Friday, December 02, 2005

It's FEEDBACK time...let me have your comments and suggestions

I want to say thank you for all of the e-mails and comments that I have received. I'm going to be away from the computer through the weekend, so I want to give you a chance to post questions, topics, feeback, likes, dislikes, and what you would like to see more of during the coming days and weeks. I opened it up to allow anonymous posters...and I will keep it that way as long as there isn't a lot of spam.

I could put scenarios here all day long of FB's or soon to be FB's...but I think that gets old. So tell me what you want to read about. I'm hear to add value...through information, education, and of course...entertainment! (you know you like the Ron Burgandy pic... "it's a DEEP BURN!")

Have a great weekend everybody, and I look forward to your feedback!

SoCalMtgGuy

28 Comments:

Blogger Econ_101 said...

I've seen figures about percent of mortages that are ARMs or option ARMs.

It seems from what you say that stated income as big an issue.

Any idea the percent of new loans that are Stated Income?

Bigger but related question: is there anything that lists percentile breakdown of mortages by type in CA (ARM, option ARM, stated income, etc.)

12/02/2005 9:37 AM  
Anonymous Anonymous said...

I love the site. It's good to hear from someone in the thick of things.

Out of curiosity, do you have (or can you access) info from areas around NYC? People are around here are always screaming how there aren't as many speculators and what not, and assume that means we're "safe," but I think that there are a ton of people taking out crazy loans - I just can't find info on it.

12/02/2005 9:48 AM  
Blogger san mateo baby! said...

I'd like to hear if there are any changes being made to lending standards. Particularly, are the lenders increasing standards in the face of flat or declining appreciation or is it business as usual and a mad scramble for market share at any cost?

12/02/2005 10:15 AM  
Anonymous Anonymous said...

PLEASE keep posting regular installments of "scenarios here all day long of FB's or soon to be FB's"!

Very educational AND entertaining stories.

thank you,


x in SF, CA

12/02/2005 11:04 AM  
Anonymous Anonymous said...

hey,

I looked at your option arm post and couldn't find any info on why an arm would adjust after 2 months instead of 5 years.

So how does a f'd bwr know if his/her arm will adjust in 2 months or 5 years? How often does a bwr get a surprize like this?

Thanks
Ferisco

12/02/2005 11:19 AM  
Anonymous Anonymous said...

SoCalMtgGuy,

Great blog!!!

This is fast becoming one of those MUST READ blogs.

Keep up the good work.

Pylex.

12/02/2005 6:14 PM  
Blogger WArenter said...

I like it all, the stories and the solid inside info. Your enthusiasm is great.

12/02/2005 10:44 PM  
Anonymous ca renter said...

Do you know who is buying the MBSs? Specifically, are there hedge funds (possibly offshore) buying these things? It can't all be central banks, pension funds and GSEs, can it?

Thank you for your blog. Have a good weekend!

12/03/2005 12:02 AM  
Anonymous ca renter said...

Let me add to the above comment...(tin-foil hat warning):

Could the US govt. be buying the MBSs through offshore hedge funds? Is it possible they've been trying to reflate the economy by pushing money into the housing market? I ask this because if average people on blogs can see the problem, why can't the financial powers-that-be? They keep touting the "benefits of homeownership" and pushing money at those least able to buy, in order to create our "ownership society."

Goes along with not publishing M3 and gold rising, perhaps? Is it possible the govt. is planning to hyperinflate?

(takes off tin-foil hat...)

12/03/2005 12:39 AM  
Blogger ocrenter said...

"I could put scenarios here all day long of FB's or soon to be FB's...but I think that gets old."

that couldn't be further from the truth. It most definately does NOT get old. keep putting up those stories, as we do learn from others' mistakes, plus it certainly has significant amount of entertainment value.

12/03/2005 6:23 AM  
Blogger Eternalflame said...

Thanks for the great everyday real life stories. I'm curious about how corrupt the appraisal business has gotten. It seems like anytime you want to refi the price of the home goes up and if it doesn't you just find another appraiser who will bump it up. Likewise I've heard that those originating the loans follow a similar practice. If the appraisal doesn't hit the number they find one that will to make the loan work. My guess is things won't change until the banks start losing money. Finally I don't really hear about any FB's. Everybody seems to be making money. Maybe it's like the stockmarket. You only talk about your winners and don't say anything about your losers...lol.

