have ever been. So unless the fed starts tightening up(this will not happen for 6+ months) they should reset to a very low rate.
Another option your friends could use is basically threatening the bank to giving them a fixed loan. Tell the bank that they can afford this rate, but no higher and if they raise the rate they will stop paying and the bank will be stuck with a house worth half as the loan.
I don't know if the second thing will work, but it may work.
john
While individuals have a contract obligation to pay their debts, so do bankers, and yet we see the Federal Reserve coughing up 13 trillion to bail out the banksters.
I figure if the banks can get their bailout, maybe we should consider bailing out the middle class.
Tabitha...what they should do is call one of those government programs to ask for refiancing assistance. Where exactly are your friends living that has had a 50% reduction in value. Az, Ca and NV hasn't had that bad of appreciation. I highly doubt that there home will be worth less than 500,000 5 years from now. Just because a property is assessed at a certain value does not mean that is the market value. I know most of you here preach this and I would just submit you prayerfully ask GOD before you give financial advice to others as this being a fact written in stone. In 2007 I was assessed at 716 and 2009 490..I wouldn't or couldn't sell at either of those prices! It's just a figure based on a computer program that spreads the wealth and the pain based on the purchased price and the previous years sales, which at the end of 08was all low..low..end. It's only used by the county for budget outlays so they aren't caught short.
"Having the same duration for all debts and paid loans of a given type would not incur any such wrath, so I would say that they could just chose to keep on file any debt that was either a mortgage or over X amount. Why not have the house you paid off 10 years ago on your FICO report, how would that hurt you? "
that paid off mortgage shows up as not having rent.
pat-
First I have never seen a 13 trillion number so that would be interesting if you can site it.
Second I assume you are talking about TARP/AIG loans. If this is the case the government is making tons of money on these loans. A lot of banks have already paid back the government and almost all of the rest will at some point. I am pretty sure even AIG the eternal money sink has now paid back most of its loans and will likely be able to pay the rest of them in the future.
Overall the government is borrowing money at 2%-3% loaning it to banks at 5%-7% and getting free stock options on top of this. Unless a significant number of the largest banks fail the government will do very well for making these loans.
I wonder if I should repost this tomorrow but here goes.
Two NVAR myths busted:
Sher, Rogers and Jarrett are so close that they have rented apartments in the same Georgetown building, near the waterfront, with Jarrett and Sher directly across the hall from each other. "We'll even do errands together on the weekend," Sher said. The first lady attended a small birthday celebration for Rogers last week and has had "girls' nights" with the women.
Article
Myth #1: High-up Obama admin people would buy. FALSE. These three woman -- all very well to do -- are renting.
Myth #2: They'd look in Northern Virginia. FALSE. Okay, I'm sure maybe in the hundreds of new admin officials you can find some who moved to Northern Virginia but I think the vast majority went to DC (and probably MD was #2 on the list with VA a distant #3).
Anyways, I presume these three well to do, educated women -- all of whom have money and can expect to continue to do well having access to a president -- are showing they are not fools who want to buy in this market.
Arkey, my friends live in Braemar, in Bristow. Houses on her street are selling below assessed value. The two that sold earlier this year went for the upper $200Ks, but they had finished basements, two more full bathrooms, and top-of-the-line kitchens/upgrades. When the houses sold new from the builder, they went for lower $400Ks in 2004, right around $500K 2005. My friends bought in the lower $400Ks, with 15% down/3yearARM, then refinanced six months later for another $78K, which went to student loans and a car loan.
For less than $400K, a buyer in her neighborhood can get a four-story, 5,000+ sqft house with upgrades galore.
Fully 1/3 of the houses on their street were flipped within three months of purchase from the builder for $20K-$100K profits. I smell more foreclosures coming.
I just can't imagine the circumstances of their house being a half million dollar house in five years. It is a cookie cutter, 1900sqft house on a tiny lot with a detached one-car garage in a sea of similar houses, at least 15 minutes from 66 or the VRE WITHOUT traffic.
Their mortgage payments are over $4000/month before tacking on taxes, insurance, and the HOA fee. They have four little kids.
I did not advise them to stop paying. But they are trying for the second time to rework their mortgage, after being turned down before since they were not behind on payments. So I did advise them that if the bank refuses for a second time to help them, they should threaten to stop paying, and seriously face the consequences of what that would mean. The option I lobbied for was a short sale, since for the moment, the difference would not be counted as income by the IRS.
They are extremely prayerful people, and I don't know what God is telling them to do, but their current situation seems unacceptable to me, so doing nothing shouldn't be an option.
(BTW, my girls are doing a homeschool-coop "summer camp" this week in Bear Creek, and my goodness, what a pretty place.)
housebuyer
http://www.nytimes.com/interactive/2009/02/04/business/20090205-bailout-totals-graphic.html
as to profits, wow $20 Billion on 12 trillion in
commtments, that's almost 0.2% profit, if they can leverage their position with some CDS, maybe they could pay the deficit off.
HB i believe you are deeply naive...
