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Declining values, defaults, foreclosures catch many local residents by surprise

A crisis hits home

By Scott Hadly (Contact)
Sunday, February 17, 2008

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Focus on foreclosures

Previous articles:
02/17/08: A crisis hits home
02/17/08: Banks' earnings hammered by sheer number of bad loans

Interactive: The subprime correction

Videos and an interactive, by-the-numbers look at mortgages and defaults in Ventura County. View now »

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Photo by Juan Carlo Mendoza

"I never thought this would happen to me," said John Bailey of a letter from the bank, letting him know that his Camarillo Springs home had been auctioned off, and he had a few weeks to clear out.

Source: Data Quick; Foreclosures.com; staff reports

Sitting in his bare kitchen surrounded by boxes of financial records, John Bailey looked as if he couldn't believe what was in front of him.

"I never thought this would happen to me," Bailey said last month as he looked at the stack of paper that told the story of how he lost his home.

The 74 year-old, who wears his red plaid shirt buttoned to the neck, is one of the 1,500 Ventura County homeowners whom lenders foreclosed on last year as the housing market crumbled under the weight of failing subprime loans.

On the top of Bailey's stack was a letter from the bank, letting him know that his home had been auctioned off, and he had a few weeks to clear out.

It was a depressing end to a monthslong fight for Bailey, who conceded he was out of options.

He and his wife, from whom he is now separated, had refinanced their Camarillo Springs home four times over six years as its value steadily climbed.

Each time, the couple pulled out a little money to fix up the place and to supplement their variable income.

But when they tried to take out money again in early 2007, they discovered that the value of their home had plummeted.

The home was worth less than what they owed, said Bailey, who still works installing fiber optics in homes and businesses. They soon got behind on making payments and started to get notices that they were falling into default.

Bailey spent several months trying to work things out with the bank but failed. In the middle of negotiations on a "work-out" plan, the bank — without notifying him — auctioned off the property, according to Bailey. He found out about it on Dec. 4, a few days after the sale.

There's no government program he can turn to, and no more last-minute ideas or negotiations, Bailey said, just the prospect that he will never retire and never own a home again.

"I've been through ups and downs before, but I thought we'd make it through this one," said Bailey, who has dark bags under his blue eyes. "Forty-three years, and we never missed a mortgage payment on the various homes we owned. I didn't think it would turn out like this."

The correction

For anyone caught up in it, the mortgage crisis hit less like a market "correction" and more like a series of little roadside bombs that keep popping off, peppering neighborhoods with swaths of collateral damage.

It harmed poorer communities worse than others, with Oxnard taking the biggest hit in Ventura County.

The correction also did damage to parts of Camarillo, Thousand Oaks, Simi Valley, Fillmore, Santa Paula and Ventura.

About 1,500 Ventura County homeowners were foreclosed on in 2007, a 90 percent increase over the previous year, according to DataQuick, the La Jolla-based real estate information company.

Ventura County ranked 31st for foreclosure activity out of the top 100 metro areas in the nation, according to statistics released last week by RealtyTrac. The Irvine-based company comes up with the ranking by comparing the number of homes in an area with the number of foreclosure filings, which include notices of default, auction sales or bank repossessions.

Cities in California, Ohio and Florida dominated the list, with Detroit at the top followed by Stockton and then Las Vegas, according to RealtyTrac.

Although foreclosed homes make up less than 1 percent of the 243,000 county households, the numbers only tell part of the story.

Almost all who own homes here have felt the downturn in some way. Whether they were part of the more than 5,000 homeowners in default on their payments last year, or simply homeowners who watched the value of their houses — probably their biggest asset — plummet.

The median sales price of new and existing homes and condominiums in Ventura County dropped from a high of $630,000 in 2005 to $525,000 at the end of 2007. The median is the midpoint, where half the homes sell for more and half for less.

Some estimate prices won't hit bottom for two more years. That's not good news for thousands who will see the value of their homes drop below what they paid for them.

According to data compiled by The Star, the total market value of homes foreclosed on in Ventura County during 2007 totaled almost $750 million.

The Center for Responsible Lending, a nonprofit based in Washington, D.C., projects that foreclosures will, over the next year or so, continue to push home values down by an estimated $6,300 per house. The group estimates that in Ventura County foreclosures will eat away about $730 million in property values.

The group projects that nationally the amount of wealth that will be lost because of the spillover from foreclosures on subprime loans made in 2005 and 2006 will be more than $200 billion.

It goes beyond property values, with the downturn slamming mortgage companies, banks, Realtors and workers in the building trades.

Assessing the damage

Economists differ on what effect the market correction will have on the overall economy.

Ventura County has not been hit as hard by the mortgage crisis as places like San Bernardino, San Joaquin and Riverside counties, according to Mark Schniepp, executive director of the California Economic Forecast in Goleta.

Barring massive layoffs, terrorist attacks or some other kind of unforeseen shock to the local economy, "I think we'll weather the storm," Schniepp said.

Bill Watkins, executive director of UC Santa Barbara Economic Forecast Project, agreed. Economic indicators are good, said Watkins, who is more worried about how layoffs at Amgen Inc. and Countrywide Financial Corp. might hurt the area.

Both economists said efforts by lenders and President Bush to encourage banks to work with borrowers could also help some vulnerable homeowners. Over the next year or so, as many as 2 million homeowners with subprime adjustable-rate mortgages will see their rates reset higher, according to federal figures. So far, the industry has renegotiated the terms on about 200,000 of those loans.

"I see the challenge we have is the number of resets," said Bob Davis, branch manager of First Mortgage Corp. in Ventura.

Right now, Davis said, he thinks there isn't enough incentive for lenders to work with borrowers. He sees the work so far as "a drop in the bucket."

"Basically, I'm screwed," said one Camarillo small-business owner facing a possible foreclosure. "Everything they're proposing in the last 30 to 60 days won't help us at all."

The man, who asked that his name not be used, said he and his wife used the equity in their home of more than 40 years to help cover mounting medical bills for their family. It worked until the market dropped last year.

"There are needs, and there are wants," the man said. "For some people, they refinanced because they wanted the new car or the 34-inch plasma TV. We don't have the new car or any of that stuff. We took out equity to pay for needs."

It's hard to ignore that the past year was pretty bad for many homeowners. All indications are that this year will be even worse as a big chunk of adjustable-rate mortgages in the county reset to higher monthly payments.

In some neighborhoods, as many as 40 percent of the loans taken out in 2006 were subprime adjustable-rate mortgages, according to federal Home Mortgage Disclosure Act data compiled by The Star. The monthly payments on many of those adjustable-rate loans are expected to jump by 30 to 40 percent this year.

It means more homeowners likely will be stretched to the limit to pay their monthly mortgages, leading to possible foreclosure.

Trying to stay afloat

"If we can't sell, we'll just walk away," said Maria Ambriz, who with her husband, Jack, has watched the monthly payments on the Camarillo home they bought in the spring of 2006 soar from $2,500 to $4,700. They're spending about 85 percent of their monthly income just to cover the payments.

The couple said they didn't understand the rate increase that came with their adjustable-rate mortgage loan.

While the couple said they are partly to blame, they think their Realtor and mortgage broker should share some responsibility.

"No one ever explained that to us; they sort of smoothed things over and said we could do it," Ambriz said.

A friend of hers who cleans houses is facing similar problems after being coaxed into buying a $400,000 home.

"It makes no sense that she got a loan, and now she's like $30,000 in debt because she was using a credit card to try and cover her payments," said Ambriz, 55.

In the case of the Ambrizes, they thought they'd quickly be able to refinance the home as its value increased, but it didn't happen. The couple cannot refinance because the value of the home dropped, and they now owe more than it's worth.

Although they haven't fallen behind in their payments, Maria and her husband, a 50-year-old retired Marine gunnery sergeant, are each working two full-time jobs. They both work night and day.

The silver lining is that their home is so little that they pay almost nothing for their utilities, said Jack Ambriz, who works as a security guard and for a company that makes computer chips for cell phones.

"We don't see each other," said Maria, who works at a pharmacy and as a customer service manager at Big Lots. "We have so much stress."

Photo by Juan Carlo Mendoza

Josie Hurtado, a Century 21 Realtor, helps Jack and Maria Ambriz sign papers to sell their condominium in Camarillo. "If we can't sell, we'll just walk away," said Maria Ambriz, who with her husband has watched their monthly payments soar from $2,500 to $4,700.

Trying to keep up with their mortgage each month has left the couple sleepless and tense. They've both lost an unhealthy amount of weight. In December, everything reached a breaking point.