12/03/2005 6:59 AM  
Blogger jack mehoff said...

I'd like to hear more about families losing their homes through foreclosure. You know, the personal stories of the kids being forced to leave their schools and friends in California to move to North Dakota where their folks can afford to rent. All this objective discussion of bankruptcies and foreclosures needs a human face. What say you?

12/03/2005 9:33 AM  
Anonymous tin-foil-hat said...

Speaking as someone who has been on the losing end of the housing equation for years now, I have an insatiable appetite for stories of FB's.

Their irrational and risky herd behavior has had a huge impact on my life. It's a grind making a living in big-city So Cal and renting while watching home prices launch into the stratosphere.

Watching the housing bubble and waiting for the inevitable crash is like watching paint dry.

Keep feeding stories of FB's to bring solace to the "financially responsible losers" like me.

12/03/2005 10:13 AM  
Blogger asu_west2 said...

First let me say GREAT JOB. Keep it up, cause it's interesting to hear from the inside.

With the prediction of major loan payment issues, etc., how about a discussion of what happens with the actual foreclosures--non-recourse, etc. And how about what happens to those non-recourse loans when the buyer used fraud (OVERstated income, etc).

Thx again

12/03/2005 12:11 PM  
Blogger ajh said...

There's an issue I suggested once as a topic on Ben's blog; the suggestion sank like a stone (or maybe just got missed, because of time zone differences when I post after work it's like 3:00am in the US). Might be more appropriate here.

Are there any straws around for drowning borrowers to clutch at, and if so how are the sharks going to use them to get some more meat from the carcases?

I can think of a couple of possibilities which have been seen here in Australia, but I don't know if they'd be even borderline legal in the US.

12/03/2005 6:44 PM  
Blogger jm said...

I, too, will be more than happy to hear "scenarios here all day long of FB's or soon to be FB's", as long as they are true stories (as opposed to hypothetical scenarios).

It would be good also if you could give some gauge of what fraction these are of the loan originations you see. Are FB's 25% of the borrowers? 5%? 50%?

12/03/2005 9:21 PM  
Anonymous rjsasko@comcast.net said...

LOVE hearing about the horror stories from the insider's perspective. I know a couple of RE agents who have been in the biz for years and each one has told me that we are in a bubble and that prices will crash. And that is in the Western burbs of Chicago where prices have only risen 60% in five years. Must be unbelievable in the more bubbly coastal areas.

What I would like to know is what career to jump into to take advantage of the coming housing burst and collapse. Being in the flooring business I have watched the "bread and butter" projects virtually disappear over the last couple of years. Almost everything has become replacing the perfectly acceptable with the needlessly trendy and expensive...all financed by HELOC of course. I know this is going to disappear with the coming price collapse. What do I do then? What flooring/remodeling projects that are left are going to fought over tooth and nail by every Juan, Jesus, and Manuel who used to be building new homes...thus lowering labor costs dramatically in a declining business.

What products and/or services (other than lawn maintenance) will be in hot demand with all of the coming foreclosures, bankruptcies, etc.? I need a new career without having to go back to school for another four+ years.

Any thoughts?

12/04/2005 7:27 AM  
Blogger AmaDablamDream said...

What products and/or services (other than lawn maintenance) will be in hot demand with all of the coming foreclosures, bankruptcies, etc.? I need a new career without having to go back to school for another four+ years.

Any thoughts?


That is a good question. Everyone is looking to what will happen with the over stretched home owners and everyone and his dog who went into the RE business, but there are surely a lot of hard working folk in the various construction trades that will be harmed.

Several of my cousins have done very well in the boom. One of them showed up to our Thanksgiving get together. I had not seen him in since he moved to Vegas about five or six years ago. This is a guy I always though of as dumb as a bag of rocks, but he has been making money hand over fist. He's rolling in a new Cadillac Escalade. I wonder what happens to a guy like him once the gravy train derails.

Maybe this is a subject more appropriate for Ben's blog.

