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DaCounselor
ParticipantYeah, Leesburg is pretty far out there. It’s not exactly in the middle of nowhere anymore due to all the development out in the far western ‘burbs, but it’s still a haul and a half to get into DC. I have a number of good friends who live in the general vicinity (Ashburn area). Huge swaths of track housing out there – from condos to Mcmansions. I think they are going to get hit pretty hard out there with devaluation when all is said and done, but probably not as bad as out here in SD. The DC/NoVa economy always seem to weather the storms better than most places which will help prop up the market.
If you want to track true luxury valuation in the DC area you do need to be looking at places like McLean, Great Falls, BCC, etc. Not sure what is happening there, but I do know a fella who bought a 1 bed condo in Shirlington in ’05 for $320K and they are selling now for around $280K.
DaCounselor
ParticipantYeah, Leesburg is pretty far out there. It’s not exactly in the middle of nowhere anymore due to all the development out in the far western ‘burbs, but it’s still a haul and a half to get into DC. I have a number of good friends who live in the general vicinity (Ashburn area). Huge swaths of track housing out there – from condos to Mcmansions. I think they are going to get hit pretty hard out there with devaluation when all is said and done, but probably not as bad as out here in SD. The DC/NoVa economy always seem to weather the storms better than most places which will help prop up the market.
If you want to track true luxury valuation in the DC area you do need to be looking at places like McLean, Great Falls, BCC, etc. Not sure what is happening there, but I do know a fella who bought a 1 bed condo in Shirlington in ’05 for $320K and they are selling now for around $280K.
DaCounselor
ParticipantYeah, Leesburg is pretty far out there. It’s not exactly in the middle of nowhere anymore due to all the development out in the far western ‘burbs, but it’s still a haul and a half to get into DC. I have a number of good friends who live in the general vicinity (Ashburn area). Huge swaths of track housing out there – from condos to Mcmansions. I think they are going to get hit pretty hard out there with devaluation when all is said and done, but probably not as bad as out here in SD. The DC/NoVa economy always seem to weather the storms better than most places which will help prop up the market.
If you want to track true luxury valuation in the DC area you do need to be looking at places like McLean, Great Falls, BCC, etc. Not sure what is happening there, but I do know a fella who bought a 1 bed condo in Shirlington in ’05 for $320K and they are selling now for around $280K.
DaCounselor
ParticipantIf you’re looking at a loan that is indexed to the Prime rate, you may want to identify with specificity who’s Prime rate is being used. Every bank sets their own Prime rate – but for practical purposes I think most big banks offer the same or similar Prime rate. The WSJ publishes a Prime rate that is the rate being offered by the nation’s biggest banks – this is the WSJ Prime and may be the Prime index for alot of loans.
I don’t know of any mandate that Prime must have a +3% margin over the FFR and/or that Prime must move lockstep with the FFR, but that seems to be the case, at least recently. I don’t know about historically. I think you are probably fairly safe operating with the assumption that a +3% margin will remain in place.
For what it’s worth (which ain’t much) I believe we are looking at a low FFR and Prime for the next few years at least. I think there is a 50% probability of the FFR/Prime going down a bit more before going up. There is also an international effort underway to reduce LIBOR down into a tighter position with the FFR.
DaCounselor
ParticipantIf you’re looking at a loan that is indexed to the Prime rate, you may want to identify with specificity who’s Prime rate is being used. Every bank sets their own Prime rate – but for practical purposes I think most big banks offer the same or similar Prime rate. The WSJ publishes a Prime rate that is the rate being offered by the nation’s biggest banks – this is the WSJ Prime and may be the Prime index for alot of loans.
I don’t know of any mandate that Prime must have a +3% margin over the FFR and/or that Prime must move lockstep with the FFR, but that seems to be the case, at least recently. I don’t know about historically. I think you are probably fairly safe operating with the assumption that a +3% margin will remain in place.
For what it’s worth (which ain’t much) I believe we are looking at a low FFR and Prime for the next few years at least. I think there is a 50% probability of the FFR/Prime going down a bit more before going up. There is also an international effort underway to reduce LIBOR down into a tighter position with the FFR.
DaCounselor
ParticipantIf you’re looking at a loan that is indexed to the Prime rate, you may want to identify with specificity who’s Prime rate is being used. Every bank sets their own Prime rate – but for practical purposes I think most big banks offer the same or similar Prime rate. The WSJ publishes a Prime rate that is the rate being offered by the nation’s biggest banks – this is the WSJ Prime and may be the Prime index for alot of loans.
I don’t know of any mandate that Prime must have a +3% margin over the FFR and/or that Prime must move lockstep with the FFR, but that seems to be the case, at least recently. I don’t know about historically. I think you are probably fairly safe operating with the assumption that a +3% margin will remain in place.
For what it’s worth (which ain’t much) I believe we are looking at a low FFR and Prime for the next few years at least. I think there is a 50% probability of the FFR/Prime going down a bit more before going up. There is also an international effort underway to reduce LIBOR down into a tighter position with the FFR.
DaCounselor
ParticipantIf you’re looking at a loan that is indexed to the Prime rate, you may want to identify with specificity who’s Prime rate is being used. Every bank sets their own Prime rate – but for practical purposes I think most big banks offer the same or similar Prime rate. The WSJ publishes a Prime rate that is the rate being offered by the nation’s biggest banks – this is the WSJ Prime and may be the Prime index for alot of loans.
I don’t know of any mandate that Prime must have a +3% margin over the FFR and/or that Prime must move lockstep with the FFR, but that seems to be the case, at least recently. I don’t know about historically. I think you are probably fairly safe operating with the assumption that a +3% margin will remain in place.
