How's your housing market? (5 Viewers)

[The Z Machine]

No, I don't hear *that* many people being under water. A few. Especially those who made dubious decisions. But not that many. I think more will come. I think this will hit home to "middle america", and only after that will the market turn around.

 

[BassNBrew]

From the WSJ: FirstFed Grapples With Fallout From Payment Option Mortgages

Like many mortgage lenders, FirstFed Financial Corp. is struggling with rising losses. ... Forty percent of its borrowers became at least 30 days delinquent after the payments on their adjustable-rate mortgages were recast. The number of foreclosed homes held by the bank doubled in the second quarter from the first quarter.

But FirstFed isn't another bank grappling with the fallout from subprime mortgages that went to less-creditworthy borrowers. ... [T]he Los Angeles bank is on the front lines of what could be the next big mortgage debacle: payment option mortgages.

It seems like Tanta and I have been writing about the coming wave of Option ARM defaults forever, but it's only been since 2005!

Barclays Capital estimates that as many as 45% of option ARMs, as they are often called, originated in 2006 and 2007 could wind up in default. Another analysis, by UBS AG, suggests that defaults on option ARMs originated in 2006 could be as high as 48%, slightly higher than its estimate for defaults on subprime loans.

The key here, for the housing market, is that the next wave of defaults will be hitting middle to upper middle class neighborhoods.

From my favorite econ/finance blog: Calculated RiskAlt-A paper is why Freddie is getting smacked around today, and why any financial institution heavily involved with Alt-A paper is going to get hammered again in the coming year, IMO.

Anyone calling a bottom in housing is insane, IMO.

Just on sentiment alone, we are not near a bottom. Some are desperate, but we need rampant desperation. I want to hear people thinking that there's no way out -- experts included -- that it's worse than anyone imagined. I still hear/see people talking about bargains and/or opportunity. That needs to stop.Being a contrarian, my interest will pique when I see the whole flock flee the market.

Scummy Lube-It hit the nail on the head. This will be your bottom. Where no one can sell, a lot of people want to sell but are under water, and lending money is tight.

More likely you won't see the bottom. Things will turn and we'll be off to the races with no fanfare. Best thing you can do is to watch two fundamentals. Rent to price ratios and $/sf relative to new home construction costs. If you can figure out the actual cost to build a home (labor/mat'l/land/permits) then you will be able to find your bottom.

 

[OC Zed]

More indications of growing weakness in prime mortgages...

Link

The next wave of mortgage defaults

More borrowers with good credit are defaulting on their home loans, and that's going to make it even harder for the staggering housing market to recover.

By Les Christie, CNNMoney.com staff writer

Last Updated: August 12, 2008: 8:51 AM EDT

NEW YORK (CNNMoney.com ) -- Prime mortgages are starting to default at disturbingly high rates - a development that threatens to slow any potential housing recovery.



The delinquency rate for prime mortgages worth less than $417,000 was 2.44% in May, compared with 1.38% a year earlier, according to LoanPerformance, a unit of First American (FAF, Fortune 500) CoreLogicthat compiles and analyzes residential mortgage statistics.

Delinquencies jumped even more for prime loans of more than $417,000, so-called jumbo loans. They rose to 4.03% of outstanding loans in May, compared with 1.11% a year earlier.

And prime loans issued in 2007 are performing the worst of all, failing at a rate nearly triple that of prime loans issued in 2006, according to LoanPerformance.

"The extent of how bad these loans are doing is very troubling," said Pat Newport, real estate economist with Global Insight, a forecasting firm.

Washington Mutual (WM, Fortune 500) CEO Kerry Killinger said last month that the bank's prime loan delinquencies are on the rise. As of June 30, 2.19% of the prime loans issued by WaMu in 2007 were already delinquent, compared with 1.40% of prime loans issued in 2005.

Also last month, JP Morgan Chase (JPM, Fortune 500) CEO Jaime Dimon called prime mortgage performance "terrible" and suggested that losses connected to prime may triple. For the second quarter, the bank reported net charges of $104 million for prime rate delinquencies, more than double the $50 million recorded three months earlier.

The latest shoe

Prime loans are just the latest class of mortgages to suffer a spike in failure rates. The first lot to go bad was, of course, subprime mortgages, whose problems set the housing meltdown in motion. Next were the Alt-A loans, a class between prime and subprime loans that doesn't require strict documentation of a borrower's assets or income.

Now, as prime loans are added to the mix, the resulting foreclosures could haunt the housing market for a long time, according to Global Insight's Patrick Newport.

"Home prices will drop for quite a while - maybe several years," he said.

Prices are already off nearly 20% from their 2006 highs, according to the S&P/Case-Shiller Home Price index.

And there's a strong inverse correlation between home prices and defaults, according to Lawrence Yun, chief economist for the National Association of Realtors.

"It's a feedback loop," he said. "Price declines lead to more defaults, which leads to more price declines."

More foreclosures will add to an already massive oversupply of homes on the market. Inventories are up to about 11 month's worth of sales at the current rate.

Indeed, about 2.8% of all homes for sale were vacant as of June 30, according to Census Bureau statistics. That's up about 50% from three years ago, and near historic highs.

More foreclosures, fewer loans

The failure of prime mortgages will also make it more difficult for new borrowers to find affordable loans - and that will slow sales even more. Lending standards have been tightening for months, but if prime loans start to look risky, lenders will be even more conservative about who gets a mortgage.

About 60% of the loan officers surveyed reported that they tightened lending standards for prime mortgages during the first three months of 2008, according to the April 2008 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Federal Reserve, which is released quarterly.

That number will likely be even higher for the second quarter, according to Mike Larson, a real estate analyst for Weiss Research. "It's already harder and more expensive to get loans," he said. "Lenders pull in their horns when things go south."

While easy credit fueled the housing boom, restricted credit is certainly contributing to the bust.

"Eventually," said Newport, "time will break the cycle. Pricing will drop enough to attract more buyers, and inventories will decline."

But there will probably more hard times ahead before markets come back into balance and recovery begins.

 

[The Z Machine]

My mom is having a hell of a time renting the vacant place. On top of that, her car was stolen (along with her purse, cell phone, and briefcase) last night. She's pretty upset and this does not bode well for her financially. She had to put in a few thousand $ into work on the rental house to get it ready for the next tenants, so this comes at the absolute worst time.

 

[tommyGunZ]

My mom is having a hell of a time renting the vacant place. On top of that, her car was stolen (along with her purse, cell phone, and briefcase) last night. She's pretty upset and this does not bode well for her financially. She had to put in a few thousand $ into work on the rental house to get it ready for the next tenants, so this comes at the absolute worst time.

has she considered letting either of her rentals go? didn't you mention that she already paid off her actual residence, so her credit score doesn't really matter?at some point it's not worth it to maintain payments on an asset that is depreciating so fast and is unlikely to get back even for a long time. you should go over the numbers wiht her from time to time to make sure letting the bank have it isn't the best option.GL either way bro.

 

[The Z Machine]

My mom is having a hell of a time renting the vacant place. On top of that, her car was stolen (along with her purse, cell phone, and briefcase) last night. She's pretty upset and this does not bode well for her financially. She had to put in a few thousand $ into work on the rental house to get it ready for the next tenants, so this comes at the absolute worst time.

has she considered letting either of her rentals go? didn't you mention that she already paid off her actual residence, so her credit score doesn't really matter?at some point it's not worth it to maintain payments on an asset that is depreciating so fast and is unlikely to get back even for a long time. you should go over the numbers wiht her from time to time to make sure letting the bank have it isn't the best option.GL either way bro.

I'm not sure the financial status of any of the properties. I'm heading down to LA this evening (and returning tomorrow morning, ugh). There's a chance she'll open up to me about it. She's really upset it for obvious reasons.I told my brother on the phone yesterday, "We need to be prepared to help our mother out financially."He didn't seem so keen on that.

 

[tommyGunZ]

My mom is having a hell of a time renting the vacant place. On top of that, her car was stolen (along with her purse, cell phone, and briefcase) last night. She's pretty upset and this does not bode well for her financially. She had to put in a few thousand $ into work on the rental house to get it ready for the next tenants, so this comes at the absolute worst time.

has she considered letting either of her rentals go? didn't you mention that she already paid off her actual residence, so her credit score doesn't really matter?at some point it's not worth it to maintain payments on an asset that is depreciating so fast and is unlikely to get back even for a long time. you should go over the numbers wiht her from time to time to make sure letting the bank have it isn't the best option.GL either way bro.

