158 replies to this topic

[TheAnk]

I'm going on record to agree with Mr Terrence? Hassett.. I think banks need to be better neighbors with these foreclosures.. Leaving a house borded up is a constant reminder of a bank lender and a house buyers gross failures in diligence.. There has to be a more aesthetically pleasing way..

Also, the relative sleeping giant in this foreclosure thing is the knee jerk reaction by lenders shutting out qualified potential buyers.. Its the ultimate catch 22, banks own houses now, but won't finance buyers to take them off their hands.. I think its a ginormous miscalculation, by banks.. To buy a foreclosure you need to either pay cash, use 203k loan, or get investor financing (shylock rates) in most cases.. I think they are overestimating liquidity out there...

In case any of you aren't aware.. Its relatively difficult, sometimes impossible to obtain financing to buy a home.. There are still some avenues for first time home buyers, namely FHA.. But the market (rightly so) is returning to the 20% down rule in most cases.. Is this a good thing? I think so.. Restore some confidence to investors that these CMO products aren't based on worthless notes..

People with multiple properties, with a bank percieved "market risk exposure" are now relegated to the sidelines.. We get lumped in with greedy landlords and Flip This House tv show wannabes.. Its sad really.. But thats how the market reacts, irrational one way, and the same the other.. Those are the new rules..

This 20% down payment has been negatively called a "barrier to entry to home ownership".. While this is true, that down payment serves a critical purpose to market stability.. Putting that amount of cash into a house ensures that you have a true vested interest in the house.. It may delay ownership, but it preserves a steady housing market..

Many people will blame The Great Depression on a few things.. When they mention the fall of the stock market, its an anecdote, and rarely gets discussed further.. Details aren't as important.. But at a risk of getting too technical, the reason for the implosion was very similar to housing now.. a "margin" account is a brokerage account where the lender will allow you to buy more than you can afford, using the securities you hold in your account as collateral.. Today, securities are given a risk %, and you can borrow against that security based on this risk.. For example, a tech stock may only yield 20% of its value for lending, while a bond maybe allows 65%..  

The market during the Great Depression did not have this diligence.. In fact, margin accounts yielded 95% liquidity.. Meaning if you had $1000 in securities, regardless of how risky.. You could borrow $950.. When the market started falling, since everyone was leveraged to the hilt, there were no buyers buying..  And we all know what happened.. After this collapse, rules were implemented to ensure this didn't happen, one being the above margin equity requirements..

How does this affect housing? When faced with a palpable real world example like the stock market crash, how can the government allow this silimar but not exact occurance to happen? Why was the 20% barrier to entry removed? Our government stood there and allowed the country to turn housing into a great depression margin lending account. And just like the 5% irrational lending in the stock market during the GD, the gov't allowed people to borrow up to 95% in housing...

While its a little different stocks vs houses, houses being far more static, the parallels are too close to ignore.. the government will need to act swiftly or it could be ugly..

[smcbride11]

Well put, Ank.

The problem, imo, wasn't/isn't the 95% loans...  it was the ease at which you could get a loan above the 28/33(?)% debt to income.

When I started looking last July, I was pre-approved (not qualified, approved) for a $429k loan at 5% down.  There is absolutely *nothing* in my history that said that I could possibly afford that kind of loan - I was sitting somewhere between 25-30% d/i, too, so it's not like I had a ton of disposable cash.  If I were like most people who've said "buy as much house as you can afford, it'll make you money", I'd be bankrupt right now.

To make a long story short, I ended up taking 100% financing for 235...  Based on the numbers I worked out, that was the absolute most I could afford.  It's tough, but it's not that big a deal...  I'm hoping the tax benefits have the effect I think they will.  Had I been forced to save 20%, it would be 2014 before I could afford a house.

IMO, the problem in my story is that the bank approved me for about $200k more than I could afford - it's little wonder that they're in trouble with lending practices like that.

[TheAnk]

There's alot to blame.. The buyer for no dilligence, the appraiser for cowtowing to the lender and agent, the lender for borderline predatory lending.. I read today that some of the fixes floating around are to lock ARMs into fixed rates without refis.. Expanding FHA.. One time 0% interest loans to rescue buyers..

