Tuesday, November 29, 2011

Irvine Housing Blog

Irvine Housing Blog

Link to Irvine Housing Blog

House Democrats lobby to give free money to loan owners

Posted: 29 Nov 2011 02:20 AM PST

In what can only be described as buying votes, Democrats in the House of Representatives are lobbying to forgive principal on GSE held mortgages.

Irvine Home Address ... 27 SHEARWATER Irvine, CA 92604
Resale Home Price ......  $725,000

I never saw the end in sight;
fools are kind of blind.
Thought everything was going alright,
but I was running out of time.

Take my words, read 'em every day,
keep 'em close by, don't you let 'em fade away,
So you'll remember what I forgot to say,
write this down.

Write this Down -- George Strait

The legions of hopelessly underwater loan owners are all praying for a write down on their mortgage. It's a false hope, but with falling prices and little prospect of a recovery any time soon, false hope is all many of these borrowers has left.

US House Democrats press for mortgage write-downs

Reuters -- WASHINGTON | Tue Nov 22, 2011 4:33pm EST

Nov 22 (Reuters) - More than 20 Democrats in the U.S. House of Representatives on Tuesday called on the regulator of Fannie Mae and Freddie Mac to help underwater borrowers by allowing their loan principal to be reduced.

The regulator has faced increasing pressure to permit the write-down of principal by the two government-controlled mortgage finance providers as a way to help some of the millions of Americans who owe more than their homes are worth. The Federal Housing Finance Agency, however, has stood fast out of concern such a change would undercut finances of Fannie and Freddie.

"We strongly urge that you reconsider your refusal to allow principal reductions to achieve better-performing (loan) modifications and avoid the extreme losses of unnecessary foreclosures," the 21 lawmakers wrote in a letter to the FHFA.

Nobody is discussing the bigger issue of moral hazard. If you give away free money, it will encourage imprudent borrowing because the borrowers know they can petition for a bailout and get it. That's the real reason we shouldn't consider principal reductions.

I am relieved the FHFA is resisting increasing the losses on the government's GSE portfolio. Giving away free money will certainly do that.

As for the congressmen, their argument is specious. How does giving away free money avoid extreme losses? Doesn't that guarantee losses? Are the congressmen really arguing that by giving away some now taxpayers will lose less later? Does anyone else see the insanity in that?

Fannie Mae and Freddie Mac provide guarantees to investors against the possible default of loans, which encourages banks to make new loans. The two companies are the biggest sources of U.S. mortgage financing, and regulations on their activities have a widespread effect on the mortgage market.

Fannie Mae and Freddie Mac, which were taken over by the government in 2008, have together received more than $145 billion in taxpayer-funded support.

Given an expanding gap between U.S. home values and mortgage balances, many Democrats and housing industry representatives have argued for comprehensive anti-foreclosure efforts that include principal write-downs.

They are arguing against the cure to the problem. If they really wanted to bring down the gap between home values and mortgage balances, they would foreclose on underwater borrowers and put them out of their misery. These congressmen are correct that the gap between what the houses are worth and what is owed needs to be reduced, but their method of doing so is all wrong. Principal forgiveness will not deter irresponsible borrowing in the future. Foreclosure has consequences, principal forgiveness does not.

Mortgage modifications usually involve a reduction in the interest rate but not the principal balance of the loan.

In the letter, Democrats estimated principal reductions for troubled borrowers would lead to lower defaults and reduce the risk of default for about 20 percent of Fannie and Freddie's portfolio.

So they want to give away the money because the GSE might lose it? How stupid is that?

Efforts to reduce principal debt are rare, often voluntary. Fannie and Freddie are also concerned that writing down loan balances would create a moral hazard -- the concept that rescue efforts breed further behavior that exacerbates the existing problem -- prompting other borrowers to stop making timely loan payments.

They shouldn't just be concerned, they should be quite certain principal forgiveness will lead to moral hazard. No borrower will ever be prudent again. If borrowers believe they have no risk in the transaction, they will take all the money they can get under any terms available because they know they will get bailed out if things go wrong.

