A "Repo Home Tour" in Stockton

They are taking buses up in Stockton in hopes of catching falling knives up there -- that is, in hopes of buying foreclosed homes. The LATimes lays out the foreclosure fallout in Stockton, including the bus tour run by Cesar Dias: "... the weekly Repo Home Tour, filling two 18-seat buses with prospective buyers eager to view foreclosed houses that can be snapped up at dramatically reduced prices."

This is one of those stories that reminds you just how crazy the mortgage and housing industry was in this state: "Monaliza Botello, a 25-year-old nurse, said she was surprised when her father, who brings in $4,500 a month, last year secured a loan requiring a $4,000 monthly payment. The idea was that Monaliza's father would own the new $495,000 four-bedroom for a year or two, at which point she and her husband, Isaac, could afford to buy it from him with a refinanced loan. But the three of them, who were all living there, fell behind in their payments, and Monaliza lost her dream home."

The article focuses in part on buyers snapping up foreclosed houses, and you have to wonder whether bad loans are still being made. These are median home prices for homes sold in San Joaquin County, according to the article:

2000: $133,000
July 2006: $425,000
October 2007: $319,000

Is $319,000 the bottom, or close to it? I wouldn't take that bet.

Your thoughts? Comments? Email story tips to peter.viles@latimes.com.

Comments

[Ann]

"Monaliza Botello, a 25-year-old nurse, said she was surprised when her father, who brings in $4,500 a month, last year secured a loan requiring a $4,000 monthly payment.

The idea was that Monaliza's father would own the new $495,000 four-bedroom for a year or two, at which point she and her husband, Isaac, could afford to buy it from him with a refinanced loan. But the three of them, who were all living there, fell behind in their payments, and Monaliza lost her dream home.

"It still hurts," she said. "We were getting phone calls and notices from the lender: 'If you give us the balance in full, you can keep the house.' It was nothing like 'Call us and we'll see what we can work out.' "

HELLO - THIS IS EARTH CALLING - THIS IS REALITY CALLING.

Buy house at $495,000 price - owe $495,000

2 years payments = negligble amount of principal paid, maybe all of $10,000 max.

Refiinance house - now 'supposedly worth " $600,000 - owe $485,000.

Duh......who cares if it would 'appreciate' over 1 or 2 years. You nitwits STILL had to pay a mortgage for $485,000.

What was going to happen in 1 or 2 years? You would win the lottery???

That mortgage needed an income of at least $159,000 to be able to pay the taxes, insurance and mortgage payment. with a 6+% 30 year fixed.

And they let this woman handle drugs and hypodemic needles???

YIEEEEE>>>>> If she calcuates medication doses or reads patient charts the same way she does a budget, she is going to KILL someone!!

[Cal]

The 2006 loans are just horrible, no underwriting at all.

Nearby, I've seen my biggest drop yet from 2006 purchase price to 2007 REO MLS list price , 36% (1.45 million to 925k).

2006 was just denial by all these loan companies that the bubble had burst. I think it made the bust worse for several reasons. They completely destroyed trust in the non-GSE securitization process (causing a more severe pullback), they falsely inflated the bubble even more, allowed more equity withdrawl for existing homeowners at inflated prices and caused massive number of foreclosures in a short period of time. The tremendous stress we are seeing in the financial market is a direct result of many years of lax loans but 2006 outdid them all in every way.

[lefty]

stockton? what is that, some town in delaware? anyway who cares, the bottom is here for metro L.A. !! feel free to buy any time in the next 6 months, because your window is about to close!

[Hula Girl]

http://www.nytimes.com/2007/12/13/
business/13lend.html?em&ex=1197694800&en=
3b585576798189d8&ei=5087%0A

Peter- check this out: Burned homeowners suing Countrywide. While I think the the lenders are scum for the most part, I still can't believe people "didn't know the terms of their loan." Homeowners became addicted to HELOCS and didn't care where the financial crack was coming from or how much it would cost - they just want that money hit. While I'm sorry for their plight, I find them just as culpable and greedy as the lenders. But then it's the American way to blame everyone else for your troubles and get the lawyers to sort it all out.

Honestly, I don't get it. I'm your typical middle class homeowner with a political science degree and low SAT scores and I can figure out my loan docs and interest rates. Are home buyers really that ignorant or do they close their eyes and sign to get the big bucks?

http://www.nytimes.com/2007/12/13/business/
13lend.html?em&ex=1197694800&en=3b5855767
98189d8&ei=5087%0A

[Hula Girl]

Lefty, your "Buy Now" cheerleading is annoying and naive. I suspect you are either a real estate agent or "a greater fool".