I'm not sure the financial status of any of the properties. I'm heading down to LA this evening (and returning tomorrow morning, ugh). There's a chance she'll open up to me about it. She's really upset it for obvious reasons.I told my brother on the phone yesterday, "We need to be prepared to help our mother out financially."He didn't seem so keen on that.

My guess is that giving the house back to the bank is an idea your mom will completely dismiss at first - seems that the stigma of losing a home was far worse amongst our parents generation. After this housing debacle, a foreclosure on the record won't be a big deal, more like a bad night in Vegas at the BJ table or a DIP for an 18 yr old.Lots of folks will disagree, but I'm of the opinion that lenders should not have loaned the cash if they weren't prepared to take the collateral back. If I hadn't done my homework and had purchased between 2005-2007, I'd certainly consider the option of walking away. Screw pride; you have to make personal financial and economic decisions based on numbers, not emotion.But hopefully it doesn't come to that Z. Again, GL to your moms.

 

[Ozymandias]

My mom is having a hell of a time renting the vacant place. On top of that, her car was stolen (along with her purse, cell phone, and briefcase) last night. She's pretty upset and this does not bode well for her financially. She had to put in a few thousand $ into work on the rental house to get it ready for the next tenants, so this comes at the absolute worst time.

has she considered letting either of her rentals go? didn't you mention that she already paid off her actual residence, so her credit score doesn't really matter?at some point it's not worth it to maintain payments on an asset that is depreciating so fast and is unlikely to get back even for a long time. you should go over the numbers wiht her from time to time to make sure letting the bank have it isn't the best option.GL either way bro.

I'm not sure the financial status of any of the properties. I'm heading down to LA this evening (and returning tomorrow morning, ugh). There's a chance she'll open up to me about it. She's really upset it for obvious reasons.I told my brother on the phone yesterday, "We need to be prepared to help our mother out financially."He didn't seem so keen on that.

Sorry to hear about your mom. Sometimes bad luck comes at the worst time.

 

[The Z Machine]

My mom is having a hell of a time renting the vacant place. On top of that, her car was stolen (along with her purse, cell phone, and briefcase) last night. She's pretty upset and this does not bode well for her financially. She had to put in a few thousand $ into work on the rental house to get it ready for the next tenants, so this comes at the absolute worst time.

has she considered letting either of her rentals go? didn't you mention that she already paid off her actual residence, so her credit score doesn't really matter?at some point it's not worth it to maintain payments on an asset that is depreciating so fast and is unlikely to get back even for a long time. you should go over the numbers wiht her from time to time to make sure letting the bank have it isn't the best option.GL either way bro.

I'm not sure the financial status of any of the properties. I'm heading down to LA this evening (and returning tomorrow morning, ugh). There's a chance she'll open up to me about it. She's really upset it for obvious reasons.I told my brother on the phone yesterday, "We need to be prepared to help our mother out financially."He didn't seem so keen on that.

Sorry to hear about your mom. Sometimes bad luck comes at the worst time.

Thanks man. She'll get though it. It will take a hit to her pride, and maybe her pocketbook, but she'll make it. She's a strong woman.

 

[The Z Machine]

My mom just left me a message.

She went out to go to the DMV to get a new license and she returned to find her house ransacked. The ####ers who stole her car had her purse with ID and address and house keys. ####### I'm pissed now. I want to hurt these mother ####ers.

 

[KGB]

My mom just left me a message.She went out to go to the DMV to get a new license and she returned to find her house ransacked. The ####ers who stole her car had her purse with ID and address and house keys. ####### I'm pissed now. I want to hurt these mother ####ers.

 

[jonessed]

My mom just left me a message.She went out to go to the DMV to get a new license and she returned to find her house ransacked. The ####ers who stole her car had her purse with ID and address and house keys. ####### I'm pissed now. I want to hurt these mother ####ers.

That's not all that uncommon unfortunately. First thing you do if your keys get stolen is change your locks. That won't stop them from kicking in the door though.

 

[Ozymandias]

My mom just left me a message.She went out to go to the DMV to get a new license and she returned to find her house ransacked. The ####ers who stole her car had her purse with ID and address and house keys. ####### I'm pissed now. I want to hurt these mother ####ers.

That is a real bummer. I hate criminals who prey on older people.About this time is when you begin the long slow journey from socialist to conservative.

 

[tommyGunZ]

My mom just left me a message.

She went out to go to the DMV to get a new license and she returned to find her house ransacked. The ####ers who stole her car had her purse with ID and address and house keys. ####### I'm pissed now. I want to hurt these mother ####ers.

That is a real bummer. I hate criminals who prey on older people.About this time is when you begin the long slow journey from socialist to conservative.

i don't get it.

 

[TommyGilmore]

My mom just left me a message.

She went out to go to the DMV to get a new license and she returned to find her house ransacked. The ####ers who stole her car had her purse with ID and address and house keys. ####### I'm pissed now. I want to hurt these mother ####ers.

That is a real bummer. I hate criminals who prey on older people.About this time is when you begin the long slow journey from socialist to conservative.

i don't get it.

He's taking advantage of a person's emotional state to proselytize. It's not much different from telling someone, "Bad things wouldn't happen to you if you gave your life to Jesus Christ..."

 

[stbugs]

More indications of growing weakness in prime mortgages...

Link

The next wave of mortgage defaults

More borrowers with good credit are defaulting on their home loans, and that's going to make it even harder for the staggering housing market to recover.

By Les Christie, CNNMoney.com staff writer

Last Updated: August 12, 2008: 8:51 AM EDT

NEW YORK (CNNMoney.com ) -- Prime mortgages are starting to default at disturbingly high rates - a development that threatens to slow any potential housing recovery.



The delinquency rate for prime mortgages worth less than $417,000 was 2.44% in May, compared with 1.38% a year earlier, according to LoanPerformance, a unit of First American (FAF, Fortune 500) CoreLogicthat compiles and analyzes residential mortgage statistics.

Delinquencies jumped even more for prime loans of more than $417,000, so-called jumbo loans. They rose to 4.03% of outstanding loans in May, compared with 1.11% a year earlier.

And prime loans issued in 2007 are performing the worst of all, failing at a rate nearly triple that of prime loans issued in 2006, according to LoanPerformance.

"The extent of how bad these loans are doing is very troubling," said Pat Newport, real estate economist with Global Insight, a forecasting firm.

Washington Mutual (WM, Fortune 500) CEO Kerry Killinger said last month that the bank's prime loan delinquencies are on the rise. As of June 30, 2.19% of the prime loans issued by WaMu in 2007 were already delinquent, compared with 1.40% of prime loans issued in 2005.

Also last month, JP Morgan Chase (JPM, Fortune 500) CEO Jaime Dimon called prime mortgage performance "terrible" and suggested that losses connected to prime may triple. For the second quarter, the bank reported net charges of $104 million for prime rate delinquencies, more than double the $50 million recorded three months earlier.

The latest shoe

Prime loans are just the latest class of mortgages to suffer a spike in failure rates. The first lot to go bad was, of course, subprime mortgages, whose problems set the housing meltdown in motion. Next were the Alt-A loans, a class between prime and subprime loans that doesn't require strict documentation of a borrower's assets or income.

Now, as prime loans are added to the mix, the resulting foreclosures could haunt the housing market for a long time, according to Global Insight's Patrick Newport.

"Home prices will drop for quite a while - maybe several years," he said.

Prices are already off nearly 20% from their 2006 highs, according to the S&P/Case-Shiller Home Price index.

And there's a strong inverse correlation between home prices and defaults, according to Lawrence Yun, chief economist for the National Association of Realtors.

"It's a feedback loop," he said. "Price declines lead to more defaults, which leads to more price declines."

More foreclosures will add to an already massive oversupply of homes on the market. Inventories are up to about 11 month's worth of sales at the current rate.

Indeed, about 2.8% of all homes for sale were vacant as of June 30, according to Census Bureau statistics. That's up about 50% from three years ago, and near historic highs.

