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A Lot Of These Risky, Expensive Mortgages Are Being Issued To Debt-Strapped Borrowers With Very Little Financial Wiggle Room

A report from Westword on Colorado. “Over the past year or so, there’s been debate aplenty about whether Denver’s real estate market has finally started to cool off after being red-hot for the past few years. Megan Aller, a sales representative for American Title Insurance Company, is an exceedingly authoritative voice in the discussion. Inventory has increased, and that’s resulted in increased price reductions and concessions, particularly on more expensive properties. Simply put, Aller says, ‘sellers can’t be as aggressive in their pricing strategy because there are fewer people who can afford to make these purchases.'”

“More recently, the appreciation rate has eased and is now in the 5 to 7 percent range, leading to those assertions about Denver becoming a buyer’s market. But Aller thinks such speculation can have negative repercussions: ‘When we start saying that, buyers will offer significantly less than the asking price, thinking we’re headed toward a recession — and that can put them in a poor position, because they’re probably not going to win the home,’ particularly during the prime spring and summer buying seasons, when she expects to see multiple offers being typical once again.”

The Westport News in Connecticut. “A substantial drop in student enrollment this year has left school board members wondering if the numbers are an aberration, or point to a larger trend. Consultant Mike Zuba told the Board of Education that enrollment numbers will steadily decrease over the next decade. ‘As we see in many of our client communities, and Westport’s no different, your student body, your immigration, your school system is driven by the sales of a lot of new or existing single family homes,’ Zuba said. ‘Overall, we’re seeing a large dip this year in housing sales.'”

The Atlanta Voice. “One of the biggest obstacles confronting low- and moderate-income home buyers is coming up with the 20 percent down payment that many financial advisors recommend they have in the bank prior to entering the housing market. Under Fannie Mae’s Home Ready and Freddie Mac’s Home Possible programs, it might be possible to obtain a mortgage with substantially less cash on hand.”

“Among the differences in the two programs, says Terri Sicilia, vice president of underwriting for Residential Mortgage Services, is that the Fannie Mae program allows a buyer to own other properties at the time of closing, while the Freddie Mac program does not. Another difference, she notes, is that Home Possible does not allow the use of a non-occupant co-borrower while Home Ready may.”

“One of borrowers Sicilia worked with was able to obtain a mortgage under Home Ready by documenting that he had 12 months of income from a boarder as a portion of his overall income. ‘This would not have been possible with a traditional, fixed-rate mortgage,’ she said.”

From DS News. “Of the metros studied, the New York-Newark-New Jersey metro had the highest serious delinquency rate of 2.6%. The metro also had the highest overall foreclosure rate at 1.3%. The next highest was Miami-Fort Lauderdale-West Palm Beach, Florida, at 2%. Only once in the past cycle has Manhattan had more foreclosures than in Q3 2019, and that was in Q4 2016. Additionally, pre-foreclosures increased 13% year-over-year in the borough.”

“‘A strong economy and eight-plus years of home price growth have made mortgage foreclosure an infrequent event,’ said Frank Nothaft, Chief Economist at CoreLogic. ‘This backdrop will help the mortgage market limit delinquencies in most of the country whenever a downturn should start.'”

From Douglas Digital. “According to data from the Federal Reserve, U.S. mortgage debt is a whopping $15 trillion. For comparison, the 2017 gross domestic product (GDP) of the United States was $19.3 trillion. Looking at a test case shows that the numbers just don’t work for most households. In the high cost-of-living state of California, the new maximum mortgage amount is $679,650, and the average interest rate is 4.79%. In order to make their monthly mortgage payment of $3,600 to $4,300 without exceeding the recommended 28% of their income, this ‘average’ borrower would have to make at least $185,000 a year.”

“Considering that the median household income in 2018 was only $61,000, it’s reasonable to assume that a lot of these risky, expensive mortgages are being issued to debt-strapped borrowers with very little financial wiggle room.”

