San Diego Housing Bubble News and Analysis

Notice that this comes from a realtor blog - of course she would like to see people buying houses under any circumstances.

Oh, and her blog entry before this one lays out how Temecula has hit bottom and it's a good time to buy.

I posted a comment (didn't copy to clipboard before closing window). Was completely respectful, but also very direct. She says all comments are welcome...lets see if she posts:)

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doofrat, that's good stuff.

Yeah, F her. She helped make this mess.

She wants you to buy a lower priced house before you mortgage resets and then screw the bank on the first. She implies she knows all the check boxes to check so that the new bank won't care about the current house.

Somehow I knew you guys would enjoy it. I also like her little quib about herself:

"Kathy Neilsen
A real estate professional skipping along on the rosey streets of real estate city, humming a sweet tune and enjoying the sunny Southern California weather. "

WTH is she on? PSD. Perpetual State of Denial.

Don't realtors have to abide by some code of ethics?
Doesn't that go against the realtors code of ethics?

Wait a second.

I forgot most of them don't have any. Silly me.

When are all the lawyer jokes going to start turning into realtor jokes.

Oh look here it is the code of ethics!

http://www.car.org/index.php?id=MjQ4NA==

Just the Preamble below

While the Code of Ethics establishes obligations that may be higher than those mandated by law, in any instance where the Code of Ethics and the law conflict, the obligations of the law must take precedence.

Preamble
Under all is the land. Upon its wise utilization and widely allocated ownership depend the survival and growth of free institutions and of our civilization. REALTORS® should recognize that the interests of the nation and its citizens require the highest and best use of the land and the widest distribution of land ownership. They require the creation of adequate housing, the building of functioning cities, the development of productive industries and farms, and the preservation of a healthful environment.

Such interests impose obligations beyond those of ordinary commerce. They impose grave social responsibility and a patriotic duty to which REALTORS® should dedicate themselves, and for which they should be diligent in preparing themselves. REALTORS®, therefore, are zealous to maintain and improve the standards of their calling and share with their fellow REALTORS® a common responsibility for its integrity and honor.

In recognition and appreciation of their obligations to clients, customers, the public, and each other, REALTORS® continuously strive to become and remain informed on issues affecting real estate and, as knowledgeable professionals, they willingly share the fruit of their experience and study with others. They identify and take steps, through enforcement of this Code of Ethics and by assisting appropriate regulatory bodies, to eliminate practices which may damage the public or which might discredit or bring dishonor to the real estate profession. REALTORS® having direct personal knowledge of conduct that may violate the Code of Ethics involving misappropriation of client or customer funds or property, willful discrimination, or fraud resulting in substantial economic harm, bring such matters to the attention of the appropriate Board or Association of REALTORS®. (Amended 1/00)

Realizing that cooperation with other real estate professionals promotes the best interests of those who utilize their services, REALTORS® urge exclusive representation of clients; do not attempt to gain any unfair advantage over their competitors; and they refrain from making unsolicited comments about other practitioners. In instances where their opinion is sought, or where REALTORS® believe that comment is necessary, their opinion is offered in an objective, professional manner, uninfluenced by any personal motivation or potential advantage or gain.

The term REALTOR® has come to connote competency, fairness, and high integrity resulting from adherence to a lofty ideal of moral conduct in business relations. No inducement of profit and no instruction from clients ever can justify departure from this ideal.

In the interpretation of this obligation, REALTORS® can take no safer guide than that which has been handed down through the centuries, embodied in the Golden Rule, "Whatsoever ye would that others should do to you, do ye even so to them."

Accepting this standard as their own, REALTORS® pledge to observe its spirit in all of their activities and to conduct their business in accordance with the tenets set forth below.

Clearly, very few Realtards understood or followed that. If that were the criteria for maintaining their license, I know a few that need to have it removed.

stansd - I don't know if it was your post, but some people told her off and she kept the post and replied w/her lame defense. Then an anonymous person (maybe herself) applauded her. WAJ.

http://kathyneilsen.blogspot.com/2008/02...

I will say that for her, she posted what I wrote:

"Anonymous said...
Hi Kathy,

I find your post to be at best distasteful, and at worst, encouragement for fraud.

The entire premise behind your recommendation is that people should take out a new loan before information becomes available that would make the lender reject that loan.

There are rules against these kinds of shenanigans in nearly every other sphere. A corporation cannot issue a bond and fail to disclose a material loss it knows it is about to experience. A divorce settlement would not be binding if one of the parties was holding back a huge windfall he/she was about to receive.

If you were lending the money, would you view the fact that the borrower was about to default as material? How would you feel if the headline on the union Tribune read, "Kathy Neilsen obtains loan by hiding material facts from lender". Would you think it appropriate for someone to get their real estate license 1 day before being convicted on felony money laundering charges?

You are not stupid, but you should be ashamed. You are at best encouraging irresponsibility, and at worst outright fraud.

You may want to consider whether this kind of marketing will inflame your more honest and upright clients and potential clients. I hope it does."

