Larry Roberts real estate writing blog: July 2014

Thursday, July 31, 2014

Real Estate Loan: Cheap credit and low cash returns causing mortgage debt bifurcation

One of the side affects of Quantitative Easing (QE) and the Zero Interest Rate Policy (ZIRP) has been ability of homeowners with debt to refinance at lower rates with shorter mortgage terms like a 10 year, 15 year or 20 year fixed rate mortgages. Even the loan mods for loanowners have cheap t...
Cheap credit and low cash returns causing mortgage debt bifurcation

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OCHN: Shiller: housing faces "turning point" as seasonally adjusted prices fall in May

Seasonally adjusted home prices fell in may for the first time in over two years. Robert Shiller warns of possible turning point in the housing market.

When a housing market reaches a top, it’s usually preceded by an unexpected drop in sales during the prime selling season. In June of...
Shiller: housing faces "turning point" as seasonally adjusted prices fall in May

Wednesday, July 30, 2014

OCHN: The Chinese housing bubble deniers are wrong

The housing bubble deniers in China use poor reasoning and macroeconomic arguments to ignore their massive Ponzi scheme.

Here in America, the bubble deniers — and Never forget the bulls and bubble deniers were completely and totally wrong — the bubble deniers succumb to their optimism bias and c...
The Chinese housing bubble deniers are wrong

Tuesday, July 29, 2014

Mortgage Refinance: Principal reduction transfers the pain from lenders and loan owners to everyone else

I have two strongly held views on foreclosure and principal reduction that are completely at odds with the drivel in the mainstream media. First, foreclosures are not a problem. In fact, foreclosures are essential to the economic recovery. All efforts to avoid or delay foreclosures are...
Principal reduction transfers the pain from lenders and loan owners to everyone else

Mortgage Foreclosure: Short sales damage house prices just like REO

Many market pundits claim lenders should focus on short sales rather than foreclosures. They contend short sales offer better capital recovery than foreclosures and they are less harmful to market pricing. This is not an accurate assessment. First, not all foreclosures become REO. About a third...
Short sales damage house prices just like REO

OCHN: Suprisingly, Mel Watt is not forgiving principal on underwater loans

In apparent recognition that principal reduction is a bad idea, Mel Watt is not forgiving debts on underwater loans owned by the GSEs.

Principal reduction is the worst policy option. The economy is weighed down by excessive mortgage debt, causing borrowers to pay money to lenders that would...
Suprisingly, Mel Watt is not forgiving principal on underwater loans

Monday, July 28, 2014

USA Foreclosure: California recorded over one million foreclosures

Everyone active in the real estate market today laments the lack of available inventory. Orange County housing market prices are rising due to the restricted inventory. Banks go “all in” betting on success of loan modificationsto resolve their prior bad loans. In the interim, delinquent mortgage ...
California recorded over one million foreclosures

OCHN: New home sales plummet in June 2014

Stymied by high prices amidst weak job and wage growth, new home construction fell dramatically in June.

This wasn’t supposed to happen. Reflating the housing bubble was supposed to lift distressed loanowners above water, stimulate building (and construction employment), and create...
New home sales plummet in June 2014

Sunday, July 27, 2014

Loan Mod Default: How Washington enables Wall Street to ransack Main Street

By encouraging asset bubbles and permitting Wall Street to extract undue gains from the volatility, policymakers in Washington encourage bad behavior on a large scale. I recently opined that quantitative easing and mortgage interest rate stimulus bail out Wall Street, not Main Street....
How Washington enables Wall Street to ransack Main Street

Saturday, July 26, 2014

Ponzi Debt: Woman wins lottery, buys house, HELOCs $2M+, and spends it all

I have profiled many stories of the capricious nature of the housing bubble and how it impacted people for better and for worse. The daily HELOC abuse posts have covered the odious behavior of borrowers from all walks of life. Usually I relegate those stories to the bottom of the daily posts...
Woman wins lottery, buys house, HELOCs $2M+, and spends it all

Friday, July 25, 2014

Debt Default: The Moral Hazard of Market Supports and HELOC Abuse

Have you ever stopped to ponder the issue of moral hazard? At its most basic, moral hazard is any change in behavior that comes about when people believe their actions have no consequences. The housing bubble was built on moral hazard. None of the parties to the real estate transaction believed...
The Moral Hazard of Market Supports and HELOC Abuse

OCHN: Zillow believes rising mortgage rates will slow home sales

In the absence of rising wages, when mortgage interest rates go up, one of two things will happen: either sales will fall, or prices will fall.

