Wednesday, August 02, 2006

Debris

Hey Marin sellers: Are you selling 'soft landing' debris?

And you might be interested in this:
Anti-Deficiency means the lender cannot try to collect the amount of their loan not paid off by the sale of the home. But there are quirks.

California has an anti-deficiency law which covers the original "purchase money loan" on an owner-occupied home. The original mortgage is covered by anti-deficiency law, but as soon as someone refinances the loan that anti-deficiency provision goes out the door. In states like California, refinancing might be the last thing one would want to do to get out of trouble.

...

The bottom line is simple: Anyone in trouble should run away from lenders promising to "save their home" via a pay option arm or other refinancing strategies. Instead they should be talking to an expert in bankruptcy and tax law for their state, and the sooner the better. Advice from lenders may be suspect, particularly in states like California where a lender might be tempted to give advice just to negate Anti-Deficiency laws.

4 Comments:

Anonymous Anonymous said...

it is important to note that a deficiency is allowed if there is fraud in acquiring the loan,and that this can also affect dischargability in bankruptcy.if you got a stated income loan and the figures you put on the application do not match the figures you gave the irs,you might could have a lttle problem.when getting a stated income loan you are usually required to sign a form 4506,which authorizes the irs to provide information to the lender,and if you default,they request that info as part of their due diligence requirements when trying to collect the loan

Aug 3, 2006, 10:09:00 AM  
Blogger rejunkie said...

Marinite-

This is slightly OT but since we have had posts before on "trustafarians" buying Marin homes (a.k.a "Where are people getting money to buy homes?"), I though you would be interested in Carol Lloyd's column this week.

Aug 4, 2006, 9:25:00 AM  
Anonymous Anonymous said...

I don't mean any disrepsect so don't take this the wrong way but that SFGate article is not news. Handouts from Mom and Pop have been going on for at least the last few years and in fact have been a regular feature since at least the 80s; it's no surprise in the least that such behavior has picked up in the last few years what will affordability in the toilet. This is another "the boomers are going to save the housing market" sort of argument/wishful thinking. Ain't going to happen.

Aug 4, 2006, 9:55:00 AM  
Blogger Marinite said...

Thanks for the link rejunkie. I have to agree with anon 13,498,764 (heh heh) that this is nothing new. And yes, it's not at all surprising and has been a regular feature of the California markets for years, especially here in the Bay Area. But you have to wonder why anyone would want to plop down a huge chunk of change for a house now, at roughly the peak of the bubble. Many pundits claim that the correction is going to last at least 10-15 years (go see the iTulip site for one; look at the historical data on this site). Most people move every 7 years or so. How many people can afford to wait 10-15 years before their house starts appreciating over what they paid for it? Also, look at the demographics of who has been buying houses like crazy. A much larger than "normal" percentage has been by 20-somethings. Good for them but most 20-somethings are a rather mobile lot, don't want to get tied down at such a young age, want to be able to move to take advantage of new career opportunities, take months long trips to Europe or where ever, etc. The point is how many 20-somethings do you think can afford to wait 10-15 years for their "investments" to return to profitability (and it only gets more complicated when you consider that a lot of these young people are going in together with friends)? Oh, and it seems like every month we hear about new layoffs in our supposedly strong economy. Just yesterday I read about how AOL is laying off 5000 people, Intel 1200. And yep, I firmly believe we are headed into a recession and it is likely to be the worst recession in memory and may very well be global in scope. And then you have to think about all the lenders, realtors, construction workers, sellers of furnishings, etc. who will and are losing their jobs which will affect all bubble markets. So again I ask you, why would anyone want to buy now? It's time to be financially defensive.

The market has quite obviously turned. The psychology has clearly changed and will only become more bearish. And unless Bernanke can find another bubble to blow to prop up our bubble-based economy the recession is inevitable. But good things will come out of an economic crash and we will be better off for it; they always do.

Aug 4, 2006, 10:26:00 AM  

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