More foreclosures, fewer loans

The failure of prime mortgages will also make it more difficult for new borrowers to find affordable loans - and that will slow sales even more. Lending standards have been tightening for months, but if prime loans start to look risky, lenders will be even more conservative about who gets a mortgage.

About 60% of the loan officers surveyed reported that they tightened lending standards for prime mortgages during the first three months of 2008, according to the April 2008 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Federal Reserve, which is released quarterly.

That number will likely be even higher for the second quarter, according to Mike Larson, a real estate analyst for Weiss Research. "It's already harder and more expensive to get loans," he said. "Lenders pull in their horns when things go south."

While easy credit fueled the housing boom, restricted credit is certainly contributing to the bust.

"Eventually," said Newport, "time will break the cycle. Pricing will drop enough to attract more buyers, and inventories will decline."

But there will probably more hard times ahead before markets come back into balance and recovery begins.

OC, why is this news at all? Did you really think that only sub prime mortgages were getting foreclosed? To me this is basically the same news as all of the foreclosure rates being up 50+% in 2008 ove 2007. This article (LINK)) talks about how in the 1st Quarter of 2008 that prime mortgages were almost 40% of the foreclosures even though sub-prime was the "crisis."Not trying to lighten the mood, but this tells me that your article isn't new news, i.e. prime mortgages have been a big part of foreclosures so far and will continue to be so. When house prices go down as much as they have been, I think a ton of people are willing to ding their credit to walk away from even a prime mortgage. If foreclosures in general are up in the 50-60% range, then the 1.38% increase to 2.44% increase seems right in line with those numbers. The jumbo one, while larger is less surprising to me. A 25% decrease on a 400k+ home is 100k+. Jumbo loans aren't the norm, they are given in areas where house prices are high and probably went through the bubble. In those houses, the drop $$$ amount is significant enough. A family in a 200k home, even with a 25% decrease, might not be willing to uproot their family for a 50k drop. A family in a 600k home seeing a 150k drop may decide that they should dump the house.

Anyway, based on the foreclosure increase in 2008 over 2007 your article seems like a different slant to the same story, not new news to me since prime mortgages have already been a big part of foreclosures.

 

[BassNBrew]

I'm sitting on a 3/1 900 sf ranch completely refurbish 2 yr ago. Just dropped the rent to $595 and still no takers.

 

[Ozymandias]

My mom just left me a message.

She went out to go to the DMV to get a new license and she returned to find her house ransacked. The ####ers who stole her car had her purse with ID and address and house keys. ####### I'm pissed now. I want to hurt these mother ####ers.

That is a real bummer. I hate criminals who prey on older people.About this time is when you begin the long slow journey from socialist to conservative.

i don't get it.

You never heard the line: "A conservative is a liberal who got mugged." ?Your education has been sadly neglected.

 

[OC Zed]

OC, why is this news at all? Did you really think that only sub prime mortgages were getting foreclosed? To me this is basically the same news as all of the foreclosure rates being up 50+% in 2008 ove 2007. This article (LINK)) talks about how in the 1st Quarter of 2008 that prime mortgages were almost 40% of the foreclosures even though sub-prime was the "crisis."

Not trying to lighten the mood, but this tells me that your article isn't new news, i.e. prime mortgages have been a big part of foreclosures so far and will continue to be so. When house prices go down as much as they have been, I think a ton of people are willing to ding their credit to walk away from even a prime mortgage. If foreclosures in general are up in the 50-60% range, then the 1.38% increase to 2.44% increase seems right in line with those numbers. The jumbo one, while larger is less surprising to me. A 25% decrease on a 400k+ home is 100k+. Jumbo loans aren't the norm, they are given in areas where house prices are high and probably went through the bubble. In those houses, the drop $$$ amount is significant enough. A family in a 200k home, even with a 25% decrease, might not be willing to uproot their family for a 50k drop. A family in a 600k home seeing a 150k drop may decide that they should dump the house.

Anyway, based on the foreclosure increase in 2008 over 2007 your article seems like a different slant to the same story, not new news to me since prime mortgages have already been a big part of foreclosures.

Am I personally surprised by this? No. But given that the Fed, Secretary Paulson and the vast majority of media stories in the last two years have focused on subprime loans being the heart of the problem, I would say that this would be news to plenty of people. And prime and other non-subprime loans really haven't always been a big part of foreclosures. The correction did start with subprime loans and is only starting to hit the Alt-A and prime mortgages particularly in the bubble states. Defaults on these loans are only starting to pick up and won't peak until 2010/2011.

 

[OC Zed]

I'm sitting on a 3/1 900 sf ranch completely refurbish 2 yr ago. Just dropped the rent to $595 and still no takers.

Where is it located?

 

[BassNBrew]

I'm sitting on a 3/1 900 sf ranch completely refurbish 2 yr ago. Just dropped the rent to $595 and still no takers.

Where is it located?

Statesville, NC

 

[Michael Fox Fan]

I'm sitting on a 3/1 900 sf ranch completely refurbish 2 yr ago. Just dropped the rent to $595 and still no takers.

Where is it located?

Statesville, NC

Do most people who live in Statesville work in Winston-Salem or Charlotte? Or put differently, what do they do?

 

[The Z Machine]

Z's Mom Update:

My mom is doing alright. she was shaken up pretty good after having a bad few days. It was good to see her last night. The thieves didn't steal much, as the things of worth in her house are mostly my grandmother's antique furniture. They stole her jewelry, but it wasn't very precious, as she wears her nice ring and keeps the rest in a safe deposit box. She's most upset at losing her car (an Acura TL), which she said to me, "About a month ago, I thought to myself: 'I'll never be able to afford a car as nice as this again'". Unfortunately this is true, as the blue book on her 2004 TL w/ 100k miles is like $7k, and she definitely doesn't have the extra funds for a car payment. She'll have to buy the best possible car she can for $7k. She pampered that car and it showed, treating her very well. But that's just a car, and a car is just a material good. I've been trying to look big picture here and trying to get her to do so as well. I think I made some progress on this front yesterday.

I'm not sure what else I can do to help her. I changed the locks in her house last night (remarkably easy BTW). My brother is coming down this WE and he'll be helping her out getting the vacant rental up to spec so that my Mom can get it rented ASAP. FWIW, she's likely to have to drop the rent about $300-400 to under $3k for it to rent in this market. She didn't mention the possibility of having to sell one of the properties, and I didn't want to push it with her in her emotional state. I am prepared to help her out financially, but I'm not sure if she'd ever accept, and I'm not sure if it's just delaying the inevitable or if it will get her through a tough period.

 

[Ozymandias]

Z's Mom Update:My mom is doing alright. she was shaken up pretty good after having a bad few days. It was good to see her last night. The thieves didn't steal much, as the things of worth in her house are mostly my grandmother's antique furniture. They stole her jewelry, but it wasn't very precious, as she wears her nice ring and keeps the rest in a safe deposit box. She's most upset at losing her car (an Acura TL), which she said to me, "About a month ago, I thought to myself: 'I'll never be able to afford a car as nice as this again'". Unfortunately this is true, as the blue book on her 2004 TL w/ $100k is like $7k, and she definitely doesn't have the extra funds for a car payment. She'll have to buy the nest possible car she can for $7k. She pampered that car and it showed, treating her very well. But that's just a car, and a car is just a material good. I've been trying to look big picture here and trying to get her to do so as well. I think I made some progress on this front yesterday.I'm not sure what else I can do to help her. I changed the locks in her house last night (remarkably easy BTW). My brother is coming down this WE and he'll be helping her out getting the vacant rental up to spec so that my Mom can get it rented ASAP. FWIW, she's likely to have to drop the rent about $300-400 to under $3k for it to rent in this market. She didn't mention the possibility of having to sell one of the properties, and I didn't want to push it with her in her emotional state. I am prepared to help her out financially, but I'm not sure if she'd ever accept, and I'm not sure if it's just delaying the inevitable or if it will get her through a tough period.

Glad she seems to have come through all right. It's nice of you to want to help her, but looks like she's fairly strong and independent. Someday she will probably need your help. Good luck and GB.