[Mike S]

Some day Lefty will be correct, just not this day or any day soon. But good comic relief none-the-less... like cheerleaders when the team is getting blown out by 45 pts. So go Lefty go!!!

[whyallthehatin?]

Ann, two words... "try decaf."

[Keith]

Lefty makes me chuckle, sort of like that crazy uncle who shows up at the family parties and drinks a little too much.

[Ann]

"Peter- check this out: Burned homeowners suing Countrywide. While I think the the lenders are scum for the most part, I still can't believe people "didn't know the terms of their loan." Homeowners became addicted to HELOCS and didn't care where the financial crack was coming from or how much it would cost - they just want that money hit. While I'm sorry for their plight, I find them just as culpable and greedy as the lenders. But then it's the American way to blame everyone else for your troubles and get the lawyers to sort it all out. Honestly, I don't get it. I'm your typical middle class homeowner with a political science degree and low SAT scores and I can figure out my loan docs and interest rates. Are home buyers really that ignorant or do they close their eyes and sign to get the big bucks?

http://www.nytimes.com/2007/12/13/business/
13lend.html?em&ex=1197694800&en=3b5855767
98189d8&ei=5087%0A

Posted by: Hula Girl

Are you certain that you can 'figure out' the documents?

It is QUITE OBVIOUS that you could NOT 'figure out' the article.

(1) No one is suing Countrywide. REPEAT: Countrywide is NOT being used by anyone.

A subpoena was issued to them for records as they are being investigated for possible consumer fraud.

(2) The one being sued is a mortgage brokering firm called One Source

(3) The HOMEOWNERS ARE NOT SUING. Try reading it again - SLOWLY

(4) The Attorney General of the State of Illinois (that is the "State") is suing a mortgage brokering firm (One SOurce) for violating state laws about consumer fraud.

(And no, they do NOT just 'take the word of the consumer', they will have documentary evidence - things written on paper done at the time of the loan - showing the fraud. AG's office's investigate the case before filing.)

(5) The Attorney General of the State of Illinois is investigating Countrywide because they were closely tied to One Source when it did bad things and broke the consumer protection laws and committed fraud.

So let's go through this one more time:

Countrywide is not being sued. One Source is.

Countrywide is being investigated because it is/was a regular business partner or and lender for One Source.

The State of illinois is suing. The homeowner is NOT suing.

The State of Illinois is suing because it thinks One Source violated its consumer lending laws and committed fraud.

The State of Illinois is investigating Countywide. (And so is the Office of the Trustee for the US Bankruptcy Courts investigating Countrywide for fraud and decit - but that is 'federal' , not 'state' and is a different matter from what Illinois is investigating. It is only mentioned in passing.)

There - do you have it now?

You claim you could understand your loan documents ......uh huh. Since you demonstrably could NOT read the article and even get the basics right, I have my doubts about the loan docs.

I suggest you get someone comptent in reading and comprehension to go over your loan documents and explain them to you.

And how in the name of all that is holy did you get a 'political science' degree without knowing what :
(1) 'Illinois' is
(2) "Attorney General" is.
(3) What the word 'investigating' means

.....and the list continues.

The low SAT scores are quite self-evident. You don't understand what you read.

Might want to be a little LESS self-righteous when someone else syas they 'didn't understand' stuff put in writing. (Glass houses, throwing rocks and all that....)

[Rob]

Lefty knows what the phrase "Pump and Dump" means.

mmmm, no really,,,, http://www.sec.gov/investor/pubs/pump.htm

[Horizontal Translation]

From Broker Universe (you can't make this stuff up):

Mortgage Fraudsters Find New Twists
When it comes to mortgage fraud, there are not many new ways to separate lenders and homeowners from their money. But there are sometimes new twists to old favorites. In a recent case of equity skimming, federal investigator Herschell Harvell Jr. found a group of 10-12 people who were running a foreclosure rescue scam. In an effort to save his home, and in return for the promise that the "investor gang" would bring his delinquent loan current, the troubled owner put all their names on the title and then paid the group rent while he continued to live in the property. Of course, the group didn't make any payments, but it did collect rent from the owner, Mr. Harvell told SourceMedia's Fraud and Risk Conference in Las Vegas Monday. Each time the lender started foreclosure proceedings, one of the group of con men filed for bankruptcy, according to Mr. Harvell, the assistant special agent in charge in the Department of Housing and Urban Development's Office of the Inspector General. And the day before a foreclosure hearing was scheduled, one con man would file for bankruptcy, delaying the proceedings. Then, the day before a hearing was scheduled, the con man would drop his bankruptcy claim and another one would file a new proceeding. The switch continued time and time again, according to the HUD official, while the owner went blindly along making his "rent" payments to the gang of charlatans. Mr. Harvell, who has successfully investigated numerous white-collar cases during his 11-year career at HUD, told the conference that despite lenders' best efforts to stop fraud, con men "continue to search for weaknesses in the system and take advantage of them."

