Monday, March 26, 2007

SoCal Realtors: How to Avoid A Legal Ass-Kicking

In times like these, few would question the wisdom of obtaining sound legal advice.

This is especially true when your profession of choice is known nationally for it's general lack of a moral compass, alongside that of used car salesmen, subprime mortgage lenders and personal injury attorneys.

So let's just take for example the profession of real estate agent.

The California Association of Realtors is now taking steps to better educate its association members of the important do's and don'ts when facing today's volatile real estate market, such as the tips highlighted within this helpful video prepared by the C.A.R. and its legal defense team.

Isn't it refreshing to know that American home realtors everywhere will now start to take copious notes of conversations with buyers, make full verbal disclosures, steer buyers to 3 or more competitive mortgage lenders for quotes, and avoid predatory lending outfits altogether?

That's just Super-Duper and Fan-damn-tastic!

Tuesday, March 20, 2007

Lessons Learned: How Did It Come to This?

National Public Radio's Marketplace points out some lessons to be learned from the mortgage-default wave.

And We'll Have Fun, Fun, Fun Till Daddy Refi's the ARM Away!

If everybody had an ARM loan,

Across the USA!

The teaser rates would be adjustin,

just like Californ-I-A!

Try not strangle your realtor,

"Home values never go down"!

Everybody's foreclosin'

Defaultin' USA!

Between 2004 and 2006 over $2.2 trillion in adjustable loans were issued to homebuyers.

A tidal wave of foreclosures is on the way.

1.1 Million Americans to lose their homes.

Total potential loss of over US$112 billion.

Oh yes, America! Plenty of "tasty waves" for everyone!

Chapter 11 Declared Today for Irvine, CA Mortgage Lender

Another one bites the dust in a big way.
This time it's People's Choice Home Loan, Inc. declaring bankruptcy right in the backyard of Orange County's prolific real estate market!
What next?

Kind of creepy.

Monday, March 19, 2007

New Most Hated Profession in U.S.? Mortgage Lenders Say To Used Car Sales People, Attorneys and Real Estate Agents: "Step Aside!"

It's refreshing when members of a certain profession really step up and call a spade a spade.

In the United States of America, a head of real estate agents, used car salesman and ambulance-chasing attorneys, mortgage lenders are now attempting to blaze their own path to the top of the list of the most hated and distrusted professionals in the country, if not the world.

But why? What on earth could cause mortgage consumers to become so unhinged?

Well, don't take it from the Rancid Truth Blog. Read on from the Reuters' article today that included comments from Ms. Jillayne Schlicke, an eloquent mortgage industry veteran, and head of an organization called The Ethical Lending Foundation.

Interestingly, if you happen to visit the Ethical Lending Foundation's website, you'll notice that one of the first little things you can click on is called a "Code of Ethics".

Ms. Schlicke has tried in vain to train and instruct mortgage lenders, real estate agents and even real estate consumers of the importance of following ethical conduct.

Some damning quotes from Ms. Schlicke in the article about the current state of affairs within the mortgage lending industry:

"We're in ethical chaos in mortgage lending,"

"It's going to be a long road to climb out of that gutter."

When will they recover?

Sunday, March 18, 2007

Rewind to 2002 Fireside Chat: Why Do Homebuyers Distrust Realtors?

I found the following interesting article published October 30, 2002 in the Realty Times, written by Blanche Evans. It provides a series of reasons why 5 years ago, in 2002, homebuyers might have held a certain level of distrust for realtors.

Here are some of the key reasons identified by Ms. Evans:

  1. Generation Gap - That GenX and GenY prejudices pose a serious challenge to realtors hoping to make that sales connection.
  2. Service Gap - That it's important to first time homebuyers to know and understand how much home they can really afford, and that other home buyers just want the realtor to find them the house they want and provide strong, favorable price negotiation expertise.
  3. Cultral Gap - Too many white agents. Not enough ethnic diversity in realtor ranks.
  4. Electronic Gap - That realtors in 2002 don't yet fully understand the significance of the internet and of e-mail communication as powerful tools to tranform their sales activities and success.

All good points brought forward by Ms. Evans.

But I am one who values self-inspection, perhaps some self-criticism. You know, taking a real inventory of one's strengths, weaknesses and character flaws.

It's now 2007. We are in the midst of a national housing downturn. Many who bought homes in 2002 and after may be in serious jeopardy of losing their homes due to reason 2.

So how would we today answer the same question?

