The Collected Works of Author and Blogger Larry Roberts

Archive for July, 2012

Home equity lines of credit (HELOCs) were the favored tools of Ponzis during the housing bubble. These were used like a credit card with an ever-expanding credit balance that didn't need to be paid back because the house was paying for it. Most borrowers viewed this as truly free money, and they behaved accordingly. This influx of spending drove the economy during the first half of the 00s, and the elimination of this stimulus and the subsequent need to repay this debt is what's causing our economic doldrums today. HELOCs are similar to other revolving lines of credit with a few key differences. HELOCs are secured by real estate whereas a credit card is not. If a borrower does not…[READ MORE]

The consensus among economists for June home sales was that sales volumes would continue to increase. Proving their fallibility, the consensus of economists was wrong -- very wrong. June and July are typically the best months for sales volume in the prime selling season, and sales volumes dropped in every region in the US. A large decline in existing home sales is further evidence that the house price bottom the consensus of economists is also predicting is in jeopardy. Nominal prices are moving higher, but it isn't based on the strength of demand, it is due to the restriction of supply. And with millions of homes in shadow inventory, weakening demand is not a good sign for the housing market.…[READ MORE]

Usually when you come across a homebuying advice article, it's a puff piece put out by realtors. These articles usually emphasize the emotional aspects of buying a home, ignore the troubles and potential downside, and try to create urgency to motivate buyers to act. In other words, homebuying advice articles are generally self-serving NAr bullshit. Today's featured article from the Wall Street Journal was surprisingly different. Either that, or the changing market conditions have made these articles less objectionable. I'll let you decide. Yea! Home Prices Hitting Bottom. Now, the Bad News. WSJ -- July 14, 2012, 9:16 p.m. ET This is a great time to buy a home in many parts of the country. There are signs that the…[READ MORE]

At some point, the dodgy loans of the housing bubble will be recycled, delinquency rates will fall back to normal, the shadow inventory will be processed, and foreclosure rates will decline to the point they no longer dominate market sales and keep prices from rising. But when will that happen? Based on the most recent data from Lender Processing Services, I have extrapolated recent trends to attempt to answer that question. But first, we need to understand where we are in the process. In early 2012, lenders halted processing shadow inventory of long-term delinquent loans to attempt one more round of loan modifications to comply with the national settlement agreement. They have taken advantage of this to greatly reduce their…[READ MORE]

CA - Foreclosure Outcomes Banks are slowing foreclosure rates yet again, and it isn't because they are out of borrowers to foreclose on. With the settlement earlier this year, banks began to clear out their existing REO inventory, and they slowed foreclosures in the Southwest in order to modify mortgages to meet their requirements under the settlement (note the uptick in cancellations last month). Ideally, the banks would like to modify loans to keep borrowers in place and complete short sales for those who want to leave. They don't want to resolve there legacy toxic loans by foreclosure. Unfortunately, borrowers are not cooperating. Borrowers benefit more by squatting until a foreclosure. BofA Give-Away Has Few Takers Among Homeowners: Mortgages By…[READ MORE]

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