patrick.net

I want Gyges' ring. But then I'd use it to prove to my brother all that's hidden in area 51 is a bunch of toxic waste.

Randy, is anti deficiency the same as non recourse? If that is what you are referring to, my general understanding is that seconds, refis, and HELOC are not non-recourse loans, and other assets can be attached.

Hey, does Virginia have an anti-deficiency provision in their mortgage laws?

Randy,

I am not surprised if they want to argue that HELOC, 2nds and refinancing for consumption will also be covered by anti-deficiency protection, since we know what kind of place California is.

The only problem is, somebody (dunno if it is the banks or hedge funds) will be left with a bunch of repossessed homes, and somebody will have to eat up the difference between the market value of the home and the loan amount. If that amount is big enough, somebody (very likely taxpayers) will have to help foot the bill. But we will worry about it when we cross the bridge.

OO, just to clarify a msiconception because California is definitely unique in a lot of ways but home loans here are definitely written in the lender's favor. To be clear, California does not have mortgages. We have TDs (trust deeds).
As opposed to a mortgage which is just a loan secured by real estate, TDs are an actual ownership position in the property. That is why in general the recourse of the lender is only for the property itself.

The only other state with anti-deficiency protection that I know of is N. Carolina.

I was made aware of the protection about a few years ago when the property market started going wild in BA, since some mortgage loan companies were touting this in their talking points for FBs who don't have enough dp or cash flow. It is a classic head I win, tail you lose situation.

In a normal market this is great for lenders, that's why the subprime market is crashing here. Lender's normally love the idea of a foreclosure in CA because often times they basically buy the house for the loan balance. Often times (OJ's house for instance) the lender will actually bid against other buyers and pay a little bit out of pocket to get the free title to the house. Then they can sell for whatever the market will bear.

skibum :

I agree completely, and I’ve made this point as well several times.

I remember now. Good, I won't feel so lonely now. :-) The median is masking a lot of things now. Eventually they will surface.

OO Says :

What is JBR?

Assuming it was not a joke ...

JBR != OO

Maybe that's why you don't know :-)

(Those new to the blog, OO's old handle was OwnerOccupier)

OO,

I have been table pounding on the purchase money loans for a while (purchase money PUT as the otherside likes to say). All we need is some traction from the MSM to get things really moving (as in FB talks about being freed from debt bondage and what a relief it is). I do feel sorry for folks who refi with a different lender and are only delaying the inevitable (and may be losing the anti-deficiency protection).
Refi's from the same lender will likely be covered (see cases below).

Our view is reinforced by the holdings in DCM Partners v. Smith (1991) 228 Cal.App.3d 729, 737-738 [“It is now well established that as a general rule where a note is created as a purchase money note it remains as such even though the terms of that note may be altered, modified or extended provided the obligation is secured by the same property. (See Palm v. Schilling (1988) 199 Cal.App.3d 63, 76)”]
http://caselaw.findlaw.com/data2/californiastatecases/b109744.doc
Definitely not legal advice!

Saw on Ben's blog that Saint Shiller was on bloomberg.com. I will take the S&P Case-Shiller Home Price Indices over medians any day (but I guess I like my news three months late :-) ) Unfortunately they don't cover your 'hood StuckInBA.

Is otherside a Realtor(TM)? S/He writes very similarly to our other Realtor(TM) friends who have posted here.

I would think that for someone to be visiting this blog and be antagonistic and have a 'look at what I have and you don't!! If you were as smart as I was you'd be an owner!!!' you would either be one of the Realtors(TM) in danger of having a falling income, a mortgage broker in danger of having a falling income, or someone who is a reset away from disaster or in danger of losing equity/being under water on a loan.

The property owners who are regular posters are mystifyed by this bubble and would like to see the housing market come back to reality (with a small 'R') so that our society can function rationally again. (I have a personal interest because I would like to see it easier for my husband to recruit people from out of the area). Otherside says s/he can comfortably afford his mortgage (I'm assuming it's a 15 year fixed in that case), so s/he must work in the industry.

Sue is awaiting your comments...

http://tinyurl.com/2bnuvn

-JB(PA)R

CR says Fleckstein says...
http://calculatedrisk.blogspot.com/2007/03/fleck-on-alt.html

Alt-A in big trouble

ubermonkey Says:

> If any of you want to see why a bailout probably
> will happen, fucking over anyone who displayed
> the smallest amount of prudence, check out this link:

With a link to the “comrades” over at the Daily Kos that said:

“The only thing wrong that these 2.2 million have done is wanting a piece of the American dream.”