From SocketSite in California. “The number of condos listed for sale in San Francisco (610) is now running 1 percent lower than at the same time last year while the number of single-family (320) is now running 2 percent higher, and that’s despite the fact that the number of single-family homes on the market in San Francisco jumped nearly 60 percent from early November 2017 to early November 2018 (versus a 31 percent increase for condos).”

“At the same time, the percentage of active listings which have undergone at least one price reduction has ticked up 3 percentage points to 28 percent, which is 3 percentage points higher than at the same time last year.”

From Homes and Property. “Jennifer Aniston’s happy days of marriage to Brad Pitt were spent in a Beverly Hills mansion that they couldn’t stop upgrading. The five-bedroom house they once loved is now on the market but struggling to find buyers. It was listed in April for £43.4 million by the current owner who has since dropped the price by £8.9 million.”

The Wall Street Journal. “Companies using technology to make rapid cash offers to home sellers are typically paying their customers close to market value, a new study from Mike DelPrete, a scholar in residence on real-estate technology at the University of Colorado at Boulder found. Yet the analysis casts doubt about whether iBuying can thrive longer term with such thin margins, especially if home prices flatten or begin falling in more markets around the country.”

“‘How are they ever going to make money?’ Mr. DelPrete asked.”

This Post Has 69 Comments
    1. Leaked video reveals ABC News suppressed Jeffrey Epstein story since 2015

      By Kevin Reed
      9 November 2019

      She went on, “Then the Palace found out we had her whole allegations about Prince Andrew and threatened us a million different ways. We were so worried that we wouldn’t be able to interview Kate [Middleton] and Will [Prince William], that also quashed the story.”

      Robach then explains that Giuffre had evidence implicating Alan Dershowitz and Bill Clinton in Epstein’s activities. “She had pictures, she had everything,” Robach said. “She was in hiding for 12 years. We convinced her to come out, we convinced her to talk to us. It was unbelievable what we had.”

      According to NPR reporter David Folkenflik, Alan Dershowitz—who was also one of Jeffrey Epstein’s defense attorney’s—called ABC News and pressured the network to kill Robach’s story.

      In a significant segment of her comments, Robach says exactly what everyone in the corporate media was thinking when Jeffrey Epstein was found dead in his New York City jail on August 10. “So do I think Epstein was killed? A hundred percent, yes I do. Because, do you want it? He made his whole living blackmailing people.”

      She continued: “There were a lot of men on those planes, a lot of men who visited that island, a lot of powerful men who came into that apartment. I knew immediately. And they made it seem as though he made that ‘suicide attempt’ two weeks earlier. But his lawyers claimed he was roughed up by his cell mate around the neck, that was all to plant the seed.”

      The ABC newscaster became emotional when she turned to the reasons that ABC spiked her story, saying, “Well, then I got a little concerned about why I couldn’t get on.” Speaking about the information she had on Epstein’s accomplice Ghislaine Maxwell, Robach said she was told, “‘Who’s that? Who cares?’ I kept getting that. ‘Who cares?’ She knows everything… She should be careful. She went out and recruited all of these girls. She should watch her back.”

      https://www.wsws.org/en/articles/2019/11/09/epst-n09.html

      1. Amy Robach is “pissed” she didn’t get credit for the story rather than outraged for Epstein’s likely intervening victims.

          1. For being the “think of the children” side, the left doesn’t seem particularly motivated by the suffering of the children in this particular case.

  1. Megan Aller is a liar.

    Buying a used house in Denver now will be the worst financial mistake of your lifetime.

    1. But…but…she assures us that during the prime Spring and Summer selling seasons, she expects to see multiple offers again! I expect she bases this assessment on her feelings, not the gloomy data. I better scamper right on down to Mr. Banker’s office and sign on the dotted line so I don’t miss out.

