The Collected Works of Author and Blogger Larry Roberts

Archive for February, 2010

Hang on, Alice, as we bolt through the rabbit hole on an adventure to financial Wonderland. Come with me on a fantastic journey to the Great Lakes to save fish falling prey to evil bloodsuckers, and along the way we will save borrowers from the evil of debt peddler, Louie the Lender Lamprey. The Sea Lamprey and the Great Lakes Prior to canals of the nineteenth century, the Great Lakes were a thriving fishery. With over fishing and the introduction of the sea lamprey through the canals, the fisheries of the Great Lakes were devastated. According to Wikipedia:   The Sea lamprey (Petromyzon marinus) is a parasitic lamprey (a kind of jawless fish) found on the Atlantic coasts of Europe and North America, in the western…[READ MORE]

Participants in loan modification programs pawn their futures. Overextended borrowers overpay for their cost of housing and promise any future equity to a lender for the privilege of continuing to use and overpay for the family home. The 3rd term that can modified is the principal, although under the conditions of HARP and HAMP, the principal may be foreborne, that is, the principal can be reduced for the period of the loan, but must be paid back when the house is sold, or foreclosed on, or borrowed on. ... It changes a non-recourse portion of the loan into recourse. Today, I want to explore the implications of  loan forbearance with principal deferment. I recently found a great post at Housing Kaboom with a relevant anecdote for…[READ MORE]

This post contains specific advice that in the future will either help you sell your house faster and easier or for more money. Utilize fixed-rate assumable financing: Government entities like FHA, VA, GNMA or some other official government program (not Freddie or Fannie) provide assumable, fixed-rate loans desired by your future buyer. Maximize your down payment (within reason) I am not advocating FHA loans because they allow you to put down as little as 3.5%. I believe you should minimize your time to payoff by optimizing (generally enlarging) your down payment and utilizing accelerated amortization. Nor am I advocating emptying savings accounts and failing to keep liquid reserves or other investments. The middle road I advocate leads to financial freedom, whereas the road of maximum debt leads to deflation through individual financial…[READ MORE]

The Great Housing Bubble cultivated a gentility of entitlement, a sordid societal residue, a system of reliance, a conviction among people that they may possess anything they wish just because; deserving without earning; Grace. Divine acceptance is given; whereas, worldly possessions are earned -- a basic truth lost through possessory entitlement. Few construct and contribute to the greater good, and many expect easy money from lenders, Governments, housing and stock markets or free-money Ponzi Schemes. We are impaired by our lender's failure and our Government's response to the crisis our lenders created; a wound that lingers as a festering sore no bailout balm can remedy. The emotional fall from Grace has barely begun. The amend-pretend-extend dance will continue until lenders…[READ MORE]

Their gullets awash with kool aid and eyes ablaze with imagined riches, fanatical bulls prematurely celebrate the bottom of the housing market. Relax. You haven't missed a thing; we are not at a bottom, and although I have stated I will not call a bottom, I do not believe conditions exist for a bottom to form -- unless perhaps kool aid intoxication is so strong that bulls can make it happen through force of will. Anything is possible. The obsession with a market bottom comes mostly from bulls hoping to make a fortune and to restart the housing ATM and to live the bubble lifestyle -- a foolish mindset discordant with our future reality of (1) flat home prices, (2)…[READ MORE]

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