The Collected Works of Author and Blogger Larry Roberts

Archive for January, 2015

Mortgage insurers have the right to collect from former homeowner on losses the mortgage insurer incurred in a foreclosure. Whenever a purchase or refinance transaction amount exceeds 80% of the value of a property, the lender will force the borrower to purchase private mortgage insurance -- not for the borrower's benefit, but for the banks benefit. It's widely known that lenders can go after former homeowners for losses incurred in a foreclosure, but what's less widely known is that mortgage insurers can do the same thing. Many former homeowners are finding out the hard way. Homeowners billed for houses lost in foreclosure By Jenifer McKim and Jess Aloe New England Center for Investigative Reporting, January 18, 2015 When Guillermo Galindo…[READ MORE]

The OC housing market faces a potential price decline caused by of rising mortgage rates and an influx of must-sell inventory from Chinese buyers. The deflating housing bubble trapped millions of borrowers underwater with mortgages they couldn't afford. The federal reserve helped lenders and borrowers by lowering borrowing costs from 6.5% to 3.5%; the policy benefited everyone by making the absurd prices of the housing bubble relatively affordable. The powers-that-be hoped stable borrowers with real jobs and incomes would buy out the hopelessly overextended hapless fools who bought during the frenzy of the housing bubble ten years ago. This policy largely succeeded, and with exception of a few markets, mortgage interest rate stimulus reflated the old housing bubble with more…[READ MORE]

2015 will finally be the year the economy recovers to near full strength. The only weak point will the ongoing slow growth in housing. I recently made a series of bold California housing market predictions for 2015. I don't believe housing will do poorly this year despite high prices because I believe the economy is improving, which will put more people back to work, cause wages to rise, and ultimately help home sales, assuming rising interest rates don't spoil the party. The only reason I am not more bullish on housing is the inevitable impact rising mortgage rates will have on sales. The federal reserve will likely begin raising short-term interest rates this year, which will likely cause mortgage rates…[READ MORE]

Historically, properties in this market sell at a 9.5% discount. Today's discount is 14.1%. This market is 4.6% undervalued. Median home price is $471,800 with a rental parity value of $556,000. This market's discount is $84,200. Monthly payment affordability has been improving over the last 8 month(s). Momentum suggests improving affordability. Resale prices on a $/SF basis increased from $388/SF to $388/SF. Resale prices have been rising for 10 month(s). Over the last 12 months, resale prices rose 8.4% indicating a longer term upward price trend. Median rental rates declined $0 last month from $2,475 to $2,474. The current capitalization rate (rent/price) is 5.0%. Rents have been rising for 12 month(s). Price momentum signals rising rents over the next three…[READ MORE]

Excessive debt created during the housing bubble is preserved on banker's and homeowner's balance sheets providing a deflationary overhang to the US economy. The US economy is generally very resilient. There are always bearish prognosticators concocting doomsday scenarios that never come to pass. Most of the time, these people are ignored as tin-hat wearing crackpots, but occasionally a real economic crisis hits that makes these people look prescient. When I was first trying to understand the housing bubble, I used to frequent the housing bubble blogs back in 2005 and 2006. When the bears on those blogs argued the case for a near depression for the US economy, I told them I thought they were too bearish: housing would crater,…[READ MORE]

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