12/04/2005 4:02 PM  
Anonymous Anonymous said...

Thank you for creating a refuge from this RE insanity.

You are extremely capable at clearly communicating not just the 'what' but the 'how' of what's going on - from the inside.

How can we get you to become a regulator?

12/04/2005 5:37 PM  
Anonymous rjsasko@comcast.net said...

I appreciate the thought (bringing it up at Ben's blog) and have tried before. The thread(s) were overrun with 'sell short home builder/building supply stocks and 'go bargain house hunting'. Not exactly the advice I am looking for.

Betting on certain stocks is not something I currently have the capital to do at this point (because I am not prepared to lose the money..it is my down payment and I worked far too damned hard for it). Investing in a house and rehabbing was my original intent several years ago when prices started bubbling. Looking at the numbers back then the risk was way too great that I would end up losing $$$. Of course hindsight is 20/20 and I would have gained because the bubble kept growing. In a falling market with loads of inventory I might get locked into a house either declining in value or neg. cash flow if I rent it out or both.

The only conclusion I can realistically come to is to get out of my business entirely and try to insulate myself a bit. I have no idea what occurs in a collapsed housing market (other than theoretically). The only similar circumstances in my memory was the S&L bust and the mess in housing market that occured. Anyone live through that era in Texas, Oklahoma, etc. and remember what was in demand jobwise?

The flooring business has been in decline for years anyway due to dropping margins on materials and dropping prices on labor so I figure better to get out before its too late.

12/04/2005 6:02 PM  
Anonymous Mike said...

I'm hoping that some of you are lenders, underwriters, or loan officers. I am just a guy who attempted Debt Consolidation through Refi. on September 10th, 2005. It's now December. My fica was 550, its now just below 500. I did everything they instructed me to do regarding payments on my current loan. (incedentally, they are now telling me NOT to make my December payment.) 2 roof certifications, 2 credit investigations, 2 home inspections and associated improvements, all just to (apparently) retro fit the collateral to meet the desired debt to income ratio. I have experienced a HEAP of trouble and broken promises. Some of the problems have stemmed from ground rent issues, some are from faulty title searches which I had to supplement with a search of my own. After every mistake they've made, it became necessary for me to receive more money as cash in the end because, "they couldn't change the terms of the loan." Now, they are raising the interest rate (changing the terms of the loan), because apparently, one of my payments went from being consecutive 30 day late, to on time, then back to 30 day's late, over the past 3 months. What exactly is going on here? My friends' think that they are "shopping my loan." Over the past month, we've regressed to a point where the notary had the papers and I was supposed to settle, back to they are printing the papers and it takes 48 hours, back to there's an error and they need to reprint, back to, oops we have to do a credit check, back to oops we have to change the loan. I feel so "unclean". :(

12/04/2005 7:03 PM  
Blogger SoCalMtgGuy said...

Thank you all for your posts!

It will probably take me a few days, but I will do my best to address your questions, comments, and concerns.

Keep checking back throughout the week and I bet you will find your answers.

I'll post a few quick bullets below that should help a few of you...

- I do not have access to anything specific to NYC. I will say that the number of "investment" properties is higher than the stats say. This is because there are a lot of people that commit fraud by claiming "owner occupancy" on a property they never intend to occupy.

- San Mateo Baby - Yes, we are seeing some tightening of standards. I'll give more details later.

- The option-ARM loan will have the 1% rate for 1-3 months (I think I have seen as high as 6 months...but most are 1-3). After that, the minimum payment is the "index" the loan is tied to (cofi, cosi, mta, libor, etc.) Again, there are many companys with many different guidelines on the loan. I'm just trying to convey the concept and the basics.

- Anon 5:37 - I would love to be in a position of influence for this industry. I don't think it will ever happen for me, because it seems most people want nothing to do with the truth, logic, integrity, or personal responsibility. I think this blog might be a start at opening people's eyes to what is going on. At least it gives me a voice...however small that it is right now. If I can help some families not fall into a dreadful financial situation, then the time spent on this blog will be well worth it.

That is all for now...some of the topics I could go on for hours about. Check back during the week for more...

