Homeowners, Lenders Skirt Default, May Curb U.S. Housing Slump

[little lady]

OH BOY!!! Wonder if this is what will happen….at least I think it will start really getting bad soon……..

http://www.bloomberg.com/apps/news?pid=20601109&sid=an4wlQaDRorE&refer=home

[little lady]

“What’s happening is the front end of this wave of teaser- rate loans that are coming into full pricing,” Bies said. “So what we’re seeing in this narrow segment is the beginning of the wave. This is not the end, this is the beginning.””

That’s what I mean!

[Cow_tipping]

This will speed the crash. Why ??? The foreclosure process takes 30 to 180 days depending on the state. The for sale sign can go up in minutes, and when whole neighborhoods go up for sale, with no one paying mortgages, banks will take a huger loss to get it off their books. Of course that sets the high water mark for the rest of the sales, who will all get under it progressively … till the market crashes in 1/2 the time it will if it was foreclosed on. States with a sudden death law for foreclosures (short period like 1 month) will crash less relatively than long death states.
Cool.
Cow_tipping.

[Bugs]

A property that is being sold short is still part of the must-sell inventory and those sellers don’t have the luxury of waiting for their price. They have to discount it enough to move it.

[kewp]

“A property that is being sold short is still part of the must-sell inventory and those sellers don’t have the luxury of waiting for their price. They have to discount it enough to move it.”

Egg-actly. I don’t have much of a problem with this as long as the prices drop and the FB learns a lesson.

I’m not enough of a JBR to wish a lifetime of ruined credit over these folks heads.

[waiting hawk]

http://video.google.com/videoplay?docid=6897935140271687860

[little lady]

waiting hawk
OUTSTANDING!!!!!

I got chills! Who sings that song and what is his name?
All the lenders, all the money, when will it get WORSE?

The Temecula area looks REALLY bad, but my next door(in Santee) neighbors house just got taken off the market. They have an accepted offer in 2 or 3 weeks. I do notice some of the houses in my area have been dropping prices to match ours, or less even. Yet they still sit. When will the HUGE mark downs start………I am waiting too….

[no_such_reality]

I say BS on the Article.

I’ve been watching ‘short sale’ claims for months. Guess what, the banks aren’t approving anything that basically doesn’t cover their loan.

What the banks are doing is delaying acknowledgement that the foreclosure wave is going to be big, and isn’t going to be just “sub-prime”. They’re jockeying for another quarter or two, maybe three of good stock prices before their book value and reserve gets crushed by having a load of REOs.

Right now, the media is blathering about sub-prime. Joe Sixpack is sitting at home thinking that isn’t him. When the foreclosures start roiling through all the neighborhoods, everybody will wake up and smell the coffee that sub-prime in reality is nextdoor, not just the ex-Ghetto.

[Cow_tipping]

Exactly … I love it when people say, that happened in the not so desirable areas where these houses sold for 150K, In my area everything was 500K, and its not happening here … wrong answer … Its not happened yet … or you’re looking the wrong way …
Cool.
Cow_tipping.

[cr]

The title is complete BS. I imagine it’s designed to comfort those who have foolishly gotten in over their heads on both sides of the loan application.

Everything but the title of this article indicates banks and owners are going to get hit hard.

“”Banks don’t want to be real estate managers,” said Doug Duncan, chief economist of the mortgage association.”

The article then points out the rise in defaults, pointing to an increase in REO’s which will only end up forcing banks to either hold onto Real Estate for a longer time, or lower prices.

How much “forgiveness” can the banks offer, before they have nothing left but a bunch of empty houses?

[Bugs]

The advantage to a short sale strategy is that it limits the lender’s losses. The borrower doesn’t trash the house out of vindictiveness, the house doesn’t sit vacant for several months and the listing agent doesn’t call label the property “bank-owned foreclosure”, thereby automatically encouraging the uber-lowball offers. The problem with a short sale strategy for a lender is that they’re still under a tremendous amount of pressure to clear that loan and they can’t wait for a borrower who’s anything less than committed to getting out.

I could see a lender entering into an approval for short sale process in lieu of foreclosure, but only if they can exercise some control over the marketing of the property. For instance, if they could designate or approve of the listing agent, the list price, arbitrary price reductions at specified intervals, availability of access, etc.. The same controls they’d have if they had foreclosed and had become the sellers themselves. A lender couldn’t allow a borrower enough freedom to stay indefinitely or otherwise obstruct the marketing or conveyance of the property.

[waiting hawk]

The artist and song is
Josh Groban -Remember When It Rained

As for your question, look for foreclosures mounting and job loss. If that doesnt mount than it will take a very long time. I am watching those 2 areas more than anything else at the moment. I’m just glad the area I want to live in is crashing.

[bubba99]

It is odd that the media is only discussing the impact on the subprime lenders. As housing prices drop in response to subprime foreclosures, the “Regular” lenders are also at risk. The zero down, or low down payments used by conventional lenders can leave a homeowner underwater. If the homeowner is deep enough in the negative category he/she may choose to walk away. It will only take a few more percentage point drop in prices to make recent buyers join the exodus. We have probably already seen a 20% drop from the highs of early 2006, and this puts many buyers at a breakeven or negative equity already. Many will try to hold out for some time, but why pay 4k per month when you can rent the same property for 2k

[little lady]

“I say BS on the Article.

I’ve been watching ‘short sale’ claims for months. Guess what, the banks aren’t approving anything that basically doesn’t cover their loan.”

I say if we don’t see larger price declines by 12/07, it’s not gonna be much worse than it is. The house prices will stagnate. Of course, I am hoping I am wrong……

[equalizer]

WSJ had article in last few days that mentioned that the defaults are correlated not to sub-prime, but directly with ARMs with low teaser rates, including both prime and sub-prime!! That makes perfect sense. A person is going to default because their rates went up, generally not because their credit is perfect or not.

[Author]

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