Larry Roberts real estate writing blog: March 2015

Tuesday, March 31, 2015

Mortgage Foreclosure: OC housing market ratings and historic city values

California has a long history of real estate bubbles. Cycles of boom and bust range back to the gold rush in the nineteenth century. Over the last forty years, California has experienced three major real estate bubbles. Each of them had different causes and sprung forth from different...
OC housing market ratings and historic city values

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OCHN: The unjust enrichment of delinquent mortgage squatters

Tens of thousands of delinquent mortgage squatters may be awarded free housing if attorneys prevail with their statutory claims.

“In law, unjust enrichment is where one person is unjustly or by chance enriched at the expense of another, and an obligation to make restitution arises,...
The unjust enrichment of delinquent mortgage squatters

Monday, March 30, 2015

OCHN: Affordable housing in California requires ignoring the NIMBYs

Curbing the power of NIMBYs at local government is essential to providing more housing to alleviate shortages in California.

California house prices are high relative to the rest of the nation for two reasons, one fundamental, and one not. First, California wages are higher than most of the...
Affordable housing in California requires ignoring the NIMBYs

USA Foreclosure: When MLS inventory is tight, good deals are hard to find

Banks are slowing their acquisition of foreclosures to reduce their standing inventory of REO. They are also slowing the rate at which they are selling on the MLS and putting fewer and fewer homes for sale. Delinquent mortgage squatters are not taking up the slack and listing their homes as...
When MLS inventory is tight, good deals are hard to find

Renter News: 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

Sunday, March 29, 2015

USA Housing: We don"t need another homeowners advocacy group

What we probably really need a group promoting saving your money and not getting to races with the Joneses, but is a topic outside this blog. I’ll the article do most of the description of the new group. New group being formed to advocate for homeowners’ interests WASHINGTON — Do 75 ...
We don"t need another homeowners advocacy group

Saturday, March 28, 2015

Real Estate Ruin: Delinquent mortgage squatters predominate high-end properties

The housing bust began when subprime borrowers were unable to make payments on their 2/28 loans. Subprime borrowers have less resources than other borrowers, so when they experience any financial distress, they immediately implode. The collapse of subprime in 2007 led to a large number of...
Delinquent mortgage squatters predominate high-end properties

Friday, March 27, 2015

Debt Default: Loan modification entitlement will be rescinded as prices near the peak

Last year I pointed out that loan modifications are not an entitlement, banks don’t want to make them one. That’s not how borrowers see it. One of the moral hazard consequences of the housing bubble is a belief among borrowers that if they get in trouble, they will be given an opportunity t...
Loan modification entitlement will be rescinded as prices near the peak

Housing Market: Ponzis want another chance at free mortgage money

The desire for home ownership is stronger than ever. There are many emotional reasons to covet home ownership, and these are valid reasons to buy a house. However, over the last 30 years, the desire to own a home for family and security has been darkened and twisted by the desire to make...
Ponzis want another chance at free mortgage money

OCHN: Rising interest rates will harm ultra-high-end housing

Wealthy real estate investors will move their money out of ultra-high-end properties when better investment opportunities become available.

Rising mortgage rates hurt properties priced under $1.5 million directly because rising mortgage rates reduce the amount financed buyers can borrow and...
Rising interest rates will harm ultra-high-end housing

Thursday, March 26, 2015

OCHN: Ten Lessons learned from a real estate coach

Sometimes people who feel they have something to say communicate far more by their actions than their words.

Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, author and trainer with over 1,000 published articles and two best-selling real estate books. She recently wrote about...
Ten Lessons learned from a real estate coach

Wednesday, March 25, 2015

Housing Forecast: The cash value of real estate explained

Most people purchase real estate in California because they believe they will get rich. Few want to spend money to provide a home for their family as most expect their home to provide money for the family. Houses are the new wage earners, not through rental cashflow but through appreciation. ...
The cash value of real estate explained

Mortgage Refinance: Pent-up demand from boomerang buyers may not materialize

A big part of the bullish sentiment toward real estate is the believe that former owners who lost their houses in foreclosure will return in droves to mop up the supply of shadow inventory and push prices higher. But what if they don’t come back? What if they were so burned by the...
Pent-up demand from boomerang buyers may not materialize

OCHN: China"s real estate plunge accelerates

Chinese house prices fell considerably in February. Is this the first leg down in what will become an epic financial catastrophe?

