Larry Roberts real estate writing blog: August 2015

Monday, August 31, 2015

USA Foreclosure: Foreclosures dominance of housing market projected to end in 2015 or 2016

At some point, the dodgy loans of the housing bubble will be recycled, delinquency rates will fall back to normal, the shadow inventory will be processed, and foreclosure rates will decline to the point they no longer dominate market sales and keep prices from rising. But when will that happen?...
Foreclosures dominance of housing market projected to end in 2015 or 2016

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Renter News: Higher loss severities will force lenders to resolve bad loans and liquidate REO

If banks could store time in a bottle, they could keep in on the shelf with their worthless paper until the market gives it life again. Unfortunately, rather than storing time in a bottle, the remaining equity capital in our banking system is leaking away through servicing costs like sand in an...
Higher loss severities will force lenders to resolve bad loans and liquidate REO

OCHN: Should homebuyers worry about a California housing bubble?

Resting on a foundation of stable loan products and backed by can-kicking loss mitigation practices, the risk of future real estate declines is low.

Real estate prices do not always go up. Prior to the housing bubble, and despite two previous bubbles in California where house prices went down,...
Should homebuyers worry about a California housing bubble?

Sunday, August 30, 2015

USA Housing: The minimum down payment should be at least 10%

The Dodd-Frank financial reform law required bureaucrats to draft rules for qualified residential mortgages. Loans that conform to the standards defined can be sold into the secondary mortgage market without restriction. Loans that do not conform require the lender to retain 5% of the capital...
The minimum down payment should be at least 10%

Saturday, August 29, 2015

Real Estate Ruin: Loan owners are $3.7 trillion underwater

The depth of American’s underwater mortgage debts is truly staggering.$3,700,000,000,000 That’s not the amount of debt outstanding, that is the amount Americans are underwater. Principal reductions are not going to make America whole again. Nobody, not even the US government can...
Loan owners are $3.7 trillion underwater

Friday, August 28, 2015

Debt Default: Is the 30-year fixed rate mortgage a risky product?

Is the 30-year fixed rate mortgage is just too risky of a product? Banks don’t like it because it creates asset-liability mismatch. It’s become a risky product for taxpayers because the mortgage underwriting process has become too easy and the risky loans are backed by the...
Is the 30-year fixed rate mortgage a risky product?

Housing Market: Now is the time to reform the home mortgage interest deduction

If you listen to the people who benefit most from government housing subsidies, there is never a good time to reduce or eliminate a source of government largess. If you’ve been reading this blog for very long, you have a finely tuned bullshit detector. Whenever you read the shrill cries of...
Now is the time to reform the home mortgage interest deduction

OCHN: Do realtors care if buyers sustain home ownership?

realtors lobby for the same foolish policies that caused the housing bubble and ended with millions of families losing their homes.

realtors care primarily about obtaining a large check from escrow after closing. What happens after that is not their concern. I assume most of them wish their...
Do realtors care if buyers sustain home ownership?

Thursday, August 27, 2015

Real Estate Loan: REO-to-rental is superior to principal forgiveness

REO-to-rental hedge funds are latest bogeymen touted by the political left. The evil Wall Street money grubbers are profiting from the disaster created by the Banksters. It’s a narrative Matt Taibi popularized, and now others are jumping on the bandwagon. The latest diatribe from the left...
REO-to-rental is superior to principal forgiveness

OCHN: Are today"s homebuyers counting on continued Chinese home purchases?

The flow of money into the US from China slowed recently. Is this an alarming new trend, or a temporary setback?

Stories about foreign buyers circulate periodically in the mainstream media. The plot is always the same: foreign buyers loaded with cash are buying houses as an investment. The...
Are today"s homebuyers counting on continued Chinese home purchases?

Wednesday, August 26, 2015

Housing Forecast: Real house prices will take 90 years to reach the peak absent another housing bubble

One of the more esoteric debates on the fundamental value of houses centers on whether or not houses appreciate faster than the overall rate of inflation. Nobody who isn’t kool aid intoxicated believes house prices rise much more than the level of inflation because intelligent people...
Real house prices will take 90 years to reach the peak absent another housing bubble

Mortgage Refinance: For the foreseeable future there won"t be a resurgence of the private mortgage industry

Home prices have been increasing, mortgage rates are at all time low, and the cost of ownership is below the cost of renting in some market places. So, why isn’t private banking lending money to borrowers? After the federal government took over Fannie Mae/Freddie Mac and then greatly e...
For the foreseeable future there won"t be a resurgence of the private mortgage industry

OCHN: Fed rate hike may lower mortgage rates

If increasing the federal funds rate causes inflation expectations to drop, mortgage rates may actually fall, causing further rises in home prices.