"The performance of the enterprises' mortgage modifications leaves much to be desired for homeowners, for the housing market, and for taxpayers," Representative Brad Miller, a Democrat and a member of the House Financial Services Committee, said in a statement. Miller, who has proposed legislation to reform housing finance, led the Democrats in writing the letter.

Some economists see principal reductions as central to cleaning up the housing mess and preventing foreclosures.

Some economists are really stupid.

Settlement talks between the government and some of the biggest mortgage servicers to clean up alleged foreclosure abuses include widespread principle reductions in their agreement.

There's the money shot -- the false hope to keep more loan owners paying. Widespread principal reductions are coming, right?

If there is principal reduction in the agreement, it will be targeted to the most severely underwater borrowers who are most likely to strategically default anyway. By reducing the principal a little, they will get a few more payments out of the borrowers before they implode. Perhaps this is what the Democrats had in mind when the proposed principal reduction, but I rather doubt it.

A house I know

When I first began writing for the IHB back in February of 2007, I had just moved into a property in University Park. While I was looking for that property, I made an offer to rent this property. At the time, the asking rent was $2,700, and with the prevailing 6.3% interest rate, the house was well over rental parity. It's amazing what a difference a 4% interest rate makes.

At the time, one of the main reasons I didn't rent this property was because I knew the owner was a speculator who just bought the property, fixed it up, and was using an Option ARM with a 1.5% teaser rate to keep his monthly cost down. In other words, I knew he was going to blow up.

He did. Despite putting $142,000 down on this property, the negative amortization and declining value prompted him to give up. He quit paying sometime this year, probably when his payment recasted to fully amortizing and the cost of ownership started burning a hole in his wallet.

Foreclosure Record
Recording Date: 09/23/2011 
Document Type: Notice of Default

The description says it's an equity sale, but I rather doubt he has much flexibility to lower the price and still pay off the loan. This will probably die on the MLS and either become a short sale or an REO.

With 4% interest rates, this house costs less to own than to rent. The price is still ridiculous, but the cost of ownership is what it is. The buyer of this property will be saving money versus renting, and for a single-story home in Woodbridge, that's not all bad.

This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707 

Irvine House Address ...  27 SHEARWATER Irvine, CA 92604
Resale House Price ......  $725,000

Beds:  3
Baths:  2
Sq. Ft.:  1538
Property Type: Residential, Single Family
Style: One Level, Contemporary
Year Built:  1979
Community:  Woodbridge
County:  Orange
MLS#:  S679826
Source:  CRMLS
Status:  Active
On Redfin:  10 days
Equity sale in North Lake, Woodbridge! Move-in ready. Upgraded maple kitchen cabinets, granite countertops, stainless steel appliances. Neutral ceramic tile, carpet, paint and decor. This highly-desireable floorplan boasts private Atrium off master bedroom. Nice open floor plan, great for entertaining. Walking distance to Eastshore, Lakeside & Woodbridge High. 
Proprietary IHB commentary and analysis 

Resale Home Price ......  $725,000
House Purchase Price … $740,000
House Purchase Date .... 11/17/2006

Net Gain (Loss) .......... ($58,500)
Percent Change .......... -7.9%
Annual Appreciation … -0.4%

Cost of Home Ownership
$725,000 .......... Asking Price
$145,000 .......... 20% Down Conventional
4.02% ............... Mortgage Interest Rate
$580,000 .......... 30-Year Mortgage
$140,790 .......... Income Requirement 

$2,776 .......... Monthly Mortgage Payment 
$628 .......... Property Tax (@1.04%)
$0 .......... Special Taxes and Levies (Mello Roos)
$151 .......... Homeowners Insurance (@ 0.25%)
$0 .......... Private Mortgage Insurance
$82 .......... Homeowners Association Fees
$3,637 .......... Monthly Cash Outlays