Wanting a piece of the American Dream was one of the few things that they didn’t do that was “wrong”. Some (but not all) of the things they did that was wrong are:

1. Not reading the Loan Documents
2. Not asking what “neg am IO” was
3. Getting Cash Back at Close
4. Stating an income 300% higher than their actual income
5. Not asking if the payment would ever change
6. Getting a HELOC to pull out cash 6 months after buying with no money down
7. Not paying bills on time and starting with a low credit score and high start rate
8. Not asking why the “appraised” value of their home was $100K higher than others in the area.
9. Not asking “how” they could “qualify” for a $500K loan when they only made $20K
10. Believing that the fact that “they are not making any more land” means that a $500K s#it box in Turlock will be worth $600K next year…

Some sub-prime lender just called me on my cell phone to offer to refi me at 1%

This is clearly a junk call.

How do I file a complaint and get money out of them?

eburbed,

I think it is quite difficult to do. I think you notify them that you are on the list and then have to be able to prove that they called again.

The next time he calls just say "Oh, I'd love to! Can you hang on a minute?' Pop back in a minute and then, after a couple seconds say 'Oh, I'm so sorry, hang on a second.' Pop back after 5 minutes and then ask him to hold on again. Go out to dinner, when you get back if he is still there tell him you've changed your mind and not to call back.

PAR,
I gave Sue my housing bear opinion.

Malcolm Says:

> Randy, is anti deficiency the same as non recourse?

As someone has funded and foreclosed on over a $1 Billion in California real estate loans I can tell you that almost all loans in California are “effectively” non recourse loans.

California is a “trust deed state” (about half the states use trust deeds and half use mortgages to secure an interest in real property).

California is also a “single action state” (some states allow a lender to take back a property and then later go after a Borrower for a deficiency judgment).

When someone stops paying a Lender they can either take back the property under the terms of the deed of trust (DOT) or go through a long “judicial foreclosure” and get a deficiency judgment.

Since it is rare that a person with a high net worth (or much of any net worth) stops making payments the lenders just take the property back and move on…

How do I file a complaint and get money out of them?

Forget the complaint. Take the money, borrow 105%, trash the house, walk away when it resets. :)

Disclaimer: Not advice.

I just sold CFC short... a whopping 10 shares. It's my 'fun bet'.

FAB,

Can you provide the link for that DKos comment? I don't see it on the front page.

I think it's unfair in general to characterize a website based on one random comment. If someone took just one comment or commenter here, this site could be characterized as racist or knife obsessed or Pi denying.

In fact, my first contact with a mass awareness of the credit bubble and the housing bubble came via DailyKos and other "comrade" sites. That was around early 2004, some people at Kos (a majority of those voicing an opinion on the subject) were actually advising against borrowing against the house, speculating in RE and to refinance into fixed rate mortgages!

To clarify, that should read:

advising against borrowing against the house and speculating in RE, and for refinance into fixed rate mortgages!

eburbed,

If your cellphone is registered on donotcall.gov, there is an area to file a complaint. (takes about 2 minutes). I was getting spam calls and filed a complaint.

If only the government could do that for all those assy student loan scammers disguised as official mail and credit card offers disguised as collections notices!

Trolls are all the same, they ignore any reasonable comment that rebuts them and repeat the same old tripe over and over again. I'm beginning to think Trollism is a diagnosable condition like in-grown toe nails or stinky armpits.

Obama keeps calling my phone. Or at least some kids who claim to be working for him do. They're probably calling from my lawn with their newfangled cell phones!

theotherside, you conveniently forget the $0.5m that Randy has in cash. What about the interest he'll earn on that for five years? And no way he pays 7% to realtor in this market. 5% is generous.

SFBB,

Interesting. All I got was letter from Hilary asking for money. Since I don't like her, her policy, or a Bush Clinton Bush Clinton America, I tore it up. Thinking back, maybe I should have mailed bag of pennies with the prepaid envelope...

This Subprime crisis sucks. I didn't think the stock market would get this hammered.

My main holdings are in tech stocks (i know i know) and I'm just getting hammered.

