The Collected Works of Author and Blogger Larry Roberts

Archive for April, 2014

California’s Homeowner Bill of Rights compels banks to foreclose through courts and take more time to complete. The housing bubble and bust exposed many flaws in our property finance system. The Dodd-Frank reform corrected many of these problems, and I believe the new mortgage regulations will prevent future housing bubbles. It's rare, but occasionally legislators and regulators get it right. The California Homeowner Bill of Rights was not one of those occasions. The California Homeowner Bill of Rights supposedly corrects flaws in the foreclosure processing system exposed by the millions of California borrowers who quit paying their mortgages. Apparently, adhering to the terms of the promissory note and mortgage agreement, as has been customary for hundreds of years, somehow violated…[READ MORE]

Decimated during housing bust, first-time homebuyers and first move-up buyers struggle to buy homes, breaking the chain of move-ups. Houses are expensive. Most renters who would like to buy a home lack the down payment necessary, and many are early in their careers when their income is lower. As a result, first-time homebuyers are forced to buy the lowest cost properties available for sale in the housing market, and they must use the highest cost financing options due to their low down payment. Assuming they sustain ownership, assuming they have an amortizing mortgage, and assuming house prices rise, after some period of waiting, the first-time homeowners could sell their starter house, usually to another first-time buyer, for enough to cover…[READ MORE]

Weak job growth creates persistent unemployment and slows wage growth, which delays a durable housing recovery based on fundamentals. For the housing market to really improve, the fundamentals underpinning the market must improve because manipulating inventory and interest rates can only carry the market so far. The recent house price rally had little or no fundamental support; even housing bulls acknowledge that fact. Although housing bulls like to ignore or downplay the record lows in purchase mortgage originations, this is a sign of just how weak the housing market fundamentals really are. What the housing market needs to get back on track is growth in jobs and incomes. People who get high paying jobs either form new households or make…[READ MORE]

Attracting private equity to housing finance without GSE loan guarantees will raise lending costs and lower loan balances, hindering bubble reflation. Since many borrowers at the margins borrow the maximum allowed based on their income, any increase in borrowing costs decreases their borrowing power, lowers their bids for houses, and ultimately hinders efforts to fully reflate the housing bubble. For lenders and underwater loan owners who want prices as high as possible, higher borrowing costs imposed on new borrowers is a bad thing. Unfortunately, it's impossible to reform Freddie Mac and Fannie Mae, the GSEs, without increasing borrowing costs. Senators recently unveiled a Fannie Freddie reform plan. Housing industry lobbyists oppose any meaningful reform; realtors, homebuilders, and lenders all want…[READ MORE]

I spend nearly every Sunday morning at Disneyland with my son James. It's the best time of my week, something I always look forward to. I've been a season passholder as Disneyland for several years. My son and I go nearly every Sunday morning, arriving just as the rope drops on Main Street in the happiest place on earth. We have our routine; we go to Space Mountain, Star Tours, Astro Blasters, then make our way over to Indiana Jones, Big Thunder Mountain Railroad, Splash Mountain, and Pirates of the Caribbean. If you arrive just as the park opens, there are no lines, so it's easy to hit all your favorites and be done by lunchtime. We put in our…[READ MORE]

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