I think the best avenue is to make FHA an easier program to use, but not raise the lending limits.. FHA guarantees loans to banks, making them desirable loans to own, no risk.. The buyers gets a 30yr fixed, pay their PMI and MIP, and everyone is happy.. Relatively (the buyer pays 1.5% up front, and a nails on chalboard monthly fee for the product)..

No matter what, banks should not be bailed out.. They need to lie in the bed they made... In a federal reserve system we have, there is exactly zero resons to bail out banks.. there can be no runs on banks, there is no risk to peoples money with FDIC and SIPC.. For the most part.. Any bank bailout by our government should result in complete outrage and revolt.. I am not exaggerating..

For home buyers, locking ARMs rewards people for their failure.. Bad solution, but doable with some concessions.. I can say that allowing them to refi into a fixed rate loan ABOVE market rate, maybe by .50% more is a decent solution.. This will save people who are "well to do" about keeping their house, and still allow the incredibly irresponsible to foreclose, and rightfully so.. It will also not incense the fixed rate buyers who acted responsibly, as these ARM users are still worse off for their awful decisions...

FHA loans are tough to write because the house can have no deficiencies, there are income limits, and you must be first time buyer (sort of).. I think changing income limits and increasing the cap home value limit (like 360k now) are mistakes.. These loans are intended to allow lower income buyers to buy a house with only 3% down.. that should not change.. Raising income limits and house values makes the product a housing insurance for far too many people than should be using the product.. It also increases the exposure of our funny money govenment by further increasing their role as housing market stabilizer, never a good thing..

But making the inspection process less intensive and comprehensive would allow more mainstream use of the product, but still within its original intension.

I really do think that without some type of curbs (like the stock market has) installed it could get pretty bad.. But not everyone should be saved, just some people.. and no banks.. There are certainly people out there who need help.. But there are also people out there who do not deserve it..

If smcbride11 went out and bought a 430k house as approved, and was in trouble.. Well.. you get what you deserve.. But he/she didn't, and acted diligently, despite what the bank offered.. If people in this category ever do have difficulty when ARMs adjust (not saying you ever will, just an example), I think help should be levied..

[Jerry2]

TheAnk, on Oct 9 2007, 11:50 AM, said:

There's alot to blame.. The buyer for no dilligence, the appraiser for cowtowing to the lender and agent, the lender for borderline predatory lending.. I read today that some of the fixes floating around are to lock ARMs into fixed rates without refis.. Expanding FHA.. One time 0% interest loans to rescue buyers..

I think the best avenue is to make FHA an easier program to use, but not raise the lending limits.. FHA guarantees loans to banks, making them desirable loans to own, no risk.. The buyers gets a 30yr fixed, pay their PMI and MIP, and everyone is happy.. Relatively (the buyer pays 1.5% up front, and a nails on chalboard monthly fee for the product)..

No matter what, banks should not be bailed out.. They need to lie in the bed they made... In a federal reserve system we have, there is exactly zero resons to bail out banks.. there can be no runs on banks, there is no risk to peoples money with FDIC and SIPC.. For the most part.. Any bank bailout by our government should result in complete outrage and revolt.. I am not exaggerating..

For home buyers, locking ARMs rewards people for their failure.. Bad solution, but doable with some concessions.. I can say that allowing them to refi into a fixed rate loan ABOVE market rate, maybe by .50% more is a decent solution.. This will save people who are "well to do" about keeping their house, and still allow the incredibly irresponsible to foreclose, and rightfully so.. It will also not incense the fixed rate buyers who acted responsibly, as these ARM users are still worse off for their awful decisions...

FHA loans are tough to write because the house can have no deficiencies, there are income limits, and you must be first time buyer (sort of).. I think changing income limits and increasing the cap home value limit (like 360k now) are mistakes.. These loans are intended to allow lower income buyers to buy a house with only 3% down.. that should not change.. Raising income limits and house values makes the product a housing insurance for far too many people than should be using the product.. It also increases the exposure of our funny money govenment by further increasing their role as housing market stabilizer, never a good thing..

But making the inspection process less intensive and comprehensive would allow more mainstream use of the product, but still within its original intension.

