Monday, January 28, 2008

It ‘Makes No Sense’ To Continue Paying The Mortgage When The Value Of Your Home Stops Going Up.

60 Minutes On The New Logic Behind Foreclosures.

Okay, I'm kidding but Stephanie Valdez is not. Matt and Stephanie Valdez are a couple who can afford to continue paying their mortgage payments but see no point in making them. Is it really worth it to continue making payments on an underwater mortgage and at 11% [usury] interest rate? “There is a certain cold logic to just walking away”, says Steve Kroft.





But Matt and Stephanie Valdez say they knew exactly what they were doing when they bought a small two-bedroom for $355,000. They could afford the initial payments and planned to refinance the mortgage before the interest rate jumped to 11 percent. But they couldn't do it because the value of the house had fallen below what they owed on the mortgage. They say they can afford the higher payments, but see no point in making them.

"The house keeps going down, payments keep going up. Where's the logic in that? And how can we fix it? I mean, that's what this whole thing's about for us is how can we fix this? And if we can't fix it, then what do we do?" Matt Valdez asks.

"Why pay a $3,200 payment on a 1200-square-foot home? It makes no sense," Stephanie Valdez adds.

"That's what you agreed to do when you bought the house," Kroft points out.

"Fine. If the value is going up. But we're not going anywhere. The price or the value is going down. It makes no sense because we will never be able to refinance and get a lower payment. There's no way," Stephanie Valdez replies.

"You're saying, essentially, that you're going to stop making payments on it? You're just gonna let it go into foreclosure?" Kroft asks.

"You know, that's the only advice we've gotten so far is walk away from the home. We don't want to do that to our credit. Why can't our mortgage company work with us?" she says.



The full video does a nice job at explaining the whole ponzi scheme. Also from Mish's Global Economic Trend Analysis: Does 60 Minutes Legitimize Walking Away?

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Thursday, January 24, 2008

Over 2,000 bank owned homes to be auctioned off in California starting this weekend (Jan 26 - Feb 24)




It appears that REDC (US Home Auctions) is going to be quite busy this month and earning some nice commissions (5% “Buyers Premium”). If you visit their site and click on an area, there is a detailed break down on all the homes being offered and an option to download them to an excel file. REDC also lists what the previous REO asking prices were. Adding up that column comes up to about $650 million worth of REO that "MUST BE SOLD" in one month (11 auctions). Lenders are now in liquidation mode as foreclosures continue to climb. (Dataquick: California Foreclosure Activity Still Rising)

While obvious that we still haven't hit the "bottom" yet as far as home prices are concerned, and according to a Merrill Lynch report, home prices will drop another 15 percent this year, and declines will continue in 2009. The unknown is just how serious will the upcoming recession be? The FED is in full battle now in fighting against a monstrous deflationary force caused from the collapse of the housing bubble.

Should I buy yet? It really depends on your area. Real estate is local to a greater extent, just make sure you get a good deal, and by that I mean a very good deal. If you can negotiate a good price and intend to live there, I'm guessing you should be okay (yes, i did say guessing). Mortgage rates are at a 2 year low and expected to come down even further. This will make a difference and will bring in a lot of people who were on the sidelines back into the market. Okay, I'm starting to sound like a Realtor(TM) now. Simply put, I don't believe you should put your life on hold waiting for the absolute bottom and in some areas it may not turn out as you expect.

Be sure to do your homework and figure out what a property would rent for and and compare that to what your monthly mortgage payments would be. Here's a calculator from the New York Times and another one from the Center for Economic and Policy Research (2005). If you are looking to buy and flip a house, then be sure to check out one of my favorite sites on flipping houses. Good Luck to all those attending the auctions and be very careful on how you bid.


Update: (And thanks Bubble Sitter for posting this)

US Home Auctions allow SHILL BIDDING. The quote below is right out if their brochure (and this is the second time I have posted this quote on your web site):”

“On page 122 paragraph 3, I quote verbatim: ‘Except where prohibited by law, the Auctioneer may open bidding on any property by placing a bid on behalf of the Seller and may further bid on behalf of the Seller, up to the amount of the reserve price, by placing successive or consecutive bids for a Property, or by placing bids in response to other bidders.’”

“Your advice to be very careful is right on the mark. US Home Auctions wants to get the bidding going and get people invested in time and effort, then PUMP THEM UP!”

“BE CAREFUL INDEED.”



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Wednesday, January 23, 2008

15,905 Homes Offered For Sale on Countrywide Financial's Website

Total REO Asking Price: $2,547,478,845
(As of 2/18/2008)



Source: http://www.countrywide.com/purchase/f_reo.asp

Click on state below for detailed listings
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State Count Total Asking
Price($)
Average Asking
Price($)
AK367,955,499220,986
AL18324,714,277135,051
AR726,566,07791,196
AZ956136,108,198142,373
CA4,240961,105,871226,676
CO24145,855,294190,271
CT11320,450,963180,982
DC346,545,590192,517
DE244,101,800170,908
FL1,459193,116,117132,362
GA81894,784,411115,873
HI5720,347,800356,979
IA575,227,01491,702
ID8220,267,900247,170
IL58874,681,105127,009
IN26318,277,99869,498
KS596,609,250112,021
KY1058,930,48585,052
LA565,833,482104,169
MA21034,256,084163,124
MD26857,284,698213,749
ME393,122,19080,056
MI87660,464,07369,023
MN42561,016,587143,568
MO21719,047,51987,777
MS9710,641,054109,702
MT173,981,299234,194
NC27738,019,489137,254
ND0259,80029,900
NE232,196,80095,513
NH7912,577,098159,204
NJ20138,036,992189,239
NM385,502,099144,792
NV950147,176,146154,922
NY20345,590,398224,583
OH36923,110,25962,629
OK1089,780,89090,564
OR12226,406,100216,443
PA17418,132,394104,209
RI9010,121,496112,461
SC13921,198,270152,506
SD121,542,800128,567
TN26225,615,54797,769
TX53173,038,152137,548
UT6320,237,900321,237
VA31756,355,686177,778
VT05661,501132,300
WA21048,759,099232,186
WI1038,488,79982,416
WV272,531,29593,752
WY081,047,200130,900
Total15,9052,547,478,845147,111

















