Beleive it or not, a Realtor wrote this

In 1996, unemployment was low, the economy was booming, stocks were rising, and the future looked bright. Email and the internet were just starting to make their ways into homes around the country. Optimism was high as an economic revolution was brewing.

Is there any reason why homes today should be worth twice as much as in 1996?

Graphically, prices were heading right back to 1996 until the government decided to spend trillions of dollars to prop them up.

Consider what’s been done to halt the collapse of home prices. Our demand for homes has been artificially boosted with low mortgage rates and tax credits, and our supply of homes for sale has been cut drastically by all of the foreclosure prevention efforts.

For some perspective, check out the original Case-Shiller graph that shows home prices, adjusted for inflation, for the last 100 years or so. Note that the numbers are slightly different because this chart includes all national data, not just large cities.

Looking at long-term trends, we each must fall into one of two camps. Either you believe that, eventually, home prices will revert back to their relative historical norm because people can only pay so much of their monthly income for housing. OR, you believe that this time really is different; that people going forward will be willing to pay relatively more each month for shelter than for the last 120 years.

I don’t see how this time is different. I don’t know why, socioeconomically, people will pay more of their monthly paychecks for housing over the next 120 years than they did for the last 120. Sure, you can make a case that a particular neighborhood or town has become more desirable, but that is irrelevant on a national scale.

In short, if you believe that the economic growth since 1996 was robust enough to justify the doubling of home prices during that time, then perhaps home prices are now at the “correct” levels. But if you believe that most of the economic growth since 1996 was built on bubbles and debt, then it’s hard to find a reason why homes should be twice as expensive.

....................................

Whoddathunkit??? A Realtor that's not full of it. Although in 1996 prices were pretty depressed in Southern California. That was at the bottom of our last crash and many including me think prices were probably a bit undervalued in that time frame. But two or 3 years later prices had recovered to what I would consider normal levels. So what should the median be today based on a "normal" market. In the year 2000 the median price in Riverside was $150k. If we add a decade of normal appreciation the median today would be approx $200k. And remarkably enough that's right about where we are today. However taking into consideration the terrible economy, the high unemployment and the government intervention propping up prices it's probably safe to say we are currently overvalued given the economic conditions. Maybe we should go back to the bottom of the last bust (1996). If we do that we find the median was around $120k and with normal appreciation that would give us a median of $181k today. Not a great deal of difference between the two, primarily because of the additional 4 years of appreciation. So, are we at the bottom? by all indications in most areas of the IE we are, or damn close to it. The only question is how long will prices remain low. Personally I don't think they are going anywhere but sideways for a while. Small normal gains are possible but with the current economy I don't see it happening (assuming the government stays out of the mix). So if you are gonna buy, you better plan on staying a while.

I got the median numbers from the California Association of Realtors and the "normal" appreciation I used was 3%.

How to fix this mess

Foreclosure IS the cure, not the problem!





I read this over at the Irvine Housing Blog,

A 600% increase in foreclosures

I attended a local Building Industry Association conference on Friday 26 March 2010. The west coast manager of real estate owned, Senior Vice President Ken Gaitan, stated that Bank of America, which currently forecloses on 7,500 homes a month nationally, will increase that number to 45,000 homes per month by December of 2010.

After his surprising statement, two questioners from the audience asked questions to verify the numbers.

Bank of America is projecting a 600% increase in its already large number of monthly foreclosures.

This isn't unsubstantiated rumor; this comes straight from one of the most powerful men in Bank of America's OREO department (yes, that really is what they call it). It appears they have too many properties already.

Living in the past

A few years ago you could buy a house, live in it for a year and make $100k. Here's a owner that thinks those days have returned.

3140 Crestview Dr. Norco. The homes sold one year ago to the current owners for $515k. After one year of ownership for what ever the reason the new owners need to bail. I doubt these are flippers since they have horses. Flippers don't bring horses to a flip, they bring paint, carpet and sod. Apparently it's upgraded beyond belief! Although the pics show basic white tile and builder grade cabinets in the bathroom. I have no idea if they poured any money into this or not, but after a year in the home these folks think they are entitled to $115K. Any think these guys have a hope in hell? There's been a few flips sell in the mid $500s recently but those were much larger homes. I'm thinking if they can get out for what they paid they are doing great.

Old story, new twist

My buddy sent me this little gem. It's an old proverb with a new twist.