 

[17seconds]

greenspan

 

[OC Zed]

Z's Mom Update:My mom is doing alright. she was shaken up pretty good after having a bad few days. It was good to see her last night. The thieves didn't steal much, as the things of worth in her house are mostly my grandmother's antique furniture. They stole her jewelry, but it wasn't very precious, as she wears her nice ring and keeps the rest in a safe deposit box. She's most upset at losing her car (an Acura TL), which she said to me, "About a month ago, I thought to myself: 'I'll never be able to afford a car as nice as this again'". Unfortunately this is true, as the blue book on her 2004 TL w/ $100k is like $7k, and she definitely doesn't have the extra funds for a car payment. She'll have to buy the nest possible car she can for $7k. She pampered that car and it showed, treating her very well. But that's just a car, and a car is just a material good. I've been trying to look big picture here and trying to get her to do so as well. I think I made some progress on this front yesterday.I'm not sure what else I can do to help her. I changed the locks in her house last night (remarkably easy BTW). My brother is coming down this WE and he'll be helping her out getting the vacant rental up to spec so that my Mom can get it rented ASAP. FWIW, she's likely to have to drop the rent about $300-400 to under $3k for it to rent in this market. She didn't mention the possibility of having to sell one of the properties, and I didn't want to push it with her in her emotional state. I am prepared to help her out financially, but I'm not sure if she'd ever accept, and I'm not sure if it's just delaying the inevitable or if it will get her through a tough period.

Wow, that really is a bad string of events. It sounds like you are helping her make the best of a bad situation.

 

[OC Zed]

greenspan

Could he give any more of a generic prediction than "Um, we think housing will bottom next year, but maybe it will continue to slide after 2009." ? Thanks a whole ####ing lot for the insight, Nostradomus. How about actually doing your job in trying to stop inflation?!?!?! What a ####ing novel thought that would be!!!

 

[BigSteelThrill]

greenspan

Could he give any more of a generic prediction than "Um, we think housing will bottom next year, but maybe it will continue to slide after 2009." ? Thanks a whole ####ing lot for the insight, Nostradomus. How about actually doing your job in trying to stop inflation?!?!?! What a ####ing novel thought that would be!!!

We must quit sending hundreds of billions of dollars of resources into another country -or-

we must take the resources within that country for our own.

 

[Michael Fox Fan]

greenspan

Could he give any more of a generic prediction than "Um, we think housing will bottom next year, but maybe it will continue to slide after 2009." ? Thanks a whole ####ing lot for the insight, Nostradomus. How about actually doing your job in trying to stop inflation?!?!?! What a ####ing novel thought that would be!!!

it's annoying that we still have to listen to that ### clown

 

[OC Zed]

I thought this article was amusing as it discusses how the falling housing market is actually causing unhappy couples to stay married...

Tough Housing Market Complicates Divorce

by Elizabeth Razzi

Friday, August 15, 2008provided byBankrate

Divorce is rarely an easy process. But falling home values and sluggish real estate sales are combining to make it particularly difficult right now.

Couples aren't fighting over who gets to keep the house. They're scrambling to get away from the burden of it. It's too soon to see the trend reflected in official statistics; the most recent marriage and divorce numbers compiled by the National Center for Health Statistics date back to 2005 -- just when real estate markets started to turn down from their boom years. But lawyers and financial planners anecdotally say they are seeing more clients stay married -- if only for the time being -- simply because they cannot afford to break up.

"Truthfully, it's a mess," says Carol Chumney, an attorney who practices family law in Memphis, Tenn. "There are a lot of folks who want to get a divorce, and the house is an impediment because nobody wants it."

House No Longer Counts as an Asset

The tough housing market is hitting divorcing couples in several ways. If the home's value has fallen below the amount owed on the mortgage, neither spouse wants to be saddled with that liability. If one wants to keep the home, it's difficult to refinance the mortgage so the departing spouse can be cut loose from the debt. And evaporating home equity can take with it the means to pay lawyers for the divorce itself.

Dan Couvrette, chief executive officer of Divorce Marketing Group, a Canadian company that publishes Divorce Magazine, says he's also hearing anecdotally that some couples cannot afford to divorce now. "One of the ways they pay their legal fees is by selling or refinancing their home, and selling the home is getting more difficult," he says.

Bonnie Hughes, a Certified Financial Planner with The Enrichment Group in Miami, is living through the situation herself. Two years ago, when she and her husband divorced, he kept their vacation house by a Tennessee lake, and she retained their main residence, a 3,000 square-foot home in Chattanooga, Tenn. He was able to sell the house at the lake; she was unable to get rid of what had been the family home.

"I was planning on just selling it," Hughes says. "I had already moved to Atlanta." Even though the asking price is almost $100,000 lower than they had paid for it, the house in Chattanooga remains unsold at a list price of $329,000. "It's in inventory with homes that are just like it," she says. A renter helps pay the mortgage, but Hughes still has to contribute to the mortgage payment each month, even though she has moved on again, from Atlanta to Miami.

Fortunately, she and her ex-husband have maintained an amicable relationship. Although she pays the full amount, he has allowed his name to remain on the mortgage so she doesn't have to refinance out of the 4.8 percent fixed-rate mortgage they had obtained while together.

Dumping the House on the Ex

Of course, not all divorcing couples are able to get along well enough to minimize their losses in a depressed housing market.

"A lot of times both of them cannot agree on what to do," says Chumney. "It can be a huge financial mess. In the past, a lot of times, folks wanted to keep the house, and lately, that's not the case."

Some spouses simply dump the problem -- the home with a shrinking value -- on their soon-to-be-ex. "They just leave," says Chumney. "They move out and they're gone." The remaining spouse may have few options but to move out and try to rent the home, assuming that brings in enough to keep up with the payments. Or the home could be lost to foreclosure.

If left-behind spouses try to keep their homes, they face legal bills when they try to get the departing spouses to approve sales. "Every time your lawyer goes to court, you're paying for the lawyer's time, and some of these people don't have the money," says Chumney.

Putting Off the Divorce

Sometimes the divorce has to be put off -- at least for the time being.

Hughes says she sees the issue come up with clients. "I think we're seeing people who are not divorcing. Some people cannot leave comfortably at this time."

But Nancy Zalusky Berg, a family-law attorney in Minneapolis, says not divorcing may not be a realistic option for some couples, despite their financial hardship. "What we're having is two people staying in the house because they can't afford two places. They're staying together in the same place, with a fair amount of difficulty, including threats of domestic violence and incidents," she says. "Right now is a very ugly time in my business."

Houses Are Hot Potatoes

It used to be that divorcing couples would vie to be the one who kept the home. Women, in particular, often fought to remain in the house where the couple's children had grown up. That wasn't always the savvy thing to do financially, especially if the ongoing expenses (property taxes, insurance, utilities and repairs) proved to be too much to handle on her income alone. And often women would give up other valuable assets in the divorce settlement, such as pension benefits, in order to win the house. That seems to be changing.

"Houses have become like hot potatoes," says Berg. "Nobody wants that on their side of the ledger. They might want the house, but they don't want it at the value that's being agreed to, or because they don't feel it's a safe investment."

Hughes says women seem to have less attachment to the family home now, which may be a positive change, reflecting their understanding of how they may be burdened by ongoing expenses. "I hope it's because they have learned," she says.

"More and more, neither person wants to live there," she says. Especially when couples are ending a long-term marriage, both may wish to start fresh, with fewer belongings, including the home. "People want a new start with much less," she says. "In some cases neither wants any of it. It's a past life."

Recommendations for Warring Spouses

Experts do have some recommendations for couples struggling with a marriage that is ending -- and homeownership that is lingering.

Most important, they say, is to pay sharp attention to the valuation of the home when dividing assets. Both spouses need to be honest about how low that home's resale value may be now, given the current weak market. If it is valued too high, it distorts the distribution of assets and liabilities from the marriage.

Divorcing spouses may have to sell some of their investments to generate cash to pay off the mortgage on their former homes, and allow each to move on separately.

Spouses who wish to remain in the home after a divorce need to be realistic about the ongoing maintenance costs associated with living there. Without two incomes -- and the economies of scale that come from two people sharing living expenses -- the home may be a serious long-term drain on that person's finances.

