The Collected Works of Author and Blogger Larry Roberts

Archive for May, 2013

Banks are enjoying the market's recent strength as collateral value returns to back their bad loans. Homeowners who aren't distressed don't mind either, but it's the banks that benefit the most from the current situation of restricted MLS supply. To further restrict supply and really get prices to shoot upward, banks stopped foreclosure processing on May 6, 2013. Ostensibly, they did this for procedural reasons related to new regulations, but this is simply a ruse to cover their real intent of forcing prices to shoot up even more rapidly to help them avoid more losses when they finally do liquidate their bad loans. 3 big banks nearly halt foreclosure sales after U.S. tweaks orders By E. Scott Reckard -- May…[READ MORE]

HELOC abuse is one display in many of the properties I profile each day. I made my point about HELOC abuse years ago, and I originally wrote today's post back in early 2010. No matter how many of these I profile, many readers, including myself, find these stories interesting. It's one thing to know HELOC abuse happened, but it's much more entertaining and educational to see every manifestation of the disease. The thinking behind this behavior is flawed, es evidenced by the legions of people who lost their homes this way. Recognizing the mistakes of others can be very helpful in avoiding them in our lives. There is a simple truth about the housing market; people are going to buy…[READ MORE]

Back in March, I reported that low housing inventory is an indicator of residual mortgage distress. In that post, I noted that loanowners have less incentive to sell when prices are rising because they can be patient and sell without a loss. Plus, I focused on the work of Mark Hanson who points out that even those who are a little above water don't have the equity necessary to sell and pay commissions and certainly don't have enough left over to make a move up. Building on that insight, I postulated that distressed inventory can be gauged by measuring how depleted inventories are from normal levels. A baseline for comparison can be constructed if you project the line from 2000…[READ MORE]

Perhaps the news of Edward DeMarco's ouster as head of the FHFA was premature. I wrote last month that the head of GSEs Edward DeMarco faces replacement, unfortunately. The political left hates him because he won't let them buy votes by reducing mortgage principal on their constituent's loans. The political right was angry with him for vigorously pursing buy-backs from financial services firms that sold the GSEs bad loans (something which DeMarco has quietly stopped.) With the opposition from the political right waning, DeMarco has started to gain favor in the eyes of Conservatives who like that he isn't willing to give out free money at taxpayer expense to benefit politicians on the left. I'm not the only one who…[READ MORE]

In April of 2008, I wrote a post about the psychology behind the various government programs designed to help banks kick the can until conditions got better. In the five years that transpired since, their efforts went from frantic, to desperate, to sublimely ridiculous. Each step along the way, the sheeple were strung along and enticed to make a few more mortgage payments in what will prove an ultimately futile effort to benefit from occupying a property they can't afford. Over the years, others picked up on the nonsense. This in 2011 from US Congressional Representative Patrick McHenry: How Homeowners Are Hoodwinked. This in 2012: Billions of dollars wasted on program that created false hopes among homeowners. Most of the…[READ MORE]

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