Larry Roberts real estate writing blog: November 2014

Sunday, November 30, 2014

Loan Mod Default: HELOCs make a comeback as neighbors steal from neighbors

When people are victims of theft, they usually work to remedy the situation so the theft doesn’t happen again. If a thief breaks into someone’s house, the homeowner installs better locks or alarm systems to avoid a future loss of property or worse. However, when the crime is more...
HELOCs make a comeback as neighbors steal from neighbors

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USA Housing: Is the so-called housing recovery the mother of all headfakes?

The housing market bottomed in early 2012 due to a combination of restricted inventory, record low mortgage rates, and increased investor participation in the housing market. I thought the rally was a seasonal bounce, and I was not convinced of the durability of this bottom until it became clear...
Is the so-called housing recovery the mother of all headfakes?

Saturday, November 29, 2014

Ponzi Debt: Conservative House Financing Is Making a Comeback!

When people decide they want to buy a house, they figure out how much they can afford, then they search for something they want in their price range. For most people, what they can “afford” depends almost entirely upon how much a lender is willing to loan them. Lenders apply debt-to-income rat...
Conservative House Financing Is Making a Comeback!

Friday, November 28, 2014

Debt Default: Lenders unwilling to loan to wealthy strategic defaulters, hoocoodanode?

Actions have consequences — which is not to say that many bailout advocates want everyone to avoid these consequences — but in the real world, the decisions we make impact our lives. When rational people make good decisions, they carefully consider the potential consequences of their...
Lenders unwilling to loan to wealthy strategic defaulters, hoocoodanode?

OCHN: Beyond personal greed, house price inflation is bad (redux)

This post was originally posted in early 2011, but the information is timeless.

For readers of this blog, the editorial that follows will not cover new ground. For the wider readership in California, what follows is pure sacrilege.
Bursting our bubble
Why do we continue to think that rising...
Beyond personal greed, house price inflation is bad (redux)

Thursday, November 27, 2014

Real Estate Loan: How Much Does a House Really Cost?

When contemplating purchasing a home, one should examine all of the costs of ownership to budget properly for the expenses they will face. Most people simply focus on the payment, and soon after they purchase, they realize that the true cost of ownership is often 20%-30% greater than they...
How Much Does a House Really Cost?

OCHN: Should unaffordable housing be a government policy? (redux)

I used to be thankful for affordable housing for everyone, but then lenders reflated the housing bubble with the government’s blessing.

The agents of denial seem bent on failing to learn the lessons of the housing bubble, or worse yet, they want to learn the wrong lessons. We are setting...
Should unaffordable housing be a government policy? (redux)

Wednesday, November 26, 2014

OCHN: Why do lenders and politicians promote HELOC abuse?

Lenders profit from consumer debts, politicians gain finance industry donations, and borrowers run personal Ponzi schemes. What could go wrong?

Macro-economists focus on their financial models and behavior in the aggregate, and they intentionally ignore the incentives and moral implications of...
Why do lenders and politicians promote HELOC abuse?

Tuesday, November 25, 2014

Mortgage Refinance: Are Mortgage-Backed Securities Dead?

One can argue that structured finance creates greater efficiency in our financial system because capital is freed to pursue other objectives. Although, it can also be argued, as Warren Buffet has, that derivatives, the product of structured finance, are “financial weapons of mass destruction.” Bo...
Are Mortgage-Backed Securities Dead?

Mortgage Foreclosure: Can the Fed reflate the housing bubble without negative side effects?

Economists say there is no free lunch. Apparently, those economists don’t work at the federal reserve. Interest rates are near record lows, and the federal reserve has been printing money to buy $40 billion a month in mortgage-backed securities to reduce mortgage rates further and provide...
Can the Fed reflate the housing bubble without negative side effects?

OCHN: Mel Watt is doing a surprisingly good job

Mel Watt receives criticism from both political parties, demonstrating he balances the competing ends, a competent replacement for Ed DeMarco.

I was wrong about Mel Watt. Despite my concerns he would use his position to advance a left-wing agenda, at least so far, he’s proven a capable...
Mel Watt is doing a surprisingly good job

Monday, November 24, 2014

USA Foreclosure: New report may kill the home mortgage interest deduction

Home ownership hurts the economy. That’s the startling conclusion of a new report that demonstrates a strong correlation between high rates of home ownership and high rates of unemployment. While correlation may not be causation, the correlation is too strong to be ignored. Whether or not...
New report may kill the home mortgage interest deduction

OCHN: Short sale tax relief is free money to HELOC abusers

Many borrowers spent their home equity during the housing bubble, and now they want income tax relief on the money they spent as income.

