I'm not surprised that people are this stupid. The lure (and lie) of "homeownership" was just too great, there was just too much pressure to buy, and not just buy any old home, nope, buy that awesome new McMansion your wife wanted so badly.
Then that nice realtor and her friend the mortgage broker, who was also so nice and caring, were able to get you that no-down, option-arm something kind of loan, and your payment was only $1000 a month! Less than you were paying in rent! See, "owning" IS cheaper than renting! No matter what HousingPANIC and those stupid bubble blogs were saying.
Plus it's always a great time to buy, and real estate can only go up and up and up! Man, are you smart or what.
Then why is my payment $4000 this month, and why did my neighbor just sell for $400,000, not $500,000?
Oh, crap.
Defaults up as home prices fall in Placer County
Default notices have risen 262.4 percent in the fourth quarter of 2006, prompting some people to put their homes on the market, even though the median home prices in Placer County continued on a downward trend. Photo
There you are, living in the house of your dreams. It cost you $500,000, but you're only paying $1,100 a month after you 100-percent financed your home with an interest-only pay-option adjustable rate mortgage, known as an ARM.
Then the market changes.Your completely financed home, after the market has cooled, is now going to cost you almost $4,000 a month for your mortgage. Welcome to the world of some of Placer County's residents.
Even though figures showed an upward trend in some areas, the overall Placer County real estate prices has continued to go down, making those who jumped in at the height of the boom feel the pinch.
"The reason for the increase is because interest rates were low for a long period of time and consumers were getting loans that normally would be out of their reach, King said.
Consumers who got 100 percent financing on negative amortization loans and other adjustable-rate mortgages are starting to feel some discomfort, and more could be on the way."
1.5 trillion in loans will be adjusting this year (nationwide). They're going to adjust a lot, some will adjust two percent," King said. "It's going to be an interesting year to see what happens with foreclosures, that's for sure."
"It's got to be tough and be scary, but if they can make that payment they should try and make it," Maki said. "Because I think the property values will come back up, they always do."
31 comments:
"Unleash Hell" Marcus Aurelius Roman Legion General in the final battle for Germania 62 BC AND Keith HP'er 2007 AD the resetting of ARMs on 1.5 trillion in RE Mort loans on overvalued RE to signal the end of Denial of the Great American RE bubble.
Prices got inflated because of the demand created by toxic loan availability. Now that those loans are toast, and those potential homedebtors aren't able to get funny money, demand surely comes down even faster, and prices with it.
The Great Unwinding is here
Denial is not a river in egypt.
The next 25 years should be fun, and highly profitable providing you have gold in hand to raise cash to buy homes for pennies on the dollar at the courthouse steps when the avalanche hits!!!
Yes, that bush built schiett sandwich of supplyside voodoo will come home to roost for many glorious years. As the sheeple will find out that voting for an EVIL imbecile carries harsh and prolongued penelty minutes in the penelty box. LOL
$500,000 to $400,000? Where have homes only fallen by that much? More like $500,000 to $300,000 in reality
I looked at houses for sale in Placer County last June during a job interview. 4 bed 2.5 bath houses going for $700k-800K that were nothing special. I told the 'Suzanne' RE clerk that I thought the prices were insane and that they were in a bubble (the same houses had sold for $250k five years before). Her response? Oh, no. Real estate IN CALIFORNIA never goes down. They aren't making any more land in CALIFORNIA.
Now the chickens come home to roost, apparently.
'Serfdom is cool, its so retro...lets party like its 1399!'
God that made me laugh right out loud at work!
Tip for Suzanne: California has more land than any other state except Texas and Alaska.
The housing bubble was fueled by easy credit: extending credit to the uncreditworthy; providing excessive levels of credit through non-traditional loans; and by the general public's unusual willingness to take on an unhealthy level of debt.
This parallels the huge growth in college tuition. As more and more student could easily borrow any amount of money to pay for college tuition, the price of college tuition increased accordingly.
In order for this type of bubble to burst, there needs to be tightening of credit. The tighter the credit, the lower prices will get.
My question to you all is what makes you think credit will tighten now, any time soon, or ever?
The realtor clerks should of told people to buy now before the sub-prime lenders go belly-up .You only have to pay 100k for that no down adjustable in falling prices .
Just think about how much nicer it would of been to just be renting one of those 500k house for 1500 a month .
I want to know when the REIC is going to be sued for giving investment advice to millions of people and lying about the real estate investment .
How about all those sub-prime lenders that assured borrowers that they could refinance out of those teaser-rate low down loans before the payment went up? False advertising with intent to gain a commission .
Realtor Code of Ethics where ignored during the housing boom ,but what do you expect out a a group that would even sell their own mother a inflated house to get a commission . Even telling someone that they are wasting their money renting is investment advice .If I was a lawyer I would prove that your not wasting your money renting and sue those crooks .
Nobody should even consider buying real estate until the sub-prime lenders are history , the correction has taken place, and we get back to true market value (your guess is as good as mine).
