BofA Reductions

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Submitted by SD Realtor on June 2, 2010 - 1:34pm

Submitted by FormerSanDiegan on June 2, 2010 - 1:45pm.

Here is the BofA press release ...

http://tinyurl.com/yeqa78p

Submitted by Effective Demand on June 2, 2010 - 2:07pm.
Submitted by jpinpb on June 2, 2010 - 2:18pm.

Effective Demand wrote:
This is way way worse:

http://www.housingwire.com/2010/06/02/california-set-to-vote-on-foreclosure-mediation-bill?utm_source=rss&utm_medium=rss&utm_campaign=california-set-to-vote-on-foreclosure-mediation-bill

That should delay things some more.

Submitted by Nor-LA-SD-guy on June 2, 2010 - 2:26pm.

Anyway there is a dire need for the Cities (and the State) to maintain home values, as this is where they get the majority of their funding, (real estate taxes).

The Banks are basically being paid off to do this as well.

So I am basically not surprised by anything anymore.

I still say I should have bought that Ocean View McMansion three years ago with that Option Arm.

Submitted by Arraya on June 2, 2010 - 2:37pm.

Through it, lenders are required to meet with borrowers to develop a modification plan before foreclosure.

lol

Talk about the full court press.

"Please, please pay something, really it's a good buy now"

Submitted by bearishgurl on June 2, 2010 - 2:43pm.

Effective Demand, IMO, our Legislature is "grabbing at straws here." If the actual bill is written like it is described in your link, it will surely die on the house floor.

It's full of holes and doesn't address the huge percentage of defaulters who have two loans or more.

What will compel a squatting trustor to have an in-person conversation with a lender who has filed an NOD on his property? If he does so, he will have to begin to make payments equal to 50% of his mo. mortgage payment. The only "carrot" dangling for the trustor to call his lender is possible "modification" of at least one of his/her mortgage loans. We all know that's not gonna work because the trustor is too underwater with mostly recourse paper, which he/she has been living off of these past few years.

If it does by some stretch pass, it won't delay the NOD time frames. The 30-day time limit to call and set up a time to meet with the lender is already built into the NOD's legal waiting period. They will be concurrent.

I maintain that if all lenders exercised their timely right to foreclosure, we would eventually be able to see the light at the end of the tunnel.

Submitted by Arraya on June 2, 2010 - 2:46pm.

bearishgurl wrote:

I maintain that if all lenders exercised their timely right to foreclosure, we would eventually be able to see the light at the end of the tunnel.

Which would be a train because unleashing 7 million homes to the market, >40K in SD alone would crush prices and trigger more defaults and deflationary pressure.

Submitted by jpinpb on June 2, 2010 - 2:57pm.

Nor-LA-SD-guy wrote:
I still say I should have bought that Ocean View McMansion three years ago with that Option Arm.

Yep.

bearishgurl wrote:
I maintain that if all lenders exercised their timely right to foreclosure, we would eventually be able to see the light at the end of the tunnel.

Amen.

Arraya wrote:

Which would be a train because unleashing 7 million homes to the market, >40K in SD alone would crush prices and trigger more defaults and deflationary pressure.

It's a given that anyone upside-down is squatting/walking if not already, soon to be eventually. Just get it all over with instead of dragging it out.

Submitted by Arraya on June 2, 2010 - 3:01pm.

jpinpb wrote:

Arraya wrote:

Which would be a train because unleashing 7 million homes to the market, >40K in SD alone would crush prices and trigger more defaults and deflationary pressure.

It's a given that anyone upside-down is squatting/walking if not already, soon to be eventually. Just get it all over with instead of dragging it out.

No doubt, we need to get this collapse moving forward which goes far beyond the us RE market. I just wouldn't be too excited about profiting from it. It's going to be ugly and it's going to be global and it's going to bring insanity.

Submitted by bearishgurl on June 2, 2010 - 3:09pm.

Arraya wrote:
Which would be a train because unleashing 7 million homes to the market, >40K in SD alone would crush prices and trigger more defaults and deflationary pressure.

