Larry Roberts real estate writing blog: 2014

Wednesday, December 31, 2014

Housing Forecast: Loan Modifications Succeed by Increasing Borrower Entitlements

Lenders really need to let go. They blew it. It’s over. Just let it die. Both the lender and the borrower pay a price — or at least they are supposed to. Instead, we bail them out, and we pay the price. Don’t forget about us who pay for their mistakes. Part of the price we pay i...
Loan Modifications Succeed by Increasing Borrower Entitlements

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OCHN: Thieves of the housing bubble were ordinary people

The free money offered during the housing bubble turned many good people into thieves.

People are basically honest and will do the right thing if given the chance; however, people are also opportunistic, and if encouraged and enabled to steal, many ordinarily good people will go down the wrong...
Thieves of the housing bubble were ordinary people

Tuesday, December 30, 2014

Mortgage Refinance: 2012: the year housing market manipulations paid off

It looks like the bottom-callers of 2012 were right. Continued interference in the mortgage market by the federal reserve lowered mortgage interest rates to record low levels. Plus, changes in policy at the major banks held back the tide of foreclosures and greatly restricted the MLS inventory....
2012: the year housing market manipulations paid off

Mortgage Foreclosure: Four Lies Believed During the Housing Bubble

There are a number of fallacies about residential real estate that either affirm the belief in perpetually rising prices or minimize the fears of a price decline. These fallacies generally revolve around a perceived shortage of housing or a belief that the higher prices are justified by current...
Four Lies Believed During the Housing Bubble

OCHN: Lenders violate the Sherman Antitrust Act to drive up house prices

America’s largest banks engage in anti-competitive practices to drive up the price of housing, and rather than crack down, the government encourages it.

Unfettered capitalism has its drawbacks. The two most notable among them are key issues in the housing bubble and bust: Ponzi schemes,...
Lenders violate the Sherman Antitrust Act to drive up house prices

Monday, December 29, 2014

OCHN: California home buyers must time the housing market

Due to the volatile nature of California house prices, timing the housing market is something every buyer must consider and understand.

California house prices are notoriously volatile. A combination of restricted inventory due to regulatory constraints and foolish optimism enabled by equally...
California home buyers must time the housing market

USA Foreclosure: Do pocket listings enrich realtors at the seller"s expense?

A pocket listing is a property kept off the MLS for exclusive showing to select buyers. Most often pocket listings are used by agents who want to double-end the deal and make double the commission. In that scenario, the agent is ignoring the inherent conflict of interest in dual agency to...
Do pocket listings enrich realtors at the seller"s expense?

Saturday, December 27, 2014

Ponzi Debt: What is the Option ARM Payment Rate?

A negative amortization loan is any loan where the monthly payment does not cover the monthly interest expense. Interest-only or conventionally amortizing loans do not have this feature, and the monthly payments are based on the interest rate charged and/or the duration of the amortization...
What is the Option ARM Payment Rate?

Friday, December 26, 2014

Debt Default: Appraisers now complicit in efforts to reflate the housing bubble

Appraisers are supposed to be impartial third-party arbiters of value. If appraisers do their job right, prices can’t get out of control and rise too rapidly. For quite a while, this system worked. However, probably on instruction from lenders, appraisers are now “hitting the...
Appraisers now complicit in efforts to reflate the housing bubble

Housing Market: Sometimes real estate is a ball and chain

Banks have been allowing delinquent mortgage holders to squat while prices rebound because rising prices allows them to recover more on their bad loans. In many cases, the delinquent borrower moves on with their lives and leaves the property vacant with the assumption that the bank will finally...
Sometimes real estate is a ball and chain

OCHN: Rental parity analysis in appraisals would prevent another housing bubble

Evaluating rental parity would provide a check and balance preventing comparable sales from getting overvalued.

I have long contended that rental parity is the fundamental value of houses. Whenever values differ significantly from rental parity, up or down, reversion to the mean is inevitable....
Rental parity analysis in appraisals would prevent another housing bubble

Thursday, December 25, 2014

Real Estate Loan: Were You a Victim of Predatory Lending in the Housing Bubble?

The most egregious examples of predatory lending occurred when interest-only loan products where offered to subprime borrowers whose income only qualified them to make the initial minimum payment (assuming the borrower actually had this income). This loan program was commonly known as the...
Were You a Victim of Predatory Lending in the Housing Bubble?