So now BA prices are stagnant, and my net worth is falling. Fantastic.

eburbed,

I feel for ya, man. I keep thinking I should get my 'downpayment' amount out of stocks and in bonds. The rest I would let ride.

Otherside,

If I had a home I'd bought before the bubble, I wouldn't have sold it at the top of the bubble unless I decided I really didn't care for it. If I liked it, I wouldn't have bothered purely from conveniance. I also wouldn't have sucked equity out of it like crazy. There are 2 types of FBs... the ones who bought late in the game because they were afraid they'd lose their 'ticket to millions', and those that refied their originally reasonably priced home for anything other than emergencies.

Buying and holding a home, even through a bubble, isn't stupid. Heck, if you can hold long enough, even buying at the top of a bubble will eventually work out. Just not as nicely as if you'd waited. However, people who bought and refied with the idea that 'there's no end in sight' to the appreciation, and thus the money, and so bought themselves mortgages they can't afford.

I salute people who had the gumption to try and sell at the top and plan on rebuying as close to the bottom as they can. It's not something I would have done, and it's a risk.

theotherside,

You're an idiot.

Save yourself the anxiety and sell your house now (assuming you still can). The longer you wait, the greater the loss. Do the math on that.

"I forgot to add about $500,000* 0.12 = $60,000"

.12 increase for how many years and wouldn't 7% per year be a better assumption? Making the difference more in the neighborhood of at least $100K or more.

You're also forgetting the tax benefit of locking in $500K housing profit tax free.

Oh, also hedging against a bad economy. Cash on hand will get you through with ease. Huge McAlbatross liability...not so much.

http://www.dailykos.com/story/2007/3/7/222428/5798

Astrid, see above for a link to the Kos thread. I think the diary is meant to be snarky. The vast majority of people posting in that diary are against a bailout.

lunarpark,

Thanks! I don't think the diary was snarky but I'm glad most of the comments (after the first two dozen "me-toos") were sensible. DKos attracts all sorts of people, but I find a good many of the folks to be very sensible and responsible people. It is unfair to broadly paint it as somehow radical and extreme when most of the discussions are very middle-of-the-road sensible...or would be, if Bush hadn't pushed middle-of-the-road back to the 11th century.

Dodd's from Connecticut, the state that thought Joe Lieberman was a good idea. Connecticut is now on my "Places That are Dead to Me" List. Plus, I don't even think many Dems who knows Dodd is running for anything.

Ha Ha,

You would vote Republican is they decided to tattoo "Loser"on your forehead and deported you. You've made that quite clear already.

Wow, me can't write me way out paper bag soggy!

That should have read:
"You would vote Republican if they decided to tattoo “Loser”on your forehead and deport you. You’ve made that quite clear already."

Last night around midnight "SP" hinted that s/he had inside information about Google, and that s/he was going to explain its rich valuation to us with information that is publically available.

Did s/he? I'm waiting to see how it's different this time.

SFW wrote:

"..The property owners who are regular posters are mystifyed by this bubble and would like to see the housing market come back to reality (with a small ‘R’) so that our society can function rationally again.."

She left out the part about how we'd like to see the correction Flush the Toilet of some of the petty burgeois arrogance, too.

GC,

That's true to some extent, everybody has different utility functions. However, theotherside's argument extends to everybody and argues that buying is relatively low risk when it is not. He or she also build up a series of straw man arguments and falsehoods (ex: we can earn more than 12% over 5 years if we parked money in 6 month treasury bonds; saying US$ is a liability-which is on its face false).

Or the main straw man, this fearful owner selling merely in anticipation of owning in a couple year. Nobody here has encouraged that! We have current homeowners who are staying put even though they're convinced of a 30%+ correction! This blog's consensus was always towards the macro problem of a housing bubble and the problem of buying, especially stretching to buy, now.

Furthermore, I think RE is going to drop a lot more than 20% from height to final low point.

Finally, it's just hard for me to think that buying a house makes any sense for any practically utility function. Could the ability to paint walls and install new windows really be worth losing hundreds of thousands of dollars over? Even Randy H, who has the money and strong motives to buy, is staying put in a less than perfect position, because the potential cost of buying now is so high.

Could the ability to paint walls and install new windows really be worth losing hundreds of thousands of dollars over?

No, but the perceived ability to extract tens of thousands of dollars every year seems attractive.