Real Estate Crash thread

[ass-to-mouth]

Ditch because you're angry and want to throw a tantrum that none of the people you're upset with will even notice. Ditch because you'll show all those selfish, shallow, "it's just business", no-ethics, assholes that you can be one too - just without the benefits they enjoy. Burn your neighbors, burn the folks who don't fit the normal mortgage math and are making their payments and improving their neighborhoods, burn the banks so we can all pay in to bailing them out more. Fuck everybody over - who cares about them?- because the banks won't show you sympathy on mortgage modification.

AMEN BROTHER!!! TESTIFY!!!

[Benny Profane]

I've talked to several people, mortgage brokers and dirt merchants, who expect the credit to be extended for at least another six months (June 1, 2010).

Betcha 50 bucks it will be 15,000, too. Hey, why not, it's not as though it's real money, right?

[Stu Gotz]

It's quite possible that it may become impossible for banks to foreclose on any securitized mortgages. It sure seems as if the courts are ruling against the banks on a regular basis these days.

http://www.ritholtz.com/blog/2009/09...-legal-shield/

[ass-to-mouth]

Betcha 50 bucks it will be 15,000, too. Hey, why not, it's not as though it's real money, right?

That'd be real nice. Hopefully the offer I made on a short sale last march will finally get accepted. I could finish the basement and have enough left over for a heli trip in AK next spring. Or maybe head down to South America for a couple weeks next summer. The possibilities are endless.

[Benny Profane]

Be careful, though. As my Mom said, don't count your eggs.......



* September 18, 2009, 1:49 PM ET

Want the Home Buyer Tax Credit? Don’t Shop for Furniture



With the deadline on the first-time home buyer tax credit looming, plenty of buyers are under contract and looking to close before Nov. 30.

Excited to move into a new home, some of these first-timers start hitting the stores shopping for new furniture, appliances or curtains.

Big mistake.

Real estate agents are reminding buyers to wait until the close to start buying stuff.

The reason: Lenders are occasionally running credit reports on closing day, and they might not like to see an increase in credit card debt or indications that debt could soon increase, says Lew Reich, a Realtor with Keller Williams Realty in Plano, Texas.

Buying is off the table, but so is serious looking: Don’t even think about checking out that new car or boat because even an inquiry on a credit report might raise red flags. Too many inquiries, Mr. Reich adds, might be detrimental, particularly for those who just met the lender’s minimum requirements.

“If someone’s squeaking by and, all of a sudden, they may be looking at increasing debt, the lenders will have a keener eye in looking at your loan,” he says. “Don’t look until you’ve closed is basically what it comes down to. That’s the safest way. Stay out of the stores.”

While such measures have been used over the years, lenders, still dealing with the fallout from the boom’s lax lending standards, are being especially particular these days. Even buyers with great credit scores face scrutiny.

Agents also advise not moving money between accounts, so don’t join two savings accounts, transfer large sums out of savings or add more funding to checking. Emptying out an account could look like money’s being spent, and lenders might request a paper trail for the money flow, Mr. Reich explains. That could delay the closing or, in rare cases, terminate the loan. That wouldn’t necessarily free the buyer from the obligation to buy the home, he warns.

Dan Rider, a broker with Dickson Realty in Reno, Nev., says one of his recent closings was delayed by five days when lenders spotted a $500 deposit in a buyer’s checking account. It wasn’t a gift – it was a repaid loan from her mother – but it sparked concerns that the buyer needed help to close the deal. Though the buyer had a healthy checking balance, the lender wanted canceled checks and bank statements and both parties had to write an explanatory letter.

“The simplest things can create fairly major delays,” Mr. Rider says, adding buyers could face financial penalties for late closings. And of course, with the clock ticking on that tax credit, there’s also the penalty of missing out on eight grand. Although, delayed buyers could still get lucky: A Senate bill introduced Thursday seeks to extend the credit for another six months.

[ass-to-mouth]

1. banks don't give a shit about you so don't even consider their 'feelings' on the matter or the ramifications to their bottom line. they would fuck you over in a heartbeat..

Stop it. This guy cares about you. A whole lot.