Mortgage interest rates are the single-most important factor determining the borrowing power of a potential house buyer. When rates are very low, a ...
Fed rate hike may lower mortgage rates

Tuesday, August 25, 2015

Mortgage Foreclosure: Despite record low mortgage rates, home sales volumes weakened

The spring rally is over. Every year prices and sales volumes increase from January through August, then they decline for the remainder of the year generally hitting bottom on the last business day in December. The pattern repeats every year, and it’s not new or surprising. realtors...
Despite record low mortgage rates, home sales volumes weakened

OCHN: Can a parking space be worth $1 million?

It’s difficult to imagine paying more for a single parking space than most houses are worth, but some urbanites do.

Like any form of real estate, the sales prices of parking stalls are subject to the laws of supply and demand. If the demand is high and the supply is low, bidders compete...
Can a parking space be worth $1 million?

Monday, August 24, 2015

USA Foreclosure: Bank of America had one million customers who missed at least two payments in 2012

CA – Foreclosure Outcomes Banks are slowing foreclosure rates yet again, and it isn’t because they are out of borrowers to foreclose on. With the settlement earlier this year, banks began to clear out their existing REO inventory, and they slowed foreclosures in the Southwest in...
Bank of America had one million customers who missed at least two payments in 2012

Renter News: Accelerated mortgage defaults likely choice to deleverage household debt

Households likely to deleverage debt with underwater mortgage defaults: Report by JON PRIOR — Monday, December 20th, 2010, 11:02 am Bank of America Merrill Lynch analysts said the most likely way households will deleverage roughly $1 trillion in excess debt is through the default of more...
Accelerated mortgage defaults likely choice to deleverage household debt

OCHN: Remembering the housing bubble 10 years later

The United States inflated a massive housing bubble in the early 00s that burst painfully and upset the housing and retirement plans of three generations.

Last year I wrote A Brief History of the Housing Bubble, and for anyone wanting a more detailed recap, you can download my 2008 book on the...
Remembering the housing bubble 10 years later

Sunday, August 23, 2015

USA Housing: What can we learn from Norway"s massive housing bubble?

During the 00’s many countries inflated massive housing bubbles. The readers of this blog are well acquainted with the issues surrounding the US housing bubble, but Spain, Great Britain, and Ireland, among others also inflated painfully deflating housing bubbles. Norway inflated a housing...
What can we learn from Norway"s massive housing bubble?

Saturday, August 22, 2015

Real Estate Ruin: Bank of America to lease homes to loan owners

It’s always better to get something from a house rather than nothing. Lenders finally figured this out. For the first five years of the housing bust, lenders preferred to allow delinquent borrowers to squat in the bank’s house without making any payments. Someone at BofA finally...
Bank of America to lease homes to loan owners

Friday, August 21, 2015

Debt Default: How might the home mortgage interest deduction be changed?

I recently opined that Now is the time to reform the home mortgage interest deduction. The need to reform this deduction is clear; it does nothing to boost the home ownership rate, it costs the government $70 billion a year, and it merely inflates home prices for high wage earners who count on...
How might the home mortgage interest deduction be changed?

Housing Market: Housing bubble 2.0: Is it different this time?

Because prices are rising so rapidly, particularly in California where kool aid intoxication is a cultural addiction, many people are wondering if we are inflating another housing bubble. My answer to that question may surprise you. No, we are not inflating a new housing bubble. It’s...
Housing bubble 2.0: Is it different this time?

OCHN: Living in dodgy motels is one step above homelessness

The housing ladder has many levels, and the first step above homelessness and shelter life is to live in cheap and often unsafe motels.

Everyone wants to move up to better housing accommodations. Despite a few frugal outliers, most people spend most of their lives enjoying the highest quality...
Living in dodgy motels is one step above homelessness

Thursday, August 20, 2015

Real Estate Loan: Will HELOC abuse be as prevalent this time around?