Do homebuyers trust realtors more than they did 5 years ago?

Impac Mortgage of Irvine: $1.4 billion in Problematic Loans

Well, here's another surprise.

By "problematic" we mean in serious risk of default. Now 6.2% of Impac Mortgage borrowers have missed mortgage payments of 2 months or more. This is up 3.1% over last year.

Another textbook example of mortgage lender trying to shovel its way out of a financial nightmare created by lackluster self-regulation, corporate greed, and ultimate reliance on the American taxpayer to eventually foot the bill of homedebtor defaults.

Ah, the American Dream! Just like common sense. You never really come to appreciate it until it's gone.

Can't afford home. Can't afford car either.

This Detroit Free Press report earns the "No-Shit-Sherlock Award" this week as they attempt to link dips in car sales to sunny weather states.

You know, I'm not entirely up to speed about the housing market and economic situation in Michigan. What I have heard is that the situation isn't pretty. But here's a nugget of useful information for our Wolverine-state friends at the Freep:

Dips in sales of Detroit cars has little, if anything, to do with sunny weather.
A little self-criticism is always a good place to start, and might clear the air a little.
Consider some of the following factors on for size:

  1. Detroit's automakers have been officially "jumped" by both Toyota and Honda in terms of car sales in America. It is highly doubtful, given past performance, that American automakers are in any position to recover market leadership in the short or long-run. Good for American car sales? Not really.
  2. Honda, Toyota, Volkswagen and BMW have shown the greatest technology innovation, highest customer satisfaction and highest overall quality ratings of industry auto manufacturers. GM and Ford are essentially MIA in all three departments. Good for American car sales? Gee, lemme thin..No.
  3. Southern Californians, Nevadans, Arizonans and Floridians have something a little more important to worry about these days than buying a Hummer that get's them 10 miles to the $2.80 gallon of gas. Yeah, I can understand how this might be quite a shock to some. You see, the item that all four of these markets share in common, besides sunny weather, is a housing market slowdown, the economic consequences of which may become very serious indeed. The financial well-being of many individuals and families in California alone may be adversely affected. Suddenly, buying a car - new or used - will become less and less of a priority as 2007 wears on. Now, is this good news for car sales - domestic or foreign? Probably not.

4th Largest Home Builder: "Recovery Unlikely in 2007"

CFO Roger Cregg of Pulte Homes, Inc., the fourth largest homebuilder in the United States of America, reports to Bloomberg that "we're not projecting anything to bounce off the bottom at this point."

But, wait just a damn minute...

On March 13th didn't NAR head David Lereah just state that a "housing market recovery" was in store in 2007?? (see March 13th post).


OK, now I get it!

This is the part in the film where mainstream American media bashes the real estate industrial complex, and internet housing bloggers utilize these reports to justify their caustic attacks on the innocent, just-doing-our-job home realtors and mortgage lenders of America.

Tip of the hat to Mr. Cregg and Pulte Homes, Inc. for telling the story like it is - the Pulte way: "The way it should be".

Saturday, March 17, 2007

Housing Crash Biting U.S. Worker Mobility

The ability of American workers to move freely from one market to another for gainful employment is just one of many important variables within a complex equation that contributes to economic stability, growth and national competitiveness. The easy, fluid movement of workers actually sets the U.S. apart from many other world economies.

This story from USA Today exposes how the housing market crash of 2006-2007 may adversely affect this critical variable to economic success, and lead to greater challenges for employers to grow their businesses, and for the U.S. economy in general, to avoid economic stagnation.

American workers considering relocation due to new employment opportunity must weigh more carefully than ever before the real financial impact of both selling their current home and buying anew.

Tuesday, March 13, 2007

National Association of Realtors: Recovery on Deck for 2007

Look, you bubble-bloggers and bitter renters have got to calm the hell down.

"Underlying trends point to a housing recovery in 2007,..."

"Lending problems in our nation's subprime marketplace are building, which could inhibit
future housing activity and further dampen our forecast. Even so, there problems are likely to be contained and not spill over into the prime mortgage market."

You see?!
It's all cool, baby! No problems. Now we got the NAR in the house!

You wanna see something REALLY scary? - Peter Schiff

The end of the US economic dominance is coming.

Signs, Signs, Everywhere Are Signs

"Signs, signs, everywhere there's signs

Fuckin' up the scenery, breakin' my mind

Do this, don't do that,

Can't you read the sign?"