"Finally, I started crying and said, We can't do this anymore,'" said Maria, who sold most of her jewelry to keep up with her rising mortgage payments.

Their options now are limited.

If they continue to make their interest-only monthly payments, they'll owe even more on the home in a year, and its value will likely have dropped lower than it is now. They're trying to do a "short sale," selling the home they bought for $610,000 for $399,000. Of course, they would lose their $73,000 down payment and may still owe money on the house, but they would walk away with their credit intact.

"We both have cried over this," said Maria. "I'm crying right now because I don't want to lose the house. We love to work hard but not like this. There's nothing else to do. I say to my husband, Don't worry honey, we'll buy another house some day.'"

Last week, they got an offer for $405,000 on the home. While they want to sell, and their Realtor is confident the deal will work out, the bank ultimately has to approve the transaction.

In some Ventura County communities, more than half the properties for sale are either bank-owned or "short sales," homes priced for less than what the owner paid.

That means opportunity for some people.

With two kids and a relative all squeezed into their 900-square-foot Thousand Oaks home, Laurence and Kaylene Jacobson longed to move up.

But prices in Thousand Oaks, where median home values peaked at $690,000 in late 2006, were beyond what they could afford.

When prices seemed to plateau and drop a little, they saw their chance and snapped up a bank-owned home on Teasdale Street for $521,000. It had sold in 2005 for almost $700,000.

They thought they'd timed everything right, but almost immediately Laurence was laid off from Amgen.

"That was like a blow to the solar plexus," said Kaylene, who is 38.

She later collected her thoughts and chalked up the change to "God's plan" for her family. Laurence, 35, quickly switched gears and ramped up a computer consulting business he had nurtured out of his home.

The Jacobsons — the couple have a daughter Rebekah, 4, and a son, Nate, 7 — suddenly found themselves juggling a mortgage on their old home, one on their new one and an equity line of credit.

Despite the stress, the couple said, they have things under control.

"I think people got crazy there for a while, and a lot of people got into loans without really understanding what it means," she said. "We know exactly what we're doing."

Critical observer

John Kaspar is not as big a risk-taker. Ventura County's high-priced market has kept him on the sidelines. A manager at a building supply company in Camarillo, Kaspar is hesitant to leap in and buy.

Married with three children, Kaspar watched prices even in middle-class parts of Camarillo nudge up past $540,000 two years ago when he began looking.

By traditional lending standards, a family would have to earn $150,000 a year to afford a home in the range of $511,000 to $612,000, according to some estimates.

"We prequalified for $500,000, but there was no way I was going to do that," he said.

Kaspar didn't want to overextend his family. He's seen booms and busts before. He felt the "bubble was about to pop."

But it has been difficult to sit and watch.

"I have a friend who refied' five times and mostly for silly things," he said.

Now that the market's crashing, Kaspar is not sure if it's fair that people who took big risks and their lenders — some of which were "absolutely predatory" — should get government help.

Discussions

Posted by SmashyCrashy on February 17, 2008 at 2:49 a.m. (Suggest removal)

The housing market went crazy because the lenders were giving money away and people weren't financially literate enough to understand the mortgages they were getting. They thought the lenders wouldn't possibly give them money if the lenders didn't think they could afford it. The lenders thought that borrowers wouldn't borrow money unless they thought they could afford it. And the realtors and mortgage brokers clearly were ignoring their fiduciary duty to protect their clients so they could close the deal.

Now that lenders are slowly returning to traditional lending standards the prices are dropping and will continue to drop until the prices match the incomes for the local area. For areas that are currently under stress the lenders institute a "declining market" policy where they will lend less money (you need more down payment) and underwrite the loan more stringently.

You can see the areas lenders and mortgage insurers think are in trouble and will be in trouble for the forseeable future here:
https://www.cwbc.com/ContentManaged/f...
Here:
http://www.pmi-us.com/guidelinechange...

and here:
http://mgic.com/pdfs/Restricted_Marke...

Note: Oxnard-Thousand Oaks-Ventura is the Census definition of Ventura County, what they call a MSA. It covers a wider area than those 3 cities.

2008 and 2009 will be a time of historic price declines. People buying a house today that is worth 100k less than it was last year think they will be insulated from the downturn. But the people doing the same thing last year thought the same way. It is clear that prices have much further to decline before they are supported by the income level of Ventura county.

Traditional lending guidelines are 28% of income for housing cost for Fannie/Freddie and 29% for FHA. So someone wanting to sell a 600k (at 6% interest) house will need to find someone making around 200k with no down payment (which is about 2% of the local population) or 150k for someone with 120k down payment. Pretty much everyone selling a house today cannot afford to buy the house they are selling yet think someone richer than them wants to live there.

Posted by live_for_purpose on February 17, 2008 at 4:58 a.m. (Suggest removal)

Good points, SmashyCrashy. I know many people who refied to take money out for cars, furniture, fencing, remodeling, etc. Now we'll see what they think. We refied twice since 2002, but only to take advantage of lower interest rates. The first time we paid the small closing costs out of our own pocket. The second time it was refied at no cost to us to get down to 5.5% FIXED. We never took one penny out. The principal balance kept declining. We only restarted the 30 year clock by about one year.

The foreclosure numbers in Oxnard tell a big story. You must be literate in English and think for yourself or you will get swindled. Sad, but true. Yes, there is a lot of blame to go around, but the bottom line is caveat emptor--buyer beware. Don't borrow money you can't repay. Live within your means. Don't try to keep up with the Joneses. A bird in the hand is worth two in the bush. A penny saved is a penny earned. Look before you leap.

We thought about selling towards the peak and moving to another state back near family and buying a big house with some land around it for cash and still have money in the bank. Some friends did that in June 2006 (roughly the peak) and have a great place in South Dakota to raise their three boys. Now we've "lost" probably $200,000 on our 3+2 we bought in 2002 for $370k. Perhaps prices will go lower than that. Should I cry and complain because we didn't go ahead and decide to sell? No. We all make decisions and then live with the consequences. We should never forget that.

Posted by ecarson1958 on February 17, 2008 at 7:14 a.m. (Suggest removal)

Remember this point: LESS THAN 1% OF THE HOMES are having financial difficulties. There is way too much talk for that small group of people who basically get exactly what they deserve. If you don't have enough intelligence to read the "ENTIRE" loan documents before you sign on the guarantee loan payments line, YOU GET WHAT YOU DESERVE COMING to you. If you borrowed money from your house and thought that it is ok because we can just refinance again when the house goes up again, you get what you deserve. The 74 year old guy in the story used his house like a giant ATM and probably bought toys, went on vacations, ate at expensive restaurants drinking wine and thinking, "honey life is so good right now, as soon as we can refinance again we can keep this gravy train going." Guess what? It's time to pay the piper. Everybody needs to take their lumps. Grow up and accept the responsibilites you have brought to yourself and your family with a house. Don't look to the government, your lender, friends, relatives, the t.v. There is only one place you should be looking and that is in the MIRROR. You, you are the one who put yourself in your position of financial irresponsibilty. This is a learning lesson in your life. It will pass. Grow with it and move on.

Posted by nitzer93 on February 17, 2008 at 7:25 a.m. (Suggest removal)

I just want to commend SmashyCrashy for the consistently enlightening comments on the real estate market over the course of many months and many articles. His (or her) comments have often times been better than the article itself. By just crunching the numbers you can see how to cut straight through the bullsnort that the real estate agents, brokers, buyers, and sellers are putting out there.

Posted by Camman on February 17, 2008 at 8:21 a.m. (Suggest removal)

While this Powerpoint slide set does contain some harsh language, it is an excellent overview of how we got into this mortgage mess in the first place. I learned more from reviewing this than all the news articles out there...

http://home1.gte.net/res008k5/mess.pps

Posted by uknow1 on February 17, 2008 at 8:53 a.m. (Suggest removal)

Smashy it seems writes an informed, cogent posting, however, I must disagree with her/his point that "The lenders thought that borrowers wouldn't borrow money unless they thought they could afford it".

This whole real estate debacle or calamity is due to the vertically aligned collusion, fraud and deciet by the entire real estate industry, from the appraisers to the mortgage brokers, and r.e. agents. With Countrywide and affiliates at the helm of the crazy, crashy ship, the people who made the most money are responsible for much of the grief that is transpiring. It has always been the responsibility of the lenders to conduct due diligence on each applicant to verify what what the borrower put on the application is documentable and true. When you have mortgage brokers saying and doing anything to get everyday folks to sign on the dotted line, it is simply a massive scam perpetrated on the people who trusted them. I saw it first-hand when Countrywide encouraged me to takeout a loan that would have resulted in a $3500/mo. payment when I was only taking home $5000/mo.; and the property taxes were not even impounded. No, I didn't do it.