I really do think that without some type of curbs (like the stock market has) installed it could get pretty bad.. But not everyone should be saved, just some people.. and no banks.. There are certainly people out there who need help.. But there are also people out there who do not deserve it..

If smcbride11 went out and bought a 430k house as approved, and was in trouble.. Well.. you get what you deserve.. But he/she didn't, and acted diligently, despite what the bank offered.. If people in this category ever do have difficulty when ARMs adjust (not saying you ever will, just an example), I think help should be levied..

As someone that directly works in the industry day in and day out, I don't think anyone should be bailed out. After all the press lately, I find that people are EXPECTING the government to bail them out of a situation that THEY put themselves in. If more American people didn't try to keep up with the Joneses and pay more attention to their largest financial transaction as opposed to the E nightly news, they would still have their homes. What people don't essentially realize is, that even with relaxed underwriting from FHA, their proposed loan payments are still going to be higher than what the majority were paying with interest only or negative amortization loans.

[TheAnk]

Jerry2, personally I completely agree with you.. People should be held 100% responsible for their actions.. But when I take a larger, more global view, the overall effect of many people going under could be catastrophic..

So while I do agree with you, I think the lesser of two evils is to help some people and let banks and the completely idiotic fall on their face, as they should.. But there are just so many people affected by this, that I think some sort of curbs needs to be implemented.. I think the fringe people need to be assisted..

And yes, that solution flies directly in my views on personal responsibility as a libertarian.. But as I said before, you need to pick your poison.. These people's idiocy will no matter affect us normal, dilligent people.. I think that a bail out of certain folks to head off a recession while completely disgusting, may be necessary.. I think I just threw up in my mouth..  

[atheorist]

Economist Dean Baker put forth a beautiful plan to deal with this mess.  It does not bail anyone out.  Borrowers and lenders will feel the consequences of their decisions, yet society will avoid the idiocy of increasing vacancies accompanied by increasing homelessness.

The laws of foreclosure must be amended as follows for owner occupants only.  When the borrower falls behind and the lender moves to foreclose, the borrower will be allowed to remain in the house for as long as he can pay a court-determined fair market rent.  There must be provisions for unbiased appraisal and ongoing adjustments to this fair market rent.  The title goes to the lender, who can keep it or sell it as he sees fit.  Any buyer must respect the right of the tenant to remain as long as he pays the fair market rent.

[Frankie811]

Foreclosures threaten Providence neighborhoods’ vitality.  Block by city block, foreclosures are scarring the landscape in neighborhoods such as Olneyville, Elmwood and the West End, raising fears that the deteriorating real-estate market could hurt property values and undermine years of urban redevelopment efforts.

[Frankie811]

Neighborhoods at risk.





Banks now own more than 800 houses in Rhode Island that were repossessed through foreclosure, setting the stage for what experts say could be a massive real-estate fire sale.

Edited by Frankie811, 14 October 2007 - 06:04 AM.

[Frankie811]

Foreclosures stem from new loan practices.

The housing turmoil that is roiling Providence and other cities results from a confluence of factors: historic changes in the real-estate industry, the drive toward home ownership for every American, low interest rates, exotic mortgages, unscrupulous lenders and lax regulators.

[BigUglyCat]

TheAnk, on Oct 10 2007, 10:23 AM, said:

... But when I take a larger, more global view, the overall effect of many people going under could be catastrophic...

And yes, that solution flies directly in my views on personal responsibility as a libertarian.. But as I said before, you need to pick your poison.. These people's idiocy will no matter affect us normal, dilligent people.. I think that a bail out of certain folks to head off a recession while completely disgusting, may be necessary.. I think I just threw up in my mouth..

When I hear it in my head, I just have to write it down:

"And there's winners, and there's losers / But they ain't no big deal
'Cuz the simple man baby pays for the thrills, / The bills and the pills that kill

CHORUS:
Oh but ain't that America for you and me / Ain't that America we're someting to see baby
Ain't that America, home of the free / Little pink houses for you and me"

The above by John Mellencamp, excerpted from his lyrics for "Pink Houses," courtesy of LyricsDepot.com here.

None of the above should be construed to negate my 100% agreement, in this instance, with The Ank.