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Monday, January 21, 2008

11,453 Homes Offered For Sale on Countrywide Financial's Website

Total REO Asking Price: 1,845,595,537
(As of April 6, 2009)



Source: http://www.countrywide.com/purchase/f_reo.asp

Click on state below for detailed listings
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State Count Total Asking
Price($)
Average Asking
Price($)
AK295,376,700185,403
AL16222,914,886141,450
AR575,687,29999,777
AZ65897,732,200148,529
CA2,694637,381,149236,593
CO16126,520,897164,726
CT9015,674,666174,163
DC275,769,198213,674
DE223,490,800158,673
FL985125,282,569127,190
GA53364,780,416121,539
HI6623,392,900354,438
IA332,595,50078,652
ID7919,587,000247,937
IL43253,450,741123,729
IN19211,592,29260,377
KS393,943,000101,103
KY848,095,69996,377
LA476,065,393129,051
MA12721,500,197169,293
MD21944,804,972204,589
ME211,374,89665,471
MI68848,810,79470,946
MN32347,278,294146,372
MO13311,883,10089,347
MS807,761,29497,016
MT165,410,400338,150
NC21732,126,696148,049
ND04489,600122,400
NE262,525,30097,127
NH345,565,599163,694
NJ16032,604,992203,781
NM354,788,298136,809
NV809120,744,634149,252
NY17636,756,195208,842
OH25616,796,59065,612
OK9010,011,999111,244
OR10721,609,317201,956
PA11611,867,598102,307
RI636,692,201106,225
SC10720,075,698187,623
SD09947,099105,233
TN18822,213,550118,157
TX44359,721,445134,811
UT6920,980,999304,072
VA28147,952,881170,651
VT04405,600101,400
WA15933,147,199208,473
WI807,223,10090,289
WV191,799,09594,689
WY04392,60098,150
Total11,4531,845,595,537148,537





















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Note: California Average REO Asking Prices have increased +4.2% from last month, and are down -41% from their peak of $400,000.

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Thursday, January 10, 2008

Bank of America in talks to acquire Countrywide Financial

From the Wall Street Journal:

“Bank of America Corp. is in advanced talks to acquire struggling Countrywide Financial Corp., according to people familiar with the situation.”

“It isn't clear how quickly a deal might be struck, but two people familiar with the matter said it could occur very soon. It also is possible that an agreement could be delayed or fall apart altogether.”

“The market value of Countrywide has plunged to about $3 billion, which represents about two months' profit for Bank of America. The Charlotte, N.C., bank paid ...”

Read full article [WSJ subscription needed]


Countrywide has been struggling with the U.S. housing slump, and on Wednesday said foreclosures and late payments among home loans for which it collects payments rose to the highest levels on record in December.

"‘Somebody is going to have to absorb the massive losses in right-positioning Countrywide,’ said Sean Egan, managing director of credit-rating firm Egan-Jones Ratings Co. ‘It can be done, but the cost is going to be exorbitant. From Countrywide's perspective, it is their best chance for salvation.’"


Shares of Countrywide Financial (CFC) surged 51% to 7.77.

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Tuesday, January 8, 2008

20,255 Homes Offered For Sale on Countrywide Financial's Website

Total REO Asking Price: $3,270,467,911
(As of January 15, 2009)



Source: http://www.countrywide.com/purchase/f_reo.asp

Click on state below for detailed listings
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State Count Total Asking
Price($)
Average Asking
Price($)
AK297,053,100243,210
AL22231,587,987142,288
AR817,407,29991,448
AZ1,194177,853,550148,956
CA5,5951,258,408,604224,917
CO31857,334,897180,298
CT14626,356,293180,523
DC367,555,495209,875
DE213,518,099167,529
FL1,764250,986,059142,282
GA1,061121,468,800114,485
HI6824,009,300353,078
IA706,349,10190,701
ID9824,770,200252,757
IL773103,479,869133,868
IN30918,962,04561,366
KS717,417,800104,476
KY1319,830,88475,045
LA717,410,797104,377
MA24541,349,387168,773
MD29767,720,914228,017
ME423,597,79685,662
MI1,14775,918,71966,189
MN47365,697,562138,895
MO30728,433,99892,619
MS12112,875,994106,413
MT255,404,500216,180
NC34446,268,692134,502
ND02137,80068,900
NE322,523,80078,869
NH11619,004,796163,834
NJ25049,741,987198,968
NM537,194,500135,745
NV1,174194,092,405165,326
NY23951,102,494213,818
OH48327,411,68656,753
OK12010,545,41487,878
OR15432,842,700213,264
PA22423,134,342103,278
RI11213,282,194118,591
SC16024,699,397154,371
SD101,094,000109,400
TN32933,137,087100,721
TX74297,021,370130,757
UT6823,757,200349,371
VA46083,483,501181,486
VT05711,500142,300
WA24056,847,300236,864
WI17214,699,70085,463
WV403,665,09791,627
WY111,309,900119,082
Total20,2553,270,467,911148,341

















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