Monday, March 12, 2007

Oh Fuuuuuuuuuudge!....(Only I didn't say fudge...)

The subprime nightmare unfolds continued (and explained)....

Somebody's got to be to blame, right? RIGHT?!

Saturday, March 10, 2007

America's Largest Homebuilder: "2007 Is Going To Suck"

During times of trial one must often pause in order to appreciate the profound eloquence of American finest business leaders such as Mr. Donald J. Tomnitz, CEO of D.R. Horton, the largest home builder by volume in the United States.

Subprime Meltdown: Worse This Time Around

The last time the subprime lenders were knocked down in Orange County California was 1997-1998. The market shakeout lasted a couple of weeks.

This time the outcome could be very different. The market circumstances are different. The players are different.
Some analyst predict that, in the end, the potential for future "fire sales" for foreclosed homes could put substantial pressure on OC home prices.

Mark Mueller's report from the OC Business Journal here.

Don't Make The Realtor Mad

Exotic home loans.

Who needs them?

Why can't we go back to the old fashioned way of doing things?

You know, the way of actually "doing your homework" instead of going through the bureaucratic motions?

To others, exotic loans are toxic waste, that should be abolished altogether from the real estate industrial complex.
Whatever the outcome, let's just ensure we do the right thing and not make home realtors angry.

Afterall, nothing can or should stand in the way of that 6% carrot at the end of the homesale rainbow.
Dead bodies?
No problem. Step aside!

It's Official: U.S. Housing Market Now "A World of Shit"

Anyone, and I mean, anyone who would now describe the U.S. housing market as beaming rays of sunshine is a delusional idiot.

The financial ineptness and illiteracy of the American homedebtor.

The rampant, anything-goes, sales strategy and tactics of American mortgage lenders.

The insidious actions of American home realtors, most completely lacking business ethics and experience, greasing the palms of mortgage lenders and home assessors, and using duplicitous promotional tactics with homesellers and homebuyers alike to earn that 6% - at all costs.
It's all being exposed before our very eyes.

There will be Congressional hearings.
It's only a matter of time.
All of these horror stories will be told.

FBI on U.S. Mortgage Fraud: "OK, We're Done Fucking Around"

The FBI is issuing harsh warnings to both mortgage lenders, realtors, property assessors AND potential homedebtors to "stop fucking lying".

After the FBI's report was released last Wednesday describing mortgage fraud in the United States as "pervasive", the FBI's notice informs consumers and lenders that mortgage fraud is punishable by up to 30 years in prison, a $1 million fine, or both.

Are any realtors out there paying attention? What good is that undeserved 6% commission you earned on a 6 figure Orange County home sale, and that huge-ass Hummer parked in your driveway, if you're own ass is parked in prison?

The FBI reported that it investigated 818 mortgage fraud cases in fiscal year 2006 (up from 436 in fiscal 2003), resulting in 263 indictments, 204 convictions, and recoveries of $630 million in restitution and fines. Currently pending cases total 1,014. The FBI estimates that 80% of all reported fraud losses involve collaboration or collusion by industry insiders.

"The increased reliance by both financial institutions and nonfinancial institution lenders on third-party brokers has created opportunities for organized fraud groups, particularly where mortgage industry professionals are involved," the FBI's annual financial crime report says. (source: National Mortgage News).
No shit, Sherlocks.

New Century Mortgage: Is This The Last Straw?

No, this isn't George Hamilton.

It's Mr. Angelo Mozilo, CEO of New Century Mortgage, one of America's largest subprime home mortgage lenders, having posted almost $60 billion of loans in 2006.

Big trouble.
Famous for providing special mortgage loans to individuals with shitty credit, it's now approaching crunch time for New Century. Time to pay the piper. Unfortunately, more and more of these higher-risk mortage loans are going into default, which means New Century cannot pay it's own creditors back.
The hole in the boat has been patched, according to New Century. They've finally decided to stop writing up any more shitty loans. Also, general lending standards are being tightened up. But it's probably too late to save the company from bankruptcy proceedings.

Twenty mortgage businesses have already been shut down from making further loans, or have gone bankrupt altogether.

Wednesday, March 7, 2007

Spotlight Lake Forest: Big Problems at 22931 Hazelwood

The owner of a 4 bedroom, 3 bath, 2136 sq. foot home at 22931 Hazelwood in Lake Forest is in pre-foreclosure.

