[ocbuyer]

OK:

great question. few things to understand from a macro level.

first – the $126M worth of mortgage backed securities has a ton of fluff wrapped in there. fees upon fees that the various wall streeters have added. interest, penalties etc.

second – just because they are forcing ownit to buy these back doesn’t mean that they are in default as a mortgage. it just means they’re in default as a mortgage backed security. that can occur from a number of things depending on how they were packaged and sold, the % they were paying the investors for their risk, and the market they are in. some packages can adjust in risk JUST BECAUSE their value drops lower than it was appraised. Most common reasons are, late pay, more than 30 days late, DTI (debt to income) ratio increase, or default/foreclosure/REO.

third – they will not and probably have not hit the “jackpot” a servicer usually is in touch with a homeowner as things in the foreclosure process progress.

fourth – dallas isn’t returning fwd’ing his emails and the hard money guys behind ownit CIVC say talk to him.

fifth – wall st is all about velocity and the bottom line,they won’t get anything out of ownit, but a nice carry fwd, so they’ll package the non-performings loans, consolidate the good ones and sell the bad ones off at 30 cents on the dollar.

b of a has part of ownit? didn’t read that, but they’ve acquired so many people who knows. merrill owns a solid piece, CIVC owns a chunk, and dallas owns a piece.

ownit is screwed and so are most in the subprime world.

they’re just not screwing home owner they’re really screwing the pensioners that have half their cash in these mortgage backed securities. in socialist and communist countries those pensions are everything.

things are going to get interesting.

thanks wall st. thanks idiot consumers. thanks highly leveraged sub prime guys.

[ocbuyer]

auctions are a solid and healthy way to appraise and evaluate the market in real time.

if we’d have had more auctions on the uptick we’d be in better shape. it shows exactly what people are willing to pay – today.

even the 6% gang is jumping on board.

http://www.ocregister.com/ocregister/money/homepage/article_1329168.php

the auctions at the top of the market are the best for the developers by far – that’s a well known fact. so get frustrated for a while, but know they wont get those dollars in 9 months to a year.

[ocbuyer]

daniel,

just saw your post – 2nd mortgages are often times SOL as well. that’s why they have high interest rates. they are often backed with hard money. some helocs are different esp. if it’s an fdic lender.

there is another facet that hasn’t been discussed. on the high priced homes $2M plus. Lenders will sell off the top half or first position on the note and make back considerable money. The lenders that buy this have first crack at recouping costs via liquidation etc.

hope that helps.

[ocbuyer]

hey gang,

has anyone mentioned (i didn’t see it) if this is a non-recourse loan or not?

if it’s non-recourse, which lots of exotic financing is these days, it’s got harsh language and talks about going after $$ – but it’s actually non-recourse.

it’s worth (if you have a friend that’s a lawyer, that will do a favor) having them look it over to see if it’s non-recourse.

if that’s the case then you can hand it back and walk. that’s it. as far as the moral implications – sellers were just as implicit in these situations as buyers. Further, the “loans” that were given and written are just as morally flawed with balloon payments, and various other twists and turns. what goes around comes around – who knows the conditions and understanding under which she entered contract.

careful to point the finger.

[ocbuyer]

d,

japan is a great parallel – our consumer patterns, industrial growth etc. our residential market today is to what they view US commercial real estate in the late 80’s a sharply inflated commodity.

we will have pockets of sharp decline and an overall flattening. depending on media coverage AND government regulation – the areas that just go flat will either slowly grow or slowly decline.

the consumer (masses) is (are) in charge here. who will fight for their minds and $$? media? politicians? or people who have seen it all along?

[ocbuyer]

the international markets are doubling down in a big way with the subprime markets. the initial results will reap great benefits, but the long term won’t pan out – in the least bit. REO departments in even the smallest lenders are quadrupling their portfolios – and not moving the properties. how can that NOT effect the institutional guys? i’m not saying i’m 100% but when lehman says they have over 1,000 reo’s somethings seriously wrong.

[ocbuyer]

Interesting discussion. I feel that being comfortable with a “buy range” or overall bottoming out or leveling off is what people should try to predict.

Here’s why – they need to know how much cash they should have on hand. I think that’s going to be the toughest part of this downturn. Getting cash.

Laugh if you want, say “duh, that’s the toughest part of ANY recession.” But i want you to think about this:

Credit Debt = all time high
Home Ownership = all time high
Cost of Living = all time high
Consumer Expectations = all time high
Graduate Debt = all time high

The institutional lenders are going to get their asses kicked by the international markets and the government regulators (while losing their tail on hard money RE investments too). At the same time the interest rates will begin to rise again to stave off inflation. All the while, people own more homes, have more debt and are less liquid than they were during the last recession.

(BTW If you want a real comparison to what we have now i.e. gas and economic climate, international relations, etc. Look to the 70’s and see what sort of mess we became when the gvmt. got it’s hands involved. which consumers will demand again)

CIF as my pops calls it Cash In Fist – will rule the day.

Will you be ready?

[ocbuyer]

Josh,

Is Maisal a developer’s name or the Company’s name?

I’ll search it right now thanks.

Yes, the market is heavily overvalued. Our price points are usually 20-40% of the current market price.

Our goal is to sell in the 40-60% range accordingly.

Our disposition is entirely web based and we conduct international marketing efforts so we get the most value for our marketing and the most value for our properties … of course all in the shortest amount of time.

Make sense?

At the end of the day we don’t really care if we only make say, 10%. We’re doing it 3-4 times with that same dollar within a year. If anyone is interested in starting a fund like these please post a way to contact you and I’ll follow up offline.

[ocbuyer]

josh,

im not looking to buy at a premium. i’m looking to take out projects at a low #. i work with 2 of the largest vulture funds in the US.

and, well, i’m not looking to give away exactly what i’m trying to do.

but i will say this:

i’m doing it in 3 other markets (FL, AZ, NV)
i’m focusing on condo conversions, and condos
i’m going to sell direct to consumer at market-rate prices

you want to see it in action?

help me find projects in SD!

[ocbuyer]

still … would be nice to have a snapshot of the properties that are in the most stress.

[ocbuyer]

great question,

I have a disposition company that can sell the units off via online sales inside of weeks or months … depending on the #.

If I can’t turn the units over (priced a little too high etc) … they still might cash flow.

lots of options. i’m a bear 100% – but i also know what i can rent or turn over quickly.

anybody out there with suggestions?

[Author]

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