Larry Roberts real estate writing blog: June 2014

Monday, June 30, 2014

USA Foreclosure: Grifters for God: fraudulently occupying a $1.3M home for five years

One of the cartoons I post when appropriate is called the National Squatters Entitlement. It speaks to a truth about people’s attitudes toward home ownership. People convince themselves they own property even if they have no equity claim. Their names may be on title, but all they really...
Grifters for God: fraudulently occupying a $1.3M home for five years

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Renter News: The federal reserve missed the housing bubble and its effects

It is shocking — and a little frightening — to see how clueless and inept the people in charge of our money supply really are. Recent releases of federal reserve open market committee transcripts clearly show the federal reserve completely missed the housing bubble, and they grossly...
The federal reserve missed the housing bubble and its effects

OCHN: The deflating Chinese real estate bubble could destabilize the world economy

The Chinese inflated a real estate bubble more than ten times larger than the United States. Bursting this bubble could destabilize the world economy.

I recently asked what would happen if the Chinese housing bubble burst. The implications for Coastal California’s real estate market is...
The deflating Chinese real estate bubble could destabilize the world economy

Sunday, June 29, 2014

Loan Mod Default: Government and lender solutions focus on loan modifications and short sales

Based on their recent behavior, it’s safe to conclude the government and the banking cartel believe they can resolve all their ills through loan modifications and short sales. Despite a huge shadow inventory of delinquent loans, lenders have slowed their foreclosure processing, and they...
Government and lender solutions focus on loan modifications and short sales

USA Housing: Bank"s attitude toward struggling loanowners toughening as prices rise

In any negotiation the options of the parties determines the strength of their bargaining position. Ordinarily, when a lender and a borrower execute a promissory note and a mortgage agreement, the lender has most of the power, which is why they determine the terms of the agreement. The only...
Bank"s attitude toward struggling loanowners toughening as prices rise

Saturday, June 28, 2014

Ponzi Debt: Federal reserve official promotes principal reduction and Ponzi borrowing

The federal reserve exists to create moral hazard. Their policies are designed to lessen the impact of the financial cycle, make booms less of an upswing and make busts less of a drag. However, the recessions at the end of a long boom are necessary. Unsustainable Ponzi-based business plans and...
Federal reserve official promotes principal reduction and Ponzi borrowing

Real Estate Ruin: Credit Expansion and the Housing Bubble

The expansion of credit took four forms: lower interest rates, lowering or eliminating qualification requirements, different amortization methods, and higher allowable debt-to-income ratios. Lower interest rates expand credit by allowing larger sums to be borrowed with the same payment amount....
Credit Expansion and the Housing Bubble

Friday, June 27, 2014

Debt Default: Walk away from mortgage debt to secure your children"s future

Lenders are pressuring owners to repay their underwater loans by appealing to morality. As people strategically default and their lives improve, they tell their friends which triggers the next wave of strategic defaults. The pressure of morality gets less and less effective, particularly when bor...
Walk away from mortgage debt to secure your children"s future

Housing Market: 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

OCHN: Mortgage regulations give homebuying fence-sitters peace of mind

If new mortgage rules will prevent housing bubbles, prudent fence-sitters have no urgency to buy for fear of being priced out of the housing market.

The real estate industry hates homebuying fence-sitters. Those who make their incomes on real estate transactions aren’t concerned about...
Mortgage regulations give homebuying fence-sitters peace of mind

Thursday, June 26, 2014

Real Estate Loan: How to game the system with FHA loans for maximum advantage

Our current housing finance system is a mess. It’s laden with moral hazard, and likely to implode with enormous losses to be absorbed at taxpayer expense. All our current policies are geared toward saving our banking system from financial ruin and making loan owners comfortable with their...
How to game the system with FHA loans for maximum advantage

OCHN: Did the federal reserve"s taper slow housing and cause a new recession?

The federal reserve began tapering bond purchases in December 2013, and the US economy shrank at a 2.9% annual rate in the first quarter of 2014. Coincidence?

The federal reserve works to minimize the damage caused by economic downturns by stimulating the economy during recessions to prevent...
Did the federal reserve"s taper slow housing and cause a new recession?

Wednesday, June 25, 2014

Housing Forecast: Can the GSEs Exist Outside of Government Conservatorship?

