The Collected Works of Author and Blogger Larry Roberts

Archive for January, 2014

Anticipate tougher standards; Expect your loan balance to be limited; Save more money; Gather abundant documentation; Obtain a fully underwritten loan approval; Pay off other debts. And expect your future homebuyer to do the same. On January 10, 2014, lenders must fully comply with the provisions of the Dodd-Frank Qualified Mortgage Standards. Why does this matter? Because lenders want the safe harbor protections bestowed on Qualified Mortgages. Given the legal environment favoring loanowners in response to the collapse of the bubble (loan modification entitlements, Loanoweners Bill of Rights, and so on), lenders will not be eager to stick their necks out and make loans outside the parameters of a qualified mortgage. Imagine what will happen if they do. Let’s say…[READ MORE]

Housing market manipulation in Great Britain even more foolish than US. The United States government in cahoots with the federal reserve and our too-big-too-fail banks openly and brazenly conspire to reflate the collapsed housing bubble. Under the guise of economic recovery, ostensibly to help homeowners regain equity, the powers-that-be implemented a variety of market props and manipulations over the last several years. Their first efforts, comprised of tax credits and interest rate stimulus, failed miserably. After an initial boost brought out a chorus of bottom callers, prices reversed and declined for 18 consecutive months. Their most recent efforts involved widespread can-kicking by repackaging bad loans as "permanent" modifications into junk securities purchased by the federal reserve for nosebleed prices. So…[READ MORE]

Current conditions favors loan modifications and squatting over short sales or foreclosures. Higher prices, slowing appreciation, rising lender costs, and stronger lender balance sheets will tip the balance in favor of foreclosure. Banks delay foreclosures on delinquent loans because it's in their best interest to do so. Many houses languish beneath excessive mortgage balances, and if lenders foreclosed on underwater delinquent borrowers, the lenders would lose a great deal of money. Even if the borrowers are current and want to sell the property in a short sale, lenders no longer approve those sales unless the borrower makes up for any shortfall because to accept less than the outstanding balance on the loan would also create a colossal loss. Since either…[READ MORE]

Purchase mortgage applications must increase to compensate for declining investor demand, a difficult proposition considering higher prices, tighter lending standards, and slow job growth. When a financed buyer contracts to buy a home, they apply for a purchase-money mortgage. The Mortgage Banker's Association tracks the number of these applications, and has done so for many years. Studying the chart of purchase mortgage applications reveals much about the health of the overall housing market. In the post 2013 housing recovery was different, in a bad way, an economist with the federal reserve documented how the rapid housing recovery (bubble reflation) in 2013 was unique among price rallies over the last 60 years -- in a bad way; prices did not rise…[READ MORE]

The Orange County housing market holds steady at the limit of affordability for a sixth consecutive month. Price momentum peters to zero. The Orange County housing market fully reflated last year. At the end of a wild 18-month rally, the market reestablished equilibrium at the ceiling of affordability, with momentum abruptly ceasing when rising mortgage rates removed excess affordability. Since housing markets normally pause during the fall and winter, most interested observers believe house prices will resume their powerful upward momentum when the spring buying season produces a bumper crop of eager buyers. If a spring rally does materialize in 2014, it probably won't be lead by owner-occupant buyers. The mainstream media overflows with optimistic (wishful) projections of legions of…[READ MORE]

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