New Wave of Alt-A Foreclosures to be Worse than Subprime Wave

[thaidyed]

Dang it! Just tell us!
...i don't handle suspense well...

 

[siamamerican]

I agree completely.

The flogging is about a particular poster who claimed that "many" people are 40% underwater LTV. It may be that a some people in the worst bubble areas who bought at exactly at the wrong time and did a 100% finance are 40% under. The comment made no sense since only a few people nationwide find themselves in that situation, and I doubt the term 'many' applies to people living right in the bubble areas.

The poster then became rude and tried to argue that the dictionary definition of the word 'many' was incorrect.

Here we go again with banal misrepresentations. If makes you feel better about yourself, with your flogging accusations, keep at it.

You state, " It may be that a some people in the worst bubble areas who bought at exactly at the wrong time and did a 100% finance are 40% under. The comment made no sense since only a few people nationwide find themselves in that situation".

Reread my post. I claimed that there are many borrowers in hard hit areas that are 40% underwater. A poster a few posts back posted about Riverside properties being auctioned for 50% of their highs.

Also, why do you think 100% financing has anything to do with the value of the property? Logic isn't a strength of yours.

As for the definition of MANY. I disagree with your interpretation. Some how you think it means a majority as you stated earlier. Try this - many people are grammatically challenged. This doesn't mean you are the majority.

Again, sorry that you bought in a major bubble area in 2007. You might be a good person to answer jclarksnakes post( #92).

 

[siamamerican]

siamamerican,
...You actually pay good money to people who are that stupid. You may want to rethink your hiring practices.
Jeff

You might want to ask Cute Fuzzy Bunny. He purchased a home in a bubble area in 2007. He might not appreceate being called stupid.

My employees are young and have never really experienced a housing downturn. I don't consider them stupid. Regardless, it is hard to time the market and looking back they were too optimistic.

 

[honobob]

Here we go again with banal misrepresentations.

Reread my post. I claimed that there are many borrowers in hard hit areas that are 40% underwater. A poster a few posts back posted about Riverside properties being auctioned for 50% of their highs.

I read the post that stated that listings were 50% less but that offers were more than that. Didn't say 10% more, that could possibly support your 40% underwater so your claim of this supporting you contention is baseless.

 

[honobob]

Here we go again with banal misrepresentations.

Also, why do you think 100% financing has anything to do with the value of the property? Logic isn't a strength of yours.

So if you paid cash and the property lost 90% of value, how do you see someone as underwater. Logically speaking.

 

[siamamerican]

So if you paid cash and the property lost 90% of value, how do you see someone as underwater. Logically speaking.

Logically, I see that person as 90% underwater. If you borrowed 100% of the purchase price for a stock, and it went down 90%, you would be 90% underwater. Leveraged or not, the paper loss is the same.

If you purchase a home and it declines in value, you have the same paper losses, regardless of how much you owe.

Sorry, I don't understand the point you are trying to make.

 

[Marquette]

Logically, I see that person as 90% underwater. If you borrowed 100% of the purchase price for a stock, and it went down 90%, you would be 90% underwater. Leveraged or not, the paper loss is the same.

If you purchase a home and it declines in value, you have the same paper losses, regardless of how much you owe.

Ahh, I see the problem now. You don't know what you're talking about.

 

[honobob]

Sorry, I don't understand the point you are trying to make.

Exactly!

 

[honobob]

American homeowners owe more on their mortgage than the value of their home, according to a new study by Moody’s Economy.com. This is what happens when buyers make minimal down payments, and then housing prices start falling.
The consequences are all bad, which you can tell by the term the industry uses to describe the situation. Such borrowers are said to be “underwater” -- they are drowning.


Twaddle, is that you? I got news of $5,000 beach front property. Come home!!


However, if their rents are still what they planned or their payments are manageable, WTF cares? Especially when they realize that this is just a dip and "to the moon Alice!" appreciation comes back in a big way!

 

[honobob]

I'm right in the middle of this mortgage mess. Everyday I have to deal with delinquent loans. Interest rates and subprime borrowers have very little to do with the rise in foreclosures. Loan to value is the main culprit.

siamamerican

Dryer sheet wannabe

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Current Activity: Modifying Post

So you're in the middle of this and you don't know what a underwater loan is? WTF? Modify, modify! Have you even watched the movie "Pacific Heights"?

