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People Were Using Their Homes As ATMs And Not Always For A Good Reason

A report from the Globe and Mail in Canada. “Satnam Sidhu has been a realtor for almost 40 years and he’s been buying and selling foreclosed houses for the past couple of decades. ‘I have never seen more foreclosures on the market than I have in the last six or eight months, especially in areas like West Vancouver and the west side,’ Mr. Sidhu says.”

“And most of the properties are being sold off by private lenders – a rapidly emerging and largely ignored major player in the B.C. housing market. An obvious reason for the increase in foreclosures is the overall market downturn. But another is the distortion caused by private lending. Private lenders are individuals and mortgage investment corporations (MICs) that fund mortgages, and the number of private lenders in B.C. has exploded in the past few years.”

“Because they are taking a greater risk, a private lender is more likely to foreclose on a property as soon as the mortgage payments stop. Since the banks introduced ‘stress test’ rules on borrowing, property owners have turned to private lenders in droves.”

“They use them if they are self-employed and don’t have the necessary credit rating; to borrow first or second mortgages on their homes because they need to pay off Visa bills; to pay their kid’s university fees; for a new car, or any number of reasons.”

“Mr. Sidhu says he sees a lot of borrowing to pay off income taxes and to consolidate debt. ‘In the past, the bank would say, ‘We will refinance and increase your mortgage from $500,000 to $600,000, and now banks won’t do that – because people were using their homes as ATMs and not always for a good reason, for maybe a car or a motorhome.'”

“‘And now, when I look at foreclosures on the market, a good 70 per cent of the properties being foreclosed upon are [backed by] private lenders,’ he said.”

“Another one of those listings is at 928 Groveland Rd., West Vancouver, which is a 7,767-square-foot mansion, built two years ago and listed at $6.998-million, reduced from $8.898-million. Listing agent Malcolm Hasman says that he knows nothing about the seller, other than it is a private lending company.”

“‘Of my active 20 listings, I only have two that are under Supreme Court order,’ Mr. Hasman says. ‘This house [on Groveland] was originally priced two years ago at $10.88-million. Some people might say it’s come down 35 per cent, but the truth is it was probably unrealistically priced when first listed.'”

“Private lending isn’t just a Vancouver phenomenon. John Pasalis of Toronto’s Realosophy released a report last fall with Teranet that showed a major spike in private lending. In the second quarter of 2018, refinancing mortgages from private lenders increased 67 per cent in two years in greater Toronto.”

“Due to requests from clients on the hunt for foreclosures, realtor Ian Watt has relaunched his website exclusively devoted to Vancouver homes that are court ordered sales. He has already collected about three dozen listings, including multimillion-dollar houses. Private lenders are behind more than half the listings, he says.”

“‘The stress test doesn’t mean anything. It just means it’s pushed people into private lending, and private lending is way riskier,’ Mr. Watt says. ‘It’s riskier because who knows if those guys can keep their boats afloat. What if people start withdrawing their financial support? There is so much money involved and nobody knows where it’s coming from.'”

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This Post Has 48 Comments

  1. ‘Some people might say it’s come down 35 per cent’

    I guess they would. So we got 35% here, 40% there, 20% down in Santa Barbara, soaring foreclosures. Are we there yet?

    1. “Are we there yet?”

      Wanker.Banker Mega.Bank$ $trong! “HB.B ll knot our fault!”

      NON.Bank$ weak, gettin’ weaker. “$lect.a.loan.Click!”

      Wanker.Banker$ dripping oppoortuni$t $aliva, waiting … waiting …I

      Nope, where knot.there.ju$t yet. Clo$e, & gettin’ clo$er bye the month.

      1. Mortgage$? Big bank$ may be throwing in the towel
        MarketWatch |Published: Apr 17, 2019

        Non-bank$ made over half the mortgage$ taken out by American con$umers in 2017

        Jamie Dimon, JPM’s CEO, said this in his $hareholder letter released at the same time as Q1 earning$:

        “In the early 2000s, bad mortgage laws helped create the Great Rece$$ion of 2008. Today, bad mortgage rules are hindering the healthy growth of the U.S. economy. Because there are so many regulators involved in crafting the new rules, coupled with political intervention that isn’t always helpful, it is hard to achieve the much-needed mortgage reform. This has become a critical issue and one reason why banks have been moving away from significant parts of the mortgage business.”