The anonymous person who posted applauding her was 3 minutes after her defense post. Come on. Has to be her. Please. I guess give her credit to putting your post up.

I added a comment after 8:30pm. Let see if it gets posted. No foul language or name calling in it.

Don't waste your time, it is marketing in a blog format. I love the article from Feb 4th, calling bottom and claiming some homes have dropped 100k in the last year but only those that were priced incorrectly. I can probably find drops of 100k since Feb 4th when she gave that sage advice, I can certainly find 200k drops all day without trying and have posted 50% drops many times. I'll take the challenge, heck, I'll go one handed on a dial up connection.

Some other gems is her analysis of the 100k average sales price difference between murrieta and temecula, her only explanation was that maybe the next month the numbers would be different, HEY, thanks for the analysis. She put up the raw numbers (1800 listings in mur, 50 sales, 1300 listings in tem, 50 sales) but instead of pointing out that a new record of 26 and 36 months of inventory had been reached, she still managed to come to the conclusion that it has hit bottom and it's a great time to buy! I guess they don't teach history or economics in the Tarbell realtor training classes.

More "tricks." This person posted:

"Anonymous said...
Thanks for the good story. I live in California and know a neighbor who did exactly what you are reporting about. Only in this case, the wife quit claimed her name off the property. Her income was NOT REQUIRED to buy their house.

I have done this before (wife purchases house). My wife has a high FICO, and I make twice the income with almost zero FICO score. Why? I own my own business with NO DEBT, no plastic, lots of savings. FICO scores measure how you pay back DEBT. If you have NO DEBT, you have no FICO. I don't care about a bad credit report, since I am not a debtor ie no loans no plastic. The lender required us to have both names on the mortgage even though only one of us bought it. Credit scoring is a scam to encourage people to go into debt. We are both savers, and Realtors, mortgage lenders and banks HATE SAVERS---because we don't give them our hard earned money.

Once the QUITCLAIM document was filed with the County recorder. The husband placed a notice in the newspaper stating he was solely responsible for the mortgage. In the mean time, the wife found a suitably priced house and bought it using only her credit information. ONLY SHE WAS THE BUYER. The husband gets the bad credit (He does not care since he has NO OTHER DEBT and NO CREDIT), the wife buys a new house. It looks perfectly legal to me. Since SHE was the one buying the house, she did not lie. If she wanted her "deadbeat" husband to move in with her thats her problem. LOL ROFL.

They told me the loan company did not care--they had 20% to put down on the house. ITS ALL ABOUT MONEY - NOT MORALITY!"

Has anyone seen these guys who claim to Stop Foreclosure with 97% success? Loan Resuce Programs is their site. I know until I ran into them I didnt have a clue services like this existed.

Nope. Scam.

Instead of attacking the realtor on the website most of you need to learn to face facts. If someone bought a home between the second half of 2004 and 2007 then they are likely going to be foreclosed on. When you buy a house in California (and you don't refinance or take out home equity) then the loan is a full collateral non-recourse loan. That is you lose your house to foreclosure and the lender gets your house and nothing else. They are entitled to nothing else( they can't come after your bank account). Now if you buy a house for $700000 and you can't afford to make payments then it would be better for you to let the house go. Buy the same house for $425000 and then the bank will get their money (because you can now afford it) and you will get your house and everybody lives happily ever after. ALSO, a word of warning anyone out there who paid WAY to much for their house and you are on a 3/1,5/1 ARM or anything like it and you are scrambling to refinance. DON'T DO IT! If you refinance the bank can come after additional assets. Let the house go and start over again. And any of you who inherited, bought a house (a long time ago) for really cheap and you are renting homes for tasty incomes and/or you are paying $20 a year in property tax because of PROP-13. And you aren't interested in buying a house at current valuations then SH&! the F%^& UP.

That is not entirely true pedrocon. Read CA Civil Code 580d. If you refinance, and the lender pursues a non-judicial foreclosure (99.9% of lenders pursue non-judicial foreclosures), then the lender cannot sue you for a deficiency. It is still non-recourse. Of course, if you have two loans on the property, and you refinance them both, and the 2nd becomes a sold-out junior, then he can come after you for a deficiency. In other words, it would be a recouse loan in this situation.

Now if you buy a house for $700000 and you can't afford to make payments then it would be better for you to let the house go. Buy the same house for $425000 and then the bank will get their money (because you can now afford it) and you will get your house and everybody lives happily ever after.

Hmmm. How do you figure that everyone lives happily ever after? One party is going to take a $300,000 loss (most likely taxpayers). So no, everyone isn't going to live happily ever after. Some scum bucket is going to suck $300K out of the wallets of unhappy taxpayers.

