Well heres fun look into in the housing market

[Pat K]

Jingle Mail?

Forget that! It's so 2007.

For 2008, let's try a little reverse financial engineering: Squatting in $3 million dollar waterfront mansions in Florida and paying nothing.

At least, that's a new and growing problem we learn of via MW in South Florida. MW is a local developer, and claims this has become "very serious" (I have been able to independently verify this with a local resident, who tells me the local papers are filled with such tales).

He writes:

    "There is a very important phenomenon that is occurring that has only been covered in a "glancing" manner. Beyond the concept of "jingle mail" -- which suggests that folks who can pay their mortgages may just choose to walk away given the dramatic loss of equity due to housing's collapse -- consider the following: As a developer, I had stepped to the sidelines and rented beginning in 2005, because I was sure that housing was unsustainable and was bound to collapse; it took 2 more years for it occur.

    Nonetheless, as I have followed several of the homes that my wife and I were interested in a few years back, they are all on the market now. What is shocking, that in each and every case, I have been told by brokers and banks that the owners have ceased paying their mortgages in some cases for nearly 2 years and have continued to occupy these homes. Now, these are homes in excess of $2,000,000 in the very best neighborhoods in South Florida. Brokers have added that these buyers further complicated things by putting huge home equity lines on top of their mortgages and now have no possibility of selling their homes for amounts needed to cover their accumulated debt.

    This may not seem like news, but understand what this means: There is currently an 8-10 month wait to get a court date to have a foreclosure filing heard in Dade and Broward counties. The bankers have non-performing loans on their books to the best heeled borrowers in multi-million dollar amounts with no immediate means for recovery; with a non-secured second mortgage in place, there is no possibility for a "short sale" that will satisfy all of the borrower's debt. They are reluctant to take a haircut knowing that they have the home equity debt still around their neck and are likely to frustrate any near-term sale.

    There is no clean way to sell the home that would guarantee "clean title", hence a foreclosure is the only means to separate the property from the dead-beat speculator/squatter. Banks do not want to spend the $50,000 required to take a home through a foreclosure and clear the title -- only to put the house back on the market for a deeper loss afterwards. Most likely, they have not revealed these owner occupied defaults to their shareholders, thanks to the sheer numbers of non-performing loans on their balance sheets, and the daunting task of foreclosing on all of them. This is the ultimate seizure and full stop of the market whereby everyone is standing in a stalemate. As one broker said to me, "these bums sitting in $3,000,000 homes overlooking the water are likely to be left alone by the banks for 2 years before the banks even get serious about foreclosure."

    So here is the difference between "walking away," these folks are doing anything but walking away, they are sitting on lounge chairs sipping martinis living cost free! (not to mention that they have ceased paying property taxes and insurance). I can only imagine what this market will look like in the coming years . . ."

All I can say is wow.

"MW" has been hearing this for the past six months. He believes both the local and national lenders are in a state of disbelief with no understanding on how to proceed.


Barry Ritholtz

[Lloyd Danforth]

Wow

[Russell Kanning]

funny

[John Edward Mercier]

Never loan money to rich people.

[srqrebel]

I agree with Russell, that one struck a funny bone for me, too

[malcolm]

Never loan money to rich people.

They're not rich.  They're poseurs; that's the point.  My area is full of these Hummer-driving, loud-talking, silicone-injected, Tommy Bahama-wearing, over-leveraged, maxed-out, nigh-foreclosed deadbeats.

No real money.  They're broke-ass-broke!

Some of it can be fun to watch, but not participate.  The dating scene amounts to gold-diggers and poseurs both trying to defraud each other.

Only 162 days left for me!

[Puke]

(not to mention that they have ceased paying property taxes...

The horror!!

[PattyLee loves dogs]

Most likely, they have not revealed these owner occupied defaults to their shareholders, thanks to the sheer numbers of non-performing loans on their balance sheets, and the daunting task of foreclosing on all of them.

Somebody is suspicious... or Wachovia Bank stock wouldn't be selling with a (theoretical) dividend yield of 8.5%.

[kola]

I agree with you Malcolm.

It is funny because more and more folks are filing bankruptcy and getting out of debt from credit cards and home mortgages.

The banks and credit card shraks will be getting zero dollars from their interest charges. This is good.

And all the while the feds are trying to pump more money into the sytem but the commoners ain't buying.

Sweet.

Kola

[Pat K]

Well heres how it going down by my mother in Flowda.

St. Lucie County adds night shift to deal with foreclosure backlog




Associated Press - March 4, 2008 4:14 AM ET

FORT PIERCE, Fla. (AP) - Want to know how bad the housing crisis is in Florida?

A St. Lucie County court is adding a night shift to handle the massive backlog of home foreclosure filings.

Clerk of Courts Edwin Fry Junior says the case load has become "just horrendous."

The court used to handle about 40 foreclosure filings a month. In January alone, 715 were filed.

Fry hopes the 6 p.m. to 9 p.m. shift will help the court catch up with its case load.


Information from: The Stuart News, http://www.tcpalm.com









 





   

[John Edward Mercier]

I thought they changed the bankruptcy laws, so you couldn't just write the debt off?

[malcolm]

I thought they changed the bankruptcy laws, so you couldn't just write the debt off?

They made it harder to declare Chapter 7, pushing most people into Chapter 11.  Primary residence rules remain mostly unchanged.  The irony is that now people are keeping the credit cards current to meet monthly cash-flow needs; they're walking away from the house instead.  It doesn't matter much to these deadbeats, as they had no money in the house anyway.  The bankers really didn't see this in their risk models, hence the Chinese Fire Drill in the bond insurance sector.

We're in the second inning of this ball game.

Got gold?

[kola]

In colorado filing chapter 7 gets you out of debt with credit cards and almost anything else. Bush law changed the status in regards that a filer can no longer erase debt from student loans or property taxes.

as far as I know, when someone files chapter 7 they can get protect their home, a vehicle and tools of their trade. (of course they have to keep paying on their home if they owe on it).

bush just made it harder to file with more paperwork thus increasing lawyer work and fees...and made it harder for the simple commoner to file on their own.

I believe colorado is the number 1 state for home foreclosures.

kola

[Russell Kanning]

after a while ... we can buy winter places in Florida

[Lloyd Danforth]

Well heres how it going down by my mother in Flowda.

St. Lucie County adds night shift to deal with foreclosure backlog




Associated Press - March 4, 2008 4:14 AM ET

FORT PIERCE, Fla. (AP) - Want to know how bad the housing crisis is in Florida?

A St. Lucie County court is adding a night shift to handle the massive backlog of home foreclosure filings.

Clerk of Courts Edwin Fry Junior says the case load has become "just horrendous."

The court used to handle about 40 foreclosure filings a month. In January alone, 715 were filed.

Fry hopes the 6 p.m. to 9 p.m. shift will help the court catch up with its case load.


Information from: The Stuart News, http://www.tcpalm.com









 





   

Judge Harold T. ( Harry ) Stone presiding!