    1. When you say Trump, you’ve said a lot of things nobody else can say.
      When you say Trump, you’ve gone as far as you can go to get the very best.
      There is no other one. There’s only something less. Because our President is leading all the rest.
      When you say Donald Trump, you’ve said it all.

      https://www.youtube.com/watch?v=UGp_1MOeOjc

  2. “…the appreciation rate has eased and is now in the 5 to 7 percent range, leading to those assertions about Denver becoming a buyer’s market.”

    “Win” the home?

    The wheels can’t come off of this cluster**** soon enough.

    1. American Financing dot net saturates the Denver radio market with their ads for fraudulant mortgages.

      The I Heart Radio network is engaged in financial fraud and false advertising with American Financing.

      Anybody who did a cash-out refi in Denver and goes into foreclosure deserves to die in debtor’s prison.

  3. San Francisco’s new DA won’t prosecute public urination

    Posted: Tue 3:04 PM, Nov 12, 2019

    SAN FRANCISCO, Ca. (FOX/WVLT) — San Francisco’s newly elected district attorney promised not to prosecute crimes like public urination, according to a Fox News report

    “We will not prosecute cases involving quality-of-life crimes,” said Chesa Boudin. “Crimes such as public camping, offering or soliciting sex, public urination, blocking a sidewalk, etc., should not and will not be prosecuted. Many of these crimes are still being prosecuted; we have a long way to go to decriminalize poverty and homelessness.”

    https://www.wvlt.tv/content/news/San-Franciscos-new-DA-wont-prosecute-public-urination-564811972.html

  4. OMG. This is a health and safety violation to allow people to go to the bathroom in public, not to mention indecent . These people that are running things these days are insane.

    This is a breakdown of law and order and civil society. When are people going to rebel against the apparent Insanity of the left.

    1. When are people going to rebel against the apparent Insanity of the left.

      Only when it affects them personally, apparently.

    2. Socialism is Western Civ. In retrograde.

      California is well down the road. BTW, watch your step! The streets aren’t exactly paved with gold out there in “The Golden State.” Consider a name change here.

  5. When we start saying that, buyers will offer significantly less than the asking price, thinking we’re headed toward a recession — and that can put them in a poor position, because they’re probably not going to win the home,

    And when the recession hits and they wonder on a daily basis if their jobs are in jeopardy, they will thank their lucky stars that all their bids were rejected. And if worst comes to worst, they can move in with mom and dad and not worry about dealing with a foreclosure.

    The city council at my little burg wanted to go on a $100M+ spending spree, building a second rec center, second library, bulldoze a fire station and replace it with a bigger one, etc. It would have been financed with a steep sales tax increase that would have lasted 20 years.

    The voters said no. There were a lot of butt hurt people who whined that those who voted no are just a bunch of stingy poopyheaded meanies, because the current rec center is often very busy and all the ellipticals and other machines in the gym are booked solid all day and sometimes it’s hard to find a place to park at the library and you might have to walk a block or two on a Saturday. Nevermind that expanding the parking lot would be a lot cheaper. Or that when the library was expanded 10 years ago, it was done without any tax increases, instead the city saved for it.

    Anyway, I think the city council swung for the fence with their proposed bills because they know a recession is coming and it will be years before voters have the stomach for even a small spending bill and tax increase. They love to spend, and they were able to convince voters in the downtown “redevelopment” district a few years ago to raise the sales tax downtown to pay for a building spree, which included a a multistory garage and incentives to get a Marriott, a new cinema and a luxury apartment building built. Had the new sales tax bills passed, the
    sales tax downtown would have exceeded 10%.

    Heaven help us when TABOR is repealed.

  6. Talking to people who work with the homeless on a daily basis, they say the majority of the hardcore homeless are mentally ill and/or addicts. These can’t be helped by providing them with housing, because they cannot or will not control their behavior, making them bad tenants and dangerous neighbors.