OLD VERSION

The ant works hard in the withering heat all summer long, building his house and laying up supplies for the winter.

The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away..

Come winter, the ant is warm and well fed.

The grasshopper has no food or shelter, so he dies out in the cold

Moral, Work hard and be responsible for yourself.

MODERN VERSION

The ant works hard in the withering heat and the rain all summer long, building his house and laying up supplies for the winter.

The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away.

Come winter, the shivering grasshopper calls a press conference and demands to know why the ant should be allowed to be warm and well fed while he is cold and starving.

CBS, NBC , PBS, CNN, and ABC show up to provide pictures of the shivering grasshopper next to a video of the ant in his comfortable home with a table filled with food.

America is stunned by the sharp contrast.

How can this be, that in a country of such wealth, this poor grasshopper is allowed to suffer so?

Kermit the Frog appears on Oprah with the grasshopper and everybody cries when they sing, 'It's Not Easy Being Green...'

ACORN stages a demonstration in front of the ant's house where the news stations film the group singing, “We shall overcome.” Then Rev. Jeremiah Wright has the group kneel down to pray to God for the grasshopper's sake.

President Obama condemns the ant and blames President Bush, President Reagan, Christopher Columbus, and the Pope for the grasshopper's plight.

Nancy Pelosi & Harry Reid exclaim in an interview with Larry King that the ant has gotten rich off the back of the grasshopper, and both call for an immediate tax hike on the ant to make him pay his fair share.

Finally, the EEOC drafts the Economic Equity & Anti-Grasshopper Act retroactive to the beginning of the summer.

The ant is fined for failing to hire a proportionate number of green bugs and, having nothing left to pay his retroactive taxes, his home is confiscated by the Government Green Czar and given to the grasshopper.

The story ends as we see the grasshopper and his free-loading friends finishing up the last bits of the ant’s food while the government house he is in, which, as you recall, just happens to be the ant's old house, crumbles around them because the grasshopper doesn't maintain it.

The ant has disappeared in the snow, never to be seen again.

The grasshopper is found dead in a drug related incident, and the house, now abandoned, is taken over by a gang of spiders who terrorize the ramshackle, once prosperous and once peaceful, neighborhood.

The entire Nation collapses bringing the rest of the free world with it.

Moral, What's that.....

Stand by, Here comes the next round of bailouts!

And now for the next round of meddling by the Oompa loompas in Washington

The Obama administration on Friday will announce broad new initiatives to help troubled homeowners, potentially refinancing several million of them into fresh government-backed mortgages with lower payments.

Another element of the new program is meant to temporarily reduce the payments of borrowers who are unemployed and seeking a job. Additionally, the government will encourage lenders to write down the value of loans held by borrowers in modification programs.

The escalation in aid comes as the administration is under rising pressure from Congress to resolve the foreclosure crisis, which is straining the economy and putting millions of Americans at risk of losing their homes. But the new initiatives could well spur protests among those who have kept up their payments and are not in trouble.

The administration’s earlier efforts to stem foreclosures have largely been directed at borrowers who were experiencing financial hardship. But the biggest new initiative, which is also likely to be the most controversial, will involve the government, through the Federal Housing Administration, refinancing loans for borrowers who simply owe more than their houses are worth.

Many details of the administration’s plan remained unclear Thursday night, including the precise scope of the new program and the number of homeowners who might be likely to qualify.

One administration official cautioned that the investors might not be willing to volunteer any loans from borrowers that seemed solvent. That could set up a battle between borrowers and investors.

This much was clear, however: the plan, if successful, could put taxpayers at increased risk. If many additional borrowers move into F.H.A. loans, a renewed downturn in the housing market could send that government agency into the red.

The F.H.A. has already expanded its mortgage-guarantee program substantially in the last three years as the housing crisis deepened. It now insures more than six million borrowers, many of whom made minimal down payments and are now underwater.

Sources said the agency would use $14 billion in funds from the Troubled Asset Relief Program, some of which it could dangle in front of financial institutions as incentives to participate.

Another major element of the program, according to several people who described it, will be to encourage lenders to write down the value of loans for borrowers in modification programs. Until now, the government’s modification efforts have focused on lowering interest rates.

A person briefed on the new plan said the number of underwater borrowers who qualified for the plan could be in the millions. The government is not planning to solicit loans for the program, stressing that it is voluntary.

