December 14, 2013

Priced Out For-EVEH AGAIN!

Don’t look now, but the FHA just swiftly kicked California in the housing numb…ers.

Housing Agency Will Reduce Mortgage-Loan Limits

FHA will drop the maximum mortgage loan it will guarantee next month

131213-mortgageBy NICK TIMIRAOS, Wall Street Journal, Dec. 6, 2013 5:17 p.m. ET

The Federal Housing Administration will drop the maximum size of home-mortgage loans that it will guarantee beginning next month in nearly 650 counties, the agency said Friday.

The maximum for single-family homes in certain "high-cost" housing markets including Los Angeles, San Francisco and New York will fall to $625,500, from the current level of $729,750.

The FHA doesn’t make mortgages but instead insures lenders against defaults on loans that meet its standards. It allows borrowers to make down payments of just 3.5% and has played an outsized role backstopping mortgages in the aftermath of the housing bust.

You just know those New York and DC types are behind this, trying to harsh our mellow, and kill our housing price leadership.

131213-fhaWell, we just have one thing to say to that: PTHTHBBBT.  That’s not going to hurt us here where the Engines of Creativity run 24/7/365.25.  No FHA mortgage backstop means everyone has to put 20% down on their above-$625,000 loans.  But so what?  Everyone here has a brazillion stock options and can buy houses for cash found under their Tesla Model S seat cushions! You know who that’s going to hurt, instead?

Los Angeles.  Moohahahahaha!  Look at the reaction by the California Association of Realtards, who are terrified of county median values resetting downward.  Of course, in the Real Bay Area, prices continue to only go upwards.

And as this is the first Weekend Open Thread we’ve provided in a while, feel free to comment on government housing issues, why SoCal’s housing market sucks compared to ours, or anything on your mind.

Comments (7) -- Posted by: madhaus @ 7:03 am

February 2, 2013

The Dignity Mortgage: Subprime with Training Wheels

Here’s a look at some new mortgage meshuggeneh from Burbed reader nomadic.

Housing advocates push for new type of subprime loan

The Dignity Mortgage would have a higher rate for higher-risk borrowers but include rate cuts after five years of on-time payments.

130201-latimes-dignityBy E. Scott Reckard, Los Angeles Times; January 28, 2013, 5:53 p.m.

PHOTO: Pattie and Ollie Sibug would like to buy their San Diego town house, which they are renting for $1,750 a month. They are among those who may benefit from a proposed subprime mortgage program. (Allen J. Schaben, Los Angeles Times / January 29, 2013)

With home prices rising, interest rates falling and builders building, some prominent housing advocates are calling for a new kind of loan for buyers with lower incomes or bad credit.

They’d like to call it the Dignity Mortgage, but it has another name — one that’s become more of an epithet since the housing crash: subprime.

Applicants might include people caught in the early stages of the mortgage meltdown who have since rebuilt their finances, said Faith Bautista, who heads the National Asian American Coalition.

"They lost their work, their homes and their credit scores four or five years ago," Bautista said.

And let’s see what nomadic has to say about this idea.

These people are pushing for a mortgage that not only gives them better terms after five years of timely payments (which seems reasonable) but they want the extra interest paid during the "trial" period REFUNDED to them after those five years. In other words, the banks take more risk but don’t actually get paid for it in the end. Not to mention all of the other extra costs of the program (e.g., "extensive" financial counseling). WTF? Also thought it ridiculous that the rate goes down to what people with "sterling credit" and 20% down are paying. I haven’t done the math, but I suspect people aren’t necessarily paying off 10% of the purchase price in the first five years of their loan.

Think this is a better way to treat the poor people who shouldn’t have been buying houses at all but want another swing at the property piñata?  Or was it all the banks’ fault from start to finish? Aaaaaaaaaand, this is an Open Thread.

Comments (15) -- Posted by: madhaus @ 5:16 am

December 1, 2012

Be Like Zuck! Buy a house and pay 3/4% interest


The secret to being rich is to start off rich.  Don’t believe us?  It’s true, and it’s how Mark Zuckerberg bought his house in Palo Alto.  Let’s hear from Burbed reader nomadic, who alerted us to this excellent opportunity. To go bankrupt!