[ass-to-mouth]

Be careful, though. As my Mom said, don't count your eggs.......

Damnit! And I had my eye on this sweet leather sectional. So soft and supple.

[GiBo]

Pete, you're saying what the angel says, the devil says "it's just bussiness."

I would never even have concidered it until my two buddies tried to convinvce me I was an idiot for taking the moral high ground and laid out the advantages to walking. And I'm still only slightly even concidering it at that. And frankly, their attitude and actions towards me while I've been trying to get a refi/rework is the only reason I've even thought about it.

Sure, the due dilligence was up to me, but I also had to rely on my loan guy (who happened to work for the builder I worked for and was a friend- so I trusted him). He talked me into the 7 year ARM because he said: 1)You're planning on selling when your kids are grown and 2) You can always refi later. Of course, both relied on values either rising or staying the same which he assured me they would- he being a long time mortgage 'expert' and all.

Now the hard cold fact is that in four years when the ARM adjusts I won't be able to sell and I probably won't be able to aford the payment. So why doesn't the bank refi? I see no reason whatsoever why they wouldn't rework my loan. It's full of win for them. They get the entire amount AND they still make a shit load of money on interest. Why wait until they get into a cluster with me in four years to talk turkey?

[H0G]

I'd try to shortsale if i was you. .

x2 Sell it as a short sale. Just make sure you hire a realtor that has a track record for closing these types of deals. They can be a head ache. It is much easier on your credit than a foreclosure.

[Platinum Pete]

Pete, you're saying what the angel says, the devil says "it's just bussiness."

I would never even have concidered it until my two buddies tried to convinvce me I was an idiot for taking the moral high ground and laid out the advantages to walking. And I'm still only slightly even concidering it at that. And frankly, their attitude and actions towards me while I've been trying to get a refi/rework is the only reason I've even thought about it.

Sure, the due dilligence was up to me, but I also had to rely on my loan guy (who happened to work for the builder I worked for and was a friend- so I trusted him). He talked me into the 7 year ARM because he said: 1)You're planning on selling when your kids are grown and 2) You can always refi later. Of course, both relied on values either rising or staying the same which he assured me they would- he being a long time mortgage 'expert' and all.

Now the hard cold fact is that in four years when the ARM adjusts I won't be able to sell and I probably won't be able to aford the payment. So why doesn't the bank refi? I see no reason whatsoever why they wouldn't rework my loan. It's full of win for them. They get the entire amount AND they still make a shit load of money on interest. Why wait until they get into a cluster with me in four years to talk turkey?

Don't get me wrong, I have sympathy for your situation. It sucks that the market turned so ugly so fast, and that the advice from friends and pros wasn't right - but it could turn around in a different scenario than everyone is expecting too. Plus, Obama has every incentive to kick the banks in the ass to move forward on more mortgage modification - the banks are locked up on it now because they haven't figured out their real profit end (currently -if I understand right - mortgage mods look like writing down losses on balance sheets and that hurts stock performance, which is not something any exec wants right now) even though it is already a better deal for them. It sounds to me like you have 4 years to get this figured out. If I was in your shoes I would also painfully consider walking, but not until after giving it more time to play out.

[Stu Gotz]

Why not split the difference. Give yourself and the bank six months to bargain in good faith. (Two calls is not an effort.) Work hard at restructuring the loan. Document everything. If in 6 months the bank is still f'ing around, walk. At that point, the bank has been duly informed of the issue and is now a collecting interest on an asset they know they will be getting back in four/five years. That's predatory lending.

One person's opinion.

[woodstocksez]

Pete, you're saying what the angel says, the devil says "it's just bussiness."

I would never even have concidered it until my two buddies tried to convinvce me I was an idiot for taking the moral high ground and laid out the advantages to walking. And I'm still only slightly even concidering it at that. And frankly, their attitude and actions towards me while I've been trying to get a refi/rework is the only reason I've even thought about it.

Sure, the due dilligence was up to me, but I also had to rely on my loan guy (who happened to work for the builder I worked for and was a friend- so I trusted him). He talked me into the 7 year ARM because he said: 1)You're planning on selling when your kids are grown and 2) You can always refi later. Of course, both relied on values either rising or staying the same which he assured me they would- he being a long time mortgage 'expert' and all.