The administration recognizes that some people’s finances have deteriorated so far that they are beyond help, the person said. People in that situation simply cannot afford the houses they are living in, the person said, even if the mortgages were reduced.

“All these programs are geared toward people for whom it makes sense, for whom it’s workable when all is said and done,” the person said. “Some people are too far gone.”

Principal write downs??

Can this week get any worse. First health care, then California throws away 200 million and now news of principal write down plans...... I thought it was just a few homes with old Countrywide loans but now CR indicates more are in the works. I never thought I would see this.

BofA announced a principal reduction plan for certain Countrywide borrowers.

CNBC's Diana Olick reports that Treasury might announce a principal reduction program in the next few days: Bank Of America's Mortgage Write Down—Just the Start?

The reason this program is so important though is because we know something is in the works over at Treasury to do something like it. We may even get news of that later this week, according to some of my sources.

The Special Inspector General for TARP criticized HAMP today. The report was critical of the changing goals (no way 3 to 4 million will avoid foreclosure), the performance metrics, the marketing of the program, the low conversion rate to permanent status, and the high risk of re-default. The report notes that Treasury expects between 50% and 66% of temporary modifications will become permanent, and 40% of borrowers in the program will re-default (either while temporary or permanent). Those are horrible numbers.

First time home buyer? Wait till May to buy

I can't believe my eyes but California has passed another $10k buyers credit for new homes and first time buyers of resale homes. This makes perfect sense since California is just flush with cash.... $200 million dollars down the drain.

This trumps the federal tax credit by $2k so buyers might as well wait till May to buy when the state credit kicks in. Better to get $10k than $8k (although it is over 3 years). That should slow the market down a bit in the coming months.

And now some unfortunate truths about loan mods from Calculated Risk. This is actually kinda funny in a pathetic kind of way.

One aspect of the Making Home Affordable loan modification program known as ‘HAMP’ is almost always taken for granted in its wide reporting – that the borrowers in fact need ‘help’. Moreover, it is generally taken for granted that those seeking modification under HAMP simply cannot afford their monthly mortgage payment. It is assumed that they have made great sacrifices, assumed they have already cut back drastically on discretionary expenses, assumed that they have already gone over their monthly budgets with a fine-toothed comb to eliminate all but the most necessary expenditures in an effort to keep their home. So prepare to be shocked – shocked! – as I share with you that I have seen first-hand that this assumption is oftentimes greatly, seriously flawed.

Let me begin with a word to the wise for HAMP applicants: unless you believe Snooki is now in charge of approving HAMP applications, it might be a good idea to cut back a bit on some of the creature comforts to which you have become accustomed at least a month before submitting your HAMP modification application.

Allow me to explain. The guidelines for servicers participating in HAMP stipulate that the borrower must submit a “hardship affidavit”. This, ostensibly, is to serve as their sworn testimony that they have been driven into default due to some particular hardship they encountered, and despite making every possible sacrifice, they can no longer “maintain payment on the mortgage and cover basic living expenses at the same time"

To demonstrate this, applicants are required to submit recent paystubs and bank statements. The statements are to help further corroborate the income they report (lest they forget to include all of their paystubs) and also to demonstrate that their monthly expenses are as described on their application. Which is to say that they have already ‘cut back to the bone’ and STILL are unable to make ends meet.

So how do these look in practice? The very first ‘HAMPlication’ that your correspondent pulled up recently showed a wanton disregard for minimizing spending. On the contrary, it looked like “cutting back” for this applicant does not involve such Draconian cuts as eliminating:

• visits to the tanning salon
• the nail spa
• some kind of gourmet produce market (have you seen the price of arugula?)
• various liquor stores
• A DirecTV bill that must involve some serious premium programming or pay-per-view events (or both?).
• And over $1,700 in retail purchases, including: Best Buy, Baby Gap, Brookstone, Old Navy, Bed, Bath & Beyond, Home Depot, Macy’s, Pac Sun, Urban Behavior, Sears, Staples, and Footlocker.

And that was just in one month! They were seeking to reduce a $1,880 mortgage payment that had just gotten to be a real cramp to their ability to keep a roof over their heads.

I’d like to say this is the exception, but it’s much closer to the norm. Many people who request HAMP modifications submit bank statements that demonstrate little if any “belt-tightening” going on.

Flipping article

Here's a pretty good article from the Press Enterprise on flipping.

The number of houses purchased by investors at these auctions, the last step in the foreclosure process, has more than tripled in California in 12 months, from 900 in January 2009, to 3,688 in January this year.

