Foreclosures

[BabiGayPimp]

Climate, location, amenties aside, what ultimately determines home prices is the money supply. From 1996 to 2006 home prices exploded in many areas due to an abundance of cheap money (from drunken lenders) and a still booming economy. From what I hear, that's all dried up. The money tree is bare.

Americans have lost trillions in paper wealth with the stock market meltdowns, soaring unemployement and health costs, and a general losss of confidence in the financial markets.

I think the era of $700,000 California bungalows, bidding wars over run-down tract-style ranch homes, and $800,000 shoebox condos in Florida and Nevada are over. People who paid those kinds of prices at the top of the market will probably lose their shirts and a whole lot more. That's unfortunate, but the writing was on the wall. An asset (if you want to call it that in this case) cannot keep doubling and tripling in value right up to infinity.

I see home prices, generally, continuing to fall in many places until they are more closely aligned with what banks are willing to lend and what people are able to pay.

So, I wouldn't be in a hurry to buy just yet.

 

[Kulindahr]

I heard a snippet on the radio today about a government program where people having mortgage trouble can call, and get a new loan through the government.

They should have been doing that a year ago!

Will it help much now?

 

[BabiGayPimp]

I am in favor of restructuring some loans to make them more affordable for those homeowners who can be salvaged. This would include a break on the interest rate and stretching out the term. I am NOT in favor of forgiving any of the principal balance just because the property dropped in value. You pay what owe if it takes 40 years. Remit or quit!

I'm also concerned that some homeowners are underwater (owe more than the house is worth) only because they foolishly took out home equity loans (when they were righside up), gave the money to their deadbeat relatives to BLOW, then rolled that home equity into some crummy subprime cash-out re-fi that they couldn't afford long-term (and blew the extra cash received off that too).

Now they're asking for reduction of their principal loan balance (free money) so they can continue their lifesytle uninterrupted. Oh hell to the no!

We have to be careful with this. A one-size solution does not fit all. And, franky, some of these people need to be out of those houses , because they just can't afford that ball and chain their living under at any price or interest rate. Perhaps, more deserving others can be saved.

I just don't know what is going to be done with all those vacated, expensive, crumbling, cookie-cutter McMansions that fools built and only the sons of fools would want to take over.

 

[Kulindahr]

^ Good point up there: some of these mortgages were second (and third!) mortgages so people could, in essence, buy toys.

In such cases, I'd make any help contingent on selling the toys -- for starters.

I know of a couple of cases of second mortgages here, that were taken out to cover unexpected and massive health care costs -- what do we do with them?

 

[metta]

^ Good point up there: some of these mortgages were second (and third!) mortgages so people could, in essence, buy toys.

In such cases, I'd make any help contingent on selling the toys -- for starters.

I know of a couple of cases of second mortgages here, that were taken out to cover unexpected and massive health care costs -- what do we do with them?

That is very common and is also the number one reason for people going bankrupt in the US. Another reason why we national health care. People should not have to risk everything they have earned in their lifetime as well as their credit and future in order to get the necessary health care they need.

 

[ejbonk]

If the US Auto Industry fails, Welcome to the 2nd Great Depression. Then the Governmemnt will find out that they can't even raise enough money to pay the interest on the national debt.

I estimate 12 million out of work 9 months after the last US Auto worker is layed-off. And that is a very,very, consevative estimate. It could be worst than that.

 

[thewiz]

Having been involved in trying to close on a condo for the last three months...I can say that things are anything but normal....

I have outstanding credit; I can save $900 per month financing through FHA plus most banks are now wanting more and more down. I now found out that the condo for the parking is screwed up and is holding up the condo purchase. Tomorrow I will make an offer to get the damn thing closed and hopefully save some money in the process.....

 

[metta]

And this is why I can't see the economy recover in 2009....
A Second Mortgage Disaster On The Horizon?


Alt-A & option ARM


http://www.cbsnews.com/stories/2008/12/12/60minutes/main4666112.shtml

 

[Kulindahr]

??

I'm getting video with no sound.

 

[metta]

^
it worked for me.

 

[Kulindahr]

And this is why I can't see the economy recover in 2009....
A Second Mortgage Disaster On The Horizon?


Alt-A & option ARM


http://www.cbsnews.com/stories/2008/12/12/60minutes/main4666112.shtml

Where do they come up with these labels? "Alt-A"????

 

[metta]

Where do they come up with these labels? "Alt-A"????

alt = alternative
a = I think that it stands for adjustable

alternative adjustable loans. they were often times loans that you did not even have to make the interest payments on the loan in the beginning part of the loan. They sounded crazy to me then and they sound crazy to me now.

 

[metta]

i found more info about them here:
http://en.wikipedia.org/wiki/Alt-A

i was right about the ALT....i'm not sure about the 'A'

 

[Kulindahr]

So...

if I got a loan, and had the option of making someone else pay it, would that be an Alt-tab?

 

[metta]

http://1.bp.blogspot.com/_pMscxxELHEg/SUvuzBO30II/AAAAAAAAEDg/2AXd9umXsI0/s1600-h/T2Partners.jpg

 

[Kulindahr]

^ That really doesn't convey anything about the problem. Are you saying that all the loans shown there are bad loans?

 

[metta]

Buyer's Market; Seller's Nightmare

http://cosmos.bcst.yahoo.com/up/player/popup/?rn=3906861&cl=11277074&ch=4226720&src=news



As of this weekend, my home has dropped $400k-500k in value. Thank goodness I'm not selling. The homes are in my neighborhood are now selling below what they were selling for when they were built in 2002. The foreclosures are killing our values.

There are areas where prices have barely dropped, for example, there are areas of Pasadena where the values of homes have only dropped 3-4%, which is almost nothing. A 3500 square foot house is still selling for $1.7 million.

One of my friends has an ocean front rental property. He just told me yesterday that he has dropped his rental rates by 30%. And his villa in france has very little in scheduled vacation rentals for next year.

 

[BabiGayPimp]

Whatever happened to people selling their existing home, renting for year, while looking for a replacement home at their leisure and free from the pressure of having to close two deals (selling and buying) at once?

I still think a lot of these homes are overpriced, even with recent price drops.

 

[metta]

^ That really doesn't convey anything about the problem. Are you saying that all the loans shown there are bad loans?

No, it is just showing that there are other areas to look at that we will/or have probably see problems in: Alt-A's, Credit Cards, Commercial real estate, automobile loans, etc.

 

[metta]

4400 sq foot home.

REO Valley Center. Original Owners paid $927K new in 2005, now being offered for $579.9K 2 acres. Very little in upgrades. Poorly positioned home.