Had foreclosures been pursued timely starting over three years ago, we would have been much further along in a recovery. Because they weren't, we now have a lot of squatters who aren't going anywhere until they are evicted.

Even the defaults filed today are in different stages. I don't see all the properties being marketed at once. Once a lender acquires a property, they still have to take time to ready it for sale. This should take under a month.

Isn't the REO inventory that's out there moving fast, often with multiple bids to choose from?

There might be some initial dip in values when all the squatters are sent packing in the same 3-6 mo. time period, but then the resulting REO's will be quickly snapped up and we can get back to a "regular" market.

I just glanced at the Amended AB1639. It states, in pertinent part: "The bill would also provide that the timelines set forth in the provision governing the exercise of the power of sale, as specified, would be suspended until the completion of the program, as specified."

Of course, this only applies if the TRUSTOR MEETS WITH HIS LENDER, SIGNS UP FOR THE PROGRAM, begins making payments equaling 50% of his mtg. pymts. AND provides ALL THE FINANCIALS THE BANK IS ASKING FOR with the 15-DAY TIME ALOTTED. This doesn't allow for too much delay on the part of the delinquent borrower. The lender can reactivate the NOD during ANY point where the trustor falls down on his end of the bargain.

I don't see this new program as being a HUGE success. It's already been tried under various other acronyms but w/o the 50% pymt. requirement and the NOD/NOS hanging in the balance.

Submitted by SK in CV on June 2, 2010 - 3:12pm.

Both plans, BofA's and the proposed CA law make sense.

B of A will turn some bad loans into good loans. Good business decision. Though their requirement that loans be delinquent in order to enter the program seems misguided.

The proposed CA law will speed up the process while requiring interim payments from borrowers. The time frames for requesting entry into the mediation program, response from the lender, follow-ups, and mandatory meetings between lender and borrower are all within the first 45 days after NOD. Most foreclosures take 9 to 12 months with NO payments. Lenders should have been doing this all along.

Both appear to be pretty logical plans.

Submitted by SD Realtor on June 2, 2010 - 3:17pm.

Yes it is all fine to prognosticate what would have been done and should have been done. The problem is the golden rule. Those that have the gold rule. For those of you who think this is the end of the little tricks they will play and that the taxpayers will no longer tolerate subsidies, I hate to say it but you are pulling the same ostrich with your head in the sand that illogical sellers did when the market started to deteriorate. What those in power are doing is not right. However they do not have an objective to make things right, to promote a free market, or to provide an affordable home for a San Diego citizen. They have an objective to continue to make money and continue to stay in power. Unfortunately this is orthogonal to your objective. It is not a good time to buy or a bad time to buy. However it is a good time to realize where you stand in the overall order of things and plan accordingly. It will be credit or lack there of that brings the house of cards down. The problem is that there are alot of cards still left in the deck.

Submitted by jpinpb on June 2, 2010 - 3:26pm.

bearishgurl wrote:

Had foreclosures been pursued timely starting over three years ago, we would have been much further along in a recovery.

There might be some initial dip in values when all the squatters are sent packing in the same 3-6 mo. time period, but then the resulting REO's will be quickly snapped up and we can get back to a "regular" market.

Thank you. I agree.

bearishgurl wrote:

I don't see this new program as being a HUGE success. It's already been tried under various other acronyms but w/o the 50% pymt. requirement and the NOD/NOS hanging in the balance.

That's why, to me, it just seems another form of delay, maybe a few that get saved. Maybe some will pay the bank and then end up foreclosed in the end.

I stand back and look at this whole mess and it's just transfer of funds from taxpayers to banks. Indirectly some people get a little of a free ride along the way.

SD Realtor wrote:
They have an objective to continue to make money and continue to stay in power.

Sadly, true.

Submitted by Arraya on June 2, 2010 - 3:58pm.

Had foreclosures been pursued timely starting over three years ago, we would have been much further along in a recovery. Because they weren't, we now have a lot of squatters who aren't going anywhere until they are evicted.

you are not looking at the big picture, globally, as well as the other "interventions" done nationally. Halting foreclosures is just one of the few major manipulations done. Which all amount to a massive deflation stopping plan. While I agree we would have been farther along to where ever it is going, I would not call it a recovery in a sense that most understand. Once the global debtocalypse plays out, like it invariably will, we will be at a much, much lower level of economic activity with all the unpleasantness it brings. There is no magic cure for the deflationary pressures unleashed, all we have is stalling tactics.