While it is completely true that many used rising appreciation as an "ATM", what layperson could have predicted that every other expense associated with raising a family would concurrently go through the roof? Expenses such as insurances (premiums, co-pays and deductibles), utilities, gasoline, college tuition, food, etc? It is all symptomatic of a corrupt infrastructure that starts at 1600 Pennsylvania Ave. and spreads like a cancer to evry other formally ethical and stabile institution.

I wonder how all of these co-conspirators, the mortgage brokers, lenders, appraisers, r.e. agents have ratioanlized their actions now that the chickens are coming home to roost? They're a despicable lot and if there is a hell they will all surely end-up there.

Posted by Holycow on February 17, 2008 at 8:54 a.m. (Suggest removal)

Help me on this one! In the unfortunate situation where the family is upside down on the finances: “They're trying to do a "short sale," selling the home they bought for $610,000 for $399,000”.
Say the plan is real simple. They sale their house and the lender forgives $211,000 of their debt. When the settlement is made, would the bank not report the $211,000 to the IRS? And would this money not be considered a gift? And would this not be taxable as ordinary income????? Ouch!

Posted by uknow1 on February 17, 2008 at 9:04 a.m. (Suggest removal)

Let us not forget that there were many other co-conspirators; like newspapers who benefitted from all of the advertising of all of the r.e. related companies and did nothing to investigate the scam while it was occuring. All you have to do is look at the feces-eating grins of these charlatans popping-out of the pages of the paper to understand that you were in for a rude awakening.

Posted by live_for_purpose on February 17, 2008 at 9:59 a.m. (Suggest removal)

America is too much of a society who wants it now, wants it big, and wants it at any cost. That always comes with a price tag. Why not istead of living paycheck to paycheck, lets save and invest from paycheck to paycheck. Learn thriftiness. Learn frugality.

Learn the value of a dollar (unfortunately going way down--due to the federal government spending way too much money under both Democrats and Republicans). Give the President a lin-item veto to veto certain lines in appropriations measures, just like many governors have. And these mortgage grantors who sell bad loans and then bundle them together and sell them on the secondary market--we need a lot of reforms there too, both on the sellers of the bundles and on the buyers of the bundles. Those people are foolish.

Posted by freethought on February 17, 2008 at 10:02 a.m. (Suggest removal)

Holycow - In California, the forgiven portion of the loan on short sales is not considered taxable income. It used to be, though.

Posted by cason on February 17, 2008 at 12:07 p.m. (Suggest removal)

Screw this.

Hold the loan officers, the lending corps all responsible for predatory lending. We all know big brother and the big corps all profited madly off this fire sale. What the hell are we doing, people we have to take our government back. They are just a bunch of stupid old white people who love greed, power and hate. When is enough, enough? Or just let the gap between rich and poor grow. Wait we are the hard working individuals who own this country, lets kick all their #^%$# and take our country back or better yet give it back to the Indians who are the true owners.

Posted by cassandra on February 17, 2008 at 12:57 p.m. (Suggest removal)

Well, cason, quit mincing your words. Tell us what your really man. Beneath the fulminations, however, there is much truth in this posters remarks. (I'm not willing to give the Chumash back my little lot, however.) The only further point I would make was that the crash had been predicted for YEARS in the independent media, but I didn't catch a whisper here till it was a done deal.

You want to know what's going on? Turn off the regular channels, tune into foreign news, Democracy Now!, Truthout, Alternet, Clusterf...k Nation, Heinberg's blog (used to be Museletter), Hopedance, et al.

Posted by SmashyCrashy on February 17, 2008 at 1:15 p.m. (Suggest removal)

I would love to know the Ventura County Stars definition of subprime loan for the graph they made. If the moderators are reading if they could let us know.

For many it is a loan given to people under a certain FICO score (usually around 620). But in reality it is the loan features and underwriting which are subprime rather than defining the borrowers as subprime. Features such as interest only, negative amortization, teaser rates, ARMs tied to volatile indexes like LIBOR, 100% financing, stated income, etc were given to "Prime" borrowers as well under the "Alt-A" guise. Many of the loands had multiple of these features. The amount of concentration of these loans in California is tremendous. Both in purchase and refinance.

People would do well to sign up for Loan Performance monthly newsletter, though highly technical it does have loan concentration breakdowns for the quarters that they are reporting.

For example:
http://www.loanperformance.com/market...

Page 5. It says 11.8% of purchase loans were option arms for California for the reporting period and **59.2%** (!!!) for Ventura,CA were interest only. Approximately SEVENTY PERCENT of loans given then were probably subprime loans.

The return to normal lending practices where people have to pay a monthly payment which amortizes (pays down the loan balance) means that people have a tremendous hit to purchasing power. Price will continue to drop, anyone telling you different is a realtor or a loan officer. All one has to do is chart the statistics over time to see how much trouble the market is in.

Important sites for people wanting to learn for themselves insteaad of listening to realtors telling you it is time to buy:

http://www.dqnews.com/ (check out the archive)

Read and sign up for the foreclosure newsletters/press releases here:
http://www.realtytrac.com
http://www.foreclosureradar.com

Watching the Mortgage Bankers Association website for news releases is instructive:
http://mbaa.org

And for a good blog related to the economy and housing:
http://calculatedrisk.blogspot.com

Good luck, protect yourself.

Posted by live_for_purpose on February 17, 2008 at 3:23 p.m. (Suggest removal)

cason--Quit blaming the white man (or woman). Take care of your business and leave race out of people who made foolish personal choices. Cop-outs on personal responsibility don't help you.

Posted by Tyrone on February 17, 2008 at 3:36 p.m. (Suggest removal)

I added Mr. Bailey to the Housing Bubble Hall of Shame®. Be sure to visit.

Ventura is going to crash hard over the next few years.

Posted by daleeks on February 17, 2008 at 4:43 p.m. (Suggest removal)

What amazes me is that this debacle is a surprise to anyone. I worked at Countrywide for several years and could not believe what I was seeing. Billions of dollars were loaned to people who had no way of paying it back except for the continuation of an unsustainable increase in home prices driven by loose lending and speculation. Only a small percentage of this madness was linked to "subprime" loans. The article details cases of people who have NOT lost jobs or seen significant reductions in income, as the requisite "economist" of the piece implies is a prerequisite to a meltdown. They simply borrowed way way too much and were encouraged to do so, based on the idea that home prices averaging 7-11 times median incomes would simply continue to rise! This is the case with EVERYONE who bought and/or refinanced significantly after about 2002. There are millions of NON subprime borrowers in this boat, and the first job loss, divorce, or illness that affects them will trigger events leading to foreclosure. Many will simply walk away when their home is worth less than what is owed. This situation is an obvious disaster that does NOT require unemployment to spike significantly for the chain reaction to begin or acclerate. The crash has only just begun and will feed on itself until house prices are at sustainable levels, about 3-5 times median area income, or about $280K in Ventura County. Unemployment is rising now as is inflation, the secondary markets have seized up and there is more bad debt floating around now than there was last year. This mess will get worse for another two or three years before it BEGINS to improve and prices will most likely drop for the next 3-5 years. The mainstream media may catch on by around 2009 and, until then, the blogosphere is the place to get intelligent analyses of the meltdown.

Posted by star7 on February 17, 2008 at 5 p.m. (Suggest removal)

My family & I are victim's of foreclosure. I am a renter & I just found out by accident that the home I've lived in for 10+ is being auctioned off very soon. My landlord has not informed me of this. So Thank you STAR for informing me on what I'll be facing after auction,a couple of weeks to clear out. My landord has 2 other home under foreclosure, tenents where not informed either. But, the landlord lives in a big beutiful house that was payed for by all the loans they got on rentals. They should have there home own taken away.

Posted by cassandra on February 17, 2008 at 6:07 p.m. (Suggest removal)

Bad luck, Star7. You had no warning. Sorry, and hope you folks land on your feet.