Tabitha..Gotcha..Braemar, in Bristow..yep, tough commute. That is/was a popular place if I remember correctly for young families. Now that I know where and what I can direct my prayers in a specific direction and snoop around for any available resources. Have they contacted a credit counslor? Sometimes these guys can work deals you wouldn't believe. There are programs. I'll research and see what I can dig up. Its tough right now but as long as our housing options are cheaper than Stafford with a back-log of buyers..all is not lost on them regaining some of their equity. I was really concerned about Blooms Crossing but they are already making a strong come back considering how hard they were hit..much harder than Braemar. I haven't seen or I don't remember seeing new trustee notices for there and I've been checking since Ellis keeps listing so many SS and foreclosures..man about a third in there already from last year and this year..cripes I hope they are done!....secret..Bear Creek has lots of Catholics. If I was home, I'd ask them to come swim..everybody swims at my place and I don't wear diapers ...yet..
Tabitha, I went to Frankly and selected solds and solddate high...yep, they are selling like hot cakes so its still a very popular place..yes, shorts and foreclosures are killers..but..there is a silver lining look at the sold prices..recently..like this month and last..I see recovery starting..
Local Office Vacancies Soar, Driving Down Rent
Rate Hits 10.2 Percent in D.C.; Tops 13 Percent in Virginia, Maryland Suburbs
Pat-
Your joking right you really are counting all of that is money the government spent?????
You are calling me naive and then you say that insuring something is the same thing as spending money. They also will not spend large portions of the money listed in there. The commercial paper market is working again so the government will not buy anywhere near what they originally stated. Finally, even if they do buy all these bonds who cares they will be paid interest on this and get their principle back when everything is said and done. Everything they have done for banks will be profitable for the government.
If you want to complain about bailouts talk about the stimulus, because that money is not an investment, but instead is being spent. You can also complain about the money going to GM, because there is no way GM will be worth 60 Billion when they emerge from BK.
Tabitha, are you friends aware of this site?
http://www.firsthomealliance.org/ForeclosurePrevention.asp
Tabitha,
I'm no lawyer. Regarding your friends: I don't recall what you have said about income, but unless it is very high, I think they should walk away. Is this ethically ideal? No. Bu they have competing ethically responsibilities here. They do have a responsibility to the bank, sure, and even a very minor one to their neighbors. But they have a greater responsibility to their children. In a less complicated ethical scenario, I think it is a toss up of competing responsibilities (steal bread to save starving family). Here though I think that the responsibility to the bank is mitigated by some of the complicating factors. a) Collateral- the bank had decided that the property was sufficiently valuable to serve as collateral for this loan, b) The appraisal process- through this process, regulated by the banks, they were assured of the value of their property. The bank was complicit in the erroneous purchase decision. Given enough money, the most ethically justifiable position would to realize that the banks were unethical, and have created a system in which you are being taken advantage of, but to pay anyway. Given limited resources, if it comes to not being able to provide for their children, I think they need to assign priorities to the competing responsibilities. And in that case, the bank loses. They should walk.
Tabitha,
The other side of it is this. They are not putting half their take home pay towards the house payment, they're putting half their take home pay towards all of their debt service including a car and student loan payments, they just chose to roll it all into one. So, it's not fair to characterize that last $75k as value that the market would need to recover for them. They're no worse off on that part of it, (aside from a 30 year amortization on a 15 year life car and a normally 20 year payment student debt). So if you take that part aside, then inflation only needs to get them back to $400k before they can sell and feel good about it, even if they accept a deficiency judgment on a short sale.
"Contrarian said...
Tice's response to Faber (Dr. Doom) was merely tact and diplomacy, nothing more."
Oh. I see.
Tabitha, I assumed they have only one wage earner? As Cara pointed out, that is a house, car and student loan monthly payment. I know it looks horrible now and you can't see a brighter future but we have had busts in the 70's, 80's, 90's and now. Even if they did a short sale they would still incur housing costs for a 6 member family that would run about 1700/1800 a month(?) I'm not sure how much a 3 bedroom would rent for. I'm not sure they want a SS because they can't afford to continue or they are afraid of paying more than they can ever get back. There are no guarenttes when you buy a house..period. I did find a blog from Novaguy dated Oct. 19th 2008 where he performed some historical research on sales in Braemar and found even the tinest place still had about 50 grand in equity after the builder slashed costs in 2005. That and the current buying frenzy out there bodes well for them to get back to even keel well within 5 years. PWC is projected to grow through 2013 before leveling off. We had a building morotarium in place through 2007 on new homes so nothing new was built and we all know 2008 and 2009 was scarce. All I'm trying to do is broaden your perspective on the current dismal picture. Just look at all the new stores from Walmarts, Harris Teeter, Wegmans..restaurants..I can't think of any major chain that isn't building and opening up shop. You can trust me on this, the big guys do a lot more market research than I could ever do to figure out where the growth and money markets are. If they are placing a bet on PWC I don't believe our county planners are off the mark. This with the government employee expansion means housing will regain its footing and fairly quickly. If we were in a declining mode and homes in SS or foreclosure were sitting on the market I might have more qualms but as it is currently, not a problem. Some people are getting a deal of a lifetime for NOVA.
Post a Comment