-$643 .......... Tax Savings (% of Interest and Property Tax)
-$833 .......... Equity Hidden in Payment (Amortization)
$203 .......... Lost Income to Down Payment (net of taxes)
$111 .......... Maintenance and Replacement Reserves
$2,475 .......... Monthly Cost of Ownership 

Cash Acquisition Demands
$7,250 .......... Furnishing and Move In @1%
$7,250 .......... Closing Costs @1%
$5,800 .......... Interest Points
$145,000 .......... Down Payment
$165,300 .......... Total Cash Costs
$37,900 ............ Emergency Cash Reserves
$203,200 .......... Total Savings Needed

real estate home sales

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Monday, November 28, 2011

Home Architectural Design

Home Architectural Design

Mariposa Villa in Costa Rica by Kalia

Posted: 27 Nov 2011 07:52 PM PST

The Mariposa Villa is a vacation home in Black Beauty Village in Ostional, Costa Roca. The developer, Kalia, completing this 4,424 square foot with three bedroom, two and a half bathroom in contemporary style offering spectacular views of the Pacific Ocean and lush mountains. This villa can be booked around from $550 to $700 per [...]

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Hill-Maheux Cottage by Kariouk Associates

Posted: 27 Nov 2011 06:32 PM PST

Hill-Maheux Cottage was designed by Kariouk Associates as a small, weekend and vacation retreat and take refuge from the world. Although the home is introverted but it still achieve a maximum connection to its beautiful, forested, lake-side site. Last, it is important to note that this home is built as a place the clients will [...]

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Irvine Housing Blog

Irvine Housing Blog

Link to Irvine Housing Blog

FHA loan limits go back up to $729,750 in Irvine

Posted: 28 Nov 2011 02:30 AM PST

In an effort to support prices of expensive homes, Congress has voted to increase the FHA loan limit to $729,750 through the end of 2013.

Irvine Home Address ... 3531 PECAN St Irvine, CA 92606
Resale Home Price ......  $639,900

Cheap is small and not too steep
But best of all cheap is cheap
Circumstance has forced my hand
To be a cut price person in a low budget land
Times are hard but we'll all survive
I just got to learn to economize

I'm on a low budget
I'm on a low budget

The Kinks -- Low Budget

When the conforming limit for GSE and FHA loans went down in October, borrower spending power went down with it. In response to the dramatic drop off in demand, Congress has voted to increase the FHA loan limit back to $729,750 through 2013.

Congress votes to raise FHA loan limits

By Margaret Chadbourn

WASHINGTON | Fri Nov 18, 2011 2:43pm EST

(Reuters) - The U.S. Congress on Thursday approved a bill to raise the maximum size of mortgages the Federal Housing Administration can insure and sent it to President Barack Obama to sign into law.

The measure would push the so-called FHA conforming loan limit in the highest-priced real estate markets back up to $729,750 through 2013, from $625,500, a sign of lawmaker concern over the still-depressed state of the housing sector.

It's far more than a sign of concern, it's an acknowledgement of the weakness in the market for high wage earners, a market that didn't used to get government support.

The FHA has been perverted. It used to provide home ownership opportunities for low and middle income Americans. It was never intended for supporting overpriced markets dominated by high wage earners like here in Irvine. Markets with prices requiring loans over $417,000 are supposed to be supported by savings and equity from previous sales. Since most Americans have no savings, and since home equity has been largely wiped out in the crash, the markets for high wage earners are looking for the government to bail them out.

This policy will undoubtedly cause more FHA losses because prices will continue to decline, and with the tiny down payments on FHA loans, borrowers will go underwater and many will strategically default. In short, this policy will shift losses from the private lenders and investors to the taxpayer -- to you.

The limits, which vary from market to market, were temporarily raised for FHA and Fannie Mae and Freddie Mac during the financial crisis when banks became reluctant to lend. They automatically dropped back on October 1.

Lawmakers decided not to raise the loan level for Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB), which have soaked up about $169 billion in taxpayer aid, as they sought to strike a balance between supporting the market and starting to shrink the government's housing footprint.