    We have to return to involuntary commitment of these people, because leaving them on the street is not only worse for them, it’s worse for society as a whole. Yeah, court rulings have made this more difficult. But legislators can work to craft laws to accomplish that as best we can within the constraints of those court rulings. Right now, we’re doing basically nothing because we basically have no places to warehouse these people. We’ll have to spend the money to build new institutions.

    And if we don’t begin to address this growing problem soon, some gung-ho bullyboys will decide to take matters into their own hands. Better to deal with it now than let things deteriorate further.

    1. involuntary commitment of these people…warehouse these people

      Prison for not being able to hold down a great job seems rather harsh.

      1. I’m not talking about the people who are homeless because they can’t afford an apartment. I’m talking about the people who are so impaired they cannot live independently and cannot function in society. It might be only marginally better for them to be warehoused than to continue living on the streets and sidewalks, but it will be much better for society.

        And if or when they’re able to live more or less independently, they can be transitioned back into society.

        As for the homeless poor, I’d like to see cities return to permitting rooming houses and other single-room occupancy options. That was the norm until shortly after WWII. And instead of the ridiculous tiny houses fad, consider subsidizing the construction of modular housing developments as an affordable housing option for the blue-collar and lower-middle classes.

        1. I’d like to see cities return to permitting rooming houses and other single-room occupancy options. That was the norm until shortly after WWII.

          Many things were possible before your house was your retirement plan. Now we can’t allow anything that might result in slower growth in housing prices, let alone cause any to fall in value.

        2. Hell why not trailer parks with single wides? They work well in Calif weather. Not so well in the Midwest.

        3. letting homeless who save up a month’s worth of diarrhea to hurl on an innocent woman on her way home from the store go free is I thought the tipping point, but nope. How can it get any worse?

        4. I wished I had chimed in here earlier, but I consider all your observations spot on Homoaner. The solutions will present themselves once the problem is accurately understood and assessed. Like you have pointed out, there is a big distinction between a homeless construction worker sleeping in his car and a homeless mentally ill or drug addict. But we typically lump both groups into the same category, though they are fundamentally different and require different solutions.

    2. It reaches a point where in some way you have to take people who are not functioning and take them out of society until they can function, if even possible.

      This idea that the functioning society has to give up all , so a smaller group can run over them is part of the Insanity that’s going on today.

      1. I worked with the homeless and I know it’s mostly a drug problem rather than a job problem. They are offered all kinds of social services but they don’t want to give up the drugs. Some of these people have been on the streets for over 10 years.

        You would not believe how much these people don’t even appreciate the food, clothing and benefits they get. I use to hear them talking. It’s all about the drugs. They really get to the point that they don’t care about anything anymore, and that’s a big danger for any person.

        1. They really get to the point that they don’t care about anything anymore

          All addicts are that way. We just don’t notice it so much when they are still functional.

        2. If it’s all about the drugs, then maybe it really is time to give up just flat out *give* them the drugs. Offer them a studio apartment on the outskirts of the city in exchange for unlimited drugs. Stock the units with a little healthy food, maid service, medical, and social workers. And that would be their “job.” Stay in your apartment, walk the grounds a little, read some books, play Minecraft, watch TV, and just keep the taxpayer spending to a minimum. They will be free to leave whenever they want, but they will be back for the drugs. In the end it might be cheaper than what is going on now.

          I recently had occasion to visit one of those West Coast cities famous for the homeless population. They were very different than the Washington DC homeless. The DC homeless (at least 15-20 years ago) at least had some mental capacity. They gathered blankets and slept in doorways and asked for food. These West Coast ones didn’t even bother to back up and sit against the buildings. They slept right in the middle of the sidewalk, not even a blanket, not caring about anything. And the west coasties were young, and white. Very surprising.

          1. I think this is exactly the solution that needs to be done. Having the state supply the drugs under medical supervision is what Spain has done. It also has the added benefit of taking out the criminal/cartel element of drug supply, so reduces organized crime.