The home's sales history includes:

February 3, 2005 $ 607,000

July 21, 2005 $ 775,000

One and a half year later, the owner defaulted on a $620,000 loan, having already put $155,000 down initially, but failing to keep up with home payments. Ultimately, the owner's overdue payments piled up to $23,300, forcing the funniest of mortgage lenders, Washington Mutual, to foreclose.

Now the house is again up for sale.

The loan default and the foreclosure are sad occurences for the owner and family and represent one problem.

The second problem is the new sale price.
The realtor is creatively positioning the home at around $750,000 "as is", despite the fact that most comparable homes next to this one are now hovering precariously around or below the $650,000 mark. The annual trend for this area of Lake Forest is definitely going south. The realtor may himself be mesmerized by the Zillow Zestimate for this home at $794, 238 as justification for his so called "aggressive, $50K markdown".
The home itself is pretty and good-sized, but it will need considerable repair work inside and out, since a large family with children was living in it.

Now listen.

Lake Forest is a great place to live. No question. Probably among the best communities in Orange County and the entire state of California. It lies at the feet of the gorgeous Saddleback mountain range. The neighborhood is beautiful with nearby parks and walking trails. Crime is low. Streets are clean and meticulously maintained. Plus, Saddleback district schools are among the state's best.

But let's set that aside for one moment and consider the following:
  1. The Orange Country home market is entering a dire state. Even realtors acknowledge this fact. Home values remain clearly overstated following 3 to 5 years of unjustified price pumping by the local real estate and mortgage industry leaders, and through high sales of unsecuritized, high-risk mortgage loans, which made buying such expensive homes easier for those who, under better loan regulation, would likely not be given the time of day by a Washington Mutual.

  2. The median income for a Lake Forest family is $75,000. I repeat. That is the median income. If one earns this amount or less than this, I'm sorry to say, but you have absolutely no business trying to "purchase" a home here.

  3. Assuming zero down, the new 22931 Hazelwood home sales price would demand a typical family in Lake Forest to purchase a mortgage loan of 10 times the median income, most likely 2 deeds of trust and formed as either an option ARM or interest only mortgage loan. This is textbook financial suicide for any family when the housing market is already considered dangerously unstable.
Whether or not 22931 Hazelwood is worth every penny of $750,000, I will let other debate.

Lake Forest area home values are on a slow, gradual decline. One home, also on Hazelwood has already has lost $25,000 in estimated value since January 1, 2007.

And for sale signs are NOT coming down.

The for sale sign is still up at 22931 Hazelwood. There may be bites, but if prospects continue to show patience and fear for area declining home values, then the realtors/lenders sale price must be brought down.
As for the owner, he or she just wanted to own a home and likely did not realize the massive amount of money needed on a monthly basis to keep head above water.
He or she likely was caught up in the 2005 euphoria of pseudo-homeownership in Orange County pumped up by area realtors with the slam-dunk sales pitch that "OC real estate value never go down". Who knows what qualification process used by Washington Mutual entailed in order to substantiate a massive $620,000 loan.
But the home buyer clearly couldn't keep up.
It must be a hard lesson for one to learn, as a person's credit score and ability to buy another home someday will be forever affected in an market economy now destined for more restrictive lending practices going forward.

Fed Chairman asks Congress: Pretty Please with Freaking Sugar On It, Regulate Mortgage Lenders Better

The financial holdings (loans, mortgages) of mortgage giants Fannie Mae and Freddie Mac are considered by Fed Chairman Ben Bernanke as too risk and deserving of stronger regulation by the U.S government.

But wait a minute.
Aren't Fannie Mae and Freddie Mac both GSE's? Created by Congress, both ARE GSE's, Government-Sponsored Organizations, designed to pump money into the economy by buying up loans, securitizing them and selling them on the worldwide financial exchanges?

The fear is, if these two giants start catch a cold under the weight of risky mortgage loans, that the entire U.S. economy could get pneumonia and die.

And so here we are again. Those of you who remember the bailout of the U.S. savings and loan industry in the late 1980s, will be surprised to learn that we as a nation is chock full of amnesiacs. Government regulation of both Fannie Mae and Freddie Mac organizations has been frowned upon in the past, basically because the housing market has been considered integral to the overall growth of the U.S. economy.

But will tighter regulation by the new Congress of both GSE lending practices and financial holdings, impact the economy in other respects? Tightening the easy, no questions asked availability of loans for the real estate market - which is already reeling in most parts of the U.S.? What happens when you remove the financial grease from the economic skids?