Posted by freethought on February 17, 2008 at 6:25 p.m. (Suggest removal)

SmachyCrashy - Nice posts (once again). I have been following Calculated Risk for over two and a half years now. It's actually quite satisfying to watch his (and Tanta's) predictions back then come true now. I also follow Mish's posts (web site: http://globaleconomicanalysis.blogspo...), although he's more bearish on our economy than I care to be.

star7 - Sorry to hear about your situation. I was in the same boat in 1998. We had about two months to find a new place to live after only being ther for four or five months. It won't be easy, but you'll get through it and find a new place to rent.

cason - So, it's only old white people who brought the current real estate situation on us, ay? And stupid old white people at that. Your remark reaks of racism.

Posted by uknow1 on February 17, 2008 at 6:47 p.m. (Suggest removal)

star7 and others impacted by unscrupulous landlords, banks, etc.:

www.CalTenantLaw.com

Posted by cassandra on February 17, 2008 at 7:15 p.m. (Suggest removal)

I hate the blame-the-victim attacks I see here. It looks like a way to deny the vulnerability we all face. I would have read the fine print, done it different, blah, blah, blah. Probably you wouldn't. You want the dream you've all felt entitled to from your parents' time. Your own home.

But this is not your parents' time but one of dog-eat-dog capitalism. Your sense of entitlement is demonized as a character flaw instead of a reasonable assumption in unreasonable times.

Star7 is not at fault, nor are the people who trusted banks to evaluate their capacity to have a loan. Neither were really in control. A massive failure of regulatory oversight is being packaged as a failure of individual responsibility. And the brain dead are buying it.

The problem is government, we are told. But no, the problem is wretched governance by folks who don't like government. Do them a favor and vote them out of government.

Posted by lrgvanman on February 17, 2008 at 9:34 p.m. (Suggest removal)

May I suggest that it was the cascade effect resulting from greed that has caused this phenomena?

Posted by cameronincam on February 17, 2008 at 10:35 p.m. (Suggest removal)

A good friend of mine lives just down the street from this Bailey person. He is doing backflips that he is leaving the neighborhood.

Apparently his home is a blight on the neighborhood and I was told a few years ago he built a carport in his driveway out of blue vinyl tarps.

Looks like Karma caught up with this Bailey man..

Posted by jeff93024 on February 17, 2008 at 11:26 p.m. (Suggest removal)

"the problem is wretched governance by folks who don't like government."

Powerful and true words. Chilling. I plan on repeating these words often, cassandra.

Posted by SmashyCrashy on February 18, 2008 at 1:57 a.m. (Suggest removal)

Kenneth Harney of the Washington Post had an article regarding the Mortgage Insurers tightening their guidelines.

http://www.washingtonpost.com/wp-dyn/...

Fannie/Freddie conforming limits are going up at the same time the mortgage insurers are tightening up. Basically, you'll need a hefty down and be able to prove income that fit the maximum front end ratios the lenders are requiring (28-29% of income spent on total housing costs).

Posted by live_for_purpose on February 18, 2008 at 2:42 a.m. (Suggest removal)

Give me one or two valid examples of this wretched governance that contributed to this mess. Are you saying laws were broken by government officials?

Posted by live_for_purpose on February 18, 2008 at 3:27 a.m. (Suggest removal)

By the way, in 43 years you should be able to pay off a home. My parents did it in about 10 years. Mom was a secretary and Dad was a custodian. It's called making a little extra payment every month instead of taking money out. It's called delayed gratification on optional home improvements, doing it yourself, and not spending discretionary money all the time.

Posted by spokenit on February 18, 2008 at 9:48 a.m. (Suggest removal)

I think the lenders, realtors, etc... are to blame! They new exactly what they were doing to the people. They got their commission at the peoples cost and then got out. They know exactly how to make the paper work look so that someone making 35,000 to 40,000 a year could qual. for a 500,000 to 600,000 home on those interest only loans. Then tell them they can refi. in 2yrs to a fixed rate for a lower payment and get money out of their house. They lied and cheated the people. I wonder how many of them are loosing their homes????? I think a lawsuit should be in the works! IF our Gov. really wanted to help the people they would stop the foreclosures! Its all about the mighty $$$$ and they want it more then they want the people to own homes!

Posted by bbbdugout on February 18, 2008 at 10:14 a.m. (Suggest removal)

I'm sorry I must have missed something along the way - did someone hold a gun to these people's heads and forced them to refi and TAKE money out of the equity and, oh yeah, spend that money also foolishly - we all have made our own beds - now we have to sleep in them - I certainly don't believe the government should step in and help us for making stupid decisions

Posted by speaktruthtopower on February 18, 2008 at 10:21 a.m. (Suggest removal)

...GREED...

> Buyers
> Sellers
> Realtors(TM)
> Appraisers
> Mortgage Brokers
> Bankers
> Servicers
> Securitizers
> Investors

All fed by a pyramid of greed. All encouraged by a culture of robber-barony from the White House on down. 7 years spent stealing the next 70 from our children. Materialism as Mobility; Indebtedness as Virtue. Platitudes as Pacifiers - "No child left behind." Science reviled, the Earth wounded; Millenarianism on a pedestal, the Earth be damned, all souls for themselves.

I quote a poem, written in another time, for another people...

WHERE the mind is without fear and the head is held high
Where knowledge is free
Where the world has not been broken up into fragments
By narrow domestic walls
Where words come out from the depth of truth
Where tireless striving stretches its arms towards perfection
Where the clear stream of reason has not lost its way
Into the dreary desert sand of dead habit
Where the mind is led forward by thee
Into ever-widening thought and action
Into that heaven of freedom, my Father, let my country awake.

Posted by Ventuckey on February 18, 2008 at 10:25 a.m. (Suggest removal)

Very sad state of affairs. I remember when houses wouldn't stay on the market for 24 hours and people would offer tens of thousands over what the home was selling for. A little over a year ago, our home was worth $600k, now there is a Foreclosure around the corner selling for $375k!!!! I can drive down the street and see the same houses that have been on the market for over a year and have had price reduction after price reduction.

Posted by solvingadream on February 18, 2008 at 11:01 a.m. (Suggest removal)

So many people didnt understand why housing prices were going up, they just accepted it. Now they don't understand why prices are dropping so much and will continue to do so until incomes can support them.

Posted by varroyo on February 18, 2008 at 11:18 a.m. (Suggest removal)

I agree some people put them selves it this situation, but in the case of the Ambrizes they are hard working people that just did not understand what the were getting into, the realtor and the lender should have explained the type of loan they were getting into, alot of the lenders were giving the pay option ARM loans not explaining that the minimum payment did not even cover the interest causing their principal balance to go up as much as $20k a year! alot of people are going trough the same type of situation and there is help out there you just need to be informed. Alot of lenders are working with homeomners now & are modifying their ARM loan into fixed rates & dropping the ineterst rate, you do have to qualify though, its not based on your credit but on your ability to pay. There is a non-profit local agency in Camarillo called Consumer Credit Counseling Services that helps educate homeonwers on how to prevent foreclosure & also contacts the lender on your behalf if you need them to, their # is 800-510-2227. I also agree that the realtors should take alot of the blame bacause when consumers hire a realtor to buy a home they assume the realtor knows what they are doing & trust them when in reality most of them (not all) are just looking to get paid they dont care whether the homeowners stay in their home for 30years or 2 years as long as they get their nice little bonus and yes some of these people are loosing their home as well (karma).

Posted by tathiba1 on February 18, 2008 at 11:21 a.m. (Suggest removal)

It seems to me that everyone wants to blame everyone else for the mess that they are in.
No one forced anyone to sign on the bottom line for these loans.
If something is too good to be true, well then it most likely is.
Some people are saying that they did not understand the loans that they were getting into.
Then they should have paid a few hundred dollars to a lawyer to have it explained to them.
Don't make excuses for your stupidity, be informed enough to make educated choices.

Posted by rcamacho on February 18, 2008 at 11:23 a.m. (Suggest removal)

I am most likely going to have to walk away. I will not lie about it . That number of 103 in Thousand Oaks will most likely be 104 now...
With the cost of my untimely divorce just recently and the refi that I should have used better jugdement on. The snow ball affect has started.
My wife use to work at the large biotech company I presently work at but went to Texas. I am stuck with a 4,000.00 mortgage plus a 300.00 HOA fee.
Her income was close to mine and we were ok, but even then it was a stuggle. I have to rent out my office and the guest rooms now, and still have a hard time. The house is now worth less than my refi loan. I made a stupid call, and now am paying the consequences. The only positive thing is I still have a job and wasnt laid off. My income is good, but not enough to live where I live as a single man , and I will have to move fast. I have live there for 7 years and will miss my neighbors and the location, but I learned my lesson on several fronts. Like the couple said in the story. I never thought this would happen to me.