          2. These West Coast ones didn’t even bother to back up and sit against the buildings.

            And randomly walk into traffic, cross against a red light, and all other kinds of crazy stuff.

          3. “And the west coasties were young, and white. Very surprising.”

            Don’t tell that to Bernie “white people don’t know what it’s like to be poor” Sanders.

  7. There is significant evidence that restrictions on residential land use reduce housing supply, increase house prices, and limit inflows of low‐income households. Local decision‐makers often argue that their efforts are mere attempts to preserve local amenities. We provide evidence that there is some truth to this claim: that residents of cities with more restrictions on land use appear to have access to higher‐quality and more diverse restaurants. https://onlinelibrary.wiley.com/doi/abs/10.1111/jors.12425

    1. Look no further than the sunburn states out west. Land as far as the eye can see, yet expensive as all get out to buy land and build a house.

  8. Plenty of homes for sale in King County, WA (Seattle+suburbs)

    Check out this graph, which is based on NWMLS data.

    https://twitter.com/coqumragep279/status/1194671138737025026

    Only about 1/3 of King County, WA (Seattle+burbs) homes for sale actually are under contract as of Nov 1. But the real-estate sell-side propagandists want you to believe there is a shortage of product for sale. There is no shortage. And prices peaked in May 2018. #propagandabusting

    1. “Meanwhile, CalPERS investment returns continue to fall below expectations, thus widening the gap between its assets and what it needs to cover pension promises.”

      Their actuaries were counting on 7%, or better, returns.

  9. On the one hand…

    “Inventory has increased, and that’s resulted in increased price reductions and concessions, particularly on more expensive properties. Simply put, Aller says, ‘sellers can’t be as aggressive in their pricing strategy because there are fewer people who can afford to make these purchases.’ “

    But, on the other hand…

    “When we start saying that, buyers will offer significantly less than the asking price, thinking we’re headed toward a recession — and that can put them in a poor position, because they’re probably not going to win the home,’ particularly during the prime spring and summer buying seasons, when she expects to see multiple offers being typical once again.”

    – Expert. Uh-huh. With housing bubble deflating (yes, even in Denver), I doubt next Spring and Summer are going to be strong markets. Just the opposite actually. Markets don’t correct for “prices are too darn high” by going sideways, or esp. restarting bidding wars. Yeah, I know I’m no “expert”, but at least have some common sense. Beware the experts.

  10. “Considering that the median household income in 2018 was only $61,000, it’s reasonable to assume that a lot of these risky, expensive mortgages are being issued to debt-strapped borrowers with very little financial wiggle room.”

    That can’t be true. I have it on good authority we have nothing but solid, great loans now, nothing like in the early 2000s. /sarcasm

    1. The original garage was converted to the game room with stairs to the second story addition over the new detached garage. The infinity edge pool is ridiculous given the topography and landscaping.

        1. Link in my name above, different homes, but its bank owned now. Love the part about Squatters Rights. Same thing happened to a family friend in downtown San Diego, took him 3 months to get squatters out of his condo.

          1. I recognize that home but didn’t know it was his. It went pending on 10/4/2019 with a list price of $1,581,200.

  11. But Aller thinks such speculation can have negative repercussions: ‘When we start saying that, buyers will offer significantly less than the asking price, thinking we’re headed toward a recession — and that can put them in a poor position, because they’re probably not going to win the home,’ particularly during the prime spring and summer buying seasons, when she expects to see multiple offers being typical once again.”

    The industry of dissemblers known as the NAR must be in full-blown panic mode as savvy buyers who can read the writing on the wall are the antithesis of Always Be Closing.

  12. “Bolivia’s President Evo Morales was overthrown in a military coup on November 10…Before he left office, Morales had been involved in a long project to bring economic and social democracy to his long-exploited country…The main target is its massive deposits of lithium, crucial for the electric car.”

    Tesla stock up.

    Wasting not only energy, but entire nations.

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