I'm not saying I agree with what officialdom has done, then again, at this point I don't agree with the operation of our whole financial structure to it's core.

It is a highly unsustainable and irresponsible model.

There might be some initial dip in values when all the squatters are sent packing in the same 3-6 mo. time period, but then the resulting REO's will be quickly snapped up and we can get back to a "regular" market.

So you are saying if we released 40,000 homes to the SD market it would be cleared up in a few months with just a little dip. Now I have not followed local RE numbers in about 2 years, but I seem to remember that being a little more that a few months supply

Coupled with an anemic job market I think you may be down playing the severity of the correction.

On top of the credit contracting implications of banks taking that many losses, which by many analysts number think they just can't afford, would lead to more job losses and subsequent defaults -- It's a viscous cycle once unleashed. Credit is the lifeblood of the economy and massive losses begets credit contracting -- like we saw first half of 09.

Credit collapses are not something new and there really is no new and improved money and banking technology over the last few decades. It works essentially same as it always did.

Like I said, let it flow but I would be detached from any expected out come.

The have not pledged 24 trillion dollars to this fiasco because they think it would be a minor dip in prices and quickly cleaned up. Or because of political pressure. The are fearful of the whole western world's banking system collapsing.

Submitted by Nor-LA-SD-guy on June 2, 2010 - 4:11pm.

Arraya wrote:

The are fearful of the whole western world's banking system collapsing.

Inflation, unfortunately the Powers that be can't figure out how to put money into the hand of ordinary people,

I say they should just stop pretending and do a 1 for 10 dollar split.

Just do it over a Sunday, On Monday you would earn 10 times more, but everything would cost 10 times more, and your bank account would have 10 times as much etc…

That would get things going for awhile.

Plus it would have the added benifit of burning drug dealers etc..

OK there would be some issue with debt holders, but we would need to find a balence there.

Submitted by bearishgurl on June 2, 2010 - 5:24pm.

Arraya wrote:
So you are saying if we released 40,000 homes to the SD market it would be cleared up in a few months with just a little dip. Now I have not followed local RE numbers in about 2 years, but I seem to remember that being a little more that a few months supply

Coupled with an anemic job market I think you may be down playing the severity of the correction.

Arraya, are you SURE there are 40,000 properties in SD County where a NOS has been filed and a sale on the courthouse steps is imminent?

Are you sure you're not counting squatters where no NOD was ever filed, perpetually postponed filings of NOS or postponed foreclosure sales where a sale was delayed (perhaps due to a BK filing)?

I think it's more like 10,000-15,000 and that would be spread out over multiple zips with some zips getting the lion's share. Since a non-judicial foreclosure has a predictable cycle (exc. for a "20-30 day blip" to release the stay in the case of a BK filing), if the lenders exercised their timely right here, the REOs would appear on the market in waves and most would be quickly snapped up by buyers that don't necessarily need a "job" to acquire these properties. You might want to ask a Pigg that lists REOs for lenders but IMO, in the better areas, trustees deeds and REOs are purchased with cash and rehabbed with cash. Some of the buyers are or have relatives that are . . . general contractors. I don't know what the percentage is that buy distressed property with all cash, but would guess it's >30%.

Another big chunk of distressed-property buyers may have >20% downpayment. A lower-income or self-employed loan applicant might not be as scrutinized by a lender if they are making a substantial downpayment combined with purchasing a property in a good area at a "distressed" price.

All downward or upward pressure on prices is a "micro" phenomenon, esp. in CA. In other words, if one-quarter of Otay Ranch residents were evicted in the next 30 days, this would have no bearing on Coronado housing prices.

Yes, I agree that your global "downward projection" could occur and cause a lot of pain in heavily overbuilt markets such as Florida, Arizona and Nevada or even inland CA, if several thousand REO's were dumped on a particular metro market at once. Not so in CA "coastal communities," i.e. < 5 mi. from the coast.