        Because of post-crisis capital rules, “owning mortgages becomes hugely unprofitable,” Dimon lamented later in his note. On a call with analysts, he called mortgage servicing – the bookkeeping for regular customer payments – hard. “You got to look at that and ask a lot of questions about whether banks should even be in it,” Dimon said.

        If not banks, then, who should be “in it”? “Non-banks are becoming competitors,” Dimon told analysts

    2. I doubt sb is down 20%.
      That is nirvana there.

      We just busted through the 2005 highs here in 22151

      1. 22151 VA is running on that amazon hype still. SB has doesn’t have a 800lb gorilla boosting up RE. the santa maria real estate crater is part of SB county and they are definitely tanking. up north in santa cruz they claim its up but looking at the closed homes and sale price it looks to be around that 20% decline.

        1. March 13, 2019

          From Inside NOVA on Virginia. “Homes that sold in Arlington in February had the highest per-square-foot value across Northern Virginia, although Arlington and most other local jurisdictions posted declines from a year before, according to new data.”

          “Arlington’s per-square-foot sales price was, on average, down 15 percent from the $472 recorded in February 2018. And the community wasn’t alone; declines were reported in may localities.”

          “Falls Church saw its average per-square-foot cost decline 2.8 percent to $378. Alexandria’s per-square-foot cost declined 9.9 percent to $365. Fairfax County’s per-square-foot cost dropped 9.7 percent to $278. Loudoun County’s per-square-foot cost was down 10.4 percent to $198. Prince William County’s per-square-foot cost dropped a sizable 21.4 percent to $165. Stafford County’s per-square-foot cost was down 15 percent to $142.”

          “Across the Mid-Atlantic as a whole, the average per-square-foot cost of $206 for residential properties that sold in February was down 11.2 percent from $232, based on ShowingTime data. The highest-priced major jurisdiction was the District of Columbia at $483, down 5.7 percent from $512 a year before.”

          http://housingbubble.blog/?p=1224

  3. I live close to Vancouver. A friend recently sold a condo for 16k over asking. There are still a lot of people that have not gotten the memo.

  4. Australia faces the biggest and longest property decline in 40 years

    ‘As usually happens when the market turns, the higher end of the property market suffers more. This is really an area of discretionary spending. Maybe you don’t need to upgrade your $5 million home to that $7 million mansion at the moment.’

    ‘In due course the cheaper, more affordable areas will also suffer as wages growth is likely to be low in these suburbs.’

    https://au.finance.yahoo.com/news/australia-faces-biggest-longest-property-decline-40-years-205055309.html

    1. From the Aussie article: “That’s because these downturns are only temporary, while the long term increase in value of well located capital city properties is permanent.”

      So there, you heard it from an expert! Over the long term, values only go up!

  7. “…because people were using their homes as ATMs and not always for a good reason, for maybe a car or a motorhome….’”

    What about living within your means?

    Oh, AIA, we all know what happened to that one!

    Well, guess what, the party’s over and the bills are coming due.

    Pretty quiet out there.

    Speaking of dead air, what ever happened to our REIC Fog Horn Lawrence Yun of the NAR telling us how great everything is and that infinite riches are within your grasp?

    1. Mr Yun has been very quiet… guess when there is nothing encouraging left to say there is nothing to say at all.

  8. ‘All it took was one tweet to spark a heated debate on social media about skyrocketing housing costs in the Bay Area and the commutes people are willing to go through to make it all work. Redditor DudeWhoLived posted a screenshot of a tweet from a local journalist in which she shared the plight of her hairdresser’s commute.’

    “Bay Area Cost Index. TIL (Today I learned) my hairdresser and her family decided it made more financial sense for them to buy a home in Arizona and commute to their jobs on the Peninsula 4 days/week via Southwest Airlines,” the tweet read.’

    ‘Sound crazy?

    Redditors began sharing their own commuting stories of 3+hour-long commutes to work in the city.

    “I knew someone who drove from Los Banos to Sunnyale and back for work. That’s like a 2 and a half hour drive just going one way,” one Redditor commented. That user later added “EDIT: It seems that this is actually pretty common based off all the replies I’m getting.”

    “I did Los Banos to SF for 6 months. 3.5-4 hour commute each way,” another person shared. The Bay Area and surrounding regions lead the nation with more than 120,000 people commuting at least three hours.’

    “I grew up in San Jose. I don’t work a high-paying tech job or anything but I still work there. Over the last 10 years myself and almost all of my coworkers around my age bought houses at least an hour outside the Bay Area because it’s all that we can afford. My commute is 2 hours and that’s not nearly as bad as some other people. I don’t even like the Bay Area anymore, it’s just where I have to go to make money,” another Redditor chimed in.’