Here’s the letter I got in the mail offering super-low interest rates on a loan secured by a stock portfolio.  The beauty of it is that the interest rate goes down the higher the loan amount – the opposite of what working stiffs get when they want a super-jumbo loan to buy a house in the RBA.  (Then again, the larger the stock portfolio, the smaller the risk?)

This must be how Zuck got his ultra-low interest rate on his mortgage.  Interesting that they don’t mention a mortgage in their “average loan rates” example.

121130-margin-zuckerbergThe headline above doesn’t say pay three to four percent interest.  It says pay three quarters of a percent interest.  Let me repeat that.  You can buy a house at 0.76 percent interest.  All you need is a sufficiently healthy stock portfolio to borrow at least $3.5 million against. 

Whoops.  All you need is an investment portfolio at this particular online brokerage.  For loans under $50K, you need to have twice that in your brokerage account.  With this firm.  But!  Remember about rich people getting richer? The more you have, the more you save. The more you have, the more you 121130-margin-callcan borrow, too.  If you “qualify” and have an account over $100,000, you could borrow against 85% of your assets.

Remember how well things went when anyone who could fog a mirror could buy a house for nothing down? This is an even better idea! Borrow against your investments, and if the underlying value drops, then you have to pay some of the money back immediately, or sell assets to cover it. Good thing you’ll have a bunch of equity in your new house that you could borrow against to pay back your brokerage account you borrowed against in the first place.  This sounds like a perpetual equity motion machine.

Open your portfolio, open your wallet, open your eyes, and we’re opening this thread to any topic you wish.

Comments (8) -- Posted by: madhaus @ 5:09 am

October 14, 2012

Oh Noes! Politicians hating on mortgage deduction AGAIN!

Tax deduction for mortgage interest could be targeted

By Pete Carey, Posted: 10/12/2012 04:21:11 PM PDT, Updated: 10/12/2012 05:03:23 PM PDT

121013-mortgage-mittSAN FRANCISCO — The mortgage interest tax deduction beloved by many Americans is a logical target for raising revenue to deal with growing deficits, a leading housing economist said Friday.

“For fiscal sustainability, we need to get revenue,” said Richard Green, director of the USC Lusk Center for Real Estate. The alternative to shrinking the tax break is raising taxes, he said at a forum on California’s housing market sponsored by the Lusk Center and the online real estate service Zillow.

“My judgment is it’s better to do something about tax expenditures,” Green said. “One of the largest is the home mortgage interest deduction.”

The issue has been a hot button in the presidential campaign, as Democrats challenge Republicans to disclose what tax “loopholes” they would close to pay for their proposed tax cuts.

We are doomed.  DOOMED!  Once they come for our mortgage deductions, there is no more point to living.

Comments (60) -- Posted by: madhaus @ 5:06 am

June 2, 2012

MERS so ubiquitous it ends up suing itself

Here’s a story out of Salt Lake City, Utah, but Mortgage Electronic Registration Systems, Inc. (MERS) is going to continue to be a headache all across the country.  Yes, even where it’s Special.

Bankers’ mortgage system survives legal storm in Utah

But lawsuit that catches couple shows gaps it leaves behind

120527-mers-lawyerBy Tom Harvey | The Salt Lake Tribune
First Published May 25 2012 02:07 pm • Updated 41 minutes ago

It says something about the ubiquity of the alternative mortgage registration system created by the nation’s bankers that it is now suing itself in a Utah lawsuit.

But even without that anomaly, the lawsuit is a bizarre confluence of factors that has caught a Draper couple in a situation where they bought a home based on a clean title report only to now be in court fighting to ensure the transaction was legitimate.

The case demonstrates both how much the Mortgage Electronic Registration Systems Inc. bankers created in the mid-1990s has invaded the state’s traditional property registration system and how it also left cracks along the way.

And while MERS has beaten back a flood of lawsuits in Utah challenging its legality, it faces serious legal actions in other states over its usurping of traditional real estate recording practices.