For what it’s worth (which ain’t much) I believe we are looking at a low FFR and Prime for the next few years at least. I think there is a 50% probability of the FFR/Prime going down a bit more before going up. There is also an international effort underway to reduce LIBOR down into a tighter position with the FFR.
DaCounselor
ParticipantIf you’re looking at a loan that is indexed to the Prime rate, you may want to identify with specificity who’s Prime rate is being used. Every bank sets their own Prime rate – but for practical purposes I think most big banks offer the same or similar Prime rate. The WSJ publishes a Prime rate that is the rate being offered by the nation’s biggest banks – this is the WSJ Prime and may be the Prime index for alot of loans.
I don’t know of any mandate that Prime must have a +3% margin over the FFR and/or that Prime must move lockstep with the FFR, but that seems to be the case, at least recently. I don’t know about historically. I think you are probably fairly safe operating with the assumption that a +3% margin will remain in place.
For what it’s worth (which ain’t much) I believe we are looking at a low FFR and Prime for the next few years at least. I think there is a 50% probability of the FFR/Prime going down a bit more before going up. There is also an international effort underway to reduce LIBOR down into a tighter position with the FFR.
DaCounselor
Participant“So are you saying that a regular no cash out refi (not a HELOC) of an original loan is also a non – recourse loan???”
__________________________________I don’t know of a specific ruling in CA that states “a no-cash-out refi of a purchase money loan is a non-recourse loan.” I also have not seen a specific ruling that suggests a no-cash-out refi is automatically a recourse loan. The cases I have seen are not precisely on point but do seem to suggest that a determining factor is cash-out or no-cash-out.
The legislative intent of the governing statutory section – CCP 580b – supports a public policy against deficiency judgments. The section refers to the financing of the “purchase price” – which can be construed to include a no-cash-out refi. That’s what a no-cash-out refi is, after all – financing the purchase price.
DaCounselor
Participant“So are you saying that a regular no cash out refi (not a HELOC) of an original loan is also a non – recourse loan???”
__________________________________I don’t know of a specific ruling in CA that states “a no-cash-out refi of a purchase money loan is a non-recourse loan.” I also have not seen a specific ruling that suggests a no-cash-out refi is automatically a recourse loan. The cases I have seen are not precisely on point but do seem to suggest that a determining factor is cash-out or no-cash-out.
The legislative intent of the governing statutory section – CCP 580b – supports a public policy against deficiency judgments. The section refers to the financing of the “purchase price” – which can be construed to include a no-cash-out refi. That’s what a no-cash-out refi is, after all – financing the purchase price.
DaCounselor
Participant“So are you saying that a regular no cash out refi (not a HELOC) of an original loan is also a non – recourse loan???”
__________________________________I don’t know of a specific ruling in CA that states “a no-cash-out refi of a purchase money loan is a non-recourse loan.” I also have not seen a specific ruling that suggests a no-cash-out refi is automatically a recourse loan. The cases I have seen are not precisely on point but do seem to suggest that a determining factor is cash-out or no-cash-out.
The legislative intent of the governing statutory section – CCP 580b – supports a public policy against deficiency judgments. The section refers to the financing of the “purchase price” – which can be construed to include a no-cash-out refi. That’s what a no-cash-out refi is, after all – financing the purchase price.
DaCounselor
Participant“So are you saying that a regular no cash out refi (not a HELOC) of an original loan is also a non – recourse loan???”
__________________________________I don’t know of a specific ruling in CA that states “a no-cash-out refi of a purchase money loan is a non-recourse loan.” I also have not seen a specific ruling that suggests a no-cash-out refi is automatically a recourse loan. The cases I have seen are not precisely on point but do seem to suggest that a determining factor is cash-out or no-cash-out.
The legislative intent of the governing statutory section – CCP 580b – supports a public policy against deficiency judgments. The section refers to the financing of the “purchase price” – which can be construed to include a no-cash-out refi. That’s what a no-cash-out refi is, after all – financing the purchase price.
DaCounselor
Participant“So are you saying that a regular no cash out refi (not a HELOC) of an original loan is also a non – recourse loan???”
__________________________________I don’t know of a specific ruling in CA that states “a no-cash-out refi of a purchase money loan is a non-recourse loan.” I also have not seen a specific ruling that suggests a no-cash-out refi is automatically a recourse loan. The cases I have seen are not precisely on point but do seem to suggest that a determining factor is cash-out or no-cash-out.
The legislative intent of the governing statutory section – CCP 580b – supports a public policy against deficiency judgments. The section refers to the financing of the “purchase price” – which can be construed to include a no-cash-out refi. That’s what a no-cash-out refi is, after all – financing the purchase price.
DaCounselor
Participant“While HELOCs are recourse, to get recourse the lender has to pursue a judicial foreclosure. Not something likely to happen in California. Once the trustee sale happen it wipes out everything. So unless the HELOC buys out the first and judicial forecloses on the house.. they have no recourse. From a practical point of view, high LTV HELOCs in a declining market in California are non-recourse.”
_________________________________Yes and no. In this instance it sounds like he is considering paying off a non-recourse purchase money 1st with a HELOC. There is CA case law that suggests a no-cash-out re-fi of a non-recourse loan retains the non-recourse characteristic of the original loan. In this instance, the HELOC may be non-recourse. As an aside, if a HELOC is purchase money it is non-recourse.
A post-purchase HELOC (to pay off CC or buy toys) is a recourse loan and the lender does in fact have recourse even if the 1st forecloses. While the HELOC is “wiped-off” the property, the now unsecured debt still exists and can be turned into a judgment and collected.
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