The Collected Works of Author and Blogger Larry Roberts

Archive for April, 2010

Do loan owners really want to spend a decade or more under water? It will be difficult to send their children off to college when they make too much for their kids to get aid, but they haven't saved anything because they are paying on a bloated mortgage. At some point, they may decide they don't want to stay, but then they can't move because they can't sell. They spend the rest of their lives quietly fading away. Many in California will stay because they believe the next housing bubble is right around the corner. Like gamblers at the craps table who were just wiped out, everyone places their bets and hopes for another long run. At least with HELOCs, you never have to…[READ MORE]

The banking cartel has tied up most of the inventory in California. A third to half of homeowners are now underwater and unable to sell without lender approval. Many more borrowers are facing foreclosure as about 15% of homeowners are not paying their mortgages. The lenders already own many properties. Between what they own and what they control, lenders have withheld inventory and kept much of the air in the real estate bubble.   I think this is shameful. I want to see the lending cartel crushed. Californian's have too much of their incomes going to debt service so Goldman Sachs' investors can make a few more pennies. I have a better idea. Short Sellers are reviled Many people have a negative view of short sellers. They feel…[READ MORE]

The indulgent lives of the Great Housing Bubble were last seen during the Roaring Twenties, another era notable for its sequence of financial bubbles. First came the Florida land boom (from Wikipedia): The Florida land boom of the 1920s was Florida's first real estate bubble, which burst in 1925, leaving behind entire new cities and the remains of failed development projects such as Isola di Lolando in north Biscayne Bay. The preceding land boom shaped Florida's future for decades and created entire new cities out of the Everglades land that remain today. The story includes many parallels to the modern real estate boom, including the forces of outside speculators, easy credit access for buyers, and rapidly-appreciating property values. That massive bubble…[READ MORE]

Everyone who loses their home in the deflation of the Great Housing Bubble will be counting the days until they are back in the saddle again riding their cash cows. Thanks to recent policy changes, those borrowers ready to play in the next Ponzi scheme won't have to wait too long. Fannie Mae is changing its policy in a way that will encourage strategic default. The resulting walkaways will increase delinquency and foreclosure rates, lower home values, and cause billions of dollars in losses for the US taxpayer. Fannie Mae wants to help some troubled borrowers get back into home market Kenneth R. Harney Saturday, April 24, 2010 Here's some good news for people who had to give the deed on their house back…[READ MORE]

Did anyone who participated in the Great Housing Bubble stop to consider what was the right thing to do? As long as the money flowed in a river to homeowner's doors, few cared. The river of free money isn't flowing any more, and now we have to examine why this happened, or we risk doing it again. In yesterday's post on Walking Away from a Mortgage to Secure Their Children’s Future, I presented the argument that people should walk away from their mortgages if they are facing the choice between defaulting or paying on an underwater mortgage when renting is less expensive. The astute observations from that post are among the most interesting in recent memory at the IHB. Today, I want to recap some…[READ MORE]

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