I don't see the high unemployment rate here as a deterrent to anyone who wants to sweep up some REO's to fix up for family or rentals. Most potential buyers who work 40+ hr. weeks and/or have a lot of child-related duties DO NOT want to buy an REO unless they are relatively modernized because most need more work than they can physically or financially manage.

In other words, most of the REO buyers are different animals than your garden-variety working parent and child(ren) family.

Submitted by Nor-LA-SD-guy on June 2, 2010 - 5:51pm.

Well if there is one thing the banks have learned in the last 3 or so years is that Nothing begets foreclosures like foreclosures .

I would guess there will be no Tsunami , it’s not in the banks interest, and it’s not in the gov’s interests.

Submitted by briansd1 on June 2, 2010 - 11:58pm.

Arraya wrote:

The have not pledged 24 trillion dollars to this fiasco because they think it would be a minor dip in prices and quickly cleaned up. Or because of political pressure. The are fearful of the whole western world's banking system collapsing.

I agree with you as to the reasons for the bailouts.

You say our system is unsustainable and irresponsible. But what is the alternative to propping up our system to keep economic activity going?

I think the alternative is to change priorities and consume only what we need and find happiness not in consumption but leisure and free time. But who will be satisfied with free time but no money?

Oh, the following weekend, on my free time, I want to go out and buy the new iPhone that's coming out. ;)

Submitted by Arraya on June 3, 2010 - 3:46am.

bearishgurl wrote:
Arraya wrote:
So you are saying if we released 40,000 homes to the SD market it would be cleared up in a few months with just a little dip. Now I have not followed local RE numbers in about 2 years, but I seem to remember that being a little more that a few months supply

Coupled with an anemic job market I think you may be down playing the severity of the correction.

Arraya, are you SURE there are 40,000 properties in SD County where a NOS has been filed and a sale on the courthouse steps is imminent?

.

All data is wrong. This is from TRW. It has to do with >60 day lates. As of March nationally we have 14% and SD has 9.85% of mortgage holders delinquent. Some will get short saled and some will get mod'ed(possibly - we've only had like a 4% mod success rate thus far). Generally, when somebody goes > 60 days late they have about a 95% chance of default

This is not counting less than <60 day lates that also have a probability of default

If you don't like these numbers, cut them in half, it's still bad

Aside from the massive inventory bottleneck, which is unrecognized downward pressure, we have the fact that there is virtually no private mortgage market that is not backed by the gov.

So really, there is no market to analyze per se. All speculation on what would happen if one or more unprecedented interventions was not in place, is just that speculation. What we know is there would be dramatically less money available and dramatically more inventory. At this point you can just throw historical averages in the trash because the don't mean a thing.

Submitted by Nor-LA-SD-guy on June 3, 2010 - 6:19am.

briansd1 wrote:

But who will be satisfied with free time but no money?

Surfers

Submitted by scaredyclassic on June 3, 2010 - 7:57am.

surfers and philosophers?

Submitted by Arraya on June 3, 2010 - 8:22am.

briansd1 wrote:
But who will be satisfied with free time but no money?

Oh, the following weekend, on my free time, I want to go out and buy the new iPhone that's coming out. ;)

People that realize the "marketed version of happiness" is no substitute for the real thing

fwiw - 13 people have killed themselves at the apple factor in china in the last few months.

Jobs said about the factory:

"You go in this place and it's a factory but, my gosh, they've got restaurants and movie theatres and hospitals and swimming pools. For a factory, it's pretty nice,"

Submitted by afx114 on June 3, 2010 - 9:07am.

Arraya wrote:
fwiw - 13 people have killed themselves at the apple factor in china in the last few months.

And yet the suicide rate at Foxconn is less than the national average:

What we do know is the annual suicide rate per 100,000 people in China is about 13.5, with slightly more women than men taking their own lives (the only major country where that is the case, by the way). That means the Foxconn factory, with 300,000 workers, ought to be experiencing almost 40 suicides per year, while the reported numbers are a lot less than that.