Posted by varroyo on February 18, 2008 at 11:37 a.m. (Suggest removal)

It would be great if people would educate them selves before getting into homes but the simple fact is that most people are not and they rely on & trust professionals to do their job right and not give people loans they cannot afford, most people think "well if the lender is approving my loan thats because I can afford it"

Posted by rcamacho on February 18, 2008 at 1 p.m. (Suggest removal)

Well, said vcr,well said. But I didnt get any toys out of it. And NO one is bailing me out. I am on my own on this one.
Anyone that knows me, knows I am a low maintenance dude. I lost over 60K from my divorce ( and attorney fees)and was left with the bills!
I took a gamble in Vegas last November,with a friend and lost 400.00.
I should have said "NO, thank you" then.

I kept getting calls to "Refi! Refi" and gave in.
What a STUPID A--S I was.
Countrywide whipped my Hide!

Posted by skatedons on February 18, 2008 at 1:06 p.m. (Suggest removal)

I sold my Oxnard home at the peak in Nov 05, I had only had the home just over 2 years and came away with $250k plus, bought a home in OR thinking I would never be able to afford to move back. I'm selling my OR home now and moving back (although market has slowed here prices have not gone down, thank god), but not to Oxnard, someplace in VTA county thats nicer/safer/cleaner. The home I sold in Oxnard has already been foreclosed on. I saw that coming plain as day, when a bank lets someone that can not prove income buy a crappy ole house in oxnard with no $$ down, interest only payments for over 550k then either
a) the bank is taking advantage of ignorance.
b) The person buying the property KNOWS they can not afford the property but can not understand interest only? No, they were just thinking about the monthly payment amount and how "little" that amount sounded at the time.
c) the bank and the buyer were "greedy", the bank knowing the end results and the buyer thinking the property would increase even more. (put too much air in a tire it blows).
d) all of the above-- and more
I am glad I can move back -I miss Ventura County(not Oxnard) and can't wait to return. Thanks to people who were blind to reality and their own financial status I'll be back soon. You don't bail a drunk driver out of jail then give him another beer.....why shouldnt they suffer the consequenses? I can guarantee if we dont bail them out they will educate themselves before buying property again, bail them out and what do they learn?

Posted by rcamacho on February 18, 2008 at 1:08 p.m. (Suggest removal)

Hey varroyo, had I known my wife was gonna leave me for a Club manager out in Killeen, Texas I never would have bought the home or refied. 1/2 of the the household income went for greener pastures, while I was working holidays and weekends till midnight.
Yeah, I know..."boohoo" and "waaaaaaaaaaaahhhhh" to me.
I deserve it. They probably thought with my last name I was easy game...but sadly , I proved them right.
I would have been better off putting a banana in my pants and been thrown in a cage with starving chimpanzees!

Posted by rcamacho on February 18, 2008 at 1:14 p.m. (Suggest removal)

Well, I will live out of my boat in the Marina. ..

Posted by solvingadream on February 18, 2008 at 2:06 p.m. (Suggest removal)

People make choices what they do with their savings and money. Some people choose to tap equity and lose when the market goes south and they need rainy day funds. That was there choice and the risk they took.

Others choose to save and live below their means, these people will be the long term winners of this ordeal. Chasing bubbles leads to broken dreams.

Posted by rachel on February 18, 2008 at 2:20 p.m. (Suggest removal)

It is sad to see so many people losing there homes, but I don't feel sorry for them. They should have been more responsible for their future. I think these people got into these loans FULL KNOWING when the interest only period was up, they would not be able to manage, but not to worry I can always refi. Well not anymore.
And blaming everyone else for your problems is just plan stupidity. Yes I agree that the banks got greedy and maybe took advantage of the situation but the only person we can blame for our situation is ourselves.

I make just under 50K with virtually no debt and an above 700 credit score. I was pre qualified a year and a 1/2 ago at almost 500K, I knew I could not afford that much for a house, so I decided to wait. Now I am sitting back waiting for the market to fall a little more so I can buy a house at a comfortable price.
I see friends and family who bought either just before the market took off or during, that have refied several times to buy boats, cars, remodels, vacations etc... and just think to myself how dumb it is to tack all that money onto your house

Remember.... What goes up must come down!!!!!!!!!!!!!!!!!!!!!!

Posted by litt on February 18, 2008 at 2:33 p.m. (Suggest removal)

Your posts are terrific. I read in the Sunday LA Times, the sub-prime problem may be secondary to the "walk-away" problem. The "walk away problem" defines the group of people that have kept up on their mortgage payments up until now, but at this point their home is worth 10-30% less then what they owe on it. Some are expecting a hideous increase in their payments and need to keep their credit card and car payments in good standing, so they just walk from the home. Some don't even have ARM's, so as the paper reported it, they are simply walking away because they feel they will be in "the red" for years. Now that is scary.

Posted by solvingadream on February 18, 2008 at 2:55 p.m. (Suggest removal)

If you want optimism, how about all the home owners who pulled of their homes from the market until "the market improves" lol.

Now that is a group of true optimists right there. I hope they dont mind wating a 10-15 years.

Posted by guy133 on February 18, 2008 at 3:16 p.m. (Suggest removal)

When I look on craigslist, I see lots and lots of 3 or 4 bedroom houses in Thousand Oaks listing for rent at $2400+ per month. Are there people actually signing new leases at these rates, or are they just dreams by the owners? $2400 for a 3-bedroom house seems crazy to me.

Posted by rachel on February 18, 2008 at 3:54 p.m. (Suggest removal)

guy133, people are actually paying this. I pay over 2000 for a 3+2 house that is a so so neighborhood of T.O. For everything I have read rents will continue to increase in Ventura county because of so many people losing their homes. Pretty sick that the landlords take advantage of an already sad situation.

Posted by guy133 on February 18, 2008 at 4:01 p.m. (Suggest removal)

I'm having a tough time paying my $1950/month rent in Thousand Oaks, and keep hoping the change in the housing market might bring rents down somehow. My least lasts until July, so I just hope my landlord doesn't try jacking it up again this year. (I've been in this house for 4+ years and a model tenant.)

Posted by p.oherlihy on February 18, 2008 at 4:02 p.m. (Suggest removal)

This current real estate market is the result of the Feds printing $3-4 trillion dollars during the last eight years. Real estate rises with inflation. Compounding this was that income and salaries remained the same. Lower interest rates bridged the affordability gap. Non stated, sub prime loans spanned the gap the furthest extent with the highest risk.

The real culprit to blame is overdevelopment. This is clearly shown in the STAR graphs. Oxnard has the most foreclosures and is also the most overdeveloped. Most of the houses were built in the 2005-2006 timeframe and were priced to the most inflated prices.

In Ventura, on the other hand, there are fewer foreclosures. In the early 2000's, many people refinanced and kept their houses keeping inventory low. Prices fell only 0.6% in Ventura compared to 32% in Oxnard. There will be more competition for Ventura foreclosures because of this stability.

Freethought, you have always said that recession is good and that it weeds out the weeds. However, this article personalizes each life story in connection with home ownership. The economy is really about peoples lives. For this reason I do not think recession is good.

The one person who responded that her equity paid for medical bills makes you wonder how she would have paid if she had been renting instead. The person who was able to make a better lifestyle from the equity also makes you wonder how meager he would have lived without homeownership. Also getting divorced, tenancy, or changing jobs at the wrong time of this market. These are all sad stories of recession.

It is important that we not forget these are people when we quote our stats and figures.

It is also important to remember these people in the future as we overdevelop our prime ag land.

Posted by freethought on February 18, 2008 at 6:04 p.m. (Suggest removal)

Ms. O'herlihy - I do not forget about those who have and will suffer due to this and previous recessions, especially those who will be hit due to no fault of their own. However, the numbers are what they are. It's better to know when a hurricane is about to hit so that you can prepare for it or get out of its way, if possible. I, for one, have pretty much recession-proofed myself. I have a job that I know isn't going anywhare, and I have enough cash to survive at least a year in the event that job does disappear. On top of this, I sold my home over a year ago, and am currently renting in a nice Camarillo neighborhood.

For those who will suffer through the next one or two years, I wish it were different for you (a few of you I know personally). Hopefully, you can make it through and learn from this experience. I've made some huge financial mistakes in my lifetime (and will probably make more), but I have learned from them and I'm financially sound as a result.