Now the hard cold fact is that in four years when the ARM adjusts I won't be able to sell and I probably won't be able to aford the payment. So why doesn't the bank refi? I see no reason whatsoever why they wouldn't rework my loan. It's full of win for them. They get the entire amount AND they still make a shit load of money on interest. Why wait until they get into a cluster with me in four years to talk turkey?

Don't get me wrong, I have sympathy for your situation. It sucks that the market turned so ugly so fast, and that the advice from friends and pros wasn't right - but it could turn around in a different scenario than everyone is expecting too. Plus, Obama has every incentive to kick the banks in the ass to move forward on more mortgage modification - the banks are locked up on it now because they haven't figured out their real profit end (currently -if I understand right - mortgage mods look like writing down losses on balance sheets and that hurts stock performance, which is not something any exec wants right now) even though it is already a better deal for them. It sounds to me like you have 4 years to get this figured out. If I was in your shoes I would also painfully consider walking, but not until after giving it more time to play out.

Both you and the lender made a mistake. It should have been foreseeable to both of you that things would inevitably turn (home prices cannot sustainably outstrip both rental rates and incomes as much as they had), even if not how much or how fast.

Good on you for your inclination to try and stick with the house, and I agree that the lender sucks if they won't work with you to make things more affordable (you both made a mistake). Pete's thought that things may turn around differently than many expect is, I think, very wishful thinking. I'd be surprised if your place is back to what you paid for it within the next decade. Otherwise, I'm with Pete on this: not cool to walk away without giving the lender more time to come to their senses. However, if they don't, I'd very seriously consider walking (even though I and others ultimately bear the cost, one way or another, when someone does that) because, again, you both made a mistake and you should therefore both feel some pain.

[woodstocksez]

I was thinking the other day how that this will be the real damage done to our already morally compromised society. It's pretty fucking hard to talk to kids and try to tell them to think right after all this.

I've been thinking those conversations were already going to be hard, and now, with recent events, they're going to be even harder. How to convey to my kids that what really should matter is what you know (and that's what they should value and concentrate on developing), not who you know, but, as a practical matter, you have to put some effort into the latter? How to convey to my kids that, yes, no doubt there's a fair amount of cheating going on in the business world in general and the financial system in particular, but, overall, things are mostly legit and so you should be too? My heart just isn't in those lessons as much as it would have been in view of the events of the last decade+ as revealed in the last year or two. I don't know. We'll see, I guess. If meaningful regulation comes about as a result, then maybe some of my faith will be restored. Right now, I don't have a lot.

[GiBo]

You're right. Two tries on the phone is not a 'good faith effort'. I have four years. I'm going to hit it hard and see what happens.

[GiBo]

I've been thinking those conversations were already going to be hard, and now, with recent events, they're going to be even harder. How to convey to my kids that what really should matter is what you know (and that's what they should value and concentrate on developing), not who you know, but, as a practical matter, you have to put some effort into the latter? How to convey to my kids that, yes, no doubt there's a fair amount of cheating going on in the business world in general and the financial system in particular, but, overall, things are mostly legit and so you should be too? My heart just isn't in those lessons as much as it would have been in view of the events of the last decade+ as revealed in the last year or two. I don't know. We'll see, I guess. If meaningful regulation comes about as a result, then maybe some of my faith will be restored. Right now, I don't have a lot.

See, that's something I'm not ready to do. My kids are way too smart. They'd figure out that Dad walked away from an obligation. I don't know how I could explain: "Well, those big jerks at the bank gave me some money for this house. But now this house is worth half as much as I borrowed, so I'm not paying them back!"

Walking probably sounds pretty ridiculous to kids.

[liv2ski]

I'd try to shortsale if i was you. You take a couple hundred hit points on your credit but after 3 years, you are a first time home buyer again and your credit will have come up enough to get into an FHA (620 credit score) and try again if you chose to do so. Whether you foreclose or short sale, your credits going to take a major hit. But you'll have an easier time getting a home after 3 years with that short sale being the one on there. Thats what i would do if i was in your position and just wanted out of the situation. Tough call either way. If i could afford my house, i wouldnt walk. But with your adjustable, who knows how much rates go up in the next few years. I'm assuming quite a bit.

