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disabuser
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" The homeowner's credit score takes less of a hit in a short sale, 100 points compared to 200 points for a foreclosure, he said."
What' are the credit consequences of a deed in lieu of foreclosure? It seems to me that if you are going to stop making the payments required under your mortgage contract but give the lender the collateral that secures that contract, you have behaved responsibly. I don't know what lenders expected to happen when the bubble burst. Certainly I disagree with Henry Paulson who said that homeowners were just like speculators when they walked away from their homes whose loans had gone underwater. I liked Jeff Scharf's take on this in the Sentinel column, "Banks may be getting more 'jingle mail' soon."
If lenders were smart they would then rent back the properties to the buyers or someone else while they were marketed to reduce their carrying costs and with the condition that they former buyers or new renters keep them up and cooperate in facilitating the sale.
" His wife, who volunteers at the Watsonville Law Center, told him about a homeowner who found out the four-bedroom house he wanted to remodel actually had only two legal bedrooms, and then he got a deportation notice."
Illegal immigration had a significant role in providing the fundamental demand necessary to drive up housing prices. Simply put, without an increase in household formation, there isn't sufficient demand relative to supply that is necessary to enable sellers to demand higher prices. Certainly the abandonment of traditional underwriting with things like qualifications under teaser rates, no doc loans and little or no down payment was like throwing gasoline on a market that was already heated due to demand driven by immigration population pressures in a world where anti-development politics is a powerful force. Allowing illegal immigrants themselves to buy houses also increased demand. And shouldn't loan qualifications also include the legal right to be in the country and work? Without that the loan is dependent on the government's continued refusal to enforce immigration laws, hence lenders have an active interest in the violation of immigration law.
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john
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"It's hard to figure out what these homes are worth," Frey said. "It's not a science, it's an art."
I know it's not rocket science, but now these realtors are artists????? Wow.
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ICE
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The "ART" of knowing how much they can get someone to over-pay for a home.
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non-homeowner
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He predicted that other buyers could get a three-bedroom house in good condition for $350,000. "I don't see it going much lower." Frey Said.
I like how all the Realtors are saying, "better buy now, it's not going to get much lower." They are so smart. I bet you Frey was one of the Realtors also saying, "buy now, it will only go up." I'll tell you, I won't be using Frey when I look to buy!
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JHENRY
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I think when the banks own all these houses they will lower the prices til they sell. The market is in for a huge correction.
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mermaid girl
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Just a warning to people buying foreclosure properties. I walked away from a property last year ... I had a good loan and had owned the property for ten years. It was the house from hell. I put several hundreds of thousands of dollars into "fixing it up" and when I finally gave up on it and walked away, it was virtually a tear down both inside and out. I actually feel sorry for the people who just bought it and think they got a "really good deal". It looks great! But the problems are all hidden in the walls and underground. The new owners will not know what a mistake they made for some time. For now, they are just basking in the glow they must feel after buying a property for significantly less than one would think it was worth.
Not all foreclosures are due to bad loans. Buyer beware! Some homes like mine, are just SO bad, that no amount of time and money can make them livable.
When I buy another home, it will definitely NOT be a foreclosure where nothing is disclosed. I KNOW firsthand what I could be walking into.