Posted by p.oherlihy on February 18, 2008 at 8:51 p.m. (Suggest removal)

Freethought, I recession proofed myself back around 2000 when I refinaced into a low adjustable loan but did not take out any of the equity. As my property value increased I refinanced again into a low fixed loan. I never sold and today I still have a large equity even if I were to depreciate my property 30% from 2006 prices.

For several years, my house appreciated more than 20% and the amount tacked on my loan was only a couple of thousand. So for a period, the adjustable loan was very good. Now with a fixed monthly payment, it is easier still.

I always considered my house as a savings account that would outpace inflation. When people refinance and spend the equity money, they are essentially spending their savings account. If you pull money from savings, spend it wisely. If not, then there are consequences.

Posted by SmashyCrashy on February 18, 2008 at 8:58 p.m. (Suggest removal)

p.oherlihy:"The one person who responded that her equity paid for medical bills makes you wonder how she would have paid if she had been renting instead. The person who was able to make a better lifestyle from the equity also makes you wonder how meager he would have lived without homeownership. "

How insane, these people lived way beyond their means and are now losing their homes due to a credit bubble and you pointing to it as a benefit of homeownership.

This was a credit bubble that caused asset prices to dislocate from their fundamentals. Now that the assets are returning to their fundamental price all those people who took on more debt that their incomes don't support have to live with their consequence. This too is one of the benefits of home ownership, having to deal with your decisions. For the last 5-10 years, people really haven't had to do so, for the next few years they will have to do so in spades.

Save the home ownership cheerleading for your weekly realtor meetings. It is transparent and pathetic.

Posted by tsu.lee on February 18, 2008 at 9:12 p.m. (Suggest removal)

"I always considered my house as a savings account that would outpace inflation. When people refinance and spend the equity money, they are essentially spending their savings account. If you pull money from savings, spend it wisely. If not, then there are consequences."

That attitude is what caused a lot of people problems. They believed that their home will appreciates 10%+ every years so there would not be consequences. Your house is your home not a savings account. If your home is paid off then you always have a place to live. When you are old and grey you can live on the disfunctional Social Security if you have your home paid off.

Posted by p.oherlihy on February 19, 2008 at 6:31 a.m. (Suggest removal)

Smashy and tsu.lee, you guys don't get it at all. A house is a savings account more than an investment. Historically, housing prices have appreciated more than inflation. It is a long term non liquid asset.

Thank goodness that the person had equity to pay for medical bills. Had she borrowed that money, she would be in debt for the rest of her life. As for the person who spent the equity on lifestyle, they got the benefits didn't they? Home ownership gives you that choice.

I have totally discounted what both of you have been spewing because of your anger and blaming. You only show one sided negative stats. Historically, your advice to wait for low prices and high interest is bad advice. In past history, fewer people buy under those conditions than when interest rates are low. If it is such a good plan then why don't more people follow it.

The reality is that real estate is more than fluctuating prices. There are many other important factors such as location, schools, style, maintenance, etc. Most houses are unique. My advice would be to buy a house that fits your needs and stay in it rather than flip it. I would also advise not to spend equity on anything but necessities.

The longer I hold my house the more secure I get. I bought my house in 1988. I survived the 1990's only to see my values increase tremendously in 2000+. I then refinanced to get my payments really low and did not spend the equity. There are many people like me.

Because of the huge amounts of paper money that the Feds have printed (trillions), there is a strong likelyhood that RE prices will go very high in the future. Because of the huge inventory now, there are many choice location houses available at low prices that will produce good results in the long term for homeowners.

Posted by p.oherlihy on February 19, 2008 at 9:05 a.m. (Suggest removal)

Freethought, it boggles me why you would be so hardlined and sit on cash for a year while the dollar continues to devalue. I would be more flexible on the time limit and look for long term value. Buyers in your catbird position will be naming their prices during 2008. I hope that you find a house that you will enjoy for many years....not just a flipper.

BTW, it was the flippers who really drove prices up fast. You can thank them too.

Posted by speaktruthtopower on February 19, 2008 at 9:06 a.m. (Suggest removal)

p.oherlihy:

"Had she borrowed that money, she would be in debt for the rest of her life..."
> Had she saved the money she would not have had to borrow it.

"Historically, your advice to wait for low prices and high interest is bad advice."
> Low prices and High rates are not neccessarily coincident. Look at the market today, prices 18% below peak AND lower interest rates to boot. Of course, you might spin that as a reason to buy. I beg to differ, and am content to wait out the madness in pricing.

"...fewer people buy under those conditions than when interest rates are low. If it is such a good plan then why don't more people follow it?"
> We have been conditioned to consume, and not merely for sustenance, but voraciously and continuously foraging, so to speak. So it is no surprise when you ask this question, because it goes to the heart of the problem today, and that is that sheeple have been led to believe that all that matters regarding debt is the monthly payment, be it for a mortgage or a credit card. There's nary a thought given to the assumption of mountainous and ever-accumulating negatively-amortizing principal. Your attitude, commonly prevalent, is the main reason why many of us are so deeply indebted today.

"Most houses are unique."
> This is a patent falsehood. Most houses are parts of tract subdivisions. They are about as unique as one slice of wonder bread is from another.

"There are many people like me."
> To be sure, there are. However, as any student of economics realizes, pricing is set on the periphery. Pricing these days, unfortunately, is being set by those, who we thought were few but now are many, who are either desperate, or worse. If and when people like you do decide to sell in this market, they will find a tighter market tomorrow.

"Because of the huge amounts of paper money that the Feds have printed (trillions), there is a strong likelyhood that RE prices will go very high in the future..."
> This is a gamble. A gamble on the reinflation of the real estate asset bubble. I choose to play the other side from you here. It is unlikely, in my view, that investors burned in the deflation of one asset class will return to it once more in any numbers.

"Because of the huge inventory now, there are many choice location houses available at low prices..."
> As mortgage resets continue, and they will, more and more inventory, distressed inventory, is likely to be added to the existing pile. The rate at which existing homes are being purchased it at historical lows. I am content to wait and watch the ballooning of spring and summer inventory, and the further decline to the norm in pricing. Meanwhile, for folks like me, our alternative investments in emerging markets and commodities have provided for a more than comfortable return.

sttp

Posted by 50Luva on February 19, 2008 at 9:07 a.m. (Suggest removal)

I'm sorry, but I didn't buy a home when the housing market was insane because I knew I COULDN'T AFFORD IT! I see how people could have been swindled by lenders, but come on. You know that if you make 5 grand a month, you can't afford a 3,500 house payment! It's simple math!!! Now I'm going to cash in on someone else's mistake. It sounds harsh, but its a reality! I waited it out...

Posted by varroyo on February 19, 2008 at 9:14 a.m. (Suggest removal)

I accidently put the wrong phone number for Consumer Credit Counseling Services, their correct phone number is (800) 540-2227 or their website is www.gotdebt.org. The agency is non-profit.

Posted by SmashyCrashy on February 19, 2008 at 9:30 a.m. (Suggest removal)

All these people are just realizing it was a bubble, buying at bubble prices ensures you'll stay in high loads of debt for a very very long time. You wont be able to sell if anything happens (divorce, marriage, job loss, job move) and between prices going down (negative equity) and lenders cracking down on equity extraction you will have an illiquid, underwater asset for a very long time.

I do enjoy your "Appeal to Popularity" logical fallacy. Following the herd is a sure way to get slaughtered. There is a reason that "Buy when there is blood in the streets" is the axiom of a smart investor. The blood has barely started flowing and will flow for a very long time. Buy low, sell high. Such a large financial purchase is a huge risk for people and their family when the signs are clear that prices will be falling.

Now I will responsd to your logical fallacy with one of my own, if you took rhetoric in college you'll recognize it as an Ad Hominem:

If my livelihood was based on convincing people to buy homes I guess I would be encouraging people to buy homes too (although I wouldnt know how to sleep with myself at night). Especially if I had only 1 listing between 2 agents and a slow sales enviroment to worry about.

Posted by SmashyCrashy on February 19, 2008 at 9:36 a.m. (Suggest removal)

FYI, another mortgage insurer is tightening up on March 1st, that makes 3 of the largest insurers reducing the number of buyers.

https://www.ugcorp.com/rates/Ineligib...

Credit tightening isn't close to over. Until it is the bottom will not be found. Credit is tightening faster than volume are dropping.

Anyone notice what is happened to the 10 yr note (a good proxy for the 30 yr fixed mortgage rate) lately? Going up.. rates going up not down.. The ability of the fed to reduce long term rates seems to be over.