 

[siamamerican]

Honobob, CFB, and Marquette,
You are all correct and I deserved the flogging. The post was idiotic. I was trying to make a point and in lieu made an arse of myself. Hmmm, I made a great first impression.
Sorry for dumb logic.

 

[jclarksnakes]

You might want to ask Cute Fuzzy Bunny. He purchased a home in a bubble area in 2007. He might not appreceate being called stupid.

My employees are young and have never really experienced a housing downturn. I don't consider them stupid. Regardless, it is hard to time the market and looking back they were too optimistic.

CFB is infinitely smarter than some people in this conversation.

 

[cute fuzzy bunny]

Ahh, I see the problem now. You don't know what you're talking about.

DING DING DING!

As for the definition of MANY. I disagree with your interpretation. Some how you think it means a majority as you stated earlier.

I'm afraid you'll have to take that up with those "Merriam-Websters" folks. Who also didnt say it was a majority. Since you seem to need a "Reading Is Fundamental" class, what they essentially defined the word "many" to mean is that among a large group of people or things, 'many' would be a significantly large percentage of that group.

I just read a study last week that said that in the bubble areas, a very small number of people were ~30% under, the median was around ~7-8% and nationwide the average homeowner who bought since 2006 was actually up about 5%.

Fear and loathing indeed.

As far as my buying in a 'bubble area' and being upset...well...I'm down maybe 5%. The house I sold to buy this one is now down about 30% from peak. I have no plans to sell in the next ten years at which point I'll make a very handsome profit. I've sold a handful of houses on both coasts over the last 15 years and turned around $700k in profits.

Very upsetting stuff.

Lets wrap this up: You made a fearmongering comment that demonstrated a poor grasp of the facts. I gave you several opportunities to clarify your comment so that you didnt look like a complete idiot. You chose to dig in, become insulting, and challenge the dictionary definition of simple words.

Even Clinton couldnt pull that off.

Now can the rest of you guys quit quoting the troll?

 

[ladelfina]

It may not matter to CFB if his house is worth less than when he bought.. if he likes where he lives and plans to stay there a long time. Most people here tolerate stock prices going down since they don't feel pressured to sell.

The larger issue of the housing crisis is that it does affect people who may have to move for job reasons.. or who have been (perhaps even fraudulently) encouraged to take out more debt than the purchase, taking into account their means, warrants.

If you have a bunch o' money you may not care if you have "overpaid" for a house (or a car, or a Prada purse).

I'm only mildly interested in clif's brain teaser.. because what does one data point prove? Either he's going to come out with $100k+ and demonstrate that things are now "back to normal", or $85k and they are at their limit, or $60k, showing that loose lending is still out there. I'm more interested in the overall trends and what is going to happen to the people who are not yet in foreclosure.. not so much because of what happens to them personally (although that's worrisome) but because of the proportion of assumptions that their (now non-)continued payments is supposed be propping up (MBS, prop. taxes. mortgage insurance, and so forth). If you look at housing as the keystone (as it has been) of the current economy, it doesn't take much of a hit to its integrity to make the whole edifice crumble. Seems kinda pointless to argue whether the keystone is eroded 25% or 40%... if it's unsound, what are the contingency plans?

 

[siamamerican]

CFB is infinitely smarter than some people in this conversation.

Surely wiser than those making accusations that people that purchased homes in 2006-2007 are stupid. Is it nice to be clairvoyant?

I didn't purchase a home in the last few years, but, as I've shown in my last few posts, am not superior intellectually than those that did.

 

[cute fuzzy bunny]

as I've shown in my last few posts, am not superior intellectually than those that did.

Just the last few?

 

[siamamerican]

DING DING DING!

I just read a study last week that said that in the bubble areas, a very small number of people were ~30% under, the median was around ~7-8% and nationwide the average homeowner who bought since 2006 was actually up about 5%.

As far as my buying in a 'bubble area' and being upset...well...I'm down maybe 5%. The house I sold to buy this one is now down about 30% from peak. I have no plans to sell in the next ten years at which point I'll make a very handsome profit. I've sold a handful of houses on both coasts over the last 15 years and turned around $700k in profits.

Again, sorry that you purchased a home in 2007. Your opinions are a little biased.

What study are you referring to that shows homes values are up 5% NATIONWIDE since 2006 This claim is ridiculous.

 

[siamamerican]

Just the last few?

