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Jim BrubakerParticipant
When the GSE’s (Government Sponsored Enterprise ie Fannie Mae or Freddie Mac) take in a first trust deed loan, they are oblivious to a HELOC. The HELOC (home equity line of credit) has to stand on its own two feet. Its a second trust deed. In a default, the HELOC would have to cure any deficiency’s on the first in order to foreclose on the property.
If its an 80% with a 20% HELOC and the property drops in value by 20%, the bank holding the HELOC is not going to cure the first trust deed its going to walk with a loss.
The HELOC is not going to go away from what I understand. It might drop off of the Trust Deed when the first forecloses but the amount owed is still owed by the originator of the loan, at that point it is an unsecured loan. I could be wrong on this–some of the stuff I read, I haven’t had the time to research
Jim BrubakerParticipantThey’re going out of business for another reason.
The 80/20 loan is an end run on PMI. The PMI drops out of a 80/20 no money down loan. Plus if your house has appreciated to an 80% LTV, you can drop the PMI. In essence, the 20% second is the looser on the default.
The “Second Trust Deed” is going to have the same ring as “Peruvian Bonds” in the near future.
March 26, 2006 at 1:54 PM in reply to: Where’s the money coming from to increase home prices? #23818Jim BrubakerParticipantI didn’t mean to get political both sides do it. The Republicans tend to spend printed money into the system with government purchases in the private sector that trickle down to the individual. The Democrats on the other hand are more into social programs like Social security, health care, food stamps. That part of the system can deliver printed money faster to more individuals. These are broad generalizations.
Since social programs are only transfer payments that consume and produce no product, they tend to be more inflationary.
Both party’s are pushing this hand basket to hell, I was (tongue in cheek) accusing the Democrats of pushing a little harder. I guess my “smily” before the period is not so obvious–:>).
March 26, 2006 at 10:37 AM in reply to: Where’s the money coming from to increase home prices? #23813Jim BrubakerParticipantWe agree on the enormous size of money involved. The only people not to be hurt by this fiasco will be those with their money in the bank, its FDIC insured. And if you remember the government even bailed them out in the S&L massacre.
There are mutual funds out there that are privately insured. Failure of any one of them would bring down the private insurance that backs them up.
Take your Vanguard fund, if one of the units of that fund goes bankrupt, is the rest left intact? At that point, what happens if there is a run on the fund, and everyone wants to move their money?
6 Trillion dollars worth of real estate is going to be marked to market. Thats about 12 times the size of the Savings and Loan disaster of the ’90’s.
Since we are dealing with such fantastic amounts of money, I feel, the mutual funds have to be considered a prime suspect.
On the issue of the government printing money, they have to spend it to get it into circulation. The Democrats have been doing that for years :>).
March 25, 2006 at 10:26 PM in reply to: Where’s the money coming from to increase home prices? #23804Jim BrubakerParticipantI’ll tell you where its coming from and you won’t like it. The first thing you need to know is that your IRA and 401k or 403K are not Federally insured. There are a few execeptions, Union Bank has a FDIC IRA that I got a pamphlet on yesterday.
Your retirement savings are being invested by mutual fund managers that have never seen a bear market. The last one started in 1968. These people are buying the Fanny Mae and Freddie Mac bond packages. They are not federally insured and probably never will be. It is implyed that they are Federally insured but they ain’t and probably never will be without an act of Congress.
So what you are looking at is a repeat of the S&L fiasco from 10 years back.]
The only problem with it this time (if your 60 years or older), you may be dead before you can collect what you put in.
The other irritating thing, the losses are not tax deductable. Go figure!!!
March 25, 2006 at 9:53 PM in reply to: S&P to launch indexes that track regional housing prices #23803Jim BrubakerParticipantI think that we have arrived at a point to where common sense means nothing. If I can sell it, they will come.
I remember (as a kid) playing Monopoly and running out of houses and hotels, we used chess pieces and whatever else would fit on square. Sounds like the same game only we are older now–not necessarily wiser!
Jim BrubakerParticipantHousing prices are going up but its not what you think.