I think we will see a bump in February sales because the buyers who have locked during that one week of low rates (MLK week) are going to try to use them before they expire. Then the mortgage insurer changes will reduce the number of buyers further and we will see further declines during the year, especially as we see more and more of these foreclosures coming online to be sold.

Posted by SmashyCrashy on February 19, 2008 at 9:38 a.m. (Suggest removal)

Correction: "Credit is tightening faster than volume are dropping."

Should read:

"Credit is tightening faster than prices are dropping. Causing volumes to drop."

Posted by p.oherlihy on February 19, 2008 at 9:45 a.m. (Suggest removal)

Smashy crashy/speaktruthtopower..enough with the hystrionics.

"Blood in the streets"???

"sheeple"

Inflation is not a gamble. Learn from history.

Posted by tsu.lee on February 19, 2008 at 9:53 a.m. (Suggest removal)

Wow I did not know I was spewing anger, I thought most of my statements were like this post about the foreclosure rescue plan
http://www.venturacountystar.com/news...

I find it funny that the Professors that study Econ. say it is a bad idea but the people that control the money think this is a great thing.

IF a person got a mortgage at the high (near 700K) the median family would need an APR of near 0% to afford the payments.
30year loan no interest 700K - $1944.45/monthly
30year loan no interest 600K - $1666.67/monthly
30year loan no interest 500K - $1388.89/monthly
So what are they going to do cut the rate to market and add to the principal every month? Are they going to "FORGIVE" a few hundred K so they can afford their albatross?

oh just for comparison
freddie mac has the average 30year fixed for Jan 07 (edit should be Jan 08) at 5.76%
http://www.freddiemac.com/pmms/pmms30...

according to Bank Rate your monthly would be
700K - $4089.46
600K - $3505.25
500K - $2921.04
400K - $2336.83
300K - $1752.62
The median family that bought a single family home near the high would need their loan cut in half to be able to afford the loan with interest.

Posted by speaktruthtopower on February 19, 2008 at 10:03 a.m. (Suggest removal)

p.oherlihy

As any good debater knows, histrionics are an essential part of one's arsenal. And you, Sir, need a bit more body to your arguments...

Yes, sheeple. We who are led to believe, rather than thinking things out for ourselves. We who have stood by apathetically as this country is driven aground. We the sheeple.

Inflation is a reality. But you didn't bother reading carefully. I said "RE-inflation of the real-estate asset bubble" is what you were gambling on.

sttp

Posted by solvingadream on February 19, 2008 at 10:56 a.m. (Suggest removal)

'enough with the hystrionics'

That is a famous term used commonly on Wall Street, hardly histrionics.

Posted by bugmenot on February 19, 2008 at 12:43 p.m. (Suggest removal)

rcamacho

I wish you the best of luck. Although you may be #104 to foreclose in TO, it sounds like you're in a better position than most to rebound. Sounds like you understand what you got into and are taking responsibility to remedy your problems. I think you'll be able to weather this storm for the next couple years and you sound intelligent enough to put yourself in a position to be successful again once the market does change. It's the people that were financially ready and had a drastic change in their life that I truly have sympathy for. In a normal market you may have been able to recover. Good luck rcamacho.

Posted by Fred on February 19, 2008 at 1:36 p.m. (Suggest removal)

p.oherlihy

Based on your posts here and on previous ones - it seems like a safe bet that your business is in some aspect of real estate - true???

Fred

Posted by freethought on February 19, 2008 at 2:23 p.m. (Suggest removal)

Fred - She's a realtor.

Ms. O'herlihy - I just read your response to me. I'm holding that cash so that I CAN name my price when the time comes. That time has not yet arrived. I am quite confident in my ability to read and understand a chart. RE numbers (both sales and prices) are heading south for the foreseeable future. In 2009 or 2010, I plan to buy. In the meantime, there are no viable suggestions as to where to put my money that's better than a MMSA - except maybe gold. I'm earning around 5% annually just letting it sit, while RE is falling at record pace. The trend will not reverse itself on a dime (it never does with RE). If you are trying to help, I appreciate it. I think your timing is off by at least a year and a half, though (try summer, 2009 at the earliest).

tsu.lee - You sound about as angry as Winnie the Pooh with a tummy full of honey. Truth always comes across bitterly to those who would rather not believe it. One addition to your breakdown above: those figures don't even add in insurance and tax. For a $400K loan, that would add between $400 and $450 to the monthly payment total.

Posted by speaktruthtopower on February 19, 2008 at 3:14 p.m. (Suggest removal)

On September17 2007, p.oherlihy wrote...

"This is my last post. Good luck to us all. It is a tough market to read and we all have our opinions. Thank you for listening to mine. Time will tell. God bless America! God bless Ventura!"

Well, now that Ventura is hallowed ground, and p.oherlihy is risen again, he/she/it must speak the TRUTH. Let us be silent, sheeple, and let prophet oherlihy lead us to the promised land (whose value shall never drop).
Praise the Lord!

Posted by tsu.lee on February 19, 2008 at 4:50 p.m. (Suggest removal)

LOL Hakuna Matata Freethought ... I am a goldbug and a lot of my investments came in 2001 during the low. So I am not angry about the housing market, I am just waiting for the right time to pounce like Tigger :).

SSSHHH we wont tell Ms. O'Herlihy that she is blaming the exact same people I did in one of the previous articles ;). Though I think I said it was people looking for a get rich quick scheme after the stock market crash and the Fed's easy money policy.

Posted by freethought on February 19, 2008 at 4:54 p.m. (Suggest removal)

Roger that, tsu.lee. I'll keep it on the down-low. By the way, you must have made a small mint on your gold investments (pardon the pun). I wish I'd done the same.

Posted by tsu.lee on February 19, 2008 at 5:05 p.m. (Suggest removal)

Oh for my breakdown depending on the area you can also add Mello-Roos and HOA's which can add another 1%+ tax per year.

Posted by tsu.lee on February 19, 2008 at 5:15 p.m. (Suggest removal)

eh I have enough to make a good down payment. I was more worried about paying off my debts, I hate the idea that the bank owns my stuff. But I was able to scrap together a little bit to throw on the wall and a few of those pennies took off.

Posted by SmashyCrashy on February 19, 2008 at 8:03 p.m. (Suggest removal)

Front page of VenturaCountyStar.com, this article. The article regarding D.R. Horton selling some of their developments at 50% off (I love the realtor quote in that one saying the developer is cheating regular people who paid full price). And the article about the VCS laying off people due in part to the slow housing market.

Not a good day for realtors, the good news for them there is always tomorrows paper.

Posted by freethought on February 19, 2008 at 10:15 p.m. (Suggest removal)

SmashyCrashy - I'm not too sure tomorrow's newspaper will bring any happier news on the RE front.

Posted by p.oherlihy on February 20, 2008 at 7:25 a.m. (Suggest removal)

Sounds like some people here are forming their own herd of sheeple. Go ahead and hibernate with Tigger.

My advice to cherrypick in 2008 seems to be the unique advice here. Low fixed interest, huge inventory, and 30% reduced prices are here right now.

According to this article "That means opportunity for some"

A bird in the hand is worth two in the bush.

Posted by SmashyCrashy on February 20, 2008 at 9:32 a.m. (Suggest removal)

p.oherlihy : "My advice to cherrypick in 2008 seems to be the unique advice here."

Only because you are the only realtor here. All you people can say is "Now is the time to buy".

Making a huge LEVERAGED financial decision in a down market is just a bad idea. Much better to let things level off before committing to a transaction that has the potential of destroying you financially if you get it wrong. A much smarter, conservative choice is to let things settle down before buying.

And now that the 30 yr fixed rate has just jumped again the prime selling season is shaping up to be quite interesting. It will be a year of historic declines, imho.

Posted by freethought on February 20, 2008 at 9:32 a.m. (Suggest removal)

Ms. O'herlihy, please tell me how I can afford a four bedroom/two bathroom home in Camarillo with the following personal income characteristics:

Income: $100K (a little more than this, but not much)
Down Payment: $50K to $60K
Monthly Mortgage Paymemnts: Cannot be over $2,300 per month. This includes insurance, tax, and PMI if applicable, not just principle and interest.

This is my situation. Most in Ventura County don't even make this much (based on VC's own stats for 2007). If you can find such a property in Camarillo that isn't a piece of crap with a price that will allow for my situation, please let me know the address. I'll check it out. If I like it, I'll get back to you personally and we can talk business. I suspect that no such deal exists today. I am sure that it will in the coming year or two, but not today. I await your reply. And yes, I am serious about doing business.