Remember the wild and wooly days of the housing bubble, where anyone who could fog a mirror could get a mortgage?  That was because the investment banks figured out that they could slice and dice these mortgages, bundle them into securities, and sell them as AAA bonds even though they were 99.44% pure crap.  These CDOs (collateralized debt obligations) and the CDSs (credit default swaps) that “insured” them were popular, and plenty of money flowed into the mortgage market in search of the ten people who hadn’t bought a house yet.

120527-mers-shareholdersNeedless to say, with all this slicing and dicing of mortgages into creative (read: fraudulent) financing vehicles, the banks didn’t want to have to keep registering all these mortgages every hour another bond fund took ownership of them.  So they instead created a ginormous spreadsheet that listed the owners and figured that was good enough.  That spreadsheet was MERS.  This had the added advantage of starving county governments, because they were no longer receiving recording fees when mortgages changed ownership.  It also is a Full Employment Act for real estate attorneys, because it’s going to take years to dig out of this mess.

The really great news is while the rest of the nation is still dealing with fallout from all the foreclosures and lawsuits, we in the Real Bay Area are just getting started on Housing Bubble 2.0.  It’s going to be Better Than EVAH.

Comments (17) -- Posted by: madhaus @ 5:10 am

May 6, 2012

12 “facts” that “may” “surprise” you about the “housing bust”

While the parent company of the Wall Street Journal, News Corporation, is getting a proper punching across the pond, let’s see how Rupert Murdoch’s business-as-usual cheerleader reports on the causes of The Second Great Depression.

Twelve Facts That May Surprise You About the Housing Bust

By Nick Timiraos, The Wall Street Journal, May 4, 2012

120505-foreclosure-sign-wsjWhat if the conventional wisdom about the mortgage crisis is all wrong?

That’s the implication of a new paper from economists at the Federal Reserve Banks of Atlanta and Boston that’s bound to spark debate because, if their premises are correct, it sharply undercuts the justification for much of the new regulation that’s been erected over the past two years.

Three economists, Christopher Foote,Kristopher Gerardi, and Paul Willen, present two narratives of the financial crisis in trying to answer why so many people made so many dumb decisions.

The first view is that the financial crisis was an “inside job” where various industry players, from the mortgage lenders to mortgage traders, took advantage of unsophisticated rubes, from homeowners to mortgage investors.

They largely discard that view for a second one—the “bubble theory” where delusional attitudes about home prices, not distorted incentives, fueled poor decision making.

120505-mcmansion-broken-windowsThis is the Wall Street Journal.  Does anyone think for a New York minute that they’d get behind the Inside Job view of the housing debacle?  Of course not.  It was obviously the fault of strawberry pickers, the Community Redevelopment Act of 1977, Barney Frank, and undeserving minorities who never should have been allowed to own property ever ever ever.  (Uppity rabble might then expect the vote, too.)

And as for the origin of this paper?  The Boston Federal Reserve?  Everyone working there is hoping to get hired by one of those market manipulators, so don’t look for their facts to bear much relation to what really happened.

Here’s the authors’ abstract of the excuse for wrecking the whole economy report:

This paper presents 12 facts about the mortgage market. The authors argue that the facts refute the popular story that the crisis resulted from financial industry insiders deceiving uninformed mortgage borrowers and investors. Instead, they argue that borrowers and investors made decisions that were rational and logical given their ex post overly optimistic beliefs about house prices. The authors then show that neither institutional features of the mortgage market nor financial innovations are any more likely to explain those distorted beliefs than they are to explain the Dutch tulip bubble 400 years ago. Economists should acknowledge the limits of our understanding of asset price bubbles and design policies accordingly.

Translation: if we blame the meltdown on irrational exuberance, then none of our friends will have to give up their bonuses. Or their freedom.

120505-fed-theoriesThe above diagram is from the research paper, and it neatly blames the victims for believing housing prices only go up.  Notice who’s missing from the picture?  Realtards.  You know, the people who tell you that housing prices only go up.

Fact 1: Resets of adjustable-rate mortgages did not cause the foreclosure crisis.