A home lender takes a risk every time they lend someone money. A loan without risk does not exist. When you buy real estate the house is collateral for the money the lender gives you to purchase the house. The lender holds the title and you pay the carrying costs (eg property tax yadayada). Therefore, if for ANY reason as a home owner you do not wish to live in the house you can simply leave and the lender gets the house for good. This is (was) considered to be a fair and equitable arrangement. Now about your comment, in a free market the bank would be in big trouble if they made to many risky loans ( or bought too many investments related to bad loans) then their market cap might plummet and they might even go bankrupt. But in America the government have socialized irresponsible investing by the wealthy eg Bear Stearns, S&L, Fannie and Freddie, so the tax payer will bail them out. The intent is to make sure the banks have the liquidity to lend money again. So the banks are bailed out in the long run. But if you are some poor sucker who made a bad investment the government won't be sending you some extra money so you can pay your mortgage, your income isn't going up, maybe you or your wife lost their job. Why should you be a slave to the bank when you made a bad investment. Especially, when the loan is a fair and equitable COLLATERIZED loan. Send the lender your keys and move on. Life is too short to play slave. Rent or look for another house its not the end of the world.

@pedrocon

If you take out a loan and use 'tricks' to prevent the lender from knowing about the other mortgage, you are guilty of fraud 18 USC 1014 -- look it up.

penalty: fined not more than $1Mil, imprisoned not more than 30years.

If you enter into a new purchase while simultaneously intending to default on the old.. you may be guilty of conspiracy to commit fraud as well.

Now if you think that the 'defaults' will make it easier.. you are wrong. Watch what Fannie/Freddie are doing. The spread between Treasury rate and lending rate is increasing. This is known as risk premium. Because of people defaulting and pulling tricks like you support, the banks see increase risk in lending and will increase the risk premium put on all loans and mortgages. The result is that is really screws everyone.. no happily ever because mortgage rate will go sky high. Also, you need to remember where the bank is getting the money to lend.. it is from your pensions and savings. Remember: Banks operate with 'other people's money!'.

It is not the choice of the banks in a free market to lend non-recourse. It is the law of California.

In most sane countries, mortgages are full recourse and that encourages more sensible borrowing and cuts the size of any house price boom.

It is insane that banks are forced to lend non-recourse on second homes for example : more communist than capitalist.

I spoke with a friend who runs a residential branch for Citi over dinner about this. I asked him why wouldn't someone who is upside down now default on their current house and either move up or buy a similar house at a much lower cost. His response is that the new lender will not close the loan on the new house without you closing w/o short/foreclosure on your current house.

It is not insane to have a non-recourse loan. Again. I repeat in general a collateral loan for a home is normally a very safe investment for the bank, since historically the price of real estate goes up ( tracking inflation ). It is totally reasonable for the home to be sufficient collateral for a home loan. If the current lenders aren't happy with the arrangement they should get out of the business. Believe me the vacuum will be filled quickly by new lenders. The current condition of the market is atypical.

About the risk premium comment (ucodegen) if interest rates continue to climb then this will force the price of real estate to drop further. With tightening lending standards, high interest rates, and weak income growth comes lower affordability which in the end will cause prices to drop further. Again if we let the market regulate itself in the long run it will probably work better than the gov trying to patch up a sinking ship.

If your are foreclosed on and the lender doesn't want your business then you rent. If you have strong income (100000+) and sound fundamentals (good down payment)other than your foreclosure and you want to buy a $300000 instead of the $700000 house that you bought in 2005 I have a feeling that there will be lenders out there who will be interested in your business. MONEY TALKS PEOPLE!

This from Jim's Website:

The mortgage market is getting tighter.

First the DAPs bit the dust, and now the 'Anti-Buy-and-Bail' program is kicking in.

In order to get a Fannie/Freddie mortgage, homebuyers who already own a house have to have at least 30% equity in it to qualify. If not, full PITI payments on BOTH houses get held against you when qualifying, and you have to have in the bank at closing at least six-month's worth of payments on BOTH houses. No credit for renting the previous house, even if you have a rental agreement, which was the usual solution previously.

Countrywide now includes FHA loans in the same category.

A mortgage banker, and FHA expert, told me yesterday that they think that once the new housing bill gets implemented in October that all lenders will eventually incorporate the 'Anti-Buy-and-Bail' guidelines into both Fannie/Freddie and FHA underwriting.

Mortgages are being eliminated for these buyers:

1. Those who can't/won't document their income.

2. Those who document their income, but have too many write-offs to qualify.

3. Those with little or no money down.

4. Those who own the house they live in, but have low equity and not enough money left over once they make their bigger down payment on the house they want to buy.

If you have a down payment that covers what the bank considers to be an acceptable amount of the value of the house in a down market and you have good income and ok credit then they'll do business. Part of the power of the banks is they are willing to do anything to make a buck (ANYTHING), they will screw you, the government, they will screw anyone who is willing to be screwed. They count on the average person being somewhat moral and ethical which they are and this gives them an edge in business dealings. Treat the banks like they treat you, treat everyone else like you want to be treated.

Toots. Thanks for the insight!!
Looks like the RE market is going to get another nail in its coffin coming up pretty soon.

Yeah, toots, that's good news. Too bad they didn't enact this last year. Some people need to go to jail.