SoCalMtgGuy

12/05/2005 12:45 AM  
Blogger jm said...

One of the things I would most like to hear about is what percentage of the borrowers you see are on track to have their mortgage paid off by the time they reach 65?

A friend who does some very low-volume mortgage brokering says that many people are now thinking of their mortgage payment as being just a tax-deductible form of rent -- that they have no intention of ever paying off their mortgage.

Do you see much of this? If so, do the people taking this route have sufficient investment/pension income prospects to continue paying their mortgages and property taxes post-retirement? Or, are they expecting to downsize on retirement at a price that will give them sufficient investible assets to keep it up?

12/05/2005 9:16 PM  
Blogger SoCalMtgGuy said...

JM

Ha ha hah! So funny that you mention that. You would be surprised how many people in their 40's 50's 60's and even 70's are trying to get loans!

You would be even more surprised to learn that there are companies out there that will do STATED loans for RETIRED borrowers on FIXED income!!!

Even if my lender would do stated income on a retired borrower, I don't think I would sell that product. I can not, and will not put someobody on fixed income into a loan if they have to STATE (lie) about how much that fixed income is.

So the answer to your question is, YES, the idea of paying off the mortgage has become "old fashioned" to a lot of people.

12/05/2005 10:14 PM  
Blogger Rob Dawg said...

Yeah, I guess the mortgage burning party is a thing of the past. Me? The primary residence will be paid off the month after the last undergrad tuition check for my youngest child is due. And that's not a coincidence.

All my uncles aunts are just at retirement age and the only mortgages are vestiges if anything or in the case of one aunt because she bought a retirement home two years ago but won't be retiring for another year so she hasn't cashed out of another house yet. My mom had too much cash and needed to spend some, mandatory withdrawls and such so she bought the mobile home behind hers in Florida. She rents it 1-2 months a year to cover taxes/assesments and to make a profit better than money market. I just thought this is what everyone did. I guess the problem is that the current crop of homeowners weren't raised in the right families.

12/06/2005 6:47 AM  
Blogger SoCalMtgGuy said...

Robert Cote...

Unfortunately, in today's "get rich quick" era (stock market boom, RE boom) people have completely bought into the mania.

Paying off the mortgage (as some planners) are telling us, is a bad move. I can see their point...for the sophisticated people out there. If you can borrow money cheaply, that is a great time to use leverage on good investments. The problem is that the masses are NOT sophisticated...but they like to think they are. They feel because they made 200k on a condo they are the next Trump or Barrack.

I ask brokers, RE agents, others in the industy this question: "when was the last time I/O loans were popular??"

I have only had ONE person know the answer. Most say I don't know, or 2001, or some other answer like that.

The 1920's is the answer.

It won't be any prettier this time around. I see people in their 50s getting 2/28 I/O loans. Can you believe that?? No way they plan on getting the thing paid off.

12/06/2005 8:54 AM  
Blogger Rob Dawg said...

SoCalMT,
While your are absolutely correct that people have bought into the mania I think it is partly because they don't know it is a mania. Not only has education failed us but the professional markets have failed us. Both should have warned away all this hysteria.

Yeah there is a lot of 1920's about this but it seems sometimes that we are the only two who see it. Regards, people in their 50s however I wish you'd give them a little slack. People live a whole lot longer and have been forming families and having children later. Think of today's 55 as 1965s 38.

Man though, I'm getting worried about homes on margin with no margin call mechanism. Maybe the analogy is futures anyway. Pay a small amount now for future delivery only the commodity is a house that you hope will be worth more when the contract closes.

12/06/2005 10:08 AM  
Blogger SoCalMtgGuy said...

Robert,

I'm not knocking people in their fifties buying homes. It just makes me sick to see a 55 year old borrower with 12,000 to his name, and looking to do 100% I/O financing so they can buy a house "to retire on".

I completely agree with you about people starting parts of their lives later. But what has happened so that people in their 50s and 60s do not have any measurable amount of money saved?? I know there are things that arise, but I have seen quite a few people in this age group with nothing in savings.

The financial planner in really feels for these people. Many had hard circumstances, but many just made poor decisions.

SoCalMtgGuy

12/06/2005 12:32 PM  

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