"Just walking away"

NEW -> Contingent Buyer Assistance Program
<em>"I know you don't believe it, but some people put something down!"</em>





Yes, many people put money down. Many people did not. The people who did not will go into foreclosure and drive the prices and values down for those who choose to weather the storm.
 
<p>Oh, now ALL people who put nothing down "will" go into foreclosure.</p>

<p>All people will uproot their families in a stampede of fear.</p>

<p>I just came from a walk, talked with some neighbors, saw all the families out walking their dogs. </p>

<p>Several had their children with them.</p>

<p>All professional people.</p>

<p>Many foreingers.</p>

<p>All found value here, and are clearly enjoying their homes and neighborhoods.</p>

<p>They do not seem concerned.</p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>
 
<p>And another thing: ALL homes were not purchased recently. </p>

<p>Plenty of people have owned for many, many years - and they will also not stampede.</p>
 
<em>"Oh, now ALL people who put nothing down will go into foreclosure."</em>





I don't recall saying that, but no matter. Many, many people who put nothing down will go into foreclosure. The numbers will be large enough to more the market downward.





<em>"They do not seem concerned."</em>





You are not seeing them as they lay awake at night contemplating their ARM loan recast knowing they can't make the payments...
 
<p>Janet, </p>

<p>A 800K house = $160K down and a $640K loan. . .at 6.5 percent fixed interest, that translates into monthly payments of approximately $4050 a month. For simplicity sake, I am not counting HOA fees, property taxes and maintenance cost because they equate to about the same as one's tax deductions. </p>

<p>Assuming that the house appreciate an average of 4% a year (pretty generous), it would take you about 10 years to get back to $800K. That means it'll take about 10 years just to break even. </p>

<p>A $800K house in irvine is probably a 3bd house approx. 1800 sq ft. You could rent the the same thing for about $2500 now. Thus, one would get a windfall of approximately $1,500 a month just by walking away. That's about $18,000 a year. If you invest that $1,500 a month for the next 10 years (in a 5 percent saving acount), you would get approximately $262K. That mean you would lose $100K just to break even. I mean a bankruptcy hit is only 7 years (although bankruptcy is not really an option anymore thanks to Congress).</p>

<p>This is the best case scenario. . . you have people whose payments have doubled and tripled. They may want to stay but just cannot do it. </p>

<p> </p>
 
<p>"I just came from a walk, talked with some neighbors, saw all the families out walking their dogs. Several had their children with them."</p>

<p>I don't know why, but this statement just conjured up the image of the Von Trapp family when they were trying to sneak out of their mansion at night - walking and silently pushing their car. </p>

<p>Were these families furtively toting luggage behind them?</p>
 
<p>This article interested me. In a round of about way it ties in.</p>

<p><a href="http://www.msnbc.msn.com/id/20491350/" target="_blank">http://www.msnbc.msn.com/id/20491350/</a></p>

<p>"Some lenders _ such as Countrywide Financial Corp. _ have made a point of saying they're now most focused on making loans that can be guaranteed by Fannie and Freddie" Gauranteed being under 417k 29% DTI.</p>

<p>So if everyone is cutting down on Jumbo loans, and all of OC is a Jumbo loan right now who is going to buy these 800k houses.</p>

<p>Janet if given the personal decesion to walk away or pay another 18k a year I might do that.</p>

<p>Talked to a friend last night. They chose to put the house in just his name. He can and will walk away and buy the next house in his wifes name if his house depreciates enought to save that kind of money.</p>

<p>How many people refinanced with the chance to lower monthly payments by $400 a month.</p>
 
<p>This article interested me. In a round of about way it ties in.</p>

<p><a href="http://www.msnbc.msn.com/id/20491350/">http://www.msnbc.msn.com/id/20491350/</a></p>

<p>Some lenders _ such as Countrywide Financial Corp. _ have made a point of saying they're now most focused on making loans that can be guaranteed by Fannie and Freddie Mac. Gauranteed being under 417k 29% DTI</p>

<p>So if everyone is cutting down on Jumbo loans, and all of OC is a Jumbo loan right now who is going to buy these 800k houses</p>

<p>Janet if given the personal decesion to walk away or pay another 18k a year I might do that</p>

<p>Talked to a friend last night. They chose to put the house in just his name. He can and will walk away and buy the next house in his wifes name if his house depreciates enought to save that kind of money</p>

<p>How many people refinanced with the chance to lower monthly payments by $400 a month? Why wouldn't they walk away for more.</p>

<p> </p>

<p> </p>
 
<em>"So if everyone is cutting down on Jumbo loans, and all of OC is a Jumbo loan right now who is going to buy these 800k houses."</em>





That is the question, isn't it.





