Foreclosure and distressed property topics

NEW -> Contingent Buyer Assistance Program
Moz of Countrywide is SHOCKED just shocked by the fact that 80% of the option arm borrowers only make the minimum payment, in the WSJ acticle referred to with the graph.
 
I hope this chart clears up any confusion














<img src="http://www.irvinehousingblog.com/wp-content/uploads/2007/10/mortgage-market-flows-and-risk-exposures.jpg" alt="" />



 
<a href="http://www.housingwire.com/2007/10/24/more-than-subprime-resets-the-real-meaning-of-two-waves/">P. Jackson at HW</a> did a good post about the option arms.





I have a feeling though that the option arm resets are going to start happening sooner than most think. Everyone seems to forget that these loans were pushed big time by the likes of Quick Loan Funding. They didn't what the margin was and all they cared about was the 3 point YSP. I even knew someone who signed loan docs from a chop shop like this where even in the note it stated that the loan would recast in 22 months at the current rate. It had 3 year prepay and the payment was going to go from $1580 a month to $4600 in 22 months. Every one of these chop shops were selling this loan on the payment and getting the big YSP.





This is going to start happening a lot sooner and it is going to get a lot worse.
 
<p>Oh gosh Irvine Renter that diagram really clears it up for me--not.</p>

<p>Do you understand that chart? Does anybody in the world understand that chart? Maybe ubernerd Tanta.</p>
 
I think the sheer complicity of the diagram should send a message about the problems that we face. The mortgage mess is widespread and attempts to fix it involve way too many people to be effective. I mean trying and get 5 people to agree on pizza toppings is already an impossible task.
 
I have looked at that chart a dozen times, and I cannot understand any of it. I have been involved in some pretty complex real estate deals, but I have never seen so many parties and counterparties slicing and dicing so many pieces of the pie.
 
I think the most important thing to understand about that chart is that at every box on the chart a fee and/or comission was paid, and all those fees and commissions are discounted, (added), into the sales prices of the homes that were sold over the last few years.<p>


Yeah, so? You ask.<p>


Well, now prices need to deflate to affordable levels, like they always do, but the unwind will be minus all the fees and commissions. You can't get that money, (debt), back, so the money won't be there to pay back. And what happens when debt can not be paid back?
 
Great point Awgee, it was like a big game of hot potato (add an e if you're a VP from Indiana) with transaction fees grabbed by each successive holder of risk - I honestly don't think anyone truly knew what their risk was, but were too afraid to question the gravy train - everybody else was doing it (really reminds me of Enron, which in the end was just ineffective hedging).





The interesting thing is that no one is stepping up to say that they had absolutely no clue what they they were buying or selling other than homeowners. I think it would drive the markets down even further if the professional investing/banking community came out and accepted their sheer incompetence. Actually, I guess that's what happened in August when the credit markets crashed.
 
<a href="http://mortgage.freedomblogging.com/2007/10/26/calif-logs-record-24209-foreclosures-in-q3/">Record amount of foreclosures in CA in the third quarter</a>
 
The foreclosures shattered the record of Q3 1996. DQ only uses owner occupied homes and if you figure 61% of the housing stock is owner occupied that is 1 foreclosure for every 331 homes when in 96 it was 1 for every 467 homes.





Huh I guess it isn't just about the jobs is it?
 
<p>150,000 in one year. excluding commision. </p>

<p>53 AVONDALE DRIVE, Irvine, CA 92602


List Price: $594,900


Last Sale: 11/16/06


Sales Price: $745,000


Bedrooms: 3


Full Baths: 2


Partial Baths: 1


Square Feet: 1,622


Lot Size: N/A


Year Built: 2001


Listing Date: 10/25/07


On Market: 1 day


Type: CONDO/TH


Status: ACTIVE


MLS #: P607075 </p>
 
I understand the part on the left hand side and maybe the boxes right next

to that, I'm in (or was in) that part of it. The rest of it is tulip selling. Everybody knows of course that the Dutch invented the futures mkt to accomodate tulip selling? This was a good thing, and no doubt worth all the heartbreak of 300 years ago.



Will anything good come out of this mess, I wonder?
 
<em>"Will anything good come out of this mess, I wonder?"</em>





Perhaps the death of structured finance?





The sinking of the Titanic destroyed the belief humans had that we could somehow overcome the forces of nature. The collapse of the housing ponzi scheme may dispel our illusions that we can mitigate and control economic risk through structured finance. When people believe they can act without risk, it creates a moral hazard that overrides all risk mitigation measures. This simple fact was lost on the finance and lending industries, and they are about to rediscover this fact most painfully.
 
Does anyone know if 347 Tall Oak sold at auction on Friday and if so at what price? And do you know if any other Tall Oak addresses are being foreclosed? Thank you!!
 
<em>>> Perhaps the death of structured finance?</em>





Hahahahaha! That's a good one. You're even funny on Saturday mornings.





It's so entrenched at this point, I have only three words for you: Not. Gonna. Happen.





But I wouldn't shed any tears if it did.
 
Is it so entrenched?



From what I've read in this blog, it would be hard put to survive.



Hot off the press. I get a call from a guy in California, at home, about real estate. He owns 4 properties in Fla, 3 underwater.



Can I help?



First, he spent hours on the phone with Countrywide, only to be told they couldn't help him, and he's not even in foreclosure yet. So the promise of help was, as I thought, a lie.



Second, he was about to rent one to somebody. I said, and you're planning to default? Why do this? Why put your renter to spend the money in moving, when he's just going to get kicked out? It's not right, I said. He said right has nothing to do with it.



Then he had to hang up, because he was selling his car, and someone was at the door.



Needless to say, if this guy calls back, I'm going to tell him I can't help him, and moreover I don't want to.



Guess what this guy did for a living. No, he wasn't a realtor.
 
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