[TheAnk]

Having an econ degree makes you do odd things, like tracking housing sales, for FUN.. So in my trusty spreadsheet, I noticed some really interesting trends the past year.. Here are just a few examples.. I will let the group make its own inferences on what happened here.. I have my, as usual, very strong opinions on what happened, which in this case I bet most of you will agree with. The first name is the buyer, second the seller, followed by address, date, then price:


Montan, Camila / Aracena, Ardomis 104 Potters Ave Providence, RI 02905 08/30/2007 $240,000   
Aracema, Ardomis / Fremont Inv&Loan 104 Potters Ave Providence, RI 02905 02/05/2007 $142,900

Almonte, Elvio J / Robertson RE 130 Salina St Providence, RI 02908 07/02/2007 $220,000
Robertson RE Inc / Felix, Ivette 130 Salina St Providence, RI 02908 02/07/2007 $29,200

Cruz, Francisco / Liriano, Dennis 137 Sutton St Providence, RI 02903 09/12/2007 $280,000   
Liriano, Dennis / HSBC Bank USA NA 137 Sutton St Providence, RI 02903 04/11/2007 $173,900

Martinez, Mirito / Salamone, Francesco 14 Hempstead St Providence, RI 02907 08/01/2007 $263,000
Salamone, Fran. / Rodriguez, Yaneira G 14 Hempstead St Providence, RI 02907 06/26/2007$149,000

Flores, Jose A / Admiral 141 Associates 141 Admiral St Providence, RI 029080 8/10/2007 $245,000
Admiral 141 Ass / Deutsche Bank Natl T Co 141 Admiral St Providence, RI 02908 06/25/2007 $90,000
Deutsche Bank Natl T / CoGalindo, Sofia 141 Admiral St Providence, RI 02908 06/07/2007 $252,937

Cruz, Juan / Liriano, Dennis 146 Courtland St Providence, RI 02909 08/31/2007$250,000   
Liriano, Dennis / Aegis Mortgage Corp 146 Courtland St Providence, RI 02909 05/18/2007 $140,000

Gonzalez, Ana M / Siani, Carmine 169 Oxford St Providence, RI 02905 04/17/2007 $230,000  
Siani, Carmine / Master Asset Backed Svcs 169 Oxford St Providence, RI 02905 01/30/2007 $130,000

Almanzar, Angie / NE Properties Inc 19 Atwood St Providence, RI 02909 06/18/2007  $260,000   
New England Prop Inc / HSBC Bank USA 19 Atwood St Providence, RI 02909 03/13/2007 $125,000

Hernandez, Felix / Lirano, Dennis 19 Diamond St Providence, RI 02907 06/21/2007 $310,000
Liriano, Dennis / US Bank NA 19 Diamond St Providence, RI 02907 04/13/2007 $140,000

Rodriguez, Jose / Ruiz, Elizabeth C 24 De Pinedo St Providence, RI 02904 09/07/2007 $279,000
Ruiz, Elizabeth C / Deutsche Bank 24 De Pinedo St Providence, RI 02904 07/03/2007 $190,000

Edited by TheAnk, 15 October 2007 - 09:50 AM.

[Mothra]

Hispanics shouldn't be allowed to buy houses in Providence?

[Pseudo_Work]

Nah, he'd need an Anthro degree to back that one up.

[tangorre]

All kidding aside, it's recent immigrant / low-income minority families that are being taken advantage the worst with predatory lending and these 'ridiculous' mortgages (i.e. $380,000 on a combined family income of $25K, and I wish that was an exaggeration. You should talk to the RI Housing Network, they have plenty of horror stories.)

[mandrake258]

article from yesterday's ProJo:

Foreclosures threaten Providence neighborhoods’ vitality
http://www.projo.com...GO.4f07c9c.html

[TheAnk]

Healthy dose of haterade from Mothra and Psuedo_Work... I am picking up your thinly veiled accusations like the gas station attendant in Tommy Boy.. "22 mile".. And as to not bring any merit to them, I won't address it any further than saying I won't address it..

Anyway, Its pretty shocking to see it in real life.. Worse, I've encountered many unscrupulous realtors borderline proud of taking advantage of people like this..