120505-mortgage-ratesBanks weren’t wrong for issuing adjustable rate loans, borrowers are the problem for having crap credit.  Bad credit meant those borrowers could have an adjustable loan or remain renters. 

Hey, what do you expect when you loan to a bunch of deadbeats?

We’ve got 11 more of these delightful “facts” waiting for you after the break.


Comments (16) -- Posted by: madhaus @ 5:15 am

February 19, 2012

SF Foreclosures: They’re Doing it Wrong

Here’s some cheery news for your Sunday open house visiting!  This might make you think twice about offering anything on a short sale, REO, or previous foreclosure.

Audit Uncovers Extensive Flaws in Foreclosures

By GRETCHEN MORGENSON, Published: February 15, 2012

An audit by San Francisco county officials of about 400 recent foreclosures there determined that almost all involved either legal violations or suspicious documentation, according to a report released Wednesday.


Photo, right: Phil Ting, Phil Ting, the San Francisco assessor-recorder, found widespread violations or irregularities in files of properties subject to foreclosure sales.  Annie Tritt for The New York Times

Phil Ting, the San Francisco assessor-recorder, found widespread violations or irregularities in files of properties subject to foreclosure sales.

Anecdotal evidence indicating foreclosure abuse has been plentiful since the mortgage boom turned to bust in 2008. But the detailed and comprehensive nature of the San Francisco findings suggest how pervasive foreclosure irregularities may be across the nation.

The improprieties range from the basic — a failure to warn borrowers that they were in default on their loans as required by law — to the arcane. For example, transfers of many loans in the foreclosure files were made by entities that had no right to assign them and institutions took back properties in auctions even though they had not proved ownership.

120216-fraudWell, that’s San Francisco for you.  That doesn’t mean foreclosures in the nation’s other 3140 counties and county-equivalents should have any problems at all.  You see, bankers in San Francisco were so terrified of the terrible impact Prop 8 had on gay marriage and real estate values, they didn’t want to look at what they were signing.  For three whole years!

Good thing the $26 billion foreclosure settlement between five huge banks and 49 state attorneys general is already signed!  Who knows what kind of trouble there would be if this sort of report had been released beforehand.  Why, San Francisco homeowners wouldn’t be getting their share of the $147 million (provided they managed to hold onto the house while the banks were doing everything possible to claw it away, in which case $2,000 each ought to cover it).

This is an Open Thread.  Are you more or less likely to buy in San Francisco after reading this story?

Comments (10) -- Posted by: madhaus @ 5:09 am

January 28, 2012

FHFA Director Edward DeMarco: Please Resign Immediately

Today we have a guest post by Burbed reader Greg Fielding. This post is reblogged from his site, Bay Area Real Estate Trends, and appears here in its entirety. 

Now, I think this passionate piece on the Federal Housing Finance Agency is a great springboard for discussion, but it’s completely irrelevant to what’s going on in the Real Bay Area.  Unlike where Greg lives (hint: East is Least), It’s Special Here.  We don’t have to worry about underwater mortgages or massive foreclosure meltdown, but maybe some of you know some underprivileged people who don’t live in the RBA. 

Anyway, please give Greg a big, warm, RBA welcome!  And next time, Greg, don’t hold back.  Let everyone know how you really feel.

Dear Edward DeMarco,

Your position regarding principal reduction for underwater mortgages illustrates just how unfit you are to be running the FHFA. You argue against principal reductions, because it might cost “marginally” more than principal forbearance, yet you completely ignore all of the data suggesting that negative equity leads to strategic defaults and a potential death spiral for housing.

Home prices are still falling. Without principal reduction, more and more homeowners will make the financially-prudent decision to walk away. This epidemic can be slowed or even halted with bold action and leadership from people in positions like yours. More of the same simply isn’t going to cut it.

You are an impediment to the recovery of the housing market and our economy. Please submit your resignation, effective immediately, for the good of the Country.

Thank you,

Everyone in the world who is not currently invested in mortgage-backed securities

The head of the FHFA is either corrupt or a fool. Either way he is not the leader we need right now at that position.