"We have on average of three to four times as many properties sold at trustee auctions now as at the peak reached in the 1990s," O'Toole said.

Bruce Norris, a longtime Riverside real estate investor and consultant who warned other investors early on that the real estate market was about to tank, said the deluge of houses hitting the foreclosure auctions and the numbers of buyers chasing them are far beyond what he had expected. He recalled that a year ago it was common for just a handful of investors to turn out to hear the trustee's auctioneer reel off the addresses of houses for sale and sometimes the auctioneer would speak to an empty courtyard, he said.

Norris said risk is inherent in buying houses that are sold at auction "as is" with no title insurance or warranties and, often, with occupants who must be evicted. Buyers have no protection. They don't even have a right to inspect the houses for which they must pay cash. And after they make a winning bid, they cannot back out or demand a refund.

Success at the auctions depends on homework. In choosing among scores of houses scheduled for sale, it's up to bidders to review comparable sales, do a title search to find out if there are unpaid taxes and other liens and visit the properties. Getting inside a house to determine if it has been stripped of appliances or requires other major repairs can be impossible.

"Every month someone walks away thinking they have a deal -- and they have lost a quarter of a million dollars," Norris said.

Jenny Wang, part of a family business in Murrieta that has bought houses at foreclosure auctions for 20 years, said she feels sorry for beginners like the one she recently saw at auction who paid more than $140,000 for a house in Menifee that Wang knew had burned to the ground.

Newcomers cannot expect a helping hand from the veterans, who are fiercely competitive with one another and irritated by novices who tend to bid up prices beyond what makes financial sense, said Norris.

Feb numbers from DataQuick

The Feb numbers from DQ are out. The sales numbers for the IE took a pretty good dive and the median price was nearly unchanged from last year. San Berdu was down 10% and Riverside was down 6.5%. That's not good considering the tax credit and low rates right now. DQ also mentions the uptick in flipping. Some of those sales can probably be backed out as those flips count as two sales. Take the flips away and the market is probably worse than the numbers indicate. In any case a that's a fairly big dive in sales numbers versus last year. The sales numbers were about the same as Jan for Riverside but San Berdu saw a 7% drop. Median price was the same in San Berdu and Rivy managed a $2K gain. Median price seems to have stabilized some what on a county wide basis for both counties.

A total of 15,359 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was virtually unchanged from 15,361 in January, and up 0.8 percent from 15,231 in February 2009, according to MDA DataQuick of San Diego.

The February sales average is 17,983 going back to 1988, when DataQuick’s statistics begin. The sales distribution remains tilted toward lower-cost distressed homes, although not as steeply as most of last year.

“It’s possible the stars won’t line up this way again for many years. With prices and mortgage interest rates this low, the cost of ownership is about as low as we’ve seen it in decades,” said John Walsh, MDA DataQuick president.

The median price paid for a Southland home was $275,000 last month, up 1.3 percent from $271,500 in January, and up 10.0 percent from $250,000 for February 2009.

Foreclosure resales accounted for 42.3 percent of the resale market last month, up from 42.1 percent in January, and down from 56.7 percent a year ago, which was the all-time high.

Government-insured FHA loans, a popular choice among first-time buyers, accounted for 38.5 percent of all home purchase loans in February.

Absentee buyers – mostly investors and some second-home purchasers – bought 18.9 percent of the homes sold in February. Buyers who appeared to have paid all cash – meaning there was no indication that a corresponding purchase loan was recorded – accounted for 29.3 percent of February sales. In January it was a revised 29.7 percent – an all-time high. The 22-year monthly average for Southland homes purchased with cash is 13.8 percent.

The “flipping” of homes has also trended higher over the past year. Last month the percentage of Southland homes flipped – bought and re-sold – within a three-week to six-month period was 3.4 percent, up from 1.6 percent a year ago. Last month the flipping rate varied from as little as 2.8 percent in Riverside and Ventura counties to as much as 4.1 percent in Los Angeles County.