OCHN: Silver Linings: Tony Bliss 1966-2012

Tony Bliss was a close friend of mine who lost his heroic battle with cancer in late 2012. He wrote about his experience in a series of gripping posts that reveal a beautiful and courageous man. I was deeply moved by these posts — some of which are admittedly difficult to digest. This writing is ...
Silver Linings: Tony Bliss 1966-2012

Wednesday, December 24, 2014

OCHN: The agony of being underwater in America

I am thankful for many things this holiday season, and not being underwater on a mortgage is one of them.

The housing bubble has many lessons to teach us. I have written on the subject for five years now in hopes that people can learn from the successes and failures of those impacted by the...
The agony of being underwater in America

Tuesday, December 23, 2014

Mortgage Refinance: Why did Freddie Mac and Fannie Mae Go Under?

The Federal Home Loan Mortgage Corporation, also known as Freddie Mac, was created by Congress in 1970 to make possible a secondary mortgage market to provide greater liquidity to banks and other lending institutions to facilitate home mortgage lending. The Federal National Mortgage Corporation,...
Why did Freddie Mac and Fannie Mae Go Under?

Mortgage Foreclosure: The Guide to Pick-a-Pay Option ARM Loans

The Option ARM is one of the most complicated loan programs ever developed. It was heralded as an innovation because it allowed people greater control over their monthly payments, and it provided greater affordability in the early years of the mortgage. Twenty-nine percent of purchase...
The Guide to Pick-a-Pay Option ARM Loans

OCHN: Should unemployed renters face homelessness while loanowners don"t?

The fear of homelessness is the essential motivation to get people to work to produce goods and services in our society.

Modern American culture can trace its roots on the North American continent to pioneering English settlers. Life on the frontier is harsh, and each family unit is...
Should unemployed renters face homelessness while loanowners don"t?

Monday, December 22, 2014

USA Foreclosure: Mortgage lending standards remain prudently restrictive

realtors, homebuilders and others who profit on real estate transactions hold the false belief that lenders are holding back the market with tight lending standards. It’s an easy position to hold for those who have no risk of loss when loans go bad. The reality is that lenders are not...
Mortgage lending standards remain prudently restrictive

OCHN: If mortgage rates rise in 2015, will house prices drop?

If mortgage interest rates move up, either house prices will fall or sales volumes will fall unless wages go up significantly.

Assuming a consistent payment, higher mortgage rates decrease the size of the loan and reduce the amount borrowers can bid on real estate; therefore, if rising mortgage...
If mortgage rates rise in 2015, will house prices drop?

Sunday, December 21, 2014

Loan Mod Default: Ownership cost: interest rates and down payment requirements

Today is part 2 in the ongoing series on Ownership Cost: Ownership cost: income, payments and house prices Ownership cost: interest rates and down payment requirements Ownership cost: property taxes, insurance, Mello Roos, and HOAs Ownership cost: taxes and opportunity costs Four Major Variables...
Ownership cost: interest rates and down payment requirements

USA Housing: How renters can profit from house price appreciation

After writing the post Sell now, mortgage interest rates to keep rising, I received an email from John H. Dolan (johnhdolan@homepricefutures.com), Independent Market Maker –CME Case Shiller Futures & Options. He pointed out that sellers who are worried about potential declines in house p...
How renters can profit from house price appreciation

Saturday, December 20, 2014

Ponzi Debt: Have California House Prices Always Been Crazy?

Volatility in real estate prices is not new to California. During the 1970s, real estate prices detached from typical valuations of three-times yearly income seen in the rest of the country. Once residents realized they could push up prices in their real estate markets to dizzying heights, they...
Have California House Prices Always Been Crazy?

Friday, December 19, 2014

Debt Default: Necessary deleveraging and a lack of HELOC abuse is keeping the economy down

In the short term, a lack of consumer spending is keeping the economy down. Of course, everyone looking for a quick fix decries the lack of consumer spending and blames the consumer for our woes. It isn’t the consumer’s fault they were given too much debt during the housing bubble....
Necessary deleveraging and a lack of HELOC abuse is keeping the economy down

Housing Market: Should the government back new subprime mortgages?

The government needs to get out of housing finance. The losses at the GSEs apporach $150 billion, and the FHA needs its own bailout. These are losses all of us who didn’t participate in the madness get to pay. And as long as the government continues to back 90% or more of loans for...
Should the government back new subprime mortgages?

OCHN: Speculating on negative cashflow properties is for losers

Most real estate investors are really speculators betting on appreciation. It’s a strategy destined to be a loser.

Real estate investors during the housing bubble put their money to work on faith. There is no logical reason to believe house prices only go up. In fact, there have been two...
Speculating on negative cashflow properties is for losers