Wednesday, May 30, 2007

You'll Have A Sub-Prime Loan - And Like It!

CNN Money uncovers a less-than-startling fact about the real estate industry and the intelligence level of many of it's consumers over the last 9 years. Apparently thousands of Americans families who purchased homes and would have otherwise qualified for prime mortgage loans, were sold riskier, more expensive, sub-prime mortgage loans instead.

Was it the greedy, unregulated mortgage brokers' fault?
Was it because English was not the first language to the homebuyer?
Was it because the pigment of the buyers skin had more melanin in it?
Was it because the vampiric, self-serving Century 21 realtor incessantly urged the homebuyer: "We can do this!"

Or was it because the American homebuyer, when it comes to money, is financially illiterate and unable to balance instant gratification with delayed gratification inside his/her cretinous gord?
My vote goes to the latter.

Saturday, May 26, 2007

OC Realtor: "Great time to buy in Rancho Cucamonga"

The real estate industry, by it's corrupt nature, is in dire need of reform. Consumers of real estate in the United States of America need more information and greater protection.

What Americans must put up with today is essentially a sales organization, call the N.A.R. or National Association of Realtors, which has asserted itself to be something it is not, and can never be: an objective, informative, consumer-focused industry trade organization that serves American consumers with constructive, unaltered market data, historical sales data and pricing analyses. Above all consumers of real estate need to be reassured that licensed standards of professional business ethics are being enforced.

This can easily be accomplished, just not by a group of salespeople, which is what the N.A.R. is. It's not possible by salespeople because of the obvious conflict of interest inherent in the business exchange. Real estate sales people wants to sell and want to earn commission on the sale. How can this be balanced with the consumer need for an unbiased, representative "trusted advisor" role? Many realtors don't ever realize the precarious position they occupy when serving buyers and sellers of real estate.

It can't be balanced.

At a time of decline in the American real estate market from California to Connecticut, one would expect the realtor sales pitch bullshit and self-serving lies to stop.

Instead the bullshit never stops. And the lies never stop.

Now is always a "great time to buy". And just why is it always a great time to buy? Well, mainly because American realtors have mouths to feed and bills to pay. That's why.

If you're a prospective homebuyer with a small family, Ms. Krista-Leanne Yates of Alcco Realty instructs you to get off the fence, turn away from the still high home prices of Orange County and purchase a home based more inland in Rancho Cucamonga, CA:

Yates continues, 'By searching for Rancho Cucamonga CA real estate young families can find properties such as a 2 bedroom, 2 bathroom single story home with a mountain view on a 7,150 square foot lot for only $400,000.-
Nice lot size, but Ms. Yates, in case you haven't looked on Redfin, young families can (potentially) buy 2 bed, 2 bath single story homes in OC now for $450K and sometimes less - with a very distant Saddleback mountain view. The median family income in Rancho is abut $69,640 per annum. Ms. Yates is so focused on the well-being and customer satisfaction of young families (read: driven to earn sales commissions) that she recommends they leverage themselves by 7 times their gross income to purchase a home that either is declining, or very likely will decline, in value in the coming months. See local home sales decline in lower paragraph.

Jay Yerman, First Time Home Buyer Specialist with T.N.T. Lending in Rancho Cucamonga adds 'Payments on this home can be as low as $1960 a month with the right credit driven program offering 100% financing, no money down.

"T.N.T. Lending"? You gotta be kidding me. That's almost as bad as the Remax Realtors Hotair Balloon logo.

Hey, let's all stop what we're doing and listen to what T.N.T. Lending has to tell us about the "right credit driven program with 100% financing, no money down". I mean, we can all rely on their advice. Sounds super-duper! Where do we sign? And where is that ominous, horror movie background music coming from?

Before house hunting it is advisable to obtain a free mortgage pre-approval letter. This will allow real estate agents to only show properties in the specific price range of the maximum mortgage.
Of the maximum mortgage? Listen everybody, I'm going to show you only those houses that earn me the largest commission check and leverage you to the f&*%ing hilt! Come on! Let's go!

'Sellers also take an offer more seriously if the home mortgage loan is already pre-approved,- concludes Yerman.
Right. With that kind of local median income in Rancho Cucamonga, pre-approval is more important now than ever before, assuming T.N.T. Lending and their ilk have tightened lending standards. Ms. Yates, why do you care about what the seller "takes seriously"? Whose side are you on? Here's a tip: today potential buyers take sellers more seriously when they finally come down from their ivory towers long enough to realize the glory days are over, the pool of qualified buyers is dwindling and leveraging a property to live in is not a sure-fire way to beat inflation anymore.

Yates concludes, 'The latest housing figures indicate that sales in the Inland Empire fell 47 percent in March from the same month a year earlier. Inland Empire prices still are a bargain compared with coastal areas such as Orange County and we expect to see a movement of buyers moving inland.-
Uhhh....Ms. Yates, if sales in the Rancho area are declining year-to-date by 47%, then why is now the great time to buy? Value can and likely will plummet even further. Why not wait a few more months so that the young families you feign to care about so much won't have to leverage themselves to such a massive extent?

There are some good realtors out there.

But they are few and very far between. Experience is golden. I recommend working with realtors who have survived market crashes before in you area. I wouldn't trust any who have 8 years experience or less. Those that have really "been there" are in this career for the long haul. They will likely listen carefully to you, and will not push you into doing something that doesn't make sense. Listen very carefully what a realtor or realtor organization says. Make sure that they represent your wants and needs at all times, and that they really are knowledgeable of the market.