The Wall Street Journal reports: DeMarco: Principal Write-Downs Expensive, Benefits Uncertain

Last week, the acting director of the Federal Housing Finance Agency, which regulates Fannie and Freddie, sent lawmakers a detailed analysis of why cutting loan balances doesn’t make sense from a financial standpoint, given the regulator’s mandate to “preserve and conserve” Fannie and Freddie’s assets.      […]

Edward DeMarco, acting director of the FHFA, argued that doing so would cause taxpayers to spend more money on the mortgage giants’ rescue than other foreclosure-prevention strategies. Fannie and Freddie have been propped up by taxpayer support for more than three years, a rescue that’s cost taxpayers about $151 billion

“Any money spent on this endeavor would ultimately come from taxpayers and given that our analysis does not indicate a preservation of assets for Fannie Mae and Freddie Mac substantial enough to offset costs, an expenditure of this nature at this time would, in my judgment, require congressional action,” DeMarco wrote in the letter.

About 3 million borrowers with loans backed by Fannie and Freddie owed more on their homes than their properties were worth as of last summer. That’s about 10% of the loans they own or guarantee. A write-down of all 3 million of those mortgages would cost taxpayers $100 billion, Mr. DeMarco estimated.

Fannie and Freddie do offer forbearance plans, in which lenders don’t require any payments on a portion of the loan for up to 12 months. What they don’t offer is forgiveness, where that portion of the loan is wiped out.

Mr. Demarco, in his letter to lawmakers, said FHFA’s analysis concluded that “forbearance achieves marginally lower losses for the taxpayer than forgiveness, although both forgiveness and forbearance reduce the borrower’s payment to the same affordable level.”

DeMarco and the academic-econo-forecasters who put this study together have completely ignored the element of social mood. IF people increasingly feel like there is no hope, they will give up and strategically default. Their study assumes no increase in the total number of foreclosures. It’s as if they are expecting the world to stand still while their economic model runs it’s course in a vacuum.

[…] “Unless there is an expectation that principal forgiveness will reduce losses, we cannot justify the expense of investing in major systems upgrades,” he wrote.

[…] Fannie and Freddie would also risk giving up money if they reduced loan balances because they could no longer recover money from mortgage insurers, which cover some losses for borrowers who have a down payment of less than 20%.

What exactly are the expenses he can’t justify?

Let’s take a look at a chart from his letter. (click for a bigger view)

DeMarco argues that the taxpayers, who are paying for these losses, will save the money outlined above by offering principal forbearance instead of principal reductions. In the four scenarios they outline, these losses range from 5.5% to an actual gain of 1.15%.

Not only are these petty savings to begin with, but the data behind them assume that falling equity will NOT lead to more foreclosures. Even if falling equity only leads to a handful more foreclosures, those additional losses would offset any initial savings. Moreover, down in the trenches, a lot of underwater homeowners are holding out hope for a principal reduction. If they don’t get it, they will rationally stop paying. Edward DeMarco is out of touch with what’s happening at the street-level of the industry he oversees.

Consider Laurie Goodman’s analysis of the situation:

She figures that there will be about 10.4 million more foreclosed homes over the next 5-6 years. She assumes:

  • 90% of the existing non-performing loans will eventually end in foreclosure
  • 65% of the re-performing loans will end up in foreclosure (these are loans that have been modified).
  • 40% of loans with 120% or more LTV will default
  • 15% of loans with 100-120% LTV will default
  • 5% of loans with less than 100% LTV will eventually default

These numbers are based on performance of similar loans over the last few years. The frightening part is the side-note from the exhibit:

Assumes no change in overall housing prices, interest rates,
or new home construction

So, if 10 million more homes get lost to foreclosure in the coming years, it is reasonable to assume that the that additional distressed inventory would continue to drive home prices even lower. Which, would force adjustments to the 10 million figure, making it even worse.

And so on.

Laurie discusses this “death spiral:”

However, the (housing) overhang means that home prices, despite being very affordable, are likely to decline further. This may recreate the housing death spiral—as lower housing prices mean more borrowers become underwater. We have determined LTV is the single most important predictor of default. So more underwater borrowers means more defaults; more defaults means more inventory, more overhang, and even further declines in home prices. While home prices can go down another 5% without re-igniting this housing death spiral, a 10% decline would certainly re-ignite the spiral in our opinion.