The Chinese government and central bankers ran a Ponzi scheme to accelerate real estate development to help China catch up to the rest of the world. Unfortunately,...
China"s real estate plunge accelerates

Tuesday, March 24, 2015

Mortgage Foreclosure: Housing bubble"s defining delusion: real estate only goes up

The opening of The Great Housing Bubblesuccinctly described the real estate bubble: What is a Bubble? A financial bubble is a temporary situation where asset prices become elevated beyond any realistic fundamental valuations because the general public believes current pricing is justified by ...
Housing bubble"s defining delusion: real estate only goes up

OCHN: When will homebuilding really recover?

Assuming we don’t have another recession, homebuilding will take another two or three years to regain full strength.

I reported in 2012 that the same policies that served to eliminate distressed inventory from the MLS also served to revive homebuilding. Homebuilders provide must-sell...
When will homebuilding really recover?

Monday, March 23, 2015

USA Foreclosure: Was 2012 housing affordability an illusion?

Payment affordability is very high by historical standards. That means people who borrow most of the money to buy a home — which is about 70% of buyers — the cost of monthly payments is low relative to a borrowers income. But is this a good measure of affordability? A recent paper...
Was 2012 housing affordability an illusion?

Renter News: Delinquent mortgage squatters provided $50 billion economic stimulus

Recently I wrote about The real Ponzis and posers of Irvine. Peggy Tanous of the Real Housewives of OC made a conscious decision to get a boob job rather than pay her rent. She is not alone. The plastic surgeon undoubtedly appreciated the money, and any other provider of goods and services that...
Delinquent mortgage squatters provided $50 billion economic stimulus

OCHN: OC for-sale home inventory up 45%, sales down 3.6%

Rumors of a surging real estate market are greatly exaggerated.

I recently asked, Did the OC housing market come alive in February 2015? Anecdotal reports of surging buyer demand looks similar to the frenzy at the beginning of 2012 — or so local agents would like everyone to believe. The ...
OC for-sale home inventory up 45%, sales down 3.6%

Sunday, March 22, 2015

USA Housing: Titanic failure of American housing policy, home ownership rate hits 18-year low

The goals of US government housing policy are to increase in resale value of houses and maximize the home ownership rate. Buying a home is characterized as the best investment a middle-class family can make, and home ownership has become synonymous with the American Dream. During the early 00s,...
Titanic failure of American housing policy, home ownership rate hits 18-year low

Saturday, March 21, 2015

Real Estate Ruin: Moral hazard is central issue in housing bust

Many issues compete for our attention in the wake of the housing bust. In the sidebar of the blog is a list of topics of interest I write about frequently. However, the importance of these issues is not equal. Underlying most of them is the central problem of the housing bust: moral hazard....
Moral hazard is central issue in housing bust

Friday, March 20, 2015

Debt Default: Promoting financial innovation will result in future housing bubbles

With house prices bottoming, lenders are less risk adverse because they know rising prices reduces losses when loans go bad. As a result, lending standards will soon begin to loosen up on the fringes as lenders will take on marginal borrowers in an attempt to underwrite more loans. This is a...
Promoting financial innovation will result in future housing bubbles

OCHN: Some people destroy their homes to avoid foreclosure

What would you do if you were really, really angry at your bank?

Losing a home in foreclosure really makes some people angry. I realize that’s not exactly a news flash, but the manifestations of that anger are truly remarkable, particularly when you consider the borrower has some...
Some people destroy their homes to avoid foreclosure

Thursday, March 19, 2015

OCHN: Bidding wars are caused by underwater homes missing from MLS inventory

Bidding wars in an environment of weak demand are a sure sign of restricted inventory, a problem intentionally engineered by lenders.