Wednesday, May 23, 2007

Falling Behind On That Mortgage? Charge It!

Anything and everything is possible in the good ole' US of A! We can be sold anything to make it go away and all better.

If you're late with your mortgage payments, have no fear. American Express's mortgage payment option* is here for the low entry fee of $395.00!

Now, just don't be late with your credit card payment there, chief!

*Use of American Express credit card to meet monthly mortgage payments and prevent foreclosure may cause diarrhea, gastrointestinal cramps, headaches, sleeplessness, difficulty sleeping, difficulty waking up, delusional behavior, mild to severe mood swings, obsessive-compulsive behavior, grinding teeth, swearing, public outburts, lack of attention, snoring, erectile dysfunction, tooth sensitivity and swollen glands. Contact a physician and financial advisor before using American Express. Use only as directed.

NAR: "Yes, housing market looks, smells and tastes like.."

..shit. Only it's NOT shit! It's, umm, uh.... a chocolate birthday cake!

Yeah, that's it! Who doesn't just love chocolate cake?!!!"

Well, John Burns Real Estate Consulting and Mr. Bernanke at the Fed respectfully disagree with the NAR's assessment.

Mr. Burns

Mr. Bernanke

The NAR numbers don't add up. According to the National Association of Realtors, California home sales declined only slightly in April 2007 by 24%. Or did it really decline 37%? The discrepancies are starting to make the math teachers at the Fed a little angry.

NAR stooges must be asking: "Now where the hell did that 37% number come from?"

Look NAR members, if you aren't royally embarrassed by now, then you should be.

If you're going to fudge the numbers to mislead the public to protect your incomes, at least have the common sense to bribe the other complimentary industries to report numbers that at least jive with yours. Otherwise the lies spiral out of control. Come on! You know the drill. Just like recommending clients to that special "mortgage lender friend" of yours. Right hand washes the left. Grease the skids. Nudge, nudge, wink, wink, know what I mean?

This must really suck. On the one hand Realtors have to try and continue to assert the role of the real estate industry's can't-survive-without-us "trusted advisor". And yes, we've all seen the new commercials. Ughh! I have 4 words for the new REALTOR commercials out there year-to-date:

"Wrong, do it again".

Then on the other hand, you must manufacturer reports and lie through your teeth about actual home sale numbers to prevent a complete deadpan response from prospective buyers and investors.

It's not easy to do either anymore when your organization no longer maintains complete control of the "proprietary housing data", MLS services, and real estate industry statistics. Your counterparts in the homebuilding sector aren't exactly putting forth stats that compliment your findings.

What is a sales commission only-driven organization to do now?

Monday, May 21, 2007

OC Unemployment Increased Slightly in April

The Orange County Employment Development Department recorded a slight uptick in unemployment for the county, rising from 3.4% in the month of March to 3.5% in April 2007.
According to EDD stats the labour pool of OC (all jobs) is 1.63 million. Out of that number 1.57 million are employed. Approximately 56,300 don't have work.
April 2007's rate of 3.5% signifies a 0.3% increase in unemployment over April 2006, when unemployment was just 3.2%.

California's statewide unemployment also increased to 5.1% in April, compared to 4.8% unemployment in March 2007 - this despite the addition of over 7,400 nonfarm jobs in April.

On the face of it, not an earth-shattering increase. But it is mid May. The OC economy is considered one of the strongest in the state of California, if not the world. Do these minor increases in unemployment indicate the beginning of something far more ominous brewing in the OC economy for 2007? May's unemployment numbers will be critical. Typically April and May have been extremely robust months for employment figures even when one seasonally adjusts the employment stats.

Irvinerenter: "The Day the Market Died"

The Day the Music Died by Irvinerenter. A must read for those of you observing the housing market implosion, whether you are located in Southern California, or anywhere else in the United States of America.

California Association of Realtors Encouraging Interest Rate Buy-Downs

If California realtors haven't started already, they soon will.

I mean, trying to convince California homedebtors that the "good times are over" is hard work. And not a little bit embarrassing, since over the last 7 years it has been realtors themselves doing cheerleader splits on the front lawn everytime a house sold for 15% more than the original asking price.

Now with slowing housing market, the tables have turned slightly. A realtor's work might require a little more effort. It might even become more dangerous. Driving over to tell home sellers that they should seriously consider "dropping their drawers" on sale price in order to flip might even precipitate a smack in the mouth, or worse a pickaxe in the hood of that precious Audi A4!

We wouldn't want that.

So let's look at some other options.

The median prospective homebuyer in Orange County isn't rich. He or she is probably pulling down somewhere between $75,000 and maybe $80,000 per annum gross. So when this prospective homebuying pauper comes knocking on the door of the Open House, why not help a brother out by paying down down his interest rate over the first three years of his mortgage loan? There's the 3-2-1 interest rate buy-down, for example - sort of like bringing the "teaser rate" mortgage back from the dead! Where would we be without that concept of "get in now, while you still can!" these past 7 years!

With the interest rate buy-down sales tactic, homedebtors might even help widen the pool of prospective buyers to help them qualify for home financing in the first place.

While the interest rate buy-down solution is expensive to the seller inititially, it is financially more favorable than just slashing the home sale price.

Consider yourselves effectively warned.

With love from your local Realtor(R) and coming to a desperate homedebtor near you: Interest Rate Buy-Downs!

Say no to low prices!

Home Depot, Lowe's Sucker Punched by Lethargic Housing Market

The net profits of American home improvement chain store market leader Home Depot fell 30% in Q1. Lowe's net profit declined 12% during the same period.

