The Collected Works of Author and Blogger Larry Roberts

Archive for 2014

People who live in houses they don't pay for are viewed as folk heroes by some and contemptible deadbeats by others. Have you noticed that most of the human interest stories from the housing bubble have no heroes? The housing bust has brought out the worst in mankind. Every party involved seeks to avoid any financial responsibility while simultaneously looking for ways to game the system to their advantage. The cast of characters includes lenders, realtors, delinquent mortgage squatters, holdover tenants, mortgage brokers, basically anyone involved with real estate. Are delinquent mortgage squatters heroes fighting the system or deadbeats gaming the system? These people quit paying their mortgages, many quit paying several years ago, and banks are either unwilling or…[READ MORE]

Politicians favor home ownership because it serves as a proxy for retirement savings; however, unrestricted mortgage equity withdrawal defeats the purpose. Politicians provide many reasons for supporting home ownership through policy initiatives and outright subsidies, but one of the primary reasons they support home ownership is the forced savings account properties of an amortizing mortgage. History has shown that homeowners have more comfortable retirements than renters, and an abundance of home equity is one of the main reasons. Unfortunately, politicians allow homeowners to raid this retirement piggy bank with unrestricted mortgage equity withdrawal -- an allowance politicians don't provide to retirement savings accounts. People are still allowed to borrow against their retirement savings for specific things, like a mortgage down…[READ MORE]

Home sale asking prices impact how quickly a house sells and how much a seller obtains in the sale. Higher is not always better. I sold more real estate in 2011 and 2012 than most people sell in their lifetimes. As manager of a flipping fund operating in Las Vegas, I bought and sold more than 50 properties during that two-year stretch. As a seller I can to a few conclusions about how to get the best price. First, start with a high but reasonable asking price. It doesn't pay to error on the low side. Establishing comparable value is more art than science, and someone in the market may believe a property is worth more than you do. You can't get top…[READ MORE]

Lenders bring back stated-income (liar) loans in a desperate measure to boost loan origination volumes and increase home sales. For as much as I would like to keep an open mind about "innovative" loan products, I can't see any reason stated-income loans (liar loans) should be allowed to exist. Liar loans were the worst financial innovation of the housing bubble because these loans caused investors in mortgage-backed security pools to question the financial representations of all borrowers in all loan pools. This doubt about the veracity of loan qualifications spread from the pools that specifically allowed liar loans to all MBS pools, causing investors to abruptly stop buying mortgage-backed securities -- a problem we still have today. The abrupt halt of the flow of investor money resulted…[READ MORE]

Anger and hatred toward the banks earned during the housing and economic collapse of 2008 is still strong. Special thanks to Sean O'Daniels, When most people buy a home, they borrow money. When prospective borrowers gain loan approval and final funding, most are thankful the lender enabled them to acquire the property they wanted; few question whether or not the loan was a good deal. Most borrowers go through the lending process like cattle processed for branding. They do whatever they're told and sign whatever they need to sign in order to get the property. Most borrowers assume that if millions of other borrowers go through the same process it must be okay; they feel comfort in the safety of the herd. But…[READ MORE]

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