Was at Bank of America this morning. I saw the APR for a 30 year fixed loan was about 6.2% then a lady erased yesterdays' numbers and wrote 6.5%
People were still buying houses when interest rates were above 10% and historical interest rates were closer to 7%
A remember in 1967 a Hershey bar cost a nickle, a paper kite cost 1O cents, a ball of kite string cost 15 cents. In 1970 a three bedroom ranch house on a quarter acre of sod with a few oaks cost $30,000.
When housing prices rise faster than incomes, eventually the house of cards will fall.
Rising interest rates may bring foreclosures, especially in the subprime areas.
"My question to you all is what makes you think credit will tighten now, any time soon, or ever?"
Valid question, indeed. I'm hesitant to believe in a great collapse, but the credit noose certainly tightened some for the sub-prime mortgage industry last week:
http://www.housingwire.com/2007/02/10/commentary-subprime-hits-a-wall
or
http://ml-implode.com/
And since the CEO of the #1 sub-prime lender claims immunity to such affects from selling their loans to Wall Street, I don't see the bargain hunters beating down any doors. If you're still not convinced, would you be willing to loan me $800K for this nice little 3br in Sunnyvale, CA? I don't have a valid ID, but you do get to hold the deed to the property while I live there...and promise to make payments.
>>As the sheeple will find out that voting for an EVIL imbecile carries harsh and prolongued penelty minutes in the penelty box.<<
Come on, Clinton wasn't that bad. A sleaze ball ass but definitely not evil.
"The reason for the increase is because interest rates were low for a long period of time and consumers were getting loans that normally would be out of their reach, King said."
Does he mean breathing consumers?
Certainly consumers who are dead normally could not take out loans......and yet.
The REIC said: "It's got to be tough and be scary, but if they can make that payment they should try and make it," Maki said. "Because I think the property values will come back up, they always do."
Wowee moron ... Lets say you are right and lets say it does come back in say 5 years (remember this is 25% appreciation we are talking about here) ... wont it have been better to have dumped the thing right now, and buy then when all said and done, your dollar is worth less.
Cool.
Cow_tipping.
New Century Financial (NEW) took it in the shorts last week. Apparently they didn’t factor in that some of the loans that would go bad would have to be bought back. Whoops! Maybe THEY should read their own fine print. Turns out that the secondary market isn’t so hungry for no-doc suicide loans all of a sudden. HSBC warned that they would have to revise “loan provisions” by 20% for the upcoming quarter. HSBC isn’t a wolf crier so their warning comes as a big deal.
Turns out that market sentiment can change on a dime. Especially when $1 trillion in loans is set to reset this year and we’re only in February. 2007 will be a very interesting year don’t you think?
Dr. Housing Bubble
'Serfdom is cool, its so retro...lets party like its 1399!'
Come on, Keith!!
For the love of all that is good, will you PLEASE implement some kind of warning system for posts like this from veritas_faust?!!?
Perhaps a graphic or short line such as:
~ Coffee Out the Nose Funny
~ Don't read this over your keyboard
~ Read with one hand over your mouth to avoid public embarassment
Something... anything to warn us of this stuff before us innocent readers blow coffee out our nose onto our keyboards and embarass ourselves in public!
And to you, veritas_faust: Now THAT's funny!!
Thanks for your concern for the public well being!
I have told this story before, but I'll mention it again Since its the topic for this thread.
My husband was a FB's way before we met back in 1991. He bought a house in Alameda, CA for 215K using a straight adjustable mortgage with a teaser rate, with a huge prepayment penality.
After the adj. introductory offer expired, his payments started to go up about $300-400 at a time, every 6 months. His payments started at $1100 a month, then went to $1500, and so on...
Fast forward 3 years later his payments now were $2500 a month until 1997 when they reached their max of $2700 a month!
All this for a 964 sq foot home, that needed a new roof, with dry-rot on almost all the eves, including the detatched garage. The house also badly needed full exterior paint and interior paint, but because he was so broke, he couldnt do any of that kind of maintance for 9 years.
At one point, he even tried to sell it, only three years after he bought it,(we still have that flyer) had to list it at 193K-and received no offers, and it sat on the market for 9 months, until finally, someone came to him with an offer...$135K! - he obviously declined that low-ball offer, thought about BK, but ultimately decided to hang in and was playing poker after work and taking cash off his credit cards to make ends meet.
So, for all the people that think RE only goes up....the market changed on him, it's going to change on everyone that bought a house during this boom. My DH wanted to buy this house so badly, all he could qualify for was an adjustable (sound familiar?) he was thrilled he was just able to buy! Who cares what kind of loan it was!
Thak God, he was able to hang in there for 13 years and we sold it in late 2004 - we got 3 bids and sold for 32K over the asking price.
These toxic mortgages that buyers have been using will put alot of homeowners under who didnt want to believe their mortgage would "go up that much"!!.
Needless to say, my DH learned his lesson! And we have been happily renting a house since.