This “death spiral” is the doomsday scenario that Ben Bernanke and crew are doing everything they can to avoid. But Case-Shiller home prices are already declining at a healthy clip – how far away is that “death spiral” really?

Time and time again, policymakers make decisions based on models that can never account for the mood on the street. Or, they know the mood and risks, but are completely corrupt. I’m not sure which camp DeMarco is in, but he is clearly not the leader we need at the FHFA to help get housing back on track.

Comments (2) -- Posted by: madhaus @ 5:17 am

November 19, 2011

FICO Now Predicting Mortgage Walkaway Likelihood

imageOwe more than your house is worth?  Is your credit otherwise good?  Do you have few credit cards but pay them on time?

Congrats.  You’re a likely candidate for strategic default, according to FICO (formerly Fair, Isaac), the company synonymous with credit scoring.  And now Moody’s took a look at the mortgage market and said the most likely homeloaner to default is sitting on an upside down jumbo mortgage.  Why?  Because the subprime mortgages already shook out the people who couldn’t pay, the prime market has some risk of strategic default, but the Jumbo pool lost the highest quality mortgages due to refinancing.  Most mortgages left didn’t refinance because they couldn’t.  And this is spooking the PrimeX, the index fund of prime RMBS (Residential Mortgage Backed Securities).

Given how Special it is here with our high prices, we have plenty of Jumbos both in the Real Bay Area and outside it.  That means Walking Away all around the Bay.

Jumbo mortgages may be next in line to default

By Kenneth R. Harney, Washington Post, Published: November 11

Do you have a big mortgage and good credit scores but not much equity — maybe you’re even underwater? Do you see little chance that your home’s market value will improve much during the coming three to seven years?

If you answered yes to both questions — and thousands of homeowners across the country could do so — new research suggests that you are in a category that lenders need to worry about most: prime jumbo borrowers who once were thought to be among the safest bets but who now are the most likely to opt for a strategic default and walk away from their homes.

In a study released Oct. 31, the ratings agency Moody’s said that based on its analysis of mortgage-backed bond portfolios, homeowners with jumbos now constitute “greater strategic default risk” than any other type of borrowers, including subprime. That’s because an exceptionally high number of jumbo owners — many in high-cost markets hit by real estate deflation over the past several years — are stuck with persistent negative equity. More than half of the jumbos analyzed by Moody’s where owners are still making payments have home market values lower than their outstanding loan balances.

Whoa.  More than half the current jumbos are on upside down homes?  Good thing that doesn’t happen in the RBA!  Instead, we concentrate the upside down jumbos in subprime territory: Vallejo, Oakland, Antioch, Concord, Salinas, Fremont, Hayward, East Palo Alto and Redwood City!  And South San Francisco and Daly City and most of San Jose and half of Sunnyvale and three-quarters of Santa Clara and San Mateo, but it’s not like you should be worried, I am sure your house  is just fine!  And if it isn’t, let’s find out what FICO is doing to predict your behavior so you can stay a few steps ahead of them.

imageFICO says 67% of strategic defaulters are within the bottom quintile of nondelinquent mortgage holders, and 76% within the bottom 30% of late payers, ranked according to their model.  Obviously they’re not going to give away their Secret Formula of Doom, but they admit defaulters have high FICO scores.  That’s right, the more likely their other model says you’re a great credit risk, the more likely you are to be a terrible mortgage risk to the innocent dupes at the hapless bank.  Although this isn’t exactly rocket science here: why would someone default on their mortgage for nonstrategic reasons if they have a FICO of 845?  A high score means excellent ability to pay, so this chart really says among mortgage deadbeats, the better your credit, the more likely you’re playing the bank instead of vice versa.  I think Occupy Wall Street has been telling us the same thing for a couple of months now.