What no one knows is whether some couples who would have divorced, but who put off the move because of the economy, will simply delay the inevitable or remain married for the long term.

There may be some who try harder to work it out, says Berg. "I certainly encourage that. I hate to see people get divorced, especially young couples, because they're mad at each other."

 

[tommyGunZ]

July numbers are out - San Diego Median now down to 364k, off ~ 30% from the 518k peak in Nov '05.

Foreclosures Top 40 Percent of Local Sales

Nearly 41 percent of the homes sold in the county last month had been foreclosed at some point in the previous 12 months, DataQuick Information Systems reported this morning.

That was up from 38.7 percent in June. Only 11.6 percent of the sales in July last year were such sales.

In neighboring Riverside County, foreclosure resales counted for 64 percent of all sales in July.

In a press release, John Walsh, DataQuick's president, labeled the housing news across Southern California a "fire sale of properties" purchased or refinanced near the peak of the market using "lousy mortgages."

The increased appetite for discounted homes bumped the San Diego County sales totals positive in July. All homes sold in July totaled 3,431, a 10.5 percent increase over July's sales total a year ago. The categories of resale houses and resale condos each saw sales volume increases of more than 20 percent.

The price pressure from foreclosure sales pushed the median price among all homes sold down to $364,000 -- a 25.6 percent year-over-year drop and a 29.7 percent drop from the November 2005 peak.

-- KELLY BENNETT

NODs set new records last month as well, meaning that the foreclosures are still rising and will throughout the fall and winter. I'm guessing we'll see another 10-15% off of prices by the end of '08 if foreclosures are making up 40+% of total sales. Who'd of thunk we'd be looking at 40-50% price declines in Southern California? This is way worse than I ever thought it would be. Remember the words "soft landing"?

 

[Mr. Pickles]

San Diego: record high inventories, median price going negative YOY this month for the first time in 8 yrs., and new home/condo projects being cancelled. The party is officially over in SD, now buyers are waiting out the sellers and the words "reduction" and "motivated" are in every ad.

I see Phoenix has over 50,000 places on the market. WOW.

How's your market doing? Has momentum changed?

Your stats on Phoenix are incorrect. It is about 44k right now.Looking at YOY means nothing as 2005 was an anomoly. Phoenix is leveling off around 2004 levels (all time high before the 2005 frenzy) and experts fully expect the majority of inventory to be burned through by Q1 2007.

In Phoenix there are extremely strong drivers of the market with population and job growth (which is what inherantly drives the real estate market). Rates are slowly creeping up but shouldn't be an issue until they break the 8.50% mark or so.

In Phoenix there is a glut in condos and they are being priced accordingly (again to about 2004 levels) and there are some nice buying opportunities. However as Phoenix grows and people's commutes are getting longer and longer much of this urban lifestyle will absorb the more price sensitive buyer. Bottom line, in-fill is generally resistant to most contractions in the market.

Bottom line, most analysts here understand that this buyers market is a temporary phenomenon until we get through the excess inventory created through many investors who bought in 2005. There is not a shift in market fundamentals but rather an anomoly that accounts for only about 7 months of supply (we are averaging about 6,500 sales per month...44k/6.5k = 6.76).

I'm thinking of making this my sig.

 

[tommyGunZ]

yeah, bags whiffed on this one. i'm guessing he has a different view of PHX fundamentals today.

 

[Verbal Kint]

greenspan

Could he give any more of a generic prediction than "Um, we think housing will bottom next year, but maybe it will continue to slide after 2009." ? Thanks a whole ####ing lot for the insight, Nostradomus. How about actually doing your job in trying to stop inflation?!?!?! What a ####ing novel thought that would be!!!

Why is it his job? He's retired. Although he is possibly worse than Brett Favre with the whole retirement thing. If I was Bernake, I'd punch him in the neck.

 

[Sonny Lubick Blowup Doll]

San Diego: record high inventories, median price going negative YOY this month for the first time in 8 yrs., and new home/condo projects being cancelled. The party is officially over in SD, now buyers are waiting out the sellers and the words "reduction" and "motivated" are in every ad.

I see Phoenix has over 50,000 places on the market. WOW.

How's your market doing? Has momentum changed?

Your stats on Phoenix are incorrect. It is about 44k right now.Looking at YOY means nothing as 2005 was an anomoly. Phoenix is leveling off around 2004 levels (all time high before the 2005 frenzy) and experts fully expect the majority of inventory to be burned through by Q1 2007.

In Phoenix there are extremely strong drivers of the market with population and job growth (which is what inherantly drives the real estate market). Rates are slowly creeping up but shouldn't be an issue until they break the 8.50% mark or so.

In Phoenix there is a glut in condos and they are being priced accordingly (again to about 2004 levels) and there are some nice buying opportunities. However as Phoenix grows and people's commutes are getting longer and longer much of this urban lifestyle will absorb the more price sensitive buyer. Bottom line, in-fill is generally resistant to most contractions in the market.

Bottom line, most analysts here understand that this buyers market is a temporary phenomenon until we get through the excess inventory created through many investors who bought in 2005. There is not a shift in market fundamentals but rather an anomoly that accounts for only about 7 months of supply (we are averaging about 6,500 sales per month...44k/6.5k = 6.76).

I'm thinking of making this my sig.

 

[OC Zed]

greenspan

Could he give any more of a generic prediction than "Um, we think housing will bottom next year, but maybe it will continue to slide after 2009." ? Thanks a whole ####ing lot for the insight, Nostradomus. How about actually doing your job in trying to stop inflation?!?!?! What a ####ing novel thought that would be!!!

Why is it his job? He's retired. Although he is possibly worse than Brett Favre with the whole retirement thing. If I was Bernake, I'd punch him in the neck.

I think I misread it and thought it was Bernake that was saying it. Anyways, given Greenspan's role in all of this, he would be wise just laying low for a really long time.

 

[Reaper]

Here's an article I thought was funny figured I'd post it here...

As has been reported NYC hasn't been hit that hard yet but, a slow down seems to be in effect and coming on - Not sure if things will bottom out like other places but, prices are flat and falling depending on the market specific area and even specific Block and building in NYC....

That said - Look at this article and the example they give you of a guy that lost his shirt...

You're going to tell me a FREAKING MATH TEACHER took out Millions of dollars in loans and thought that it would add up?????

A MATH TEACHER - And we should bail this guy out???

"I make $50,000 as a schoolteacher," he says. "There's no way I should have been approved for loans that big."

"I thought real estate was a good business," he says. "But I guess it's not for me. I'm not buying property again—ever again."

Do us all a favor guy and don't invest in real estate - While your at it please stop teaching Math as well....



Many go bust in mortgage meltdown

Home loan mess blamed for 31% rise in bankruptcies

The mortgage crisis that sparked a wave of foreclosures is now responsible for a rising tide of bankruptcies across the city.

Fueled in large part by the number of homeowners who could not keep up with monthly payments on subprime loans, 14,407 people filed for bankruptcy in the New York area during the first seven months of this year, compared with 11,026 in that period last year, according to bankruptcy court records.

While the number of bankruptcies is not as high as it was during the previous economic downturn in 2001, the filings this time around are increasing at a greater rate, rising 31% from January through July versus the year-earlier period.

"I've never seen it this bad," says Gregory Messer, a Brooklyn bankruptcy attorney. "There were times where there were more bankruptcies, but I don't know if I've ever seen so many people prepared to walk away from their houses."

Bankruptcies are typically prompted by catastrophic events such as accidents, illnesses or divorce. The latest wave is different because the driving force is the mortgage crisis. Hit with monthly payments on subprime loans that suddenly increased by hundreds of dollars or more, many New Yorkers, already squeezed by rising gas and food prices, maxed out their credit cards in order to meet their obligations.

Some have given up completely—even if it means losing their homes—to get out from under their debts. Others hope to keep their homes while reorganizing their finances.

In the past, in stronger housing markets, homeowners could refinance their homes. But now, the value of a debtor's house is often less than the amount of the mortgage.

"Because of these no-income-verification, no-asset loan products that were popular, people have no equity and never did," says Michael Siegel, a Manhattan bankruptcy attorney. "Even in the real estate downturn in the '90s, you didn't have people with no equity in their homes."