Short sale or foreclosure, it is looked at as a foreclosure either way by all lenders.
Lucky this isn't Australia, as a lender there can get a judgment against you if you walk from a home loan and you will eventually pay them what was owed. But in the land of the free we say "fuck it, let me bail you out brother". If the USA was not such a pussified country, everyone would not have walked in the first place to create the declining values in the second place. Really, our sense of values are so fucked up in so many ways, but the pendulum has a way of swinging to the other extreme, so bail while you can, because in a few years we will realize this bailout shit is just that and that day my friend will be a harsh day to deal with in your present situation.
Just my 2 cents.

[Benny Profane]

But, the 500 lb gorilla in the room here is that you can't drop a HELOC like you can a primary mortgage. Those will follow one through life like a stalking ex mate. And, there's trillions in HELOCs out there.

[supermodel159]

Short sale or foreclosure, it is looked at as a foreclosure either way by all lenders.
Lucky this isn't Australia, as a lender there can get a judgment against you if you walk from a home loan and you will eventually pay them what was owed. But in the land of the free we say "fuck it, let me bail you out brother". If the USA was not such a pussified country, everyone would not have walked in the first place to create the declining values in the second place. Really, our sense of values are so fucked up in so many ways, but the pendulum has a way of swinging to the other extreme, so bail while you can, because in a few years we will realize this bailout shit is just that and that day my friend will be a harsh day to deal with in your present situation.
Just my 2 cents.

Very true, bail me out and throw in some free health insurance....

[cramer]

Short sale or foreclosure, it is looked at as a foreclosure either way by all lenders.
Lucky this isn't Australia, as a lender there can get a judgment against you if you walk from a home loan and you will eventually pay them what was owed. But in the land of the free we say "fuck it, let me bail you out brother". If the USA was not such a pussified country, everyone would not have walked in the first place to create the declining values in the second place. Really, our sense of values are so fucked up in so many ways, but the pendulum has a way of swinging to the other extreme, so bail while you can, because in a few years we will realize this bailout shit is just that and that day my friend will be a harsh day to deal with in your present situation.
Just my 2 cents.

the man makes a good point. laws were passed a year or 2 ago that stopped the IRS from coming after you on that "primary residence" when you foreclosed. I'm amazed banks cant come after you for that money you owe either. It is a bailout right now and if you think you are going to be screwed come rate hike time, walk.

i'm on a 30 year fixed that my payments are only going to go down as i get older. PMI will drop off after about 8 years or less if my value goes up and im already getting 100+ a month dropped off because im paying taxes on a 520K house right now that i bought for 200ish. My taxes are lumped into my payment....Gotta love my county, or this may be accross the board, but your taxes are what the last sold price was, not what you paid. I did get 700 bucks back and get another 700 back, so thats kinda nice to see come in the mail. I am not sure what the hell i would do if i was in your shoes, or half of my friends are in. They all in the same boat, its ugly.

[meatdrink9]

Interesting recent reading in this thread. Whereas mortgages are out the window (more than 4) for guys like myself (numerous rental properties) I'm actually tempted to jump back into flipping homes to generate cash to buy rentals. Flip 2, hold 1, repeat. The REOs are getting so cheap now that playing with cash isn;t that scary, but eventually you'll run out so I figure flipping is a good way to generate cash as the loans don't exist. In the area I work there were over 160 sold homes in the last 60 days (not a huge area). I'm pretty damn sure I can buy starter homes for just about nothing and double my money very quickly (buy home for 30K, remodel, sell for 85K, still a great deal, easy to move). If they extend the first time housing tax credit I may flip a few places pretty quickly.

[iceman]

As far as I know, the IRS has never been able to come after your principal residence for unpaid federal income taxes or penlties.

[cramer]

As far as I know, the IRS has never been able to come after your principal residence for unpaid federal income taxes or penlties.

i guess you dont know diddly


j/k i didnt know much about real estate till i bought my first house this last year. Main reason i researched so much is because of the job market and layoffs. I wanted to make sure i was just going back to square one in the event i lost my job, etc. I would be no worse off than i was before, renting, had i lost my job and had to walk.