	Sales Volume			Median Price
All homes	Feb-09	Feb-10	%Chng	Feb-09	Feb-10	%Chng
Los Angeles	4,590	5,034	9.7%	$299,000	$315,000	5.4%
Orange	1,879	1,986	5.7%	$375,000	$417,000	11.2%
Riverside	3,420	3,199	-6.5%	$190,000	$197,000	3.7%
San Bernardino	2,324	2,095	-9.9%	$153,000	$150,000	-2.0%
San Diego	2,473	2,465	-0.3%	$285,000	$322,000	13.0%
Ventura	545	580	6.4%	$327,000	$350,000	7.0%
SoCal	15,231	15,359	0.8%	$250,000	$275,000	10.0%

1099 releif

The Ca assembly passed the short sale tax relief and have sent it off to Arnold to sign. I read he may veto is as there is some additional provisions he does not like regarding tax fraud. I'm sure this will eventually get passed and the short sellers will get off the hook. However not everyone will get off. Both the state and federal tax relief only applies to purchase and refi loans. Home ATM loans (HELOCs) are still taxable. This is why the short sellers really need to get some good tax advice before selling. Vacation and rental properties are also not eligible for tax relief.

Here's some scary data for Housing Wire.

Using LPS data, for all loans more than 90 days in arrears, the average days delinquent is now at 272 days—up from 204 days in early 2008. For loans in foreclosure, the aging numbers are even more staggering: loans in this bucket average 410 days delinquent, up from 260 days delinquent in early 2008.

Ponder those numbers for just a second. On average, severely delinquent borrowers have gone more than 9 months without making a mortgage payment—and yet foreclosure has not yet started for them. For those borrowers who are in the foreclosure process, it’s been an average of 13.6 months—more than one full year—since they last made any payment on their mortgage.

So, can short sales ride in to save the day for these 7.4m troubled borrowers? What about for the many millions more who are current on their loans, but are underwater on property value and unable to sell? For some, short sales will be an important solution—but don’t kid yourself: the hype currently surrounding short sales and the HAFA program will prove to be short-lived, and REO expertise will be prove to be the key to recovery, as it has been in prior cycles.

Here's some government propaganda regarding the HAMP program (Loan Mods). Check out the chart on page 6. Before mods the average back end DTI was 76.4%! Damn Batman after you pay taxes what's left to buy food and pay utilities. It really does make you wonder what in the hell banks were thinking making these loans. 76 freaking pecent DTI...amazing. And the scary part is the back end DTI after mod is averaging nearly 60%. These people are still one paycheck away from the street, eating Ramen noodles and Hamburger Helper for dinner.

There are some other shocking numbers in the report. All the perment mods got an interest rate reduction, 40% of them got the loan extended, and 27% got a principal forebearance. (not a principal reduction!). You can see that a lot of these loan mods are time bombs unless by some miracle prices bubble up again. The average savings is a little over $500/mo.

Welcome to the Bail Out Generation! (We are the BOGs)

Friday humor

Unemployment hits new high, and state tax releif for short sales?

Inland Southern California's job base continues to absorb body blows, as January's unemployment soared to an all-time high of 15 percent, a state report released Wednesday found.

Two years of recession has cost Riverside and San Bernardino counties more than 160,000 jobs, the state Employment Development Department reported. That means that there are no longer jobs for roughly one in eight Inland residents who had been working before 2008 started. It also means the recession has wiped out the five years of solid growth the Inland area experienced before the collapse of housing-related industries pulled the economy into an abyss. And the damage has not stopped. The January jobless rate, up from 14.1 percent in December, is more than three times what it was four years ago, when virtually everyone looking for a job in the Inland area found one. Part of the increase was attributed to people who had stopped looking for work but decided to get back into the job market after the first of the year.

The jobless rate was 15.1 percent in Riverside County and 14.8 percent in San Bernardino County. Riverside County almost always has higher unemployment because it's computed based on home addresses, and Riverside County has more residents who commute to other counties.

There was job growth in 31 states, although in many cases it wasn't enough to lower the unemployment rate. California's unemployment of 12.5 percent was the fifth highest. Despite some ripples of economic life, there are no clear signs employers will be hiring. Matt Thalmeyer, president of Arrow Staffing, a Redlands-based temporary agency, said there have been short stretches in the early weeks of 2010 when orders for workers picked up, but they don't last. And, there is still a steady flow of applicants looking for short-term jobs, he said.

"Our clients are saying they're not expecting to do much of anything, and maybe not even anything big, until the third or fourth quarter," Thalmeyer said. The state is reporting about 74,000 fewer Inland residents were drawing paychecks in January than in the same month in 2009

.................

Tax relief for short sales from the state might be coming. Most people know the federal gov has a program to forgive the taxes on the forgiven debt from a short sale or foreclosure. Few people know that you are still on the hook for state tax though.