Here are the other “red flags” FICO admits to using in creating their new predictive model:

  • Lower utilization, as shown in the chart below. We also saw less overlimits on credit cards, reflecting better credit management behavior.

imageThis means, duh, people with high credit scores don’t use more credit than they need, which is, duh, why they have high credit scores in the first place (see above).  This also means that Joanne Gaskin, who developed this model, doesn’t understand the difference between less and fewer

(Free grammar clue: Use fewer for quantifiable amounts and less for amorphous abstracts.  Example: FICO has fewer exogenous variables in this model than the blog entry suggests, as utilization is directly linked to FICO score.  That makes their claims of this Predictive Deadbeat Model’s awesomeness less believable.)

  • Less retail balance—chances are that they spend money carefully.

Does spending less than the typical But I Want It Now consumer contribute to a higher or a lower credit score?  I’ll give you three guesses here.  (This is also an exception to the fewer vs. less rule. Time, money, and distance, while countable, use the term less because they still have abstract tendencies as opposed to, say, the 14.6 million underwater houses in this country.)

  • Shorter length of residence in the property—and thus, likely less attachment to that property.

The real estate market peaking between 2005-2008 (depending on where the house is) should have absolutely nothing to do with this brilliant insight (which only coincidentally has a high correlation with an individual’s Loan to Value ratio).

  • More open credit in the past six months—perhaps in anticipation of damaging their credit?

imageOkay, this one makes complete sense.  If you’re going to Walk Away on purpose, you might as well be ready for it by piling up on credit, because it’s going to dry up as soon as the first NOD hits.  Renting an alternate place to live before pulling the trigger is another thing to look for. 

If I were coming up with a model for strategic defaulters, I’d just look at the advice on the Walk Away discussion boards and see how many can be quantified via credit reporting tools. Opened new lines of credit in the last six months? You’re giving FICO too much lead time. Better open them in the last week if you’re going to walk.

Comments (33) -- Posted by: madhaus @ 5:14 am

September 10, 2011

Plan on Selling your House? Good Luck Proving it’s Yours.

Here’s some more cheery good news for your weekend!

Robo-signed mortgage docs date back to late 1990s

Widespread robo-signing of mortgage documents found as far back as 1998 could haunt owners

Pallavi Gogoi, AP Business Writer, On Thursday September 1, 2011, 8:50 pm EDT


In this July 18, 2011 file photo, Salem, Mass. Registrar of Deeds John O’Brien stands near copies of robo-signed signatures at his office, in Salem, Monday, July 18, 2011. O’Brien said an investigation of more than 710,000 documents in his office found that 25,187 homeowners in the county, or about 3.5 percent, have paperwork on file with signatures he believes are fraudulent. (AP Photo/Steven Senne, File)

NEW YORK (AP) — Counties across the United States are discovering that illegal or questionable mortgage paperwork is far more widespread than thought, tainting the deeds of tens of thousands of homes dating to the late 1990s.

The suspect documents could create legal trouble for homeowners for years.

Already, mortgage papers are being invalidated by courts, insurers are hesitant to write policies, and judges are blocking banks from foreclosing on homes. The findings by various county registers of deeds have also hindered a settlement between the 50 state attorneys general who are investigating big banks and other mortgage lenders over controversial mortgage practices.

The problem of shoddy mortgage paperwork, which comprises several shortcuts known collectively as "robo-signing," led the nation’s largest banks, including Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., and other lenders to temporarily halt foreclosures nationwide last fall.

imageI especially like the quote from a deeds registrar in North Carolina who found 74 percent of a sample of 6100 mortgages filed since 2006 had questionable signatures, and another 450 that didn’t pass the smell test in the last nine months.  But we already knew the banks were lying, cheating, fraudulent scumbags now.  What’s exciting is finding out that they were lying, cheating, fraudulent scumbags for more than a dozen years!

How about tying up your earnings for the next 30 years by signing a contract with a bunch of dishonest thieves so you can buy a house? Yeah, you might have some trouble selling it in the future, but maybe by then all the bankers will be excused from this dreariness about who owns which house and who didn’t pay their mortgage and how many times the same loan was sold into a bunch of synthetic CDOs without any paperwork.

This is an Open Thread.

Comments (4) -- Posted by: madhaus @ 5:13 am