2012 peeps are good from taxes...

http://www.irs.gov/newsroom/article/...174034,00.html

Nobody was foreclosing on homes in the last 10 years. You could sell your house. The big problem now is nobody can sell their house. They are fucked. Either ride it out another cycle or walk. Everyones choosing to walk this time. they all paid half million, a million dollard for cookie cutter house? Idiots...

[ass-to-mouth]

And the gravy train keeps on rolling.

Senators seek six-month home buyer tax credit extenision
By Jay David Murphy.

Published Sep 17, 2009 by ■ Jay David Murphy - 21 votes, no comments

Senator Reid and Senator Ensign of Nevada co-sponsor a bill to extend the $8,000 first-time home buyer tax credit. The bill was also sponsored by Senator Ben Cardin.

Nevada Senators Harry Reid and John Ensign cosponsored a bill with Senator Ben Cardin that will extend the existing home buyer tax credit of $8,000 for six more months. The bill proposes to continue the rule that allows taxpayers to treat the home purchase as occurring in the preceding year to expedite receipt of the credit.

The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009.

The definition of a first-time home buyer is a person who is purchasing any kind of home “new or resale.” They are a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the home ownership history of both the home buyer and his/her spouse.

These people are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. The new bill will extend that six more months.
For Las Vegas this is good news. Even though record sales have been recorded this summer, the majority of purchases have come from investors who are turning them into rentals. There are still 25,000 homes that have not been released back into the market from bank repossessions.
In email statements received by Digital Journalist Jay David Murphy, both Senator Reid and Senator Ensign feel strongly that this additional time will help advance economic recovery in the State of Nevada.

“Yesterday we learned that new home sales have increased in Las Vegas, and that’s good news. I hope this credit will build on that so more Nevadans can realize the American dream of home ownership,” Reid said. “I’m pleased to join Senator Ensign in supporting a bill that offers relief to Nevadans as we continue the work of rebuilding Nevada’s economy. While extending the credit is an important tool to help stabilize the housing market, I will also continue efforts to help Nevada homeowners avoid foreclosure and keep them in their homes."

Senator Ensign added on what Senator Reid said, “Nevada’s housing market has been one of the hardest hit over the run of this recession and is still struggling,” said Senator Ensign. “It is not only hurting families and homeowners but also risks dragging down our economy further. This bipartisan plan is a proven model that incentivizes potential buyers while targeting the serious problem of excess inventory in the housing sector, and I urge the Senate to extend this tax cut.”

[liv2ski]

But, the 500 lb gorilla in the room here is that you can't drop a HELOC like you can a primary mortgage. Those will follow one through life like a stalking ex mate. And, there's trillions in HELOCs out there.

Not 100% true. If it was a purchase loan, think 80/20, the lender has no recourse. It is the equity Heloc/2nd that the lender has recourse on. And yes, a shit load of those were done 2004-2007.

Cramer, you commented that your property taxes are based on the previous owners tax bill. That is temporary for the year you closed in and they should be adjusted down when the county assessor sends you out the bill in the next few months. 1st half installment due in November is for the period of time July-December 2009 and the 2nd half due in March is for January-June 2010. The assessor only adjusts the tax basis once a year and not immediately in CA.
Also, on your PMI dropping off comment. I thought you got a FHA loan and I am pretty sure the monthly MI charge does not drop off on that product ever. On a conventional loan, it will drop of when your current loan balance is 80% of the original value (you paid the loan down) or if you have the home reappraised due to appreciation, the lender may waive it at 75% of the value.

[liv2ski]

As far as I know, the IRS has never been able to come after your principal residence for unpaid federal income taxes or penlties.

Not true. In the previous RE meltdown of 1992-1995, we did a boatload of short sales and foreclosures in CA. All of those sellers/foreclosed upon people received a 1099 for the deficient amount and had to pay tax on it. It was in the last 2 years our kinder and gentler president (No wait, that was the first Bush) signed into law a bill waiving that on a O/O home in our current crisis. However, all those peeps that bought N/O homes to flip or vacation homes still get 1099ed.