Rich people have never stopped buying houses because of the price. Poor people do, and in this area, that also includes those of us that know better.
If nobody buys a house at the low end, there is no average down from the rich guy purchase price. The net effect is a rise in the purchase price.
So if you carry it to an extreme, say only two houses sold at 1 million apiece, you would have a very skewed average purchase price.
In order to see the effect, you need to take the number of houses purchased times the average price and compare them to a previous time. This will reflect a better picture of what is happening.
Jim BrubakerParticipantNotARocketScientist gets a B plus, I had a good laugh.
I’ve read a lot of his posts and this one seemed so different.
“Secret location,” should have been a givaway.
At the same time I wouldn’t be surprised to see your blurb quoted in the North County Times–Just Kidding!!
Jim BrubakerParticipantI don’t think I’ve ever seen a forclosure sign or Drasticly Reduced sign hanging from a realtors sign. I can’t think of a better way to piss off a seller.
That doesn’t mean you won’t see Forclosure or Bank Sale or Trustee Auction 8×10 paper, stapled to the garage door. “Drastically reduced” in a newspaper ad bring in an up call or two an hour.
Why keep them at a secret location ready to install with 4 hour notice? Most realtors won’t even splurge the $4.50 for the circular box for flyers to hang from the sign.
You can’t tell the truth in real estate thats why you have words like “fixerupper” (real dump). “Motivated Seller” means the lender has a gun to his head/forclosure/soon to be REO/Short sale
Jim BrubakerParticipantWhen rents = monthly mortgage payment, preforeclosures make sense. You take over the persons bank loan and if you are lucky, rent it back to him and you don’t have to pay a Realtor a dime. Plus you can have the worlds worst credit rating and not have to put anything down.
In this market, the only thing that you can compare buying preforeclosures to, is sliding down the sharp edge of a razor blade. Painful to say the least.
March 9, 2006 at 9:18 PM in reply to: Theres Not Going to Be Any Housing Crash! Read my Blasphemy #23632Jim BrubakerParticipantThis is quite possible. This is what happened in Germany in the ’30s. It took a million marks to buy a loaf of bread. Then an Austrian by the name of Hitler took over the worlds leading democracy and turned it into a dictatorship.
The same thing could happen today, we have an Austrian named Schwartznagger as Governer who people want to run for President. It comes eerily close to history repeating itself (tongue in cheek).
Jim BrubakerParticipantWhat I was talking about were construction costs figuring the land cost 0. This is what a builder uses to figure what its going to cost him to construct the unit. The cost of a house in California and the cost of a house in Louisiana is the same, its the land that people pay extra for. $300,000 for a 1,000 sq ft house is a little outrageous unless you live where I do in San Marcos. If you were a builder, it would be one hell of a return.
Jim BrubakerParticipantI think we are all thinking back a couple of years before the bubble.
A house in foreclosure today is going to be given to the first trust deed holder, while at the same time the second drops off. Nobody is going to bid. Now if the owner had any equity, the bank is going to market the unit lowering the price until it either sells, or the owners equity spread is zero. When it gets to zero, the bank, depending on how many units of inventory they have on hand might ask for bids to clear out the inventory.
Now a VA loan that forecloses will be returned by the bank to the VA. I’m not sure but I believe that the bank will get a full reimbursement. Somehow I seem to remember that the VA insures the first 20% of the banks loan against a loss. And on VA repo’s –high bid wins-if you can fog a mirror, this is a good one to jump on.
I can’t really be certain, but these people claiming to buying foreclosures, might be doing things a little more different than you think. The people they are talking to are desperate. I’ve read where for a fee, they would show the homeowner ways to stall the foreclosure and walk away with a couple of grand in their pocket. At this point,if it didn’t work out for the homeowner, he was now in even less of a position to take legal recourse.
February 23, 2006 at 7:51 AM in reply to: Fully 28.5% of homes available in SD have been reduced… #23471Jim BrubakerParticipantYes lol, I just spelled it the way it sounded–brain fog
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