It's not because of the housing market crash, people!

Come on! Stop the insane negativity already!

Poor weather in the first quarter significantly affected these declines!

Thursday, May 17, 2007

Illegal Immigration: Americans Get It Wrong, Again

Illegal immigration is not in and of itself responsible for the housing collapse we are all witnessing around the Divided States of America, but it is one of the key ingredients to the perfect storm.

What we see today - illegal immigrants crossing the U.S./Mexican border by the thousands - is a byproduct of 15 years of American apathy - the complete and utter failure of American citizens to recognize the importance of border security and strict enforcement of existing immigration laws has resulted in the illegal entry and overstay of over 11 million illegal immigrants.

Today the U.S. Congress has come to some sort of "deal" which would forgive illegal immigrants of their felony, given them a second chance to make things right, and provide them a free and clear path to a work permit, tax ID number and eventual American citizenship.

Many Americans today are outraged by this. Why? Because "this is completely unfair". "We now have to take on all of these illegals!". Some of us Americans are pounding the table blaming the "liberals" or the "conservatives".

I call it complete bullshit.

The new rule around the polarized, Divided States of America should now be this:

You can't label anyone "liberal" or "conservative" unless you include the word "about" followed by a named "issue" (crime, prostitution, gas mileage regulations, illegal immigration, abortion, the patriot act, oil exporation in wildlife reserves, gay marriage, etc.). For the record, Republicans and Democrats are equally at fault for failing to secure the nations border and enforce immigration laws already on the books.

The truth is, my politically sedentary American friends, we have been "taking on" illegal immigrants for over 20 years. Even after 9/11 more illegal immigrants have entered the country than ever before. The governments we have elected into power have done nothing - NOTHING - to impede it. George Bush Sr., Bill Clinton, George Bush Jr., take your pick, all providing incompetent, ineffective leadership on the issue.

Today, May 17th, 2007, as many as 5,000 illegal migrants from Mexico will have crossed the Mexican border illegally into Texas, New Mexico, Arizona and California.

Only now, that the boat is chock full of 11 million illegals, do the complaints begin? Nice.

Where were you people 3 years ago? 5 years ago? 10 years ago? You said nothing then.

By doing and saying nothing, you made your bed.

Time to lie down and go "nighty night" in it and enjoy the relaxing fruits of your apathy.

Yes, it is unfair. Yes, thousands of legal applicants must continue to wait in long lines in Hong Kong, Berlin, Mexico City, Cuidad Juarez, Ottawa and witness the "cue jumping" of unapologetic, innovative illegals who didn't followed the rules and have the balls to assert that America was theirs all along.

Unfair? Definitely.

But life is not fair. The U.S. Customs and Immigration Service and the Customs & Border Patrol are doing their best, but still failing miserably to protect us and enforce immigration laws. They have been perpetually understaffed for 15 straight years. Millions of valid cases are rejected unfairly every day on minor technicalities. Millions of cases are granted every day unfairly on minor technicalities.

What do Americans want? A perfect system? Yeah, right. Shouldn't you be watching American Idol right now?

The system is not perfect. The idea of rounding up all illegals, stuffing them on planes and deporting entire extended families is unrealistic. I agree it should have been done. But not now. It's far too late. The boat is full and we are too far out at sea to return back to shore.

Illegal residents now must pay a fine, return to their country of origin, and re-enter legally into the United States. They must receive a legal work permit - and hence a taxpayer ID number. They will have to pay income tax like everyone else, or face federal prosecution - like everyone else - and worse, certain deportation.

The solution is not fair, but it's better than the alternative or what we have now.

All of this vitriol about the unfairness and congressional incompetence has caused critics to turn their attention away from the biggest issue of all. It is another example of Americans blinded by anger and failing to critically analyze and understand the problem underlying illegal immigration.

The border is still not secure.

I repeat, the border remains wide-freaking-open.


Right now.

And tomorrow too.

And the next day. And the next day. And the next..

We (our elected government) have decided on amnesty first, and securing the border second, as our national borders leak profusely.

That, more than anything, should outrage American citizens, not whether or not Jose Gonzalez gets publicly caned, fined and deported.

Even the American news media has missed the point and is talking about "amnesty" rather than "border security".

We are blind.

Congress has placed more importance and immediacy on amnesty than the root cause of the problem, which is a leaky frontier with Mexico, Canada and all U.S. major ports.

This must be addressed first and with the greatest concentration of effort, funding, strategic thinking and vigor.

Otherwise, it is not only an unfair "deal", it is 1986 all over again - just another politically expedient bandaid created by our derelict, elected tenants in Washington.

Wednesday, May 16, 2007

Mortgage Fraud: California ranked 2nd in the nation

Florida has secured the pole position in the United States of America when it comes to most cases of mortgage fraud. Not a big surprise there. I mean, forget the hurricanes, who wouldn't want to leave near Disneyworld, Cape Canaveral, Tampa, alligators, elderly entitlees, golf courses, humid 90 degree weather, and a slew of Elian Gonzalez fans, not to mention very affordable housing?

California comes in a distant second place. Again, no big surprise. Everyone wants to live here. The weather is fantastic, a little traffic, a little unattentive driving, might be a little late for work - but nothing bad.

ABC's Channel 7 news finally reports on the 214% increase in mortgage fraud cases in California, and the staggering 2,800% increase in mortgage fraud cases in the Golden State since 1996.