Real estate speculators

Some New Yorkers find themselves mired in debt because the wide availability of credit turned average wage earners into eager real estate speculators. They bought investment properties in the suburbs, or in places like Florida and North Carolina, hoping to get rich. Then mortgages adjusted upward or their tenants, hit by the economic downturn, stopped paying rent. And the real estate bubble burst, sending home values spiraling downward, particularly outside of the city.

Noel, a 28-year-old math teacher from Harlem who asked that his last name not be used, always thought it would be smart to invest in real estate. So when his cousin introduced him to a mortgage broker who promised he wouldn't have to put a penny down on a $1 million piece of property in New Rochelle, he jumped at the chance. Then, the same broker told him about a home in Yonkers. Again, he didn't have to put any money down.

In over his head

Before he realized what he was getting into, Noel says, he was scammed into signing two mortgages totaling more than $1.5 million. The mortgage broker even provided a lawyer for the closing.

"I make $50,000 as a schoolteacher," he says. "There's no way I should have been approved for loans that big."

Hemmed in by monthly payments totaling more than $10,000 and bills for maintaining a third property on Long Island, Noel had no choice but to file for bankruptcy, he says. He filed without the help of a lawyer—he couldn't afford one—and he plans to walk away from the three homes and get a fresh start, this time without dreams of making it big.

"I thought real estate was a good business," he says. "But I guess it's not for me. I'm not buying property again—ever again."

The rising number of bankruptcies certainly won't help the economy.

Jay Fleischman, a Brooklyn bankruptcy lawyer, says his clients are completely tapped out.

"People will eat out less, buy fewer flat-screen TVs, take fewer vacations," he says. "I've seen so many people just tightening their belts to the absolute limit. There's simply no disposable income for a lot of people anymore."

With more mortgages due to adjust upward in 2009 and 2010, credit card companies reducing limits, and Wall Street layoffs certain to rise, bankruptcy filings will surely increase, experts say.

"I really think things are going to get a lot worse before we see any light at the end of this tunnel," Mr. Fleischman says.

 

[Ozymandias]

Here's an article I thought was funny figured I'd post it here...

As has been reported NYC hasn't been hit that hard yet but, a slow down seems to be in effect and coming on - Not sure if things will bottom out like other places but, prices are flat and falling depending on the market specific area and even specific Block and building in NYC....

That said - Look at this article and the example they give you of a guy that lost his shirt...

You're going to tell me a FREAKING MATH TEACHER took out Millions of dollars in loans and thought that it would add up?????

A MATH TEACHER - And we should bail this guy out???

"I make $50,000 as a schoolteacher," he says. "There's no way I should have been approved for loans that big."

"I thought real estate was a good business," he says. "But I guess it's not for me. I'm not buying property again—ever again."

Do us all a favor guy and don't invest in real estate - While your at it please stop teaching Math as well....



Many go bust in mortgage meltdown

Home loan mess blamed for 31% rise in bankruptcies

The mortgage crisis that sparked a wave of foreclosures is now responsible for a rising tide of bankruptcies across the city.

Fueled in large part by the number of homeowners who could not keep up with monthly payments on subprime loans, 14,407 people filed for bankruptcy in the New York area during the first seven months of this year, compared with 11,026 in that period last year, according to bankruptcy court records.

While the number of bankruptcies is not as high as it was during the previous economic downturn in 2001, the filings this time around are increasing at a greater rate, rising 31% from January through July versus the year-earlier period.

"I've never seen it this bad," says Gregory Messer, a Brooklyn bankruptcy attorney. "There were times where there were more bankruptcies, but I don't know if I've ever seen so many people prepared to walk away from their houses."

Bankruptcies are typically prompted by catastrophic events such as accidents, illnesses or divorce. The latest wave is different because the driving force is the mortgage crisis. Hit with monthly payments on subprime loans that suddenly increased by hundreds of dollars or more, many New Yorkers, already squeezed by rising gas and food prices, maxed out their credit cards in order to meet their obligations.

Some have given up completely—even if it means losing their homes—to get out from under their debts. Others hope to keep their homes while reorganizing their finances.

In the past, in stronger housing markets, homeowners could refinance their homes. But now, the value of a debtor's house is often less than the amount of the mortgage.

"Because of these no-income-verification, no-asset loan products that were popular, people have no equity and never did," says Michael Siegel, a Manhattan bankruptcy attorney. "Even in the real estate downturn in the '90s, you didn't have people with no equity in their homes."

Real estate speculators

Some New Yorkers find themselves mired in debt because the wide availability of credit turned average wage earners into eager real estate speculators. They bought investment properties in the suburbs, or in places like Florida and North Carolina, hoping to get rich. Then mortgages adjusted upward or their tenants, hit by the economic downturn, stopped paying rent. And the real estate bubble burst, sending home values spiraling downward, particularly outside of the city.

Noel, a 28-year-old math teacher from Harlem who asked that his last name not be used, always thought it would be smart to invest in real estate. So when his cousin introduced him to a mortgage broker who promised he wouldn't have to put a penny down on a $1 million piece of property in New Rochelle, he jumped at the chance. Then, the same broker told him about a home in Yonkers. Again, he didn't have to put any money down.

In over his head

Before he realized what he was getting into, Noel says, he was scammed into signing two mortgages totaling more than $1.5 million. The mortgage broker even provided a lawyer for the closing.

"I make $50,000 as a schoolteacher," he says. "There's no way I should have been approved for loans that big."

Hemmed in by monthly payments totaling more than $10,000 and bills for maintaining a third property on Long Island, Noel had no choice but to file for bankruptcy, he says. He filed without the help of a lawyer—he couldn't afford one—and he plans to walk away from the three homes and get a fresh start, this time without dreams of making it big.

"I thought real estate was a good business," he says. "But I guess it's not for me. I'm not buying property again—ever again."

The rising number of bankruptcies certainly won't help the economy.

Jay Fleischman, a Brooklyn bankruptcy lawyer, says his clients are completely tapped out.

"People will eat out less, buy fewer flat-screen TVs, take fewer vacations," he says. "I've seen so many people just tightening their belts to the absolute limit. There's simply no disposable income for a lot of people anymore."

With more mortgages due to adjust upward in 2009 and 2010, credit card companies reducing limits, and Wall Street layoffs certain to rise, bankruptcy filings will surely increase, experts say.

"I really think things are going to get a lot worse before we see any light at the end of this tunnel," Mr. Fleischman says.

When something goes wrong, we're always victims. The Devil made us do it.

 

[Foosball God]

Here's an article I thought was funny figured I'd post it here...

As has been reported NYC hasn't been hit that hard yet but, a slow down seems to be in effect and coming on - Not sure if things will bottom out like other places but, prices are flat and falling depending on the market specific area and even specific Block and building in NYC....

That said - Look at this article and the example they give you of a guy that lost his shirt...

You're going to tell me a FREAKING MATH TEACHER took out Millions of dollars in loans and thought that it would add up?????

A MATH TEACHER - And we should bail this guy out???

"I make $50,000 as a schoolteacher," he says. "There's no way I should have been approved for loans that big."

"I thought real estate was a good business," he says. "But I guess it's not for me. I'm not buying property again—ever again."

Do us all a favor guy and don't invest in real estate - While your at it please stop teaching Math as well....



Many go bust in mortgage meltdown

Home loan mess blamed for 31% rise in bankruptcies

The mortgage crisis that sparked a wave of foreclosures is now responsible for a rising tide of bankruptcies across the city.

Fueled in large part by the number of homeowners who could not keep up with monthly payments on subprime loans, 14,407 people filed for bankruptcy in the New York area during the first seven months of this year, compared with 11,026 in that period last year, according to bankruptcy court records.

While the number of bankruptcies is not as high as it was during the previous economic downturn in 2001, the filings this time around are increasing at a greater rate, rising 31% from January through July versus the year-earlier period.

"I've never seen it this bad," says Gregory Messer, a Brooklyn bankruptcy attorney. "There were times where there were more bankruptcies, but I don't know if I've ever seen so many people prepared to walk away from their houses."