State legislation to protect people who lose their houses in foreclosure or short sales from a big tax bill passed a significant hurdle this week, winning Assembly approval. The state Senate is expected to vote on the proposal Thursday.

Passing the Assembly by a 47-27 vote, the bill authored by Sen. Lois Wolk (D-Davis) would exempt people who did short sales or received loan modifications or lost their houses in foreclosure last year from having to pay state tax on any mortgage debt that was forgiven. Otherwise the forgiven debt would be considered income for the homeowners even though they received no money from the sale of their home.

Both the state and federal government extended a lifeline to homeowners in 2007 when the market was flooded with mortgage failures by temporarily exempting the tax on forgiven debt. However, while the federal exemption continues through 2012, the state's expired at the end of 2008.

Winter said a person with an annual income of $50,000 and $100,000 of debt cancelled on a house would be "on the hook" for about $8000 in additional income tax. He said most likely some of his clients would be forced into bankruptcy.

Many people who thought they were exempt from the debt forgiveness tax under both the state and federal law, Hewitt said, were shocked to receive 1099 forms in the mail from their lenders that need to be filed with their tax returns to report the cancelled debt.

As state law now stands not all homeowners who have a foreclosure, short sale or loan modification will take a state tax hit. According to the Senate Revenue and Taxation Committee, for example, debt forgiven on a first mortgage used to buy a house even now is not taxable. That is not true, however, if the original mortgage is refinanced and money taken out to buy a car or for another investment.

The fliptards return

On the last month I've noticed a lot of new flips hitting the market. There seems to be a ton of money being made by these guys. The new flipper is a far cry from the ones we saw on TV a couple of years ago. Those guys would buy a wreck, fix it up and make a healthy profit. The new breed are not having to put nearly as much effort into it. They buy house that's a few years old at the trustee sale, replace the carpet, paint the walls and put down some sod and list the place for $100k to $200k more than they paid. It's quite a scheme.

16967 Hazelwood in Riverside. This house is only 2 years old. They paid $369k on Feb 4th. It gets paint and carpet and is listed Feb 10th for $462k! Will they get it? I dunno, the price seems a little high but I ca see this easily selling for $420k-$440k. Even at the low end that's a good paycheck for a few days work.

17229 Bluff Vista, Riverside. This house is 6 years old. It was picked up for $330k in Feb and listed 2 days before the sale even posted for $426k. This one doesn't even look like it got carpet or paint. It's looks like grass and a good cleaning was all this got and they are looking to make nearly $100k (before selling costs). Again the asking price is probably a wee bit high. These have been selling in the high $300s but they still stand to make a very healthy profit.

3241 Crestview in Norco. This one was picked up for $501k Feb 22nd. It's now listed for $570k. This one isn't a no brainer. At $570k this might be a tough sell. The house is nicer than most in this tract and that might save it but at $501k there isn't much room on tis one. I'm not totally confidnet these guys will make any money on this one. There's been a couple sell in the mid $500s but those were on the highest street in the tract and that's a serious lot premium. This one does not have a view it looks at the nieghbors house across the street. I'm thinking low $500s and at that price they lose money.

Here's another one that isn't looking good to me. 18410 Lakepoint Dr up in Lake Hills Riverside. This is right at the top of the hill so you better have stock in an auto repair shop because you will be going through brakes and gear boxes living up there. The big homes in Lake Hills have been selling for around $100 sq/ft give ro take $10 s/f. The really big ones are often selling in the high $90s s/f. This house is 4576 s/f and they bought it for $415k or about $90 s/f. That's a pretty good deal but not "flipping" good. They listed it a week later after slapping on some paint and laying down some sod for a mind numbing $675K! Now that's reaching for the moon. They've have several price reductions but are still WAY overpriced at $624k. There are two identical comp sales in the last 2 months of $450k and $500k. Are they going to make any money? That depends on them they could propbably sell this fairly quickly at $450k but that's a break even price or close to it. They might get $500k if they are lucky but every month it lingers it's eats at that profit. It's already been on the market 3 month, they are slow to reduce so they could lose some money on this deal if they don't snap out of their delusion of making $200k.

This is just a small sample of the many flips I'm running across. Most of them are going to make a very healthy profit for a few days work.

