The Collected Works of Author and Blogger Larry Roberts

Archive for September, 2010

I recently wrote that squatting is becoming a way of life for many delinquent borrowers. Of course, this doesn't meet the technical definition of squatting which is possession of real estate without the owner's permission. In this instance, the squatters are technically still the owners of property, so there is nothing illegal going on, but these owners are generally hopelessly underwater and failing to make their mortgage payments. They are in possession of real estate that can be called to auction at the discretion of their lender at any time. Ultimately, they will lose their homes. Today, we are going to look at other forms of squatting from the traditional adverse possession to the return of former owners who couldn't leave their…[READ MORE]

Zero down mortgages were a big factor in the inflation of the housing bubble. The debate now is whether or not this form of financing is inherently bad or if that bird can change. This is one Phoenix that probably shouldn't rise from the ashes. I wrote about the evils of 100% financing in The Great Housing Bubble: 100% Financing is a path to destruction Once 100% financing became widely available, it was enthusiastically embraced by all parties: the lenders suddenly had a huge source of new customers to generate high fees, the realtors and builders now had plenty of new customers to buy more homes, and many potential buyers who did not have savings were able to enter the market. It seemed like…[READ MORE]

Is the US housing market going down in flames again. A precipitous drop in 2008 was temporarily halted by a massive government effort, but with the market props removed, it looks like house prices are going to resume their decline. U.S. home prices face three-year drop as inventory surge looms By John Gittelsohn and Kathleen M. Howley (c) 2010 Bloomberg News Wednesday, September 15, 2010; 12:24 AM Shadow inventory -- the supply of homes in default or foreclosure that may be offered for sale -- is preventing prices from bottoming after a 28 percent plunge from 2006, according to analysts from Moody's Analytics Inc., Fannie Mae, Morgan Stanley and Barclays Plc. Those properties are in addition to houses that are vacant or…[READ MORE]

Many people believe the crash is over because removing the supply stabilized prices. Most people who carefully watch housing markets agree that a cartel of lenders controls the market through its ability to control supply. Since lenders are being permitted to hold non-performing loans on their books -- and allow delinquent borrowers to squat -- they control the flow of properties through the foreclosure process. Also, they control the approval of short sales; therefore, they control the flow of properties through the short sale process. Since distressed sales of foreclosure properties and short sales make up a significant percentage of market sales, lenders control the bulk of the supply on the market. I believe this cartel will fall apart partly because all cartels are…[READ MORE]

Why did the home ownership rate go up? Many people have speculated as to why the home ownership rate rose from a stable 64% to an unstable 69% beginning in 1996.   Many political operatives have tried to tie this to one piece of legislation or another, and the article I am featuring today does the same. I am going to add a crazy idea to that mix. To be honest, I don't believe political decisions and government policies had much to do with the growth in home ownership. Lax lending standards and lowered down payment requirements added buyers to the pool by converting good renters into bad loan owners.   If you want to blame any particular policy for this,…[READ MORE]

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