Mortgage equity withdrawal feels like free money. When this money comes from home-price appreciation on a primary residence, the borrower did nothing to earn...
Short sale tax relief is free money to HELOC abusers

Sunday, November 23, 2014

Loan Mod Default: 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

USA Housing: The real reason the NAr affordability index is completely worthless

The National Association of realtors is dedicated to advancing the interests of listing agents who dominate the organization. Their primary focus is to generate real estate sales and commissions that provide income for its members. It spends enormous sums promoting real estate sales with the...
The real reason the NAr affordability index is completely worthless

OCHN: Shevy Akason awarded Top Producer six years in a row

Shevy Akason, exclusive agent for OC Housing News, is named a Top Producer for his great work with OC Housing News customers and others.

FOR IMMEDIATE RELEASE

Shevy Akason, exclusive agent for OC Housing News, is named a Top Producer in Orange County, California, real estate sales.

Shevy...
Shevy Akason awarded Top Producer six years in a row

Saturday, November 22, 2014

Ponzi Debt: Everyone Wants To Live Here… Not!

The Great Housing Bubble witnessed many foolish ideas and beliefs about real estate. Among the most foolish was the idea that prices went up because everyone wants to live wherever they are. When rational arguments fail to explain something, it is only natural that people will start making...
Everyone Wants To Live Here… Not!

Friday, November 21, 2014

OCHN: Existing home sales decline 5% in West despite low rates

Plagued by affordability problems, the Western US endured a 5% decline in home sales in October 2014.

Ever since mortgage interest rates suddenly and unexpectedly rose from 3.5% to 4.5% in May of 2013, the market has been weak. For almost a year prices were flat while sales volumes declined....
Existing home sales decline 5% in West despite low rates

Thursday, November 20, 2014

Real Estate Loan: Home Interest Tax Savings Are Always Overestimated

When a borrower takes out a home loan, the interest is tax deductible up to a certain amount. For borrowers in the highest marginal tax bracket, the savings can be significant, and this can make a dramatic difference in the true cost of ownership. However, this benefit diminishes over time as...
Home Interest Tax Savings Are Always Overestimated

OCHN: Robo-signer redux: first the house, now the money

Fannie Mae attempts collection on old bad debts, which were often associated with robo-signed foreclosures.

Many people borrowed money to buy a house and quit making payments. Lenders attempted to foreclose on these properties and found the volume overwhelming and their bubble-era paperwork...
Robo-signer redux: first the house, now the money

Wednesday, November 19, 2014

OCHN: Renters can acquire wealth as well as homeowners

Renters who save and invest can acquire wealth just as well as homeowners who rely on their house as their biggest asset.

Over the long term, home ownership is superior to renting because homeowners fix their housing costs whereas renters pay an ever-increasing housing cost. In fact, I believe...
Renters can acquire wealth as well as homeowners

Tuesday, November 18, 2014

Mortgage Refinance: Credit Rating Agencies and the Secondary Mortgage Market

Credit rating and analysis of collateralized debt obligations and all structured finance products are integral to the smooth function of the secondary market for mortgage loans. A credit rating agency is a company that analyzes issuers of debt and debt-like securities and gives them an overall...
Credit Rating Agencies and the Secondary Mortgage Market

Mortgage Foreclosure: The bearish case for another leg down in housing

It’s a difficult time to be a housing bear. The chorus of cheerleaders in the financial media are keen to report on the supposed strength in housing, and locally prices are going straight up. Given those realities, are the rantings and ravings of housing bears just noise to be ignored?...
The bearish case for another leg down in housing

OCHN: With the foreclosure crisis past, why are foreclosures rising?

The financial media perpetuated the fantasy that the foreclosure crisis is past. Now, can-kicking ends and foreclosures rise once again.

The foreclosure crisis never ended, it was merely delayed by lender can-kicking. Bankers designed policies to promote loan modification over foreclosure, ...
With the foreclosure crisis past, why are foreclosures rising?

Monday, November 17, 2014

USA Foreclosure: Loanowners are in no hurry to list and sell their houses

I postulated that loanowners would begin listing their homes as soon as prices reached near-peak levels when they could get out without completing a short sale. Upon further reflection, I’ve concluded that we may not see many more MLS listings once loanowners are above water. We will...
Loanowners are in no hurry to list and sell their houses