The answer is "no one."
 
<p>That is what I am seeing.</p>

<p>Some of the 600k to 800k houses were in the low 200k to low 300k in 1999 and 2000.</p>

<p>If I look at a 4% increase year over year since 2000 a 200k house should be about 263k now and a 300k house should be about 394k.</p>

<p>Yesterday I read CW actually gave out loans that after the mortgage payment a single person could have less then 600 a month and a married couple could have less then $1,000 a month. Wowza.</p>

<p>We are in for a long haul here in So Cal. Jumbo loans are now a full 1% higher then conforming.</p>

<p>On a a 417k loan to a 418k that is an extra 475 per month right now. </p>

<p>Again for an extra 1k on the loan it will cost an extra $475 per month</p>

<p> </p>
 
<em>"Again for an extra 1k on the loan it will cost an extra $475 per month"</em>





Why would someone borrow that 1k instead of adding it to his down payment? Why do people worry about paying an extra percentage point on their loan when interest rates are still near historic lows? If you think jumbo rates are high now, you should have seen them in the late 70s, early 80s.





<em>"So if everyone is cutting down on Jumbo loans, and all of OC is a Jumbo loan right now who is going to buy these 800k houses."


</em>


Believe it or not, there are people who bought more than 5 years ago who still have a great deal of equity in their home. It's quite possible that they bought their home for $200,000 and can still sell for at least $600,000 giving them a minimum of $400,000 for a down payment.
 
Whether people put money down or not they are defaulting at a record pace. In the first 15 business days of August OC has seen about 1000 NODs. At that rate in the next two business days there will be more than all of last month. Foreclosures are getting worse as well. Yesterday a place off of Foothill in Tustin in the hills went back to the bank for $1.28mil. I went to check it out and it is a nice house up on the hill with a view. It doesn't look like anyone has been there for a while and they probably just mailed the keys instead of the first payment. I also saw that a place in Huntington Harbour that was two houses from the water went back to the bank for $950k. I'm sure they had some skin in it since homes like that haven't sold for under a million since 2003 or 2004.
 
<p>ABC, </p>

<p>Nobody would only borrow the 1k but that is the cost of going from traditional to jumbo.</p>

<p>Right off the bat going from jumbo will add $453 per month. That was the point to it. That is a fairly large jump.</p>

<p>So if the person with 200k deposit from equity goes on the market they "may" limit themselves to a non jumbo loan.</p>

<p>The extra cost goes up by the amount of the loan. </p>

<p>IMVHO the days of buying a house today that you cannot afford in the real world are over. If you can't afford the house when the ARM adjusts you probably won't get it .</p>

<p>Who will buy that loan?</p>

<p>Yes you are right there are people that have that equity from when they bought 5 years ago but what made their house worth tha much more. The loans people were giving out. Now they are not. So is that 200k house really worth 600k now? Do they really have 400k worth of equity. Look at redfin they sit on the market for months now.</p>

<p>You are talking about a market that doesn't exist.</p>

<p>Your suposition is that someone has the money to buy the 600k house so they can take the equity and buy the 800k house.</p>

<p>These people may be the ones that actually reset the market value. Let me get out with 200k. Cut the price and let the others deal with comps in the area. If I bought at 200k and I have had my house on the market fro 180 days with 10 monts worth of houses in inventory. I may decide to take the money and run. People can get a loan for 417k, I will take it. I walk away with 217k not bad that is what 40k a year in appreciation. </p>

<p>When the main stream media is now saying that sellers are holding out hopes when there really are none. The prices need to come down. </p>

<p> </p>

<p> </p>
 
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