The only silver lining to this policy is that it does not apply to GSE loans. It creates an unusual situation where FHA loans will proliferate despite their higher costs due to the FHA insurance.

Many buyers who don't have a 20% down payment (or who aren't willing to put that much down) can now bid up prices using FHA loans assuming they have the qualifying income. This will be an advantage to high wage earners who haven't saved much.

Of course, it is another government prop, and when it is removed, the artificial demand it creates will disappear with it, so buyers thinking of using this financing should beware.

Seeking to avoid a polarizing debate, members of the House and Senate decided to link the mortgage measure to must-pass legislation that includes funding for a large swath of federal programs, from food inspection to law enforcement.

The bill passed the Republican-controlled House of Representatives on a 298 to 121 vote, and passed the Senate by a vote of 70 to 30.

This was "must pass" legislation, so that washes their hands of responsibility, right? Political posturing is bullshit. These idiots just passed a measure which will certainly result in major losses to the FHA -- the same FHA facing a government bailout soon. This is a stealth bank bailout nobody has the courage to take responsibility for.

FHA, which does not make loans, provides mortgage insurance to borrowers without enough of a down payment to qualify for prime loans. With an FHA loan, home buyers can put down as little as 3.5 percent.

The agency, which is mainly funded through insurance premiums it brings in, backed about one-third of loans used to purchase homes last year.

FHA, Fannie Mae and Freddie Mac have seen their share of the mortgage market swell as private lenders retrenched; they now back about 90 percent of all new residential loans.

The measure to raise the FHA loan limits still has to pass the Senate before becoming law; Senate approval could come as early as Thursday night with lawmakers laboring against a November 18 deadline, when current government funding expires.

The Obama administration and many lawmakers of both parties want to reduce the government's role in supporting the housing finance system, and the White House sees expiration of the higher loans limits as a first step.

Some Republicans splintered from their party's general consensus that the government should no longer risk the cost of subsidizing home loans on a grand scale. Lawmakers from states with pricey real estate markets, such as California and New York, argued that withdrawing support could hurt the market.

California Republicans should hide their faces in shame. This is appalling. These Republicans call for reducing the footprint of government and simultaneously vote to keep the house prices inflated in their districts with more government largess.

The housing industry and consumer advocates mounted an intense lobbying effort to convince officials the time was not yet ripe to reduce government support.

The NAr will always argue for more government support. The mistake was made by the congressmen who listened to them.

Some conservative groups fought raising the loan limits, with the influential Club for Growth warning that the government was distorting the market and impeding a recovery.

Yes, it is distorting the market and impeding the recovery. This is a mistake.

FHA, which traditionally has supported low-to-moderate income households, said on Tuesday that its capital reserves had dwindled over the past year. But it rebutted the contention of some analysts that it will likely need to turn to the U.S. Treasury for a bailout.

(Additional reporting by Andy Sullivan; Editing by Dan Grebler)

The FHA will likely need a bailout despite their assurances to the contrary. As I reported recently, the only way they will avoid a bailout is if the market bottoms shortly and their legions of underwater loan owners do not strategically default. When their market prognostications prove to be wishful thinking, they will go back to congress for a bailout and claim no one could have foreseen the continuing fall in prices. Idiots.

Countrywide encouraged a peak-buying Ponzi

This house illustrates how fortunes are made and lost during a Ponzi scheme. Two owners ago, this property was purchased on 12/13/2004 for $695,000. Only 15 months later on 3/3/2006, the owner sold the property for $853,000 pocketing over $100,000 after commissions for his one year of ownership. That's the fun part.

The owner that followed was the bagholder... or was he. He paid $853,000 but he did it with Countrywide's money. He put nothing down. In fact, Countrywide didn't think that deal was good enough, so five months later, they gave him a new $748,000 first mortgage and a $93,500 HELOC. Then a few weeks later, they increased his HELOC to $187,000 enabling him to pull nearly $100,000 out himself -- after only owning the house less than six months.

It isn't hard to see why houses were so popular and why Countrywide went out of business.