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Bobbie
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I find it interesting that consumers are constantly looking for someone to blame. Are they not partly to blame as well? This whole mortgage crisis / foreclosure situation could have easily been prevented if some of these lenders hadn't been so greedy (and some bad realtors as well) and all the buyers hadn't been so ready to take on a mortgage beyond what they could afford based on the plan of refinacing in a short amount of time. All the blame can't be put on the lenders and realtors - consumers need to accept some responsibility for their actions. I am a local Realtor and I advise clients to buy or not to based on their individual situation in relation to the current market. I advised many clients not to buy in 2005 and have also done so this year as well. One case in particular - I told a couple I was working with that it looked like the market was starting to slow down and would most likely start declining soon but their lender kept telling them they could refinance in a few years so just go ahead and buy now. They were paying more than the home was worth, I knew they were overpaying for the property, and told them that CLEARLY. I then refused to represent them for various reasons: 1. they were going through a lender that didn't have a good reputation (one who must have said a million times "you can refinance in a few years when your interest only term is up and values will be higher so we can lower your payments"; 2. Paying more than they could afford; 3. paying more than the house was worth. They bought it anyway! Two years later when their interest-only payments went up and their wonderful lender couldn't get them a better loan and values were down - guess who they called for help! You guessed it - me. So here is an example of how I think the consumer needs to accept responsibility and quit blaming all the other people involved. Yes their lender was fishy - but they were informed of that by the Realtor they were supposed to trust - they hired me to represent them so why not listen to my advice? Because it wasn't what they wanted to hear! Fortunately the people in that situation were able to work with the bank to work out a new payment plan to keep their home for now. But that isn't the norm and that's the reason all these homes are being foreclosed on. Which affects values across the board. Not to rant but I am frustrated with this whole thing. I do agree that SOME lenders and SOME realtors were giving out bad advice - but please don't think all Lenders and Realtors are bad based on the actions of a select few. Values: An art or a science? The current market is changing due to a multitude of factors and most of those are hard to predict. Give the professionals a break, your Dr. doesn't always know exactly what's wrong with you and certainly can't tell you when your going to get a cold....so how can you expect a lender to predict the lending market in a year? Or expect a realtor to predict home values in a year? Realtors, myself included, base our pricing on comps in the neighborhood....unfortunately the flood of foreclosures in some neighborhoods has decreased the value of homes that aren't in foreclosure, etc. So my advice to you - if you can hold on to your house - do it. Wait it out. This will pass. The homes will sell and the market will shift - it always does. When you ask? That is not up to me but Spring is here - which should bring with it more listings and more buyers who are looking for a bargain. There are many bargains to be had and yet - as a buyer you need to beware that you aren't overpaying, or overspending. It isn't the best time for EVERYONE to buy - you have to look at your specific financial situation to determine if it is the right time for you. When you choose a Realtor/Lender you need to first determine if they have your best interest as their #1 priority. Ask family and friends for a referral.
Best of luck!
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Pandora
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What is a house worth?
Like most things, a house is worth what someone is willing & able to pay for it. In 2005 many people wanted to/were able to buy a home, so the price was expensive. Today not as many people want to/ are able to purchase a home so the price is down. The law of supply and demand.
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xxy
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I am so glad that I completely disregarded our misguided mortgage broker's advice in 2006 and followed my own intuition instead!
if we'd listened to that advice we would be completely underwater, lost our savings / down payment and owed so much more $. all the broker's answers were the same - you can refinance later! you can sell later! dont worry, the house will go up in value so of course this makes sense!
I have never been happier that I listened to that funny feeling that something didnt feel right, called intuition and not the misguided advice of said broker !!! if we'd listened to the broker, oh the troubles we'd be in....
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SC Midtown
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I call these people the land mafia. It seems like they make their money from a legal pyramid scheme! Selling to people who often can't afford it or to some bloated Silicon Valley type who wants a nice spread by the sea. I'm SO OVER IT already. I wish we could pass a local ordinance that you can only sell X percentage of properties to people out of town. It's sad because being born and raised here, I can count on one hand the number of people I know who own houses that I grew up with. And these are people with high paying jobs and careers (myself included)!:(
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Just Us
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What do you call 10,000 realtors lying dead in the landfill?
A good start.
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bob bitchen
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Wow, realtors are ALSO artists. Those realtors are so smart. An artist as well as a crook. What a joke. Realtors suck for the most part. I would not trust a cheesball realtor any further than I could throw his/her cheap suit wearing, leased Lexus driving, gum chewing, twice divorced ass.
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alta
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Two years of supply and Frey doesn't see it going much lower ? The downcycle just began and it will last several years.
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Steve
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Prices will fall until a purchase with 20% down will buy a house that can rent for a price that will cover all costs of ownership. There is still 25-50% down to go, especially in places like Watsonville that are not that great to live.
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Judge it!
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