HELOCs are making a comeback. Banks are offering those willing to become loanowners free money at very low rates, so borrowers are taking the money. Last time around, this was an open invitation to theft as borrowers extracted over a trillion dollars in mortgage equity withdrawal which they...
Will HELOC abuse be as prevalent this time around?

OCHN: When will everything be back to normal in housing?

The lingering effects of the housing bust still distort market action eight years after the crash.

One thing most real estate market observers do agree on is that our current market conditions are not normal. But what is a “normal” market anyway?
A normal market would be characterized by a ste...
When will everything be back to normal in housing?

Wednesday, August 19, 2015

Housing Forecast: The housing bottom may persist for several more years

Economists particularly enjoy calling the inflection points in the market. Much fanfare surrounded Calculated Risk’s calling the bottom back in March. He may or may not be proven correct.The data on falling inventory certainly suggested a bottom was in the making, and even if he is later...
The housing bottom may persist for several more years

Mortgage Refinance: Man refuses to sell house he couldn"t afford, complains about foreclosure

We’ve become so accustomed to foreclosures on underwater homes that we forget that’s not how it used to be. Foreclosures have always been part of the system, and prior to the housing bust, foreclosures happened to people who had equity in their properties.Foreclosures happen because...
Man refuses to sell house he couldn"t afford, complains about foreclosure

OCHN: Do sky-high rents disguise a new housing bubble?

Inflated rents portend inflated house prices. If rents are at unsustainably high valuations, then so are house prices.

Historically, rent and income were bound in a tight relationship because renters generally pay the bills out of current income rather than savings. If income rises, renters use...
Do sky-high rents disguise a new housing bubble?

Tuesday, August 18, 2015

Mortgage Foreclosure: Future home prices? Opinions vary widely

When it comes to predicting future home prices, nobody really has a clue. It’s very difficult to predict when the market is so heavily manipulated and the erratic decisions of a few key players can completely change the outcome. For example, the federal reserve controls the interest rate...
Future home prices? Opinions vary widely

OCHN: Federal reserve underestimates sensitivity of housing to mortgage rates

The federal reserve couldn’t have prevented the housing bubble and bust through interest-rate policy alone.

In response to the housing bubble and bust, Congress passed the Dodd-Frank financial reform. These new mortgage regulations will prevent future housing bubbles by effectively...
Federal reserve underestimates sensitivity of housing to mortgage rates

Monday, August 17, 2015

USA Foreclosure: OC Shadow inventory: What it really is and how large it really was in 2012

There is no commonly accepted definition of shadow inventory. This creates a great deal of confusion, and as a result, many casual observers dismiss it as an unreal bogeyman. It’s out of sight, so it’s out of mind. CoreLogic has the most widely accepted definition of shadow...
OC Shadow inventory: What it really is and how large it really was in 2012

Renter News: The fallacy of a painless housing market recovery

Most people try to avoid pain, physical, emotional, financial. Anyone focused on playing in the California housing market Ponzi scheme, there is only one painless feat: pass the debt off to another person. Give them your seat and let them own the mortgage. Think about the windfall received by...
The fallacy of a painless housing market recovery

OCHN: Eight intractable problems in housing today

Many of today’s problems in housing result from policy changes and emergency measures instituted to minimize the damage from previous housing bubble.

House prices can only rise with wages on a sustainable basis. While policymakers can tamper with mortgage rates to influence affordability...
Eight intractable problems in housing today

Sunday, August 16, 2015

USA Housing: A pullback in the housing rally, or the peak of another housing bubble?

The housing rally of 2013 is over. We are past the peak selling season, and although the year-over-year numbers will still show gains, we are entering the time of the year when seasonal factors drag prices and sales volumes down. If we were in a normal market, we would see price declines over...
A pullback in the housing rally, or the peak of another housing bubble?

Saturday, August 15, 2015

Real Estate Ruin: Mortgage deleveraging to continue in 2012

The amend-pretend-extend policy of lenders is designed to avoid recognizing losses. They hope to replace their old bad loans with good new ones. So far they have been successful at keeping this bogus debt on their books. The result is millions of delinquent borrowers in shadow inventory. Fannie...
Mortgage deleveraging to continue in 2012