The stellar reporters of ABC news in Orange County crack another big case yet again! I mean these guys are just so on top of what's happening.
I'm just curious. Was it when the number of cases grew to the 2,000% threshhold that the story finally became newsworthy?

Wow! We're all just really impressed here, let me tell you!

Now, turn it back to American Idol!

Bipolar World of OC Housing Market Reporting

The first, a sign of improvement, a message of sunny days and summer fun ahead: Bank notifications of default declined by 13% from March 2007 to April 2007.

The other message, a horrific crash of twisted wreckage so mind-numbing you just can't look away: Home foreclosures in OC rose 129% between April '06 and April '07.

Welcome to Orange County California!

REIC still looking for "Glenngarry leads"

If you haven't seen the film Glenngarry Glenn Ross by David Mamet, then rent it.

You will discover the origins of famous American sales mantras like "coffee is for closers only" and "A.B.C. - Always Be Closing".

The film is a graphic metaphor of how high-stakes sales, high-pressure management styles, intimidation, deceptive sales tactics, verbal abuse and baseball bats can all come together to form something distinctly American.

Glenngarry Glenn Ross.

"These are the new leads. These are the Glengarry leads. And to you, they're
gold. And you don't get them. Because to give them to you is just throwing them
away. They're for closers."

Redfin CEO Kelman: REIC "Marketing Itself Off A Cliff"

The manifestation of online real estate search engines, sales and buying tools with links to all that the MLS previously afforded real estate consumers - and much more is scaring the shit out of certain individuals who have chosen the profession of home realtor.

Realtors mistakenly view themselves as the most motivated party to sell your home or help you buy a home.

This assumption is incorrect.

They are NOT the most motivated to do either. They are motivated to make sales commissions which are directly proportional to the sale price of a home.

The truth is that home sellers and home buyers are more motivated. And they no longer need realtors in the same way they did before to intermediate on their behalf. If 80% of prospective homeowners are no longer looking at newspaper ads, no longer phoning up Joannie Loves Chachi Realty Group, and prefer to research home information, sales history, prices and neighborhood data online, including crime and school district statistics, then the realtors job and importance suddenly becomes less significant.

Realtors might be tempted to assert that only they "understand your needs" when it comes to buying or selling a home. But those days are over. A computer really can perform the light lifting regarding the research.

So why are realtors necessary? What tasks or duties of the home selling and home buying process make them so indispensable?

Perhaps there are certain duties and legal paperwork items to which realtors have traditionally attended.

Glenn Kelman, CEO of Redfin offers the following in the Ad Age article:

"The most motivated advertiser is the seller and millions of homeowners are proactive now. If people can see a home without an agent, where does that leave the industry? It's kind of marketing itself off a cliff."

Right off a cliff, indeed. Sometimes CEOs like to use the damnedest of metaphors to get their point across.

N.A.R.: Let's Put A Happy Face on the Housing Market

Frank Sibley, N.A.R. VP of Communications & Conventions

The ad campaign of the National Association of Realtors (N.A.R.) serves exactly that - members of the N.A.R.

Not consumers.

Realtors shouted in unison: "We want more advertising".

The N.A.R. organization has responded.

Advertising Age reports that according to Frank Sibley, the N.A.R.'s Senior Vice President of Communications, N.A.R. members (realtors) themselves voted to hike their own association dues by $5.00 to a total of $30.00 in order to fund the new ad campaign, which would extol the virtues using Realtors over licensed brokers, and continue to flood the television airways with the notion that "Now is a great time to buy" real estate.

The N.A.R. will be increasing advertising spend by 60% to $40 million in 2007.

But will this be enough to change the sales volume stats in the housing market?

Not likely.

One must consider Brad Inman's comments in the AdAge article:
Realtors "are trying to counteract that tipping of consumer
confidence," he said. "None of those ad campaigns is going to counteract a bad market."
As a trade association, "A lot of what [the NAR does] is to
please its members as opposed to doing what is really going to persuade the public,"
Mr. Inman added.

86 The Orange County Housing Market? Better to be patient.

The OC register reported this week that median Lake Forest home sale prices fell 19.5% when comparing YTD April 2007 with April 2006. This Lake Forest statistic of median home prices smashes the Orange County-wide stat of just a .2% price decline for the same period.

Total home sales in Lake Forest, California declined 24.7% in April.

Not a good time to buy. Not a good time to be owing on an asset with an increased likelihood of a future downward trend.

So should you "86" OC housing off your future "to-do" list. Perhaps, but not necessarily long term.

There can be no question anymore that a real estate recession is underway here in Lake Forest. But if more people would just stop what they're naysaying and listen closely to realtors and Mr. Yun of the N.A.R. , then perhaps the Orange County weather might eventually save the day and bring all of those sideline prospective buyers out of the wood work, with their front pockets lined with rainy-day cash, with FICO scores hovering in the stratosphere, and of course, W2's with above-median incomes - all of them patiently waiting to re-enter the candy store of creative California mortage loans to re-open.

Only I'm not too sure that those mortgage candy stores will ever re-open.

Yeah, it looks great, doesn't it? But most can't afford to partake.
So unless you're rich kid, beat it!

Friday, May 11, 2007

Happy Mother's Day Weekend Everyone!

Mother's Day is Sunday, so remember that special woman who delivered you to the planet, and all of the other special mothers in your life!

Thursday, May 10, 2007

"A Great Time To Buy!"

Agent: "Just Give Me 29 Days"

With Lake Forest, California single family homes selling at around $675,000 a pop or more, how can it come to this?