    “I work with someone who drives from Los Banos to Milpitas everyday,” another person shared. “I thought my drive from Oakland was bad….” “Guy at my mom’s work commutes from Fresno to Oakland. That’s literally like a 3-4 hour drive depending on traffic and stops,” another person said. “But I mean hey, where else are you going to rent a 4 bedroom house for $1400?”

    “Sounds like my coworker. I think she says she wakes up at 1am or 3am, I forget which. She works at 6am. Absolutely insane. “I have another coworker that commutes daily from Modesto as well,” another person said.

    https://www.kron4.com/news/bay-area/tweet-on-out-of-state-commute-for-bay-area-family-sparks-debate-on-housing-traveling-costs/1932886768

    1. SFPD tells woman to ‘take a different route’ after being attacked by homeless woman

      ‘Homelessness is a major issue in San Francisco. At last count, there are somewhere around 7,500 homeless in the city– and it’s taking a toll.A San Francisco resident was attacked by a homeless woman who’s lived in her neighborhood for three years.’

      ‘San Francisco Police Chief, Bill Scott said they’re investigating and added, “If we can locate the person and they have committed a crime then we’ll do what’s appropriate which is to make an arrest. If that’s the appropriate thing to do it, but the homeless part has nothing to do with it.” Benedict said SFPD told her to take a different route next time.’

      https://abc7news.com/exclusive-sfpd-tells-woman-to-take-a-different-route-after-being-attacked-by-homeless-woman/5254435/

      I left my heart in San Francisco
      High on a hill, it calls to me
      To be where little cable cars climb halfway to the stars
      The morning fog may chill the air, I don’t care
      My love waits there in San Francisco
      Above the blue and windy sea
      When I come home to you, San Francisco
      Your golden sun will shine for me

      1. ‘President Donald Trump has promised more than once to send buses full of migrants from the southern border to California’s so-called “sanctuary cities,” of which Sacramento is one. “We’re a proud sanctuary city and it’s just another tweet. It’s more idiocy, frankly,” said Sacramento Mayor Darrell Steinberg.’

        ‘Steinberg clearly does not think the president will follow through. But what if he does? The mayor says Sacramento will welcome large groups of migrants. “If Donald Trump somehow followed through on this illegal, crazy idea and a busload came up to Sacramento, you’re darn right we’d welcome people,” Steinberg said. “That’s who we are as Sacramentans.”

        ‘When FOX40 asked if the city has the infrastructure to handle an influx of migrants Steinberg repeated his belief that it wasn’t going to happen. However, it is a question homeless advocates are at least considering. “We don’t have enough housing for people who are here already,” said Bob Erlenbusch with the Sacramento Regional Coalition to End Homelessness.’

        ‘Erlenbusch says there are likely more than 3,600 people unhoused in Sacramento. He says there’s no additional shelter space for new migrants. “It’s the right thing to do to provide sanctuary to people but we don’t have the infrastructure to deal with much more than that,” he said.’

        https://fox40.com/2019/04/16/could-sacramento-handle-an-influx-of-migrants-mayor-advocates-weigh-in/

        But it’s OK to drop them off in Phoenix year after year…

          1. “It’s not about the voucher program. It’s not about racism. It’s about people’s conduct and behavior,”

            Something the last president made sure we never talk about or else.

          2. Maybee they should attend the 3day $eminar in Austin, TX

            A $uburbia for the homele$$ exists and they can live there forever
            By Christopher Dawson, CNN, Thu March 28, 2019

            A movement to end homelessness
            Mobile Loaves & Fishes hopes its efforts will launch a movement across the United States; a compassionate answer to homelessness.
            Every quarter, they host a three-day symposium in Austin that teaches attendees how to build similar communities in their cities.
            Similar ideas have already taken hold. Tiny houses have been used to tackle homelessness from Seattle to New York.
            For Mobile Loaves & Fishes, it starts with seeing the homeless as members of the community.

            Community First! Village is built and run by the nonprofit Mobile Loaves & Fishes to lift the most chronically homeless off the streets and into a place they can call home.
            They live in about 100 RVs and 125 micro homes arranged on streets with names like “Peaceful Path” and “Goodness Way.”