I've seen estimates from $800K to $1.5T in resets this year. Does anybody really know? Why is this figure so wiggly?
As capitalists you would think that folks would know the basic price to earnings ratio of investing. Where is the common sense? Or has greed just about ruined our rational thinking.
From the borrower to the banker did no one think about P/E for these monstrosaties? Greed is a killer.
Are FB's considered ARMed and dangerous?
"The Thinker said...
My question to you all is what makes you think credit will tighten now, any time soon, or ever?"
Having nothing to do outside during this cold spell, I did something that I did last year at this time. Around noon on Sat, I applied for a mortgage quote on a few of those "cover the field" web sites. You know, make one entry, and get a dozen loan offers. Have no debts, don't give a rats ass about FICO score, weekends are minute free, it was a boring day, and it beat watching "Flip That House", or whatever.
Within 3-4 SECONDS after hitting enter; the first phone call came in. Voice mail picked up the also rans and I replied to their calls each in turn. Email went so crazy; I'm amazed the memory drain didn't lock up the poor computer.
Basically, NOTHING HAS CHANGED! As the little lending fish go belly up the bigger lending fish, AND THEY ARE HUNGRY, promptly devour them!
I lied out my ass about virtually everything the phone clowns asked me, homeowner status, income, assets. It didn't matter!
Ask about total damage, all they reply with is monthly payment, monthly payment, monthly payment. I tried NOT having the figures off the top of my head, NO Problem; we can just put in "this much/that much/whatever."
Long story short, the monopoly money is still there for the grasping. I understand now how these fraud groups are operating so easily. Until the government passes laws that state: YOU DON'T DO THIS, PERIOD!!!, all of the new 'Fed's lending guidelines' and regulations that will come out 'some time next week, next month, next year, etc’ aren't going to do a damn thing.
I expect that easy credit will get easier, more scarey, more shady, probably more outright illegal, as lenders get even more desperate and hungry, following the bubble to the bottom!
gOOS aRTICLE!
tHANKS FROM: HTTP://WWW.HARRISCOMPANYREC.COM
The Harris Company REA/C
The Voice of San Diego reports from California. “Every weekend for nine months, Marti Ummel has been making trips to real estate offices in North County. Ummel makes the trips in protest, asserting with printed signs that she and her husband were defrauded by a Re/Max associate in 2005.”
“She says she and her husband paid about $150,000 more than the recent homes in her Carlsbad neighborhood had sold for, a detail she says their Realtor, Michael Little, neglected to mention.”
“‘Even though it’s always ‘buyer beware,’ you think that the Realtor is looking out for the client’s best interest,’ Vern Ummel said. ‘You have to do your due diligence, but you can only work with the information you have. And we weren’t given the right information.’”
HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAH!!!!
"As capitalists you would think that folks would know the basic price to earnings ratio of investing. Where is the common sense? Or has greed just about ruined our rational thinking."
In many markets this wasn't about greed but about status & ego. In Scottsdale and other pretentious markets, around 2001, attitudes shifted and the notion that renters are a bunch of common criminals came about. Everyone was out to "buy" a house, for status, because they thought it would get them laid, or whatever. They were blinded by ego and the prospect of status and that's how they were dumb enough to buy into the shyster scam loans and become serfs today.
It's not different than the average $30,000/year Scottsdale twenty-something who is driving a BMW for status even though they have to live on bread & water to make the payments.
The Thinker is onto something. College tuition is going up like housing, because colleges and universities can raise tuition with impunity, because of easy student loan availability. The big difference is that gov't guaranteed student loan debt is almost never dischargeable in bankruptcy. A homedebtor can walk away and file BK, if he hasn't committed fraud. Not so a diploma debtor. Or a dropout debtor.
I can't tell you how many homes my wife and I looked at last summer '06 that are still for sale today. Some, the price's are down, some the same, and others even up! Realtor.com may say a 'new listing' but it's all smoke and mirrors.
My wife and I looked at a 3800sq home on 5ac. in Texas last summer. It was for sale for 625k. Currently the same home is back at realtor.com for 675K. Same owners, that also tried to lease it for $4000 a mo. with a year lease!
Not exactly germane, but I needed a
"Yup, this is going to end badly."
topic to post this under.
Sarasota Herald Tribune's coverage of: Investors see fast-bucks plan unravel
But "Yup, this is going to end badly" only scratches the surface of this story. And this is already going so badly. No lines, no waiting required on this one.
Paul Matera says he "feels terrible" about the problems that have arisen around the deals he sold to investors. But he said he warned everyone whom he brought into the Seashore circle that they should "not do this deal, if you can't carry the house."
He didn't, however, ever mention that they would be asked to carry an up to $300,000 mortgage on an essential unbuild vacant lot.
At this time, it is like a bomb has gone off, but in a Hiro Nakamura time-slowed-down special effect, people can walk around and view the shrapnel as it eviscerates victims right before our very eyes. Can't someone get out in front of this thing with some kind of kevlar vest?
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