OK, many if not all.

 

[cute fuzzy bunny]

This claim is ridiculous.

I bow to your superior expertise.

 

[siamamerican]

I bow to your superior expertise.

How about backing up your claim. You can't so now you are going to be coward and ignore it.

Have to run and enjoy the great weather. Don't worry about backing up your claim - we both know you can't.

 

[cute fuzzy bunny]

I'm afraid i've tired of this battle of wits. Next time I'd like an armed opponent.

 

[ladypatriot]

They put 20% down (having previously sold a house in Arrowhead near the peak) fixed 30 mortgage in the 5.75% range. So here is the question for you real estate experts, what is their household income?

Are we ever going to find out? Or is it like one of those "write your own ending" kind of story?

 

[clifp]

Are we ever going to find out? Or is it like one of those "write your own ending" kind of story?

Me bad, I actually did write the end of the story last week, but it got lost in the giant bit bucket in the sky. I am still baffled why my posted was not recorded, I'm glad LadyPatriot asked

The answer is less than 50K, so CFB guess of 65K was the closest. It was a trick question in one respect since I was trying to get perception of what took to afford a house in a Southern California.

He is starting his first year as youth pastor for a small church (that meets in warehouse of all place) in Riverside so it isn't wealthy. I don't know know their exact incomes, or all the financial details just what my sister has told me My niece has two toddlers at home and 2nd grader so she isn't able to work outside the house. She does make some money as teachers assistant grading papers so I figure 10K for her 40K for him. . Their total payments are right around 16-1700/month or about ~40% of their income.

My niece is very good with money classic LYBM,and he is very handy, so I doubt the average couple with their income and 3 kids could pull it off.
Still the fact that a couple with a household income roughly at the median for the US can afford a house in Southern California, is pretty remarkable.

The fact that can afford a 2000' foot house with a pool, and there is a bidding war for foreclosure in their neighborhoods leads me to believe that we have already seen the bottom in the worse hit places inland empire region of California, which in turn is one of the biggest problem spots in the country.

 

[FIRE'd@51]

The answer is less than 50K, so CFB guess of 65K was the closest. It was a trick question in one respect since I was trying to get perception of what took to afford a house in a Southern California.

He is starting his first year as youth pastor for a small church (that meets in warehouse of all place) in Riverside so it isn't wealthy. I don't know know their exact incomes, or all the financial details just what my sister has told me My niece has two toddlers at home and 2nd grader so she isn't able to work outside the house. She does make some money as teachers assistant grading papers so I figure 10K for her 40K for him. . Their total payments are right around 16-1700/month or about ~40% of their income.

My niece is very good with money classic LYBM,and he is very handy, so I doubt the average couple with their income and 3 kids could pull it off.
Still the fact that a couple with a household income roughly at the median for the US can afford a house in Southern California, is pretty remarkable.

The fact that can afford a 2000' foot house with a pool, and there is a bidding war for foreclosure in their neighborhoods leads me to believe that we have already seen the bottom in the worse hit places inland empire region of California, which in turn is one of the biggest problem spots in the country.

Wow, I don't know what to think about this. Of course, I know nothing about the rest of the financial situation of this family. Maybe Uncle Clifp sends them a check every month.

I'm surprised that a lender would make a loan in today's credit market to someone who is spending 40% of their income on housing (mortgage, RE taxes, and insurance). Did your sister or someone else co-sign the loan? If not, I would think a lender who has likely been burned already, would see this as a "train wreck" waiting to happen.

If they are typical (income-wise) of the buyers in this neighborhood, I would think that home prices may have a ways to fall yet, or we may have another round of foreclosures in the making.

 

[Abreutime]

The dictionary defines the word 'many' as
1. A large indefinite number
2. The majority of the people; the masses

Hence, its unreasonable to say that 'many' people are 40% underwater on their homes. Its feasible to say that many peoples homes are worth 40% less than the peak value was at one time, but not to imply they're 40% underwater on their loans.

As you know, if people bought with little down, there is little difference. Interest-only loans don't build equity, obviously, but conventional loans don't build much equity in the first few years either, according to most amortization schedules. With little equity (=down pmt) at the time of purchase for many recent buyers, the decrease in value went directly to putting these buyers underwater.

nationwide the average homeowner who bought since 2006 was actually up about 5%.

Source, please? This number is surprising.