I recently wrote that higher mortgage interest rates would either slow sales or cause house prices to drop. Since most real estate analysts still...
Zillow believes rising mortgage rates will slow home sales

Housing Market: The distinction between good debt and evil debt

I make no secret of my disdain for the behavior of bankers during the housing bubble. I’m not so extreme that I consider all borrowing and lending to be evil; however, I draw a clear distinction between what I consider good debt, useful for economic efficiency, and bad debt, useless and...
The distinction between good debt and evil debt

Thursday, July 24, 2014

Real Estate Loan: 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: Owner-occupant sales stall while distressed sales plummet

Housing market optimists expected owner-occupants to pick up the slack from declining investor purchases. It isn’t happening.

In 2011, lenders aggressively pursued loan modifications to avoid foreclosures. They offered any deadbeat who would play along a sweetheart deal just to get some...
Owner-occupant sales stall while distressed sales plummet

Wednesday, July 23, 2014

OCHN: Fired Ed DeMarco saved taxpayers billions

Ed DeMarco was a conscientious bureaucrat who was forced out of his position for doing a good job protecting the US taxpayer from looting politicians.

The list of evil0doers and nefarious characters of the housing bubble includes famous names like Anthony Mozilo, David J. Stern, and...
Fired Ed DeMarco saved taxpayers billions

Tuesday, July 22, 2014

Mortgage Refinance: Strategic default is the banker"s stigma of convenience

Bankers foster the idea that strategic default on a primary residence is immoral. Bankers want borrowers to continue to repay loans even when it is not in the borrower’s best financial interest to do so. I and many others have argued borrowers have a greater moral duty to do what’s...
Strategic default is the banker"s stigma of convenience

Mortgage Foreclosure: Strategic default opposed by realtors who want short sale commissions

Realtors favor anything which generates a commission and oppose anything which fails to irrespective of whether or not this is good for buyers, sellers, or the market. For example, realtors recently lobbied against allowing bulk sales of foreclosures to private equity firms. Why? Because those...
Strategic default opposed by realtors who want short sale commissions

OCHN: Some criminal bank executives should go to jail

Punishing shareholders with corporate fines does little to deter bad behavior among corporate executives. Some of them need to go to jail.

If I had to narrow my list down to the people most responsible for the housing bubble, Anthony Mozilo would be near the top of the list.
The Option ARM ...
Some criminal bank executives should go to jail

Monday, July 21, 2014

Real Estate Loan: With rising interest rates, loan assumability makes a comeback

I like to look into the future and stay ahead of the news cycle when I can. Three and a half years ago, I first wrote about loan assumabilityas a feature would garner new attention once interest rates began to rise. With the recent spike in interest rates, and with the widespread perception we...
With rising interest rates, loan assumability makes a comeback

USA Foreclosure: Federal Reserve is forcing seniors into foreclosure

The federal reserve controls short-term interest rates through buying and selling Treasury notes. These rates determine how much interest people earn in savings accounts, the asset class favored by senior citizens. The federal reserve lowered interest rates to zero to force money out of savings...
Federal Reserve is forcing seniors into foreclosure

OCHN: With flattening house prices how will 300,000 SoCal loanowners get above water?

When lenders began denying short sales, underwater owners were forced to wait for higher prices to sell, and with flattening prices, they are stuck.

Lenders caused the housing market to bottom and to rally in 2012 and 2013 by favoring loan modification over foreclosure and by denying short...
With flattening house prices how will 300,000 SoCal loanowners get above water?

Sunday, July 20, 2014

Loan Mod Default: No-doc loan modifications available now!

When borrowers stop paying their mortgages, banks don’t want to foreclose because with so many so far underwater, the bank’s losses would be enormous; in fact, it would put most banks out of business. That simple truth drives every aspect of banking and government policy. Loanowners...
No-doc loan modifications available now!

Saturday, July 19, 2014

Ponzi Debt: Profiles of the ordinary thieves of the housing bubble

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 path. Lenders led many astray. During the housing bubble, lenders were desperate to loan...
Profiles of the ordinary thieves of the housing bubble

Friday, July 18, 2014

Debt Default: Affordability Mortgage Products Make Prices Unaffordable

We all want affordable housing. There are numerous government programs designed to provide low-cost rental and ownership properties to people in all walks of life. Lenders, builders, realtors and buyers all benefit from affordable housing because affordability means an increase in transaction...
Affordability Mortgage Products Make Prices Unaffordable