We are giving Congress plenty of time to think through the GSE problem. Unfortunately, as we pass through this season, the GSEs continue to cheat taxpayers out of billions of dollars. Our view on housing finance: Don’t let Fannie and Freddie return to old neighborhood As bailouts go, ...
Can the GSEs Exist Outside of Government Conservatorship?

Housing Bubble: What is the Difference between Speculation and Investment in Real Estate?

Owner-occupied residential real estate is viewed by many people as a good investment. Realtors often use this idea as part of their sales pitch. This view is fallacious and it is one of the beliefs responsible for creating an asset price bubble. To understand why houses are not a great...
What is the Difference between Speculation and Investment in Real Estate?

OCHN: Single-family home rents will soon begin to rise

With fewer investor purchases of single-family homes, the supply of single-family home rentals diminishes causing rents to rise.

Investor purchases of single-family homes provided demand during a period when owner-occupant demand was weak; when combined with restricted MLS inventory due to...
Single-family home rents will soon begin to rise

Tuesday, June 24, 2014

Mortgage Refinance: Accelerated default, what strategic default really is

People form strong attachments to their homes. Walking away is never a decision they take lightly. We can discuss the pros and cons and come up with our own beliefs and attitudes about it, but the turnover of our housing stock caused by the housing crash will be very painful for those who go...
Accelerated default, what strategic default really is

Mortgage Foreclosure: Toxic loan peddlers failed to foresee the housing crash

People erroneously believe professionals who packaged toxic mortgage-backed securities knew the housing market would crash and profited from bad loans. Matthew 15:14 “Let them alone; they are blind guides of the blind. And if a blind man guides a blind man, both will fall into a...
Toxic loan peddlers failed to foresee the housing crash

San Diego Housing: Lending standards will keep getting tighter

Despite realtor pleas, mortgage lending standards will continue to tighten realtors never want to see a deal die because the buyer can’t get financing. Lawrence Yun, chief economist for the NAr, recently lamented about “unnecessarily tight credit standards” and “frictions related to obtaining mor...
Lending standards will keep getting tighter

OCHN: Americans don"t want small houses

Dashing hopes of academics that Americans were turning to small condos at transit stops, Americans are buying very large homes again.

For years, academics in planning circles touted the rise of the small, high-density housing alternatives near mass-transit hubs. While this product might be the...
Americans don"t want small houses

Monday, June 23, 2014

USA Foreclosure: The right-to-rent a foreclosure would encourage strategic default

The idea of a right to rent has been floated by Dean Baker of the Center for Economic and Policy Research. His proposal is to give every loan owner the right to stay on in their foreclosure for five years paying market rents. I first covered this issue in The Right to Rent Would Flatten the...
The right-to-rent a foreclosure would encourage strategic default

Renter News: Principal reductions failed to reduce future default rates

Principal forgiveness is the worst policy option. Despite this fact, it’s so appealing to loan owners and politicians, reporters are keen to write about the prospect. However, the world is not comprised only of loan owners. Nearly 40% of households are renters, and of the remaining 60% who...
Principal reductions failed to reduce future default rates

OCHN: Bad condominium investments that keep on losing

Condominium investments go bad, and sometimes the property can’t be rented out to cover the expenses. Owners can’t sell and can’t rent, so they lose, lose, lose.

I don’t like speculating on investments with negative cashflow, particularly in real estate. If the purchase...
Bad condominium investments that keep on losing

Sunday, June 22, 2014

Loan Mod Default: Loan modifications are not an entitlement, banks don’t want to make them one

Lenders and borrowers are stuck with each other. Lenders know everything about their borrowers, and most lenders believe their borrowers are capable to making their mortgage payments. Unfortunately, when they are severely underwater and paying more than a comparable rental, borrowers...
Loan modifications are not an entitlement, banks don’t want to make them one

USA Housing: Home equity spending heightened the housing bubble and compounded the crash

Bubble thinking is rampant, and the primary reason for its persistence is that people want the free spending money houses provide. The huge financial reward each bubble participant received as they went to the housing ATM gave a spender’s high like no other. Absent another housing bubble, most bu...
Home equity spending heightened the housing bubble and compounded the crash

Saturday, June 21, 2014

Ponzi Debt: The devastating aftermath of mortgage equity withdrawal

Money won’t buy happiness, but it can provide the finest forms of misery. Everyone wants money. If given the chance to do nothing and obtain money, most people would take it. Such was the lure of the housing bubble. People only had to do two things to obtain copious amounts of cash. First,...
The devastating aftermath of mortgage equity withdrawal