From Craigslist:

Get Your Home Sold As Quick As Possible!
Reply to:

Date: 2007-05-09, 1:02PM PDT

Call---800-673-9304 Ext 1010----for a free 24hr recorded message on "How You Can Sell Your Home In 29 Days or Get it Sold Free!....Guaranteed!!"


This 29 day or free plan applies to the following cities in Orange County: Aliso Viejo, Anaheim, Anaheim Hills, Brea, Buena Park, Corona Del Mar, Costa Mesa, Coto De Caza, Cypress, Dana Point, Fountain Valley, Fullerton, Garden Grove, Huntington Beach, Irvine, La Habra, La Palma, Laguna Beach, Laguna Hills, Laguna Woods, Lake Forest, Los Alamitos, Midway City, Mission Viejo, Ladera Ranch, Newport Beach, Newport Coast, North Tustin, Orange, Orange Park Acres, Placentia, Rancho Santa Margarita, Rossmoor, San Clemente, San Juan Capistrano, Santa Ana, Santa Ana Heights, Villa Park, Stanton, Sunset Beach, Surfside, Tustin, Yorba Linda,Westminster, and Seal Beach - If you are In Corona, or Riverside County, then please contact us directly to see how we can help you get your home sold.
Location: Orange County
it's NOT ok to contact this poster with services or other commercial interests

PostingID: 327649971

Wednesday, May 9, 2007

Got It Under Control?

Most Americans simply don't. Your average, everyday red, white and blue American citizen has over $9,000.00 of ongoing credit card debt.

We've probably all heard about the idea of a "cashless society". No need for bills. Charge it to a card. Swipe it or just wave it in front of a contactless smart card reader. Ease. Convenience. Speed.

But is the United States of America - the absolute worst moneysavers on the face of the planet -ready and willing to reverse the tables and move to a "cash only" way of life?

Some have already made this personal choice, because they took inventory of their financial situation and recognized an interesting weakness: a lack of self-control.

Dana Capital Update

As a follow up to the April 27th story on The Rancid Truth blog regarding Irvine, California's own Dana Capital Group, Orange County Register's investigator and mortgage industry blogger Mathew Padilla's now reports that Dana Capital has decided to close its doors yesterday, May 8th, 2007. The company leaves behind regulatory intrigue, unpaid fines and an army of angry brokers. All of it far too much for the CEO to rectify.

And so another big mortgage lender bites the dust.

So What Do Lake Forest Realtors Say About The Market?

Since some little bird told me that real estate is local, let's check in with Realty Times and 4 key, local real estate agents for the local market conditions in Lake Forest, California (Orange County) with my comments in blue text:

REALTOR No. 1: Ms. Vicki Lloyd, Realtor with an MBA
"Since we are now into our "normal" buying and selling season, it is not surprising that more listings are coming on the market, but someone forgot to invite the buyers to come out of hiding! The decline in the total escrow number includes both closed sales and cancellations. I have noticed a much higher than average rate of properties coming "back on the market" due to buyers failing to qualify for their financing. With the recent tightening of lending standards and meltdown of the subprime mortgage market, fewer buyers are able to qualify for financing"

Active - 148@ $789,650 average list ($396/sqft)

Range from $574,000 to $1,890,000

In Escrow - 31 @ $803,500 average list ($383/sqft)

Range from $579,000 to $2,500,000

Last 30 days Closed - 15 @ $686,600 ($372/sqft)

Range from $569,000 to $899,000

Taken off market (expired, cancelled or withdrawn) - 23

Probably the most informative realtor comment on local market conditions I have read before. No bull-shit or fluff. Things are slowing down and Ms. Lloyd demonstrates the cajones to call it like she sees it. That kind of candor earns respect and is appreciated. Constructive data on the numbers - prices, volume, median levels, etc. - this lady appears to know her shit. She has the confidence gene that helps certain realtors survive shit storms.
Nice, open acknowledgement about the subprime fiasco too and the impact of basically eradicating her Lake Forest customer base. Afterall, most of us unimportant Lake Forest residents on the income bell curve only pull down$75,000 per year max. Not exactly what you'd call "conducive to the profile" of purchasing any of the 148 homes currently on Ms. Lloyd's active sales list. Unless, of course, you like leveraging yourself 10 times your annual gross income. One would have to be a financial moron to do so.

REALTOR No. 2: Mr. John Daniel ("doctor of real estate" and tri-athlon athlete)
"..many of the properties are still dated. And if your are trying to sell, this weak market is going to hurt you. For the near future, buyers have an opportunity to negotiate hard as the Lake Forest market is very slow. But eventually, I believe they will benefit greatly from their secret weapon. The irvine Great park will be on the northern boarder of Lake Forest. This premeir park should be one of the best in the country. And since the irvine company and developers are damanding increadibly high prices on high density new homes surround the park, Lake Forest should directly beneficiary.."

Mr. Daniel too acknowledges a slow market and more of a buyer's market status in Lake Forest. He even issues a stark warning that the market "can hurt you" right now. I liked that. Then he loses me. We are led to believe that a new theme park in Irvine and the ongoing land development of the old El Toro Marine Base is going to cause home values to rise again. Well, "Doctor", not unless median incomes in Lake Forest increase by a factor of 10, or median home prices plummet in the same fashion. And not unless mortgage lenders see a greenlight to issue ARM and interest-only loans to anybody on the street that has a pulse. Mr. Daniels provides no acknowledgement as to the possible causes for the weak market. It's just weak, OK! He said it was weak! Are you gonna just stand there, or are you gonna buy a home from Mr. Daniels! Jesus Christ! You people and your questions, questions, questions!!