When I wrote Must-sell shadow inventory has morphed into can’t-sell cloud inventory, I outlined how lenders removed inventory from the MLS by denying short sales ...
Bidding wars are caused by underwater homes missing from MLS inventory

Wednesday, March 18, 2015

Housing Forecast: Strategic default is merely collecting on home price protection insurance sold by lenders

Do loan owners really want to spend a decade or more under water? It will be difficult to send their children off to college when they make too much for their kids to get aid, but they haven’t saved anything because they are paying on a bloated mortgage. At some point, they may decide th...
Strategic default is merely collecting on home price protection insurance sold by lenders

Mortgage Refinance: Government and lender solutions focused 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 focused on loan modifications and short sales

Real Estate Ruin: Steering: why realtors love short sales and banks should shun them

I have written a few times about flopping: realtors who sell REO for under-market prices to favored buyers. (see Flopping: unscrupulous realtors deceive lender clients and profit from fraud, Floppers: realtors who profit by ripping off their lender clients, and most recently realtor flop in San...
Steering: why realtors love short sales and banks should shun them

OCHN: Flippers rip off lenders through short sales

Flippers find most of their below-market deals from short sales.

Ordinarily, the IRS considers forgiven debt a form of income, which it is. In 2007 Congress passed the Mortgage Foreclosure Debt Forgiveness Act which allowed borrowers who short sell their houses to avoid taxation on forgiven...
Flippers rip off lenders through short sales

Tuesday, March 17, 2015

Mortgage Foreclosure: Mostly through short sales, banks met 40% of settlement requirement by 2012

The settlement with the major banks dramatically altered their incentives. As part of the settlement, banks can count short sale losses toward their settlement amount. Foreclosures don’t count. So how did banks respond? They dramatically reduced their REO processing and focused on...
Mostly through short sales, banks met 40% of settlement requirement by 2012

OCHN: Will Millennials move to the suburbs and buy houses?

Millennials will enter the housing market as first-time homebuyers over the next several years, but likely in smaller numbers than previous generations.

The Millennial generation is larger than the Baby Boomer generation, and Millennials are entering the stage in their lifecycles when people...
Will Millennials move to the suburbs and buy houses?

Monday, March 16, 2015

USA Foreclosure: Banks cut standing REO inventories by reducing new acquisitions by 50% in 2012

Foreclosure Radar just released its report on May foreclosures. The change in bank’s behavior since the beginning of the year is becoming apparent. Lenders are determined to steadily reduce their standing REO inventory. At current liquidation rates, they will have cleared out the backlog...
Banks cut standing REO inventories by reducing new acquisitions by 50% in 2012

OCHN: House hunters must sacrifice quality to buy a house in 2015

Cloud inventory restrictions, rising house prices, and stagnant wages is forcing homebuyers to substitute downward in quality if they want to buy a house.

For the last three years, house prices have gone up in price, but the incomes of most buyers has not. This simple fact forces buyers to...
House hunters must sacrifice quality to buy a house in 2015

Sunday, March 15, 2015

OCHN: How to eliminate expensive FHA insurance fees

FHA mortgage insurance is expensive, and it’s difficult to get rid of.

We are at record low interest rates, so in all likelihood, mortgage rates will go higher from here. Although it may be possible to refinance later to eliminate the insurance premium, it may not be advantageous if...
How to eliminate expensive FHA insurance fees

Friday, March 13, 2015

Debt Default: The question for the newly above water borrower: to sell or not to sell

The increase of home values have pushed some 1.4 million underwater borrowers into positive equity territory. The Federal Reserve have engineered ultra low mortgage rates and banks have suppressed the shadow inventory into “cloud inventory‘” Meaning many homeowners will r...
The question for the newly above water borrower: to sell or not to sell

Housing Market: Future housing markets will be very interest rate sensitive

Economists who focus on larger trends, the so-called macro-economists, have rightly pointed out that housing markets in the past haven’t been very sensitive to fluctuations in interest rates. For example, during the 1970s, interest rates rose significantly, which should have caused house...
Future housing markets will be very interest rate sensitive

OCHN: Repeat foreclosures result from failed lender can-kicking

As loan modifications redefault, lenders will either modify the loans repeatedly, or they will finally foreclose and resolve the bad loan permanently.

When lenders first embarked on the charade of loan modifications to delay foreclosures, I didn’t believe they could effectively use this...
Repeat foreclosures result from failed lender can-kicking

Thursday, March 12, 2015

OCHN: Your neighbor"s debt creates your home equity

The more new buyers borrow to buy neighborhood properties, the more home values go up, and the more home equity appears out of the ether.

Where does home equity come from? Does it appear by magic, a gift of the appreciation fairy? Does it accumulate by discipline through paying down a mortgage?...
Your neighbor"s debt creates your home equity