Month: January 2010 (page 4 of 4)

by Tom Johnson

Realtor, Peripatetic Iconoclast

Author website

I have been wandering around this Acropolis for a while
now and yesterday I got an email from the proprietor.

Are you game? It’s okay to say no, but
I think you would be a fun, very irreverent
addition.

My response was: What I think- Wow. Of course I would love to contribute to BHB.
It’s like being asked to join the Delta Force middle aged, overweight and not being able to shoot straight.
I consider it a huge honor. Let me know what your publishing requirements are.

So, how did this happen? As any chubby chumley knows, the way to get past the bouncer
is to have a smoking hot chick with you.   Now, I know that Greg is head over heels in love with
Cathleen, so the short skirt ploy is probably out.

I come with a hot chick in a fur coat.

Hot Chick in Fur Coat

Once I made it past the bouncer, like any job you have to pass the security check. Believe me, these guys are tough. Greg should consider contracting with Homeland Security. No underpants bombers here!

More secure than the TSA

So here I am, still wandering around in a daze. Thank you for inviting me, Greg. I hope that I can add something to this discussion that is worthy of my illustrious colleagues to the right.

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

Joining us today as a contributor is a frequent commenter and long-time friend of BloodhoundBlog, Tom Johnson.

I’ve thought about adding Tom to our roster more than once over the year, but I never pulled the trigger. It was my soul’s sister in Dayton, Teri Lussier, who made the connection I had been missing.

Tom is a Realtor in Houston, which necessarily implies that he likes to drive a lot. Wife, kid, dog. What else do you need to know?

Seriously, the gift Tom brings to our conversations is a wry irony, pungent without being cynical. His bullshit detector is finely tuned, and his sense of humor is honed to a razor’s edge.

I’ll be adding another writer next week, as well as cleaning house, something I haven’t done for a while. I have mail from a bunch of folks who want to write with us, and I’m thinking I want to come up with a new way of dealing with that. I’ll announce the new policy when I figure out what it is.

Meanwhile: Welcome to BloodhoundBlog, Tom. I’m sorry that I didn’t get to this sooner, but I know we will all be delighted to have you here.

by Jeff Brown

Real Estate Investments Broker

Author website

My stompin’ ground is San Diego. When the bubble burst here, the median price for a single family residence was within shoutin’ distance of $600,000. To give you some perspective on that number, my first ever listing was a 4 bedroom home in a blue collar area in October of 1969 — $18,100. It didn’t sell during the 90 day listing period, as it was um, a tad overpriced. Gimme a break, it was my first day on the job, and I was just 67 days past my 18th birthday.

Let’s say you and I are partners in a bank making real estate loans in San Diego. In January of 2005 we approved a couple’s application to refinance their well located 2,500 foot home with a view. Our own appraiser came in with a value of $675,000. The borrowers wanted 80% which was $540,000 — very doable considering their 770+ FICOs and impressive credit history. The interest rate was 6% fixed for 30 years — a payment of $3,237.57 monthly. Add taxes and insurance — just under $4,000!

Their home is now worth $450,000 — more than $100,000 above the current median price for the county. She’s had to resume full time work due to her husband’s job loss. He’s now workin’ two jobs at drastically reduced pay. They’re goin’ through their savings like a mower spits out grass on Saturday morning.

What do we, as the lender wanna do?

Our Board of Directors thinks either the government or the market will eventually save us. But then the White House floats a plan calling for principal reduction. Crap on a cracker.

Even if we reduce the loan balance by $90,000 (Almost 17%), the payment will only be reduced by $540 — hardly a real life solution when we consider the couple’s severely reduced income.

If we offered them a significant reduction in interest rate, say 4.5% with interest only payments for two years, then 5% the next three years, then 5% fixed for 30 years fully amortized — it would make the difference in going through foreclosure or not.

Their payment the Read more

by Damon Chetson

Raleigh Criminal Lawyer

Author website

The New York Times is reporting what everyone at Bloodhound Blog has known for a long time about the Federal Government’s attempt to encourage loan modifications:

The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.

If you’re a fan of Peter Schiff, then you heard him say in the fall of 2008 that the government’s cure to a bursting asset bubble would be worse than the underlying problem itself. He was right, but the logic of politics does not care about the long term economic health of the country.

Here’s The New York Times telling us that government-backed loan modifications are:

1. delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate,

2. [encouraging] desperate homeowners [to send] payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences,

3. [are allowing banks to use] temporary loan modifications under the Obama plan as justification to avoid an honest accounting of the mortgage losses still on their books,

4. [are preventing] housing prices [from] drop[ping] to levels at which enough Americans can afford to buy,

5. delaying the return to work for carpenters, construction workers, and a whole sector of the American economy.

These numbers tell the story:

In 2008, more than 1.7 million homes were “lost” through foreclosures, short sales or deeds in lieu of foreclosure, according to Moody’s Economy.com. Last year, more than two million homes were lost, and Economy.com expects that this year’s number will swell to 2.4 million.

Now, if in late 2008, the government had simply let foreclosures go forward without holding out hope for a loan modification program, it would’ve been an awful as opposed to merely bad 2009. But we would be seeing a recovery in the next 6 months. Instead, we’re just going to see more foreclosures for the next two years.

Update: The Washington Independent has a good Read more