Short sales made easy

Check this article out

Wachovia, a Wells Fargo company, is among the first major lenders to create an aggressive, proactive short-sale program. While the company continues to process borrower-directed short-sale offers, it has also launched a pre-approved, lender-directed approach that results in greater file velocity.

As a portfolio lender, Wachovia is not hamstrung by investors or others making the decisions on short-sale approvals on its World Savings and Golden West Financial portfolios, which are the focus of this pilot program. Wachovia does not pre-select or direct any particular listing agent to work with borrowers for obvious liability-associated reasons. The company encourages its borrowers to interview at least three agents and select the one with whom they feel the most comfortable.

Pivotal differences of the Wachovia pilot program include the following:

•No hardship letter, pay stubs or financial statements are required.
•Negotiators approve or counter offers within seven to 10 days after the offer is received.
•There is no requirement for delinquent borrowers to have experienced a hardship.
•Generous cash-for-keys payments are used to gain borrowers’ cooperation.
•The listing agent is involved to develop a pre-approved strike price at which the property would likely be sold (much like the REO process). If a property doesn’t sell at the pre-approved price, reductions may be requested until offers are received.
•The amount of the outstanding loan is not a factor in determining the list price. Unlike many lenders, Wachovia is focused solely on the economic benefit of short sales.
Other major lenders, including GMAC, have implemented or are about to implement more aggressive short-sale programs, as well. Some companies are far better at managing short sales than others, but all of them should focus on proactive communication, adequate staffing and training in order to streamline the short-sale process for both borrower-requested and lender-directed short sales.

GMAC has a special unit called “The Counsel to Sell Team” within its short-sale department that proactively contacts borrowers who have been denied loan modifications. The unit conducts outbound calling and mail campaigns to entice borrowers to consider a short sale, and GMAC reports a higher rate of success through this proactive approach

..........

Best Post Ever

Ok, so I am looking at the recent sold comps in Bridle Creek when I run across 17771 Chalk Creek. It posted a sold amount of $452k which I thought was a little high for that particular floorplan. The highest sales price so far of that floorplan is $440k and that was a pretty nice house. I figure this must be a back to bene (trustee sale with no takers). So I do a search and sure enough I find it as a REO, sale date Jan 13th 2010. I start my usual search to see if it was ever listed. Nope, this guy just went down with the ship. HOWEVER, I did run across this unusual ad for the house! What's this a HUGE Mansion Event on Jan 16th?? I bet the neighbors loved this!



Oh yea, I can just imagine what this place is going to look like when it hits the market! $ VIP rooms?? You might want to wear a hazmat suit if you look at this one. Hey you gotta give the young fellas some props, that's a better description than most realtors can write. I especially like the 0% Tolerance, Armed Security.....YIKES! (They did get the zip code wrong but there were directions on the website right to the house in Bridle Creek).

WTF is up with Congress?

Why does congress have it's priorities so F'd up? Is it just me, am I the only person in America that is wondering why NOTHING is being done about the biggest financial fiasco since the 1930s. Sure we've thrown trillions of dollars at the problem, bailed out everyone from the Taco Bell employee next door to AIG. But bailouts are not a cure for the disease. They only treating a symptom.

Congress has done squat about the system that allowed this to happen. No regulations, no controls, no oversight, no nothing so far. They sit around arguing about a health care package that 60% of America doesn't want and 30% don't understand. The other 10% are all for it because they may actually benefit from it. Why is Congress so hell bent on health care reform. Has health care brought down the economy? Are millions of people dying in the streets? No, people are living longer than ever, and contrary to popular belief we have one of the best health care systems in the world. For christ's sake, rich people from Europe come over here when they get seriously sick. I'm not suggesting for one second it cannot be improved. Cost is insane (primarily due to litigation) and most government run programs are rife with fraud. But it should hardly be the number one priority. Lets fix the freaking financial system that is still running amok. Wall street isn't investing anymore. It's like Las Vegas for the Mega Rich. Shorts and hedges and every other manor of financial black magic should not be legal. How the hell can a company buy and sell a bunch of crap they know is going to go bad then make a killing by hedging against it.

I understand perfectly that Wall St. owns the government (and vice versa). But why aren't the American people and the media shouting out for reform. Lobbyists can be persuasive but a few hundred million angry voters should be able to overcome that obstacle. It pisses me off that the media is covering this health care BS like it's the biggest thing since man walked on the moon, and the only people yelling for reform are whack jobs like Glen Beck. I hope that doesn't make me a whack job.......