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PerryChase
ParticipantLook at history. The 1990s had declines beginning in 1990 through 1996 and the boom of the late 1980s was small compared to have we had recently. Temecula will be hammered hard.
Like jg said, as humans, we are bound to learn and re-learn all the mistake we previously made.
Participant” Ameriquest’s top executive, Roland Arnall, also has been one of President Bush’s top fundraisers, generating $12 million for the president’s political efforts during the past four years. On July 28, Bush nominated Arnall, a billionaire who was ranked No. 106 in the 2004 Forbes magazine list of the wealthiest Americans, as ambassador to the Netherlands.”
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/08/12/MNG7UE70IF1.DTL
http://netherlands.usembassy.gov/biography.html
I think that if there’s a bailout, the money will all go to the lenders rather than the homeowners.
How can you extend toxic mortgages that are interest-only, negative-amortization, low teaser rates, option-ARMs? By definition, the monthly mortgage payments on these loans hardly pay the interest and the loans balances are growing, not being paid down.
ParticipantIf you credit is really bad already, why not go out and buy a reliable car (Honda or Toyota) then let the bank take back your Dodge?
Nothing illegal or unethical about that. Repossession is part of the loan contract and you’d just be abiding by the terms of the loan agreement.
If enough people did what I suggested, the banks would stop making stupid no down-payment loans to depreciating assets. The underwriting would improve.
ParticipantIf I remember well, a poster previously said that’s what he and his relatives did in the 1990s — walk away from mortgages and buy other houses at 1/3 off. Yes, it’s different this time. The numbers are larger so there’ll be even more incentives to let upside-down houses go back to the bank.
By the way, there’s nothing wrong (legally or ethically) with letting the lender foreclose. It’s one of the terms of mortgage contract and going into foreclosure is simply abiding by the terms of the agreement, nothing more, nothing less.
ParticipantIf you look back at the history of the last Real Estate crash in the 1990s, Bush (the father) loss the 1992 elections mostly because of the recession. Bill Clinton was then an unknown Southern governor.
This time the Republicans will loose because of a recession also. By the time a Democrat gets into the White house in 2009, it’ll be too late to do anything but clean up the mess.
Bill Clinton is the one who cleaned up the S&L mess and gave us welfare reform in 1996. The Republicans are like Realtors, they give us a lot of lip service positive spin but produce little (I don’t mean the Piggington Realtors). I think Republicans get votes because they are like motivational speakers who make people feel good for a short while. You invest in their schemes and you feel wealthy for a while until you go bankrupt.
ParticipantSo the house sells for $500k. The buyer needs $25k for a down payment. The seller then says I will sell it to you for $530k, give you the $30k needed as your down payment. The seller gets the $500k they wanted and the buyer gets the $30k they need and only gets a loan for $500k which works out the same for them.
No, i doesn't work as you described. You buy at $530k and you owe $530k to the bank. The seller give you $30k. Assuming that you use that $30k to pay down you loan. Now you own $500k.
That doesn't bring your loan down to $470k like it would if you had put $30k down. The $30k is not free money. It was your money to begin with because you borrowed it from the bank.
ParticipantUnderwear and lingering sting operation is funny… If i had such footage, I’d say give me a rent reduction or I’ll post it on http://www.youtube.com (just kidding)
ParticipantI quickly browsed the Realtor’s website while having lunch at my desk. The following quote is very telling. There’s a good chance that this Realtor’s condo is under purchase price right now. (sorry but I can’t get this portion to be non-italicized. Bug somewhere?).
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The benefits of investing in a Condo Conversion are numerous but the most important benefit is that of being inducted into the exclusive club of homeowners at a bargain basement initiation fee. I am the proud owner of a Condo Conversion located in Hillcrest. I bought my condo at Cliffbridge Estates in 2005 and have had nothing but positive experiences as a result. The conversion itself was done beautifully, and since it’s purchase in 2005, the property has gone up in value, pleasing me immensely.
http://www.californiarealestatevoice.com/2007/01/11/condo-conversionsa-dirty-word/
ParticipantTechnically there is no tax consequence since the buyer only gets back some of the basis he contributed.
This type of transaction if perfectly fine if the lender is aware of the cash back. The fraud is the hiding of the cash back from the lender. The lender funded a loan based on certain truthful information provided. If you lie to the lender that is fraud.
The loan officer generally doesn’t work for the lender. He gets points (commissions) based on the loan product that he sells.
Participant“You bet the government is corrupt. So is the US government. The latter just hides it better.”
tigerdog, I think you pretty well said it. In the US we are more sophisticated and profit legally. But in the end, it’s all about profiting and becoming rich.
Rich country vs. poor country is like family vs. a poor family. A rich family eats at the table with luxurious china and silverware. They have impeccable manners and seem beyond reproach. A poor family eats at the kitchen counter out of the pots. The poor family’s habits look really bad and unsophisticated.
ParticipantI’ve read that it’s fraud if it’s not disclosed to the lender (which generally isn’t). The lender is being defrauded since he put up the money yet has no knowledge of the cash back.
Others have posted that lenders don’t generally allow anything more than 3% cash back to the buyer. So people do it outside of escrow.
A friend of mine recently did this when he sold his house. I told him it wasn’t kosher but he said that his Realtor and Escrow company and loan officer well all in on it so that they could close the deal. He gave money back to the buyer outside of escrow. But he legally didn’t have to since there was no contract for that.
If the Realty folks do such things for a commission, can you trust them to give you advise that’s in your interest? Buyers beware.
ParticipantGreat point, cardiffbaseball.
Yes, what about the foreclosures? If the market is supposedly “stable” and only down a little as the realty folks pretend, then why all the foreclosures? Those homeowners had 6 to 9 months to sell before being foreclosed upon.
ParticipantThis thread is kinda fun. We need some controversy around here sometimes.
dcarl, as was mentioned before, very few can truly “afford” a home in San Diego so by your own definition, there’d be very few buyers. “Affording” a house using a toxic loan is only delaying in inevitable — foreclosure.
I own a home and it’s quadrupled so I’m no, I’m not a bitter renter. I’ve been wanting to “rightsize” and keep my current home but it hasn’t made sense yet.
We should expunge the ownership mentality out of minds. It’s the cost of shelter that counts. All else being equal, if you can rent for 1/2 the cost of buying then why buy? Even if you can afford it?
If your Navy officer invested his money well, he should be way ahead of the buyers who bet everything on housing. Remember, once appreciation stops, it costs a lot to service the debt.
Let’s put on our positive hat for a minute and assume that there’ll be no major price drop. Say we have a stagnant market for 7 to 10 years; and imagine a middle class family paying the interest-only on a $750k house year after year. At the end of that period, they’d have no savings and would be starting from zero. A rental family would have a substantial down-payment saved up to buy at that time.
Participantdcarl, you have it all wrong. sdrealtor is in Carlsbad and SD Realtor is in Scripps.
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Buying overpriced houses with a NINJA loans is not taking a chance. It’s financial suicide. I don’t see how that is taking a chance on the American dream. Going to school and learning new skills is taking a chance. Getting into debt to own something your can’t afford is not taking a chance; it’s stupidity.I don’t wish ill on people. But buyers need to be responsible for their own decisions.
The buy-sell-buy-refinance-flip model is a pyramid scheme that was bound to unravel. The music stopped and many don’t have chairs to sit on.
It’s just not subprime. Most prime borrowers have plowed their profits back into ever more overvalued properties. They will equally suffer. These guys were taking a chance for sure — on greed.
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