REALTOR No. 3: Ms. Ginger Bohland-Aliotta
"Look at the weather around the country... who wouldn't want to live here! We have plenty of inventory, giving Buyer's more to choose from. Homes are sitting on the market longer these days, but we are not seeing drastic price reductions. Those that are priced right and are in good condtion ARE selling. Now is not the time to "flip" properties, but rather to focus on building equity and enjoy the tax benefits of home ownership. Densely populated Orange County is still one of the fastest growing counties in the nation, a great place to live and a great place to invest in your future"

Man, I sure wish somebody would do something to stop all of these house flippers here in Lake Forest, California. I mean, they are an out-of-control menace!
OH, there! Wow! Thank God! Ms. Bohland-Aliotta just declared that now is NOT the time to "flip" properties!

Really? We shouldn't be flipping houses? No flipping of houses? Because I'll flip houses anyway I can flip them!

And don't forget the weather. Man, if I could only charge 6% of every realtor in OC who has ever used that line....

Somehow I feel less informed after reading Ms. Bohland-Aliotta's opinion of the local market conditions. Some realtors possess that mysterious power.

REALTOR No. 4: Ms. Victoria Craig Robles
"The median price of all homes in Orange County recorded in February, 2007 was $620,000, slightly lower than one year ago. The median price in February of Lake Forest homes was $610,000. Total sales in February dropped to 45 homes, down by 36.6% compared with one year ago. The market is favoring buyers at this time as inventory is higher than normal and interest rates remain low."

After reading Ms. Craig Robles' viewpoint on the Lake Forest market, I'm now more convinced than ever before that the California Association of Realtors doesn't license people at all.
Can we be a little more vague to prospective buyers as to why it's a buyers market, why inventory is higher than normal, and why total sales are down by a whopping 37%?
Thank you at the very least for not making any of us even a little bit more informed, and for not saying something completely stupid like "It's a great time to buy".

Let's search for a home in Lake Forest, California - Part I

I'm currently renting a 4 bedroom, 2.5 bathroom home in Lake Forest, California.

The reasons I'm renting are pretty logical and obvious:

1.) 4 Bedroom, 2+ bath single family home prices in Lake Forest, CA cost approximiately $500,000 on the low end to a cool $1,000,000 on the high end.

2.) The only way for someone like me to finance such a balloon purchase is through unconventional financing mechanisims that leave me as a potential borrower at significant risk should market interest rates change even slightly. These options include ARM loans and interest only loans.

3.) A fixed rate 30 year mortgage loan would require anywhere between $3000 to $5000 per month. I make good money, but I cannot afford such an outlay each month. There are now 40 year and 50 year fixed mortgages, but still the mortgage payment per month would be prohibitive.

4.) While I understand that I am throwing out he window almost $25,000 in rent every year, and that as much as 5 to 7% of my (2 deeds of trust) hypothetical mortgage payments would be tax deductible, this still doesn't solve the problem of monthly cashflow and meeting mortgage payments with ease.

OK. So that's the situation.

But I am open to buying a home if it could fit into my monthly budget, and assuming market conditions are favorable to owning a home.

I decided to do online search today, May 9, 2007 for a 4 bedroom, 2+ bedroom, single family home between $500 and $700k on several different online services. This is what I found out:
Total found: 35
Lowest Price Home: $609,0000
Highest Price Home: $700,000
Estimated Average Price:$654,500
Total found: 36
Lowest Price Home: $549,000
Highest Price Home: $700,000
Estimated Average Price: $624,500
Total found: 40
Lowest Price Home: $536,990
Highest Price Home: $700,000
Estimated Average Price: $618,495
Total found: 13
Lowest Price Home: $599,000
Highest Price Home: $699,900
Estimated Average Price: $649,450

OCExecutives Multiple Listing Service (MLS)
Total found: 30
Lowest Price Home: $520,000
Highest Price Home: $699,900
Estimated Average Price: $609,950

First of all, there do not appear to be that many single family homes available for sale in Lake Forest right now that meet these requirements. It must also be said that after reviewing some of the home for sale ads, 5 to 10% of these homes aren't fit for human habitation. I mean a number of homes would require serious work. I don't consider 35 units to be an earth-shattering inventory number, nor dreadful enough news to induce home sellers to disregard convention and slash prices.

However, I do believe that the Lake Forest single family home inventory trend is going upward because I have performed this same exact search many times before and come up with matches of only 10 or 15 homes max. Inventory is definitely climbing.

Secondly, the low-side of home prices remains too high. There was one house at the low-ball $520,000, which turns out to be a shit-hole house. But even if it were immaculately clean, the affordability/risk for me as a buyer is too much to shake. While I am saying that the prices are too high, I can also report that the prices are headed downward. It was not uncommon just 3 to 6 months ago to find 4 bedroom, 2 bath homes priced at $750K, $775K and even $800k. Not so much anymore. Most are in the $600-$700K range, so there's plenty of room to go.

Tuesday, May 8, 2007

Sometimes We Must Swallow Our Pride

Sometimes we must swallow our pride and what we believe we are entitled to and just say "thank you" for not making me one of your long list of financially screwed victims.

Mr. Lawrence Yun of the N.A.R. Weighs In Again

Mr. David Lereah was the Chief Economist of the National Association of Realtors (N.A.R.). Now that Lereah is pulling the ripcord and escaping the N.A.R. before the house literally burns down, Mr. Lawrence Yun, the Senior Economist of the N.A.R. steps up in his new flame-retardant suit.