This story says more about the press than it does about Foxconn, because I’ve read about it for months and nobody else seems to have done the math, which isn’t hard to do. But doing the math makes the story weaker, so of course it isn’t mentioned.

via Robert Cringely

Submitted by NotCranky on June 3, 2010 - 9:26am.

deleted, wrong thread.

Submitted by CA renter on June 4, 2010 - 2:33am.

Nor-LA-SD-guy wrote:
Well if there is one thing the banks have learned in the last 3 or so years is that Nothing begets foreclosures like foreclosures .

I would guess there will be no Tsunami , it’s not in the banks interest, and it’s not in the gov’s interests.

I'd bet we'd have 25% fewer foreclosures now if they would have hit the deadbeats hard and fast from the beginning, without any kind of interference from the govt.

What's causing all the "strategic defaults" is the fact that deadbeats are being painted as "victims" who need our sympathy...and our money.

If people knew they'd be tossed out of their houses within 90 days of a NOD (and be prohibited from buying another house for ten years?), they'd probably be more willing to tighten their belts and make their payments (if they're able).

As long as we keep trying to "keep people in their homes," we're going to see wave after wave of defaults. That's what you get when you take away the negative consequences (or balance them out with too many positive consequences -- like free rent, or promises of lower payments, or principal reductions).

Submitted by jpinpb on June 4, 2010 - 6:11am.

CAR - I agree w/you on this. Reminds me of that one song "Everybody wants some."

In any case, I don't see foreclosures happening as much as SS. Now that there are no fed or state tax implications, maybe there will be more short sales. From what I'm seeing out on the front of the REOs, some of the banks are listing for loan amounts of the first, some even higher than attempted short sale amounts.

Submitted by sdrealtor on June 4, 2010 - 7:31am.

25% is way too high. Dont believe 25% are strategic in nature around here and most of the strategic defaulters I run into just want to get it over with asap. They feel like they made a mistake, want to get the property sold asap, feel some sense fo guilt about it and just want it over so they can get on the road to recovery. At least that is what I see.

I did say "most" as I have run into some real slimebags.

Submitted by CA renter on June 5, 2010 - 7:14pm.

jpinpb wrote:

In any case, I don't see foreclosures happening as much as SS. Now that there are no fed or state tax implications, maybe there will be more short sales. From what I'm seeing out on the front of the REOs, some of the banks are listing for loan amounts of the first, some even higher than attempted short sale amounts.

Yes, there are still far too many delusional sellers who believe today's prices should be 2005 levels + xx%.

I hope the PTB grasp the fact that people who are now in their 40s+ don't have much time to waste on this nonsense. We're at the point where we'll have to go from a 30-year to a 20-year (or less) mortgage because we're running out of time.

They are chasing some of their best buyers out of the market, and making sure that when we do re-enter (if ever), we will be forced to pay even less because we won't live/work long enough to pay off a 30-year mortgage.

The way this whole bubble has been handled sucks!

Submitted by jpinpb on June 5, 2010 - 7:26pm.

CAR - So funny you say this b/c I was thinking the same darn thing. I'm so discouraged and frustrated, I'm about ready to just give up. If it doesn't make sense to buy, I'm just going to keep renting until I retire -- and it won't be here. My friend opened a B&B on Isola d'Elba and it's tempting to just call it quits and move there.

Submitted by CA renter on June 5, 2010 - 7:39pm.

jpinpb wrote:
CAR - So funny you say this b/c I was thinking the same darn thing. I'm so discouraged and frustrated, I'm about ready to just give up. If it doesn't make sense to buy, I'm just going to keep renting until I retire -- and it won't be here. My friend opened a B&B on Isola d'Elba and it's tempting to just call it quits and move there.

I think you should go for it. Didn't you say you spoke Italian and had family over there?

If you think about it, the whole point of "owning" vs. renting is whether or not you control your housing costs if/when you retire.

People who are betting on price increases are simply speculating. You are not really "gaining equity" if prices are falling faster than you're paying down the principal.

There are plenty of much more affordable places to live here and around the world. If we end up not "owning" here, it's really not the worst that can happen. It just means moving to a more affordable place to retire.

It is frustrating, though!

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