Bankruptcies are typically prompted by catastrophic events such as accidents, illnesses or divorce. The latest wave is different because the driving force is the mortgage crisis. Hit with monthly payments on subprime loans that suddenly increased by hundreds of dollars or more, many New Yorkers, already squeezed by rising gas and food prices, maxed out their credit cards in order to meet their obligations.

Some have given up completely—even if it means losing their homes—to get out from under their debts. Others hope to keep their homes while reorganizing their finances.

In the past, in stronger housing markets, homeowners could refinance their homes. But now, the value of a debtor's house is often less than the amount of the mortgage.

"Because of these no-income-verification, no-asset loan products that were popular, people have no equity and never did," says Michael Siegel, a Manhattan bankruptcy attorney. "Even in the real estate downturn in the '90s, you didn't have people with no equity in their homes."

Real estate speculators

Some New Yorkers find themselves mired in debt because the wide availability of credit turned average wage earners into eager real estate speculators. They bought investment properties in the suburbs, or in places like Florida and North Carolina, hoping to get rich. Then mortgages adjusted upward or their tenants, hit by the economic downturn, stopped paying rent. And the real estate bubble burst, sending home values spiraling downward, particularly outside of the city.

Noel, a 28-year-old math teacher from Harlem who asked that his last name not be used, always thought it would be smart to invest in real estate. So when his cousin introduced him to a mortgage broker who promised he wouldn't have to put a penny down on a $1 million piece of property in New Rochelle, he jumped at the chance. Then, the same broker told him about a home in Yonkers. Again, he didn't have to put any money down.

In over his head

Before he realized what he was getting into, Noel says, he was scammed into signing two mortgages totaling more than $1.5 million. The mortgage broker even provided a lawyer for the closing.

"I make $50,000 as a schoolteacher," he says. "There's no way I should have been approved for loans that big."

Hemmed in by monthly payments totaling more than $10,000 and bills for maintaining a third property on Long Island, Noel had no choice but to file for bankruptcy, he says. He filed without the help of a lawyer—he couldn't afford one—and he plans to walk away from the three homes and get a fresh start, this time without dreams of making it big.

"I thought real estate was a good business," he says. "But I guess it's not for me. I'm not buying property again—ever again."

The rising number of bankruptcies certainly won't help the economy.

Jay Fleischman, a Brooklyn bankruptcy lawyer, says his clients are completely tapped out.

"People will eat out less, buy fewer flat-screen TVs, take fewer vacations," he says. "I've seen so many people just tightening their belts to the absolute limit. There's simply no disposable income for a lot of people anymore."

With more mortgages due to adjust upward in 2009 and 2010, credit card companies reducing limits, and Wall Street layoffs certain to rise, bankruptcy filings will surely increase, experts say.

"I really think things are going to get a lot worse before we see any light at the end of this tunnel," Mr. Fleischman says.

When something goes wrong, we're always victims. The Devil made us do it.

lol @ getting "scammed" into it. Um, putting no money down doesn't mean you won't have to make monthly payments on the note. I have no sympathy for idiots like these. Banks will always give you enough rope to hang yourself with. Try having a little self control instead of spending to the max.

 

[Reaper]

Yeah, Just imagine "GETTING SCAMMED" into 1.5 Million of Mortgages......



"You mean that if I sign all these papers you will just GIVE ME 1.5 Million dollars worth of Real estate"

A FREAKING MATH TEACHER!!!!!!

I bet this guy popped Champagne and partied his $$$ off the day he signed these things thinking he just struck oil.

How?

WHY?

What????

It just Boggles my mind......

 

[Sonny Lubick Blowup Doll]

It IS possible to reply without using the quote function.

 

[The Z Machine]

Z's Mom Update:

My Mom finally rented out my grandmother's house. She reduced the rent to $3100 (which was where it was maybe 3-4 years ago) and a woman came to look at it and liked the place. The next day her husband came and they agreed it was a good fit. The man asked my mother if she was willing to to a 6-month lease (not preferred obviously) and reduce the rent to $3000/month IF he would pay (IN CASH) upfront for the whole 6 months.

After securing a cashier's check for a $3000 security deposit, she agreed. The family moves in the WE before Oct. 1.

My mom ended putting in something like $10k worth of (needed) repairs upgrades to the house. She spent a whole lot of blood, sweat, tears, and $$ getting it ready for the new tenants. Let's hope it pays off for her and this family is a good tenant. But I gotta wonder... who has $18k liquid lying around like that to pre-pay for a lease? Seems like a lot of dough to me.

Also, they found her car and it appears that after some quick joy riding that it was abandoned and then some homeless person used it as his domicile for a week or so. However, noting except the contents of her purse and briefcase and some CDs were stolen. In fact, the stuff she had in the trunk was still there and appeared to be untouched. The car needs something like $5k in body work and interior cleaning / repairs to get it back into shape, but the engine kicks over just fine and even the stereo was still there. Amazing. They didn't even steal the wheels and tires, which only had like 3k miles on them. I don't want to say my mom got lucky in this, but she made out better than I could have even imagined after those first 2 days of hell.

In any case, she's taking it to the Acura dealer to have a full mechanical, electrical, and safety diagnositc performed. Anything found awry will be covered by insurance.

 

[tommyGunZ]

Great to hear Z.

 

[TommyGilmore]

Z -

Make sure the cashier's check CLEARS (and REALLY clears). And make sure your mom doesn't fall for one of those "I give you a cashier's check for $19K and you give me $1000 cash back" scams. Please. Because this really does sound too good to be true.

 

[stbugs]

Z - Make sure the cashier's check CLEARS (and REALLY clears). And make sure your mom doesn't fall for one of those "I give you a cashier's check for $19K and you give me $1000 cash back" scams. Please. Because this really does sound too good to be true.

$18k up front to save $600 over 6 months? The guy could make out better just leaving it in a money market. Besides, why use a cashier's check? Is that common? I always paid my rents (been a long time) in personal checks, even security deposits.

 

[The Z Machine]

Z - Make sure the cashier's check CLEARS (and REALLY clears). And make sure your mom doesn't fall for one of those "I give you a cashier's check for $19K and you give me $1000 cash back" scams. Please. Because this really does sound too good to be true.

$18k up front to save $600 over 6 months? The guy could make out better just leaving it in a money market. Besides, why use a cashier's check? Is that common? I always paid my rents (been a long time) in personal checks, even security deposits.

My Mom asked for the cashier's check. It was her idea, not his.The $3000 deposit has already cleared. Worst comes to worst, she's out a month's rent (because it's ready and not listed), but keeps the $3000 deposit, so it's a wash.I know she did some backround checking on the guy and his wife and it came back clean, so there's that aspect too. I sure hope it works out for my mom. Thanks for the support.

 

[stbugs]

Z - Make sure the cashier's check CLEARS (and REALLY clears). And make sure your mom doesn't fall for one of those "I give you a cashier's check for $19K and you give me $1000 cash back" scams. Please. Because this really does sound too good to be true.

$18k up front to save $600 over 6 months? The guy could make out better just leaving it in a money market. Besides, why use a cashier's check? Is that common? I always paid my rents (been a long time) in personal checks, even security deposits.

My Mom asked for the cashier's check. It was her idea, not his.The $3000 deposit has already cleared. Worst comes to worst, she's out a month's rent (because it's ready and not listed), but keeps the $3000 deposit, so it's a wash.I know she did some backround checking on the guy and his wife and it came back clean, so there's that aspect too. I sure hope it works out for my mom. Thanks for the support.

Hopefully it will, just odd to pay 6 months up front and get such a small discount (3%). Just doesn't seem worthwhile to ask for that seeing as you can easily find pretty safe (GE/ING) checking/money market accounts paying 3%. I just don't know why you would want to part with the cash for essentially no reason. Weird to me.

 

[tommyGunZ]

We've seen the bottom rungs of the housing market completely collapse in bubble markets the past year or so. Now here come the nicer homes in more desirable areas, places many thought were immune to the downturn.

Foreclosures on Million Dollar Homes Surge

Foreclosures on million-dollar homes surge

More affluent folks are feeling squeezed and losing their mansions

In 2003, Robert Provost snapped up a $2.5 million villa with its own boat dock in Sarasota, Fla. A finance chief for an auto-sales chain, Mr. Provost earned more than $250,000 a year and had an impeccable credit history.