He's not just a "senior economist". He's the freaking Managing Director of Quantititative Research for the National Association of Realtors.

OK, but who is this Mr. Yun really?

Does he have some fresh or even forthright comments about the state of the American housing market?

Will he come clean about the N.A.R. being a cartel driven by realtor sales commission earnings and sales strategies, not consumer education, market principles, business ethics, and operating as "trusted advisor"?

The answer is a resounding no.

Mr. Yun is a Lereah lacky. In February of 2007, he echoed Lereah's comments about the true state of the American market. If one were to follow this N.A.R. quantitative propeller head around all day, he'd have real estate consumers believing that the market bottom was hit 4 months ago and that everyone should get ready for a recovery later in the year:

"Sales will recover gradually over the second half of the year and prices will begin to edge up again"

Mr. Yun was wrong in February. He and the N.A.R. are wrong again now.

The U.S. economy is slowing down significantly, the U.S. dollar is approaching an all-time low in value versus the Euro and the British Pound, U.S. inflation remains completely unchecked by the United States Federal Reserve Commission, fuel prices in the United States are approaching unchartered territory at almost $4.00 per gallon in California, a jaw-dropping number of mortgage lenders have been completely or partially destroyed, surviving lenders have restricted their lending standards substantially, HELOC loans are down by 20% year to date and subprime and Alt-A loan foreclosures are rocking the entire industry - and we haven't even explored the probabilities that prime loans may also weigh in badly before the year is out.

To Mr. Yun and members of the National Association of Realtors: It's time for someone from your decrepit organization to step up to the plate and tell it like it is.

The Rancid Truth - Mortgage Lenders Make More Commissions By Screwing The Borrower

From California's North County Times:

California mortgage brokers, most of whom are licensed by the state Department of Real Estate, are legally obligated to act in the best interest of the borrower.
"However, there is no enforcement mechanism in place to ensure that they (do so)," said Paul Leonard, director for the California office of the Center for Responsible Lending. Leonard told a state banking commission earlier this year that mortgage brokers "have strong incentives to make abusive loans that harm consumers, and no one is stopping them."

A mortgage broker's incentive "is to close the loan while charging the highest combination of fees and mortgage interest rates the market will bear," a 2004 study prepared by Harvard University's Joint Center of Housing Studies concluded.

Brokers can earn higher commissions -- up to 3 percent instead of the typical 1 percent -- by having customers buy loans with interest rates that are higher than market rates, with prepayment penalties charged if the loan is paid off before a certain date, and with little or no verification of the borrower's income, known as "stated income" loans. That's the difference between a $12,000 and a $4,000 commission on a $400,000 loan.

But why will the home finance market bear high fees AND high mortgage interest rates? How can structuring loans that promote perpetual financial serfdom be acceptable to the borrower? How can reckless underwriting practices as well as tried and true "bait and switch" tactics be acceptable to loan consumers?

The answer is the 21st century financial retardation of the American consumer. Sure, one can certainly blame mortgage lenders and realtors for all of the hell breaking lose in real estate. It's almost too easy to do so - much in the same way one might blame ants for showing up at a picnic.

Compensation schemes like the ones described above might make one's blood boil, but the truth is that none of these incentives would ever be that attractive or effective, if the American consumers fueling the insanity weren't so incredibly illiterate when it comes to their own money.

We are approaching the middle of 2007 and millions of American home borrowers (not homeowners) are now paying the price with personal bankruptcy and home foreclosure - harsh lessons to learn that will likely affect their financial lives for years to come.

Realtors and the IRS

Some of America's home realtors are getting audited by the IRS because they can't seem to prove that they are not passive real estate investors dabbling in house flips (flops) on the side, but that they are indeed full-time real estate sales professsionals active in a full-time annual job.

For the hundreds of American realtors being audited this year, it's very frustrating and incredibly expensive experience. Many drown in legal fees being because they are considered by the IRS guilty until proven innocent.

"It takes hundreds and hundreds of hours out of my time to provide all these details. I just feel like I'm being harassed."

Monday, May 7, 2007

Divine Intervention Saves Lake Forest Man from Jaws of Foreclosure

His prayer telephone has been literally ringing of the hook as of late, but Almighty God decided to take a nano second out of his manic day to intervene divinely in the life of Arturo Peña, an Orange County homedebtor.

Mr. Peña has been working 3 jobs trying to make ends meet while at the same time facing foreclosure on his Lake Forest, CA home. His life Olivia probably doesn't recognize him anymore, since he is never home. Instead he works his tail off trying to muster together enough dough to meet the monthly mortgage payment.

But not anymore.

Today Arturo Peña won the California Lottery Big Spin ticket for $1,000,000 from a local Albertson's grocery store in Lake Forest.

God knew that Mr. Peña previously only brought down about $30,000 gross per annum. Thanks to the lightening strike at Albertson's, Arturo and his family can add another $37,000 after taxes to their take home earnings.

Great story, and a nice faith-builder for those around the country who need help - any kind of help to prevent their own foreclosure and bankruptcy.

God was not available for extended comment following Mr. Peña check holding ceremony, but was rumoured to have requested "a word or two" with N.A.R. chief economist, David Lereah.

If you trust realtors, you are delusional.

Here's why:

If the NAR chief economist David Lereah, realtor posterboy extraordinaire, and the more prolific cheerleader of the American real estate industry boom over the last 5 years, author of infamous books like these:

then stated in late 2006 that the market was now in correction mode, but that we were all certain to experience a "soft landing", who then stated in late December 2006 and again in February 2007 that "we've hit bottom" already.