          3. A similar article appears in today’s Washington Post. Several commenters astutely pointed out that this is a ploy on the part of the LL. That upscale building has rent control in a very upscale nabe. The plan is to bring in the crazies — at taxpayer expense — to drive out the old ladies currently under rent control. When enough rent controls are gone, the LL can kick out everyone, clean the place up, and totally jack the rent or convert to $1M+ condoze.

          4. Community First! Village is built and run by the nonprofit Mobile Loaves & Fishes …

            Seems these “landlord$” are gonna have to explains such a rever$ion $trategy once they arrive @ St. Peter’$ heavenly gate.

          5. It hasn’t gone as planned.

            Functioning societies require a high level of trust. Social norms are powerful things. When social norms are incompatible trust drops below that critical threshold.

    3. The San Jose story is the kind of thing that sparked the Oil City Plan. This is a HAIRDRESSER, not a C-suite exec at Google. Why can’t she simply be a hairdresser in Arizona, or any other state in the sticks? I guess she wants work “near family.” But when is she going to have time to see her family if she spends half her day on a plane? In fact, I give this lady six months at best, before she discovers that Arizona is packed with old ladies who like short hair and high tips.

      (For ref: The original story that sparked Oil City Plan was a guy who drove 2 hours each way to work on a loading dock in LA… as if LA is the only city with loading dock jobs.)

    4. I used to commute on a sporadic basis from the Bay Area to Modesto for a gig. It’s a long slog, and doing it daily sounds unimaginably painful.

      1. As a 4-hour commuter, I think I have some insight here. But I don’t do it every day, I commute, stay on site for about 3-4 days and then stay at home base for a week. It works for me.

        But Flixbus just opened up from Las Vegas to Salt Lake City. Their introductory rate is $5! I think they’ll go up to $15 or $20 one-way after that. They have WiFi, power outlets, restrooms, and an entertainment portal. Seems like a pretty good way to travel.

          1. That is one label that I hope I can claim. I do try to conserve where I can. It is not easy in our throw-away culture.

    5. Last bubble hairdressers were making 100K+ and bought multiple properties – Ben might remember the story. Think it was in SoCal. Maybe the Loughlin girrrrlz should have gone that route!

  9. If Orange Gargamel follows through on his threat this new group of homeless would be much easier to deal with than our existing crop, could we ship them to DC? Then we open hiring halls outside every Home Depot around town and presto these people find work. Conflating illegal immigrants with the chronic homeless in America is truly shameful. I don’t want open borders either but at least they come to WORK.

    1. Well it happened during Katrina, they had multiple job listings in nyc, for people to help rebuild NO 12.50+ per hour and fema housing…the catch..must speak Spanish………Jackson Sharpton waters naacp, no one ever held a jobs march for locals to rebuild.

    2. I was told that most of the people in these caravans of women and children. That is, people most unlikely to productively work.

      A single mom with kids from different men is not likely to be working a full schedule doing productive work. If she is, she is ignoring her kids, who will become wards of the State.

      I just don’t buy that a bunch of 8 year old kids and 22 year old single moms are going to WORK, at least not for a decade or longer.

    1. While this is funny, I want to see that even less than Bezos’ below the belt selfie.

    1. Hopefully the Govt won’t be “strongly encouraging “ the Banks to make these loans as they did last bubble.

      1. Actually, Thee NON.bank$ are “strongly encouraging “ low.dispo$able income$ folks to hurry.up and get on the real.e$tate gravy.train a$ap

        It’$ Spring, never.a.better.time to $nap.up.a.$helter, hurry!

  14. “Because they are taking a greater risk, a private lender is more likely to foreclose on a property as soon as the mortgage payments stop. Since the banks introduced ‘stress test’ rules on borrowing, property owners have turned to private lenders in droves.”

    To get around dumbass banking regulations, banks involved in the mortgage lending business reinvented themselves as ‘private lenders’ in order to restore traditional banking operations, such as quickly foreclosing on deadbeats.

    What a crazy mess the banking regulators have made of a market-based lending system that used to work just find without the heavy hand of government intrusion undermining market operation. Isn’t it interesting how market forces circumvent regulators’ attempts to thwart them?

    1. Maybe. I’m wondering if it will work the opposite way though and now the Fed will have to buy properties or securities based on those properties directly from the non-bankers. For everyone’s good of course. Seems like a good opportunity for more shenanigans that hurt people looking for a cheap place to live.

      1. the non-bankers

        I think the Fed has a narrow objective that does not care about “non-banks” or the everyone’s good. We’ll see.

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