Posted by freethought on February 20, 2008 at 9:41 a.m. (Suggest removal)

SmashyCrashy - Absolutely correct. You always buy with the trend. That applies in EVERY market. For real estate, those who want to get in with some assurance that they won't see properties decline should wait until they see at least six months of steady upward price growth. Historically, prices do not shoot upward very quickly after the trend reverses to the upside.

Posted by p.oherlihy on February 20, 2008 at 10:37 a.m. (Suggest removal)

Freethought, I'm glad you asked....

In Camarillo...
3342 Corby $429k
4/2
1980 sq ft
6500 sq ft lot
with pool

In north Oxnard (nearest to Cam)--Mayfield Village and Contada

1873 Ribera $425k
Built in 2001
4/3
2044 sq ft

1210 Lombard $449k
built in 2002
4/3
1993 sq ft

1934 Ribera $450k
built in 2001
4/3
2044 sq ft

These are listing prices...make an offer. If you can buy from $400 to 425k, I think you will be close to your parameters. I havent seen the Corby house but the Oxnard houses were all originally sold at much higher prices.

Sorry to be so cras and post this info here, but for someone these will be good long term homes. I also apologize for carrying on this lengthy debate, but for the few people here to be so arrogant and say there are no bargains now anywhere just isn't the truth.

Freethought, since you know so much about me, call me at my office.

Posted by freethought on February 20, 2008 at 11:34 a.m. (Suggest removal)

Ms. O'herlihy, I appreciate the list.

As for the Oxnard listings - I'll never live in that neighborhood aagin (all are within a half mile of each other). It's where I bought previously, and I was glad to leave. Many of the neighbors are atrociously disrespectful, and the cookie-cutter design gives very little elbow room between each neighbor. On top this, there's absolutely no parking left over after the multi-family/multi-generation homes see their occupants return home from their day jobs (even worse on the weekends). These are only a few of my complaints with that neighborhood. Since many of those livng there have sub-prime loans (that's the only way a wal-mart employee or auto mechanic could afford a home there), prices have fallen dramatically there (as you stated) and will continue for awhile longer.

The Camarillo address, however, looks quite nice. I would not mind living there at all. It's just three or so miles from my current address. Here's the deal, though: I stated that my absolute cap was $2,300 per month. When I tell realtors that, it seems to go in one ear and out the other (I don't know why). Based on that figure and assuming I can get into a 6% loan with no PMI, I could not go one penny higher than $370K. That includes any closing costs I would be responsible for. If you tell me that 3342 Corby Avenue's current owners will accept a bid of $360K (to allow $10K for closing costs), then I'll call you. Anything over, and I won't even consider it. The reason is simple: I can't afford more, and I will not make the mistakes that those listed in this article have made. Let me know. Again, I appreciate your efforts.

Posted by solvingadream on February 20, 2008 at 12:09 p.m. (Suggest removal)

I think peoples definition of bargains differ widely... prices are lower relative to the boom because they are declining. But to suggest the declines are over is absurd. Backward looking over a very short term.. something might look like a bargain.. backward looking over a longer term.. not so much. Forward looking.. the same.

Posted by p.oherlihy on February 20, 2008 at 12:11 p.m. (Suggest removal)

Freethought, here's some food for thought.

I did further research on those four houses. At the top of the market they all sold between $550k and $610k. At those prices and given your parameters back then, you would not have even been able to afford a supprime loan because your payments would have been more.

My point is that all four houses were not affordable for you two years ago...and even at subprime variable rates!

Today, these houses are within your price range and at a fixed rate. There is an opportunity now that you did not have before. Plus you can take your pick, there are more

In a soft market, right now, you can negotiate with sellers. In a market trending upward, prices get firmer fast.

Posted by freethought on February 20, 2008 at 12:35 p.m. (Suggest removal)

Ms. O'herlihy - What you said is exactly the point. These homes weren't affordable to someone (me) whose household income is 25% ABOVE the current median for the county (about 10% above the median for Camarillo). And I STILL can't afford them. This is why prices will have to drop further. No one could afford them then, and they still can't today. The absolute only reason many people got into homes before was due to banks turning a blind eye to their finances and ability to repay the loan. These people are scraping by and still cannot make their monthly payments - even BEFORE the loans reset.

The parameters I gave you are based on two things: what Freddie Mac and Fannie Mae guidelines state is considered affordable, and what I know I can afford based on my own situation. For these reasons, my price range is absolutely no higher than $360K (given a 6% interest rate and no PMI). Anyone making less than I do should not be able to afford even this much house.

If you think I can negotiate a Camarillo owner of a 4/2 home in a good neighborhood down to $360K, let me know. My estimate is that, in a year, this will be possible.

solvingadream - Absolutely. As a small-time stock options trader, I see many stocks that "look" like a bargain to so-called "bottom fishers" on one day, only to continue their journey downward the next.

Posted by freethought on February 20, 2008 at 12:48 p.m. (Suggest removal)

Also, you stated that, in a market trending upward, prices get firmer fast. This has never been the case when the bottom has been reached in the past. The trend upward is always slow for the first few years. This is because most people are still very cautious of buying a home after so many years of falling prices. It takes lots of time to build their confidence back up.

Posted by mgh19712004 on February 20, 2008 at 4:10 p.m. (Suggest removal)

Realtor.com has a beautiful hillside home 5 bed/4 bath, 3585 sq/feet for $3600. I CAN afford that. I already have a cashier's check for that, taxes and closing costs!!

Posted by SmashyCrashy on February 21, 2008 at 1:16 a.m. (Suggest removal)

One short sale which has a NOD filed in Camarillo is the bargain cant miss deal of the century for freethought?

323 detached homes in Camarillo, 118 of which are either vacant or have the Lender approved, NOD filed, or short sale flag set. One third of inventory is at best motivated (empty) and at worst distressed (the rest of it) and the season has just started.

freethought, desperate realtors will drop the price of a place really low in the hopes of a hail mary offer will be accepted by the banks. Usually what happens is the home goes into foreclosure (since the servicers are overwhelmed especially difficult when there are multiple loans on the property) and the asset managers take over and the listing gets REO pricing (a few BPOs crosschecked by AVMs) to get it sold quickly. If it doesnt sell quickly they usually start cutting aggressively within a month or two.

---

Anyone see the news today? Countrywide layoffs in Simi and mortgage rates jumped big. Just imagine if BofA moves Countrywide to Texas or North Carolina after the acquisition. The biggest private employer for the county looking shaky A N D the state cutting its budget meaning less government jobs (gov't employement is huge in Ventura, both Federal, state and local).

Posted by freethought on February 21, 2008 at 6:50 a.m. (Suggest removal)

SmashyCrashy - Thanks for the overview on Camarillo. Don't worry, I have named my terms, and I doubt anyone will be willing to accept them... Yet. It will be at least a year before the type of home I'm willing to buy here in Camarillo is going for $360K or less.

Posted by marketrealist on February 21, 2008 at 10:09 a.m. (Suggest removal)

The housing crisis is just a reflection of a bigger illusion we are on right now. The Federal Govt spends money like a drunken sailor on wars that have no end (McCain says we will be in Iraq for 100 years). The Congressional Budget Office says the Iraq war expenditures are over $1.6 trillion. The interest payments on our federal debt are now $225 billion and we're accumulating more debt not paying it off. Our trade deficits keep rising with our largest expenditure for foreign oil. Sixty percent of oil is used for transportation yet our cars get the lowest fuel economy of any developed county. Civilians driving Hummers, Suburbans, and Ford 3500s to work just does not make sense. Its no wonder the people want a piece of the debt action by over-leveraging on subprime loans. We're the same people who elected these leaders with these priorities. The housing market has to keep coming down. The wealth is just not there to sustain the high price of homes in Ventura County for next few years.

Posted by jw1000 on February 21, 2008 at 12:47 p.m. (Suggest removal)

Our own congressman Elton Gallegly voted for a series of bills that made it legal for banks to issue loanshark type loans. This happened about 5 years ago when his fellow incompetents, the Republicans were in charge in congress.

Posted by p.oherlihy on February 22, 2008 at 6:27 a.m. (Suggest removal)

Freethought...have you sat down with a lender like Wells fargo yet? If your credit score is more tham 660, they have some options. I think you have the ability to make a reasonable offer. The big difference in affordability is that today you can buy with a fixed loan.

I still disagree with your advice to wait for six months of an upward trending market. Sellers will be firm on their prices if they know it is going up. However, in today's soft market, sellers are negotiating.

You should keep track an

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