Now it is May 7, 2007. Mr. Lereah already has his bags packed up, ready to leave the real estate big leagues of the National Association of Realtors, and join a new, hole-in-the wall, real estate sales organization called Move, Inc.

But the final act in the play has not yet been shown. Prior to providing his last major NAR speech at an upcoming Washington real estate conference, the Bob-Saget-Look-Alike, Mr. Lereah, had the audacity to make this admission - probably the most damning one ever about the current American real estate market.

"Ask him in a couple of weeks", indeed! I think by now, Mr. Lereah, we already know what your duplicitous reply will be.

Bob Saget

Also, Bob Saget

So, I ask you: how can any prospective homebuyer in America today turn to a home realtor in good faith anymore for "help"in purchasing a home, assist them making the right choice, and work to protect his financial interests?

I submit to you that he cannot. Not anymore. The game is up.

Bob Saget has played you all, the home consumer, the realtor, the mortgage lender.

Time for the theme music to start. This really is America's Funniest Home Videos.

Got Hummer?

If you do have one, I'd like to know: Are you still enjoying your ride? I imagine by now you either hate the monstrosity with a passion or remain completely enamored with it.
If you live where I live (Lake Forest, CA) right now per gallon 87 octane gasoline is running at about $3.51 per gallon. Hummer owners are probably not only the most-frequently-seen customers at the local gas stations (8 miles per gallon city!), but they are likely dropping somewhere between $81.00 (H3) and $112.32 to fill it up all the way!
Holy crap!

I don't own one. I rented one (not by choice) on a business trip in Denver and was pretty unimpressed. Power, handling, driver comfort, road good. But maybe that's just me. I drive a 2000 Honda Civic. But a number of people in Orange County do own Hummers, Exploders and Escalades, etc. A number of them are realtors...but don't get me started there.

But I guess you don't even need to have a Hummer to experience a coronary at the gas pump these days. Today, May 7, 2007, gasoline prices in the United States of America are only cents away from the all-time highest per gallon price in our nation's history.

And unfortunately, my opulent Orange County friends, there are few reasons to expect any future price declines as we approach the summer months and then the cooler fall and winter seasons.

So, I really do hope those of you are enjoying that gigantic beast of inefficiency and impractical machinery! Enjoy it, for the sake of the rest of us, who ride in your wake.

Now for all of you Hummer owners, if you ever see someone you've never met before at the gas station or on the road tell you to "f*&% off!" by flipping you the bird, view this site and it will help you with some background information as to the reasons why.

Thursday, May 3, 2007

Sub-Prime Bailout: Where will the money come from?

New York Democratic Senator Chuck Schumer has the answer. He wants $300 million in Federal money to help subprime borrowers keep their homes.
So the answer to the question is: you.
You will pay for it.
Unfortunately 70% of Americans believe that the "Federal Government" is some giant building with arms and legs that walks around and "does shit".
Wrong. The government is us! We fund it. Federal money is the people's fucking money!
Will someone in New York please explain that 7th grade Civics fact-of-life to their idiot senior senator?!

$300 billion dollars. Why?

Where will this "federal money" come from?

Why now interfere on the side of arrogance, stupidity and financial ineptitude in a market economy?

Why now interfere to help people keep their homes, who lied on their stated income loans and who, for all practical purposes, have no business whatsoever owning a home in the first place?

What economic and legal precedence are we trying to establish?

How will market's react?

What message does this federal government interference send to renter and homedebtors who pay taxes, who controlled their greed, who ignored the overexhuberance of the corrupt real estate industry, who chose to live within their financial means and who chose not to carelessly mortgage away their futures?

In case you have forgotten, Mr. Schumer, the above described individuals are your constituents as well.
The correct answer is to allow the market to correct itself. Indeed such a serious correction is economically painful and catastrophic for many American families, some of whom had only the best intentions - wanting to own an abode to live and raise a family. But the correction serves other import functions. It shakes out the investment crooks, flippers, liars, illegal opportunists and - to be frank - the financially inept. Good people and financially inept people are, in America, not mutually exclusive.

This comes across as cold and perhaps Darwinesque to say. I don't mean that subprime borrowers get no help at all. But I don't like the idea of allowing loan do-overs that, under normal market lending standards, would make no business sense at all.
Most of us support and believe in the merits of a laissez faire capitalist economy. Hard times like these remind us how imperfect that system can be.
Taking money away from people who didn't gamble to bail out other people who did, is irresponsible and unrepresentative of Senator Schumer and any of his supporters.
Of all industries in the United States, the real estate market is the one in most need of a market correction. Only the American oil industry makes as serious challenge from second place.
The real estate industry also requires a healthy dose of cartel-smashing government regulation.

That, alongside grand jury hearings of the N.A.R. for fraud, are the only government interference worthy of discussion right now.

Housing Crash Leads to Tragedy in Orange County

For California realtors Joni and Kevin Park a "black cloud" of real estate worries and financial stress led them down a tragic path to self-destruction last week. After wielding a gun and threatening security officers at a high-end Laguna Beach resort, and later charging police officers on the scene, Joni and Kevin Park were shot dead by OC police while their children watched.

Now all that remains is an expensive room sevice bill, and a young family in grief asking themselves just how and why something like this could ever happen to their own parents.

Are more tragic stories like these likely to increase as the housing bubble bursts in 2007 and the Ponzi scheme comes crash down around us?