[Bob]

seriously, I am not in the business of censoring people, but someone shut him up..

[Jax]

Anyone who buys a home anywhere in CA until 2010 (at the absolute earliest) is either blind and deaf or can't read, doesn't listen to the news or is totally stupid. If you buy, you will leave a lot of money on the table and be paying for an overvalued home for a loooooong time. Prices will return to 2000 levels or below. (I'm betting on 1998 levels)

[joeinlosangeles]

--Lefty, your "Buy Now" cheerleading is annoying and naive. I suspect you are either a real estate agent or "a greater fool".--

If Lefy is a realtor, it explains why he has so much time to post so much on this site: Most realtors don't have much work right now. In fact, the more you see the Leftys of the world on this blog, the worst things are getting for them.

[avraamjack]

.
If houses can quaddruple in 7 years, they can drop 75% in 7 years .
.

[Hula Girl]

Ann, I'm with Whyallthehatin. Try they decaf. You spent waaaaay too much time asserting your petty little points and insulting my intelligence. clearly you need to get a life. You've written enough words on this blog to make yourself a book deal.

Too bad you can rant but you can't write. You frustrated housewife, you.

[Gwynster]

Peter,

I live in the Sacramento area and I see the effects of the downturn all over. It is really having an profound effect on our local economies.

That said, the article still leaves out an important point which no one covers. The median household income in Stockton is 55k. Using conventional financing, homes should be priced around 150k to 180k. Yet we see new homes and resale homes with asking prices of 275k and up for the smallest and basest of housing.

The only way people were able to get into these homes was through speculative loan products and now they are finding out they had no chance to retain the home.

Until prices, whether through deflation of prices or inflation of wages, come back into line with local earnings, the market will remain clogged and unmoving. As this stalemate over pricing continues, CA based companies have a difficult time recruiting employees and young families ,who are most likely to stretch into a first time home purchase, are leaving CA for more affordable communities outside of California.

I wish someone would cover this part of the story but seems to be taboo.

[Jason Hoppe]

Ann,

I agree with Hula Girl and Whyallthehatin.

First thought to come to my mind was, "Is she drinking Red Bull, RockStar, or Monster energy drinks?"

Try some warm water.

But do continue to post your opinion, just a slighty less energenic variety would be appreciated by many. :o)

Have a nice day.

[Ann]

Ann, I'm with Whyallthehatin. Try they decaf. You spent waaaaay too much time asserting your petty little points and insulting my intelligence. clearly you need to get a life. You've written enough words on this blog to make yourself a book deal.

Too bad you can rant but you can't write. You frustrated housewife, you.

Posted by: Hula Girl

I'll see you your poli sci degree from school that did NOT teach the agencies of a state or much in the way of reading comprehension, and raise you 3 post graduate degrees from top 20 universities. (Oh yeah, and SATs that were in the top 2% kind of out-rank your admitted 'low scores.")

Being retired is boring sometimes but carelessness and ignorance are always annoying!

So what do you do all day that you can not even get a headline right or summarize an 1st paragraph? In such a huge rush to be 'first' to post something you couldn't even take the time out to figure out what it said???

My description of your SAT scores came from your statement.

My description of your reading comprenshion was not an insult - it was an accurate description of a completely misleading post as you either did not read the article or you did not understand it - all the while boasting about how you could figure out your loan docs.

People in glass houses......ought not insult the buyers described in the news article when you couldn't relay the basics about it without getting it dad wrong.

[tthgcontractor]

I have to agree with Ann. If you only bring in $4500 and your mortgage is $4000 after gas,water and electricity, how are you going to eat? In the Anaheim where I live, the way the Mexicans do it is live three families to a house.

[Horizontal Translation]

Laland smackdown. That's what keeps em comin back fer more. Speaking of retirement, anyone keeping tabs on where our social security will be in 5/10 years with all the mad spending to keep our economy propped up? And what's happening with reverse mortgages which were being pushed aggressively at the grey panthers? On the rise? Fraud-ridden? There were two main variants on these products - private and public label. I know the public variety required borrowers to go through an educational seminar to fully understand what they were in for, but is this a requirement for the private jumbo loans as well? Plus, how does home depreciation play into this? The folks who did these loans at a certain appraised value might benefit in a sense, if they're locked into a certain mortgage despite dropping value of home. What does the fine print say?

[Hula Girl]

I'm sorry Ann. Did I say try the de-caf? I meant to say try the LIthium. And try staying on topic- which is not me.

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