The most peculiar is the banks almost instantly selling for a huge loss afterwards... Fishy.. I've scoped out my fair share of foreclosures, and in 99% of cases the banks have a healthy dose of F.U. when it comes to short sales..

Especially this one:

Flores, Jose A / Admiral 141 Associates 141 Admiral St Providence, RI 029080 8/10/2007 $245,000
Admiral 141 Ass / Deutsche Bank Natl T Co 141 Admiral St Providence, RI 02908 06/25/2007 $90,000
Deutsche Bank Natl T / CoGalindo, Sofia 141 Admiral St Providence, RI 02908 06/07/2007 $252,937

The bank is willing to take an almost instant (two weeks) 160k loss on a ppty that this entity turns around remarkably quick for almost exactly what the was owed?? Very, very odd..

[TheAnk]

TheAnk, on Oct 17 2007, 02:48 PM, said:

Flores, Jose A / Admiral 141 Associates 141 Admiral St Providence, RI 029080 8/10/2007 $245,000
Admiral 141 Ass / Deutsche Bank Natl T Co 141 Admiral St Providence, RI 02908 06/25/2007 $90,000
Deutsche Bank Natl T / CoGalindo, Sofia 141 Admiral St Providence, RI 02908 06/07/2007 $252,937

Elected Person David Segal, in case I didn't express it directly, it was most certainly implied that you look into THESE examples.. I have given some real world examples of "flipping" as you had so vociferously spoken of previously..

And as an added bonus to you, there are real victims here, and they are victims that a democrat can most effectively defend.. So run with it..

I have given you:

A. A presumably unscrupulous bank/lender, willing to foreclose on a presumably "majority minority" homeowner and take a loss while selling to

B. a seemingly predatory entity, in most cases an LLC, where after buying these houses at a deep discount appear to resell these to a possibly

C. victimized, generally hispanic buyer (note, I'm only going on names in print, and while these type of generalizations are wrong, for the puropse of this case are the only facts present)..

And to add insult to injury, it appears that in most cases, the original buyer who was foreclosed on is also hispanic..

So to recap, in Ankese, my opinion only, you have the banks strong arming a hispanic owner into foreclosure, then the bank selling as a short sale this same house to an entity at a deep discount, and this entity then turns the house back over to the next victim..

What more do you need, Segal? I have more data ready and willing to assist..

You see Davey, I can deal with the bullets, and the bombs, and the blood. I don't want money, and I don't want medals. What I do want is for you to stand there in that Democrat Donkey uniform and with your Columbia mouth extend me some courtesy. You gotta ask me nicely. Col. Ankup

[TheAnk]

In pure Frankie The Link tradition:

http://money.cnn.com...sion=2007102412

[TheAnk]

So recently, Oct 23rd, a bunch of Providence foreclosed houses were sold via an unnamed public auction site, relatively quietly....  Two in particular, in front of Stop & Shop went for 52k and 76k.. I forget the exact #s..

WOW thats damn cheap... Not sure whether to be scared or happy that they are sold..

I think if these boarded up houses "quietly" go to auction its probably the lesser of two evils.. Even if they sell for deep discount, it will lessen the eyesore foreclosures.. My guess is this is probably necessary to prevent reaching a tipping point in neighborhoods..

Thoughts?

It will most certainly dip rents..

[Pseudo_Work]

TheAnk, on Oct 25 2007, 07:32 AM, said:

So recently, Oct 23rd, a bunch of Providence foreclosed houses were sold via an unnamed public auction site, relatively quietly....  Two in particular, in front of Stop & Shop went for 52k and 76k.. I forget the exact #s..

WOW thats damn cheap... Not sure whether to be scared or happy that they are sold..

I think if these boarded up houses "quietly" go to auction its probably the lesser of two evils.. Even if they sell for deep discount, it will lessen the eyesore foreclosures.. My guess is this is probably necessary to prevent reaching a tipping point in neighborhoods..

Thoughts?

It will most certainly dip rents..

I'm with you - I'd rather see them sold for cheap really quickly than sit around and act as catalysts for the decay of everything around them.  And frankly, horray for cheaper rents.  I'm tired of going halfsies on an ice cream cone.