This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707 

Irvine House Address ...  3531 PECAN St Irvine, CA 92606
Resale House Price ......  $639,900

Beds:  4
Baths:  3
Sq. Ft.:  2505
Property Type: Residential, Single Family
Style: Two Level, Traditional
Year Built:  1974
Community:  Walnut
County:  Orange
MLS#:  S679920
Source:  CRMLS
Status:  Active
On Redfin:  9 days
Rare highly upgraded, Turnkey REO in College Park. Double family rooms with fireplace. New Carpet and Paint, Newer cabinets with granite counters in kitchen and baths, Newer dual-pane windows, crown molding and much more. This home has a large open floor plan and has beautiful flooring throughout. This home sits on a large lot with a spa in the back yard. Low HOA dues and no Mello Roos. Hurry with your highest and best offers because this gem will not last long. 
Proprietary IHB commentary and analysis 

Resale Home Price ......  $639,900
House Purchase Price … $489,000
House Purchase Date .... 9/20/2001

Net Gain (Loss) .......... $112,506
Percent Change .......... 23.0%
Annual Appreciation … 2.6%

Cost of Home Ownership
$639,900 .......... Asking Price
$127,980 .......... 20% Down Conventional
4.02% ............... Mortgage Interest Rate
$511,920 .......... 30-Year Mortgage
$123,592 .......... Income Requirement 

$2,450 .......... Monthly Mortgage Payment 
$555 .......... Property Tax (@1.04%)
$0 .......... Special Taxes and Levies (Mello Roos)
$133 .......... Homeowners Insurance (@ 0.25%)
$0 .......... Private Mortgage Insurance
$55 .......... Homeowners Association Fees
$3,193 .......... Monthly Cash Outlays

-$397 .......... Tax Savings (% of Interest and Property Tax)
-$735 .......... Equity Hidden in Payment (Amortization)
$179 .......... Lost Income to Down Payment (net of taxes)
$100 .......... Maintenance and Replacement Reserves
$2,340 .......... Monthly Cost of Ownership 

Cash Acquisition Demands
$6,399 .......... Furnishing and Move In @1%
$6,399 .......... Closing Costs @1%
$5,119 .......... Interest Points
$127,980 .......... Down Payment
$145,897 .......... Total Cash Costs
$35,800 ............ Emergency Cash Reserves
$181,697 .......... Total Savings Needed

real estate home sales

Top Box Design

Top Box Design

City Centre Campus at University of Wales in Newport, United Kingdom

Posted: 27 Nov 2011 11:37 AM PST

BDP has create a new visual identity for Newport region through Glazed volume for University of Wales’s City Centre Campus that located in Newport, United Kingdom. Read more details below: The University of Wales, Newport commissioned a masterplan to create a new campus for the schools of Art, Media, Design, Business and Technology on the [...]

Sunday, November 27, 2011

Home Architectural Design

Home Architectural Design

Yallingup Residence by Wright Feldhusen Architects

Posted: 26 Nov 2011 09:16 PM PST

Yallingup Residence by Wright Feldhusen Architects in Western Australia: The site is a rural location with spectacular valley views to the east. The house is a holiday residence for the client and their extended adult family, and their children. The client is involved in steel fabrication, and therefore steel structure was part of the construction [...]

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Casa Lara by Mihai M. Tudose

Posted: 26 Nov 2011 08:30 PM PST

This Casa Lara was developed by Mihai M. Tudose in the Timisoara, Romania and features a modern structural design. The concept is "LESS IS MORE", a small efficient and practical house, small package on the outside that can fit a lot on the inside. On the interior, material chosen and clean shapes indicate the modern [...]

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House in Alcobaça by Topos Atelier de Arquitectura

Posted: 26 Nov 2011 07:24 PM PST

This project was intended by Topos Atelier de Arquitectura to realize an architecture that minimized disturbances to the environment. A mono-oriented plan is picked for the design, which was rationalized and simplified to be inscribed in the plot's width. Instead of providing the environment for the object "house", the land was shaped to blend with [...]

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