Then he lost his job. Mr. Provost missed one $10,500 mortgage payment, then another. This month, the 53-year-old put his house, a five-bedroom with sweeping views of an intercoastal waterway, on the market for $3.4 million. But the listing has thus far attracted little interest. Mr. Provost says he expects to receive a notice of default from the bank — the first step to foreclosure — in the next month or two.

"A foreclosure would be devastating," he says. "My wife and I would have to start from scratch."

The housing crisis that swept through working-class and middle-class communities across the country is now creeping into the leafy driveways and the gated communities of the nation's most exclusive towns.

One symptom of these times: a surge in the number of million-dollar foreclosures. According to RealtyTrac, the number of homes valued at more than $1 million that are in some stage of foreclosure has swelled to 7,968 between January and August. That compares with 4,214 during the same period last year.

The number of $2 million-plus homes in the process of foreclosure has grown even faster, surging to 499 in the year-to-date compared with 201 for the same period last year. Home values are based on comparable, recent sales in the neighborhoods.

It wasn't long ago that bidding wars over luxury properties were commonplace, as buyers emboldened by the booming housing market paid ever-dearer premiums for what seemed like a no-lose investment. More than 64,300 homes priced at $1 million or more sold in 2007, more than triple the number in 2002, according to DataQuick.

Purchased for $2.3 million in 2002, this 10,600-square-foot home in Flower Mound, Texas, has a private gym, media room and a resort-style cabana overlooking the pool and tennis court. Sale price is $1.75 million.

Now tighter credit, rising job losses in finance and management, wildly volatile financial markets and falling home prices have started squeezing the most affluent. Patricia Tan, a broker in Florida with several million-dollar distressed listings and foreclosures, says her clients usually fall into three categories: executives who lost their jobs, homeowners who traded up to a larger house but couldn't sell their first, and speculators and flippers.

What all these groups have in common is that they lacked sufficient financial wiggle room if the market went south. Experts say it's becoming apparent that the even the well-to-do weren't immune to the aggressive lending practices of the go-go years.

"If you've got a lender who pushed them to the limit and you have some change in supply or demand, you'll have foreclosures," says Karl Case, the Wellesley College economist associated with the widely followed S&P/Case-Shiller index of U.S. housing prices. "Loans were unbelievably risky in every category," adds Tom Lawler, a housing economist in Leesburg, Va. "We're seeing the results of that lending in the high end."



The problems at the high end are only expected to grow. While luxury properties still make up a tiny slice of the overall foreclosure market — the number of total filings surged to 303,879 in August of this year — brokers specializing in foreclosures say banks are increasingly calling them to appraise foreclosed homes worth $1 million or more. (Foreclosures, the process by which lenders assume ownership of a house, usually are initiated when a borrower is more than 90 days behind in payments, although many lenders are now waiting longer and cutting deals with homeowners to avoid foreclosure.)

And according to a new report from UBS, delinquencies are rising rapidly for "jumbo prime" mortgages — large loans made to high-quality borrowers. About 4 percent of adjustable rate mortgages for prime borrowers who took out mortgages in 2007 have missed more than two monthly payments, up from just 0.52 percent for loans issued in 2005. Total jumbo mortgages outstanding could total about $1.34 trillion, according to UBS.

The wave of expected layoffs at Lehman Brothers Holdings and Merrill Lynch, combined with previous cuts on Wall Street, is likely to worsen conditions in the Northeast, Mr. Case, the economist, predicts.

For now, the biggest concentration of luxury foreclosures is in the Sunbelt. According to RealtyTrac, California accounted for more than half the nation's total of million-dollar foreclosures, with 4,756 homes in the year-to-date ending in August. Florida ranked second with 1,088, followed by Nevada with 215. California and Florida have for months been among the biggest losers in the national housing downturn.

Adam Fenn, a Nevada broker who specializes in foreclosures, says he had no million-dollar listings last year. Now he's trying to sell about 20 homes in the $1 million-plus range, and expects to have several priced at more than $2 million in the next month or two.

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Several of his listings are in prestigious golf communities. One home that he's about to list in the Seven Hills community was purchased for $4.3 million in January 2007.

After foreclosure by Washington Mutual, the home is now on the market for $1.749 million, and Mr. Fenn says the price may lowered. "From what the banks are telling me, we're just at the beginning," he says. "High-end foreclosures are getting to be a daily occurrence."

Perched on the edge of Silicon Valley, the tony suburb of Los Gatos, Calif., is lined with mansions and is home to tech entrepreneurs, venture capitalists and software tycoons. It's also home to a foreclosure: a 3,000-square-foot, four-bedroom home on Loma Vista Avenue whose buyer stopped making mortgage payments before he could finish a major renovation.

The house was purchased in 2005 for $815,000. After assuming ownership the home's lender finished the renovation, which includes Brazilian-wood floors, vaulted cathedral ceilings and high-end Electrolux appliances. The home is now on the market for $1.6588 million.

"This is not a neighborhood where you hear the word 'foreclosure,' " says real-estate agent David Mortaz. He and the bank declined to identify the buyer.

Georgia real-estate agent Dwayne Richardson recently got a foreclosure listing unlike anything he had seen before — a 7,168-square-foot mansion perched on Lake Blue Ridge, about an hour and a half from Atlanta. The home boasts a home theater, soaring views of the lake and a its own high-security, 10-by-10-foot bank vault.

Mr. Richardson said the Atlanta-based owner was a housing investor who defaulted on the mortgage, forcing the house into foreclosure. The home is now listed for $2 million, though Mr. Richardson says the price may soon be reduced.

An even bigger home is in Greenwich, Conn., ground zero for hedge-fund billionaires. The Internal Revenue Service recently scheduled a foreclosure on the five-acre estate owned by Michael Lauer. A hedge-fund manager, Mr. Lauer and four others were charged earlier this year by the Securities and Exchange Commission with conspiracy and wire fraud in a scheme that allegedly cost investors more than $200 million between 1999 and 2003. The 7,328-square-foot home at 7 Dwight Lane will be sold Sept. 26 at auction. The starting bid is $2.5 million.

For speculators, the bust is a painful reminder of how risky real estate investing can be. In 2005, Florida-based business owner Jim Scalici teamed up with some partners and purchased a 5,700-square-foot home in the Lakewood Ranch community in Bradenton, Fla., for $2.1 million. His plan was to rehab the home and either buy out the partners or sell it to another buyer and split the profits.

In the fall of 2006, however, the partners walked away and Mr. Scalici took on the mortgage payments and taxes. He put the home up for sale for $3.8 million, but it failed to sell. Mr. Scalici stopped making mortgage payments in August. After a long dispute, Countrywide Financial, which holds the mortgage, demanded a new appraisal, which valued the home at $1.4 million. Countrywide is now in talks to sell the home for $1.4 million or less.

"It breaks my heart to see this house sell for such a small amount," Mr. Scalici says. "It doesn't make sense."

© 2008 The Wall Street Journal. All rights reserved.

 

[TommyGilmore]

Wait, I thought that only poor people bought homes they couldn't afford??

 

[The_Man]

Foreclosures on Million Dollar Homes Surge

Foreclosures on million-dollar homes surge

More affluent folks are feeling squeezed and losing their mansions

In 2003, Robert Provost snapped up a $2.5 million villa with its own boat dock in Sarasota, Fla. A finance chief for an auto-sales chain, Mr. Provost earned more than $250,000 a year and had an impeccable credit history.

Then he lost his job. Mr. Provost missed one $10,500 mortgage payment, then another. This month, the 53-year-old put his house, a five-bedroom with sweeping views of an intercoastal waterway, on the market for $3.4 million. But the listing has thus far attracted little interest. Mr. Provost says he expects to receive a notice of default from the bank — the first step to foreclosure — in the next month or two.© 2008 The Wall Street Journal. All rights reserved.

People are still delusional. He's getting foreclosed on and he's still trying to sell his his house for 36 percent more than he paid for it 5 years ago. 36 percent appreciation in 5 years is not reasonable. Why not list it for $2.5 million and walk away? Because he's no doubt refinanced (probably several times), taking out big chunks of cash, and now owes $3.4 million. Hey, dude -- just because you owe $3.4 million on it doesn't mean anyone else wants to pay that much for it.