When the time comes most will then transfer to a fixed rate . In our area only the areas that are cheaper are being subdivided, and contractors are not speculating like they were in '78-'80. Mostly units are geared to empty nesters ( townhouses), and first time buyers (semi's). As long as the contractors and banks aren't speculating, demand and supply are close together. erie
I believe that there is "margin call" for mortgage. The house owner borrowed a fixed amount of money using his/her real estate property as collateral. What will happen, if the market value of the house drops well below the mortgage loan? Since a bank hates to lose money, I ***THINK*** they will either ask for more collateral, or take over the property(and then sell it immediately).
well when we keep losing middle class jobs and the standard of living keeps incrementally declining, eventually the defaults will snow ball and this will collapse pricing. people will quit trying to make payments on a house they are considerably upside down on. when asian debt holders realize they are holding the bag and they start dumping this debt, rates will have nowhere to go except up. at that point, these McMansions will return to a "fair" value. consumer debt is at chronic levels...there will be no soft landing. the fed has painted themselves into a corner and now they lie each time they raise rates. they are not trying to curb growth....they are trying to delay the inevitable. all fiat money systems eventually reveal themselves as ponzi schemes.... just a matter of when, not if. the winner is the federal reserve banks who know what they are doing and have already bought up assets with their worthless greenbacks.
Well its not only checkmate to the US...but to the Asian countries who benefited from selling to the US previously/continually... The current economic position is the result of the smoothing of the previous cycles the US used to have...just like mortgage interest changes have been smoothed... The goal of the fed is to prevent economic disruption caused by the old boom/bust heavy inventory buildups that were reflective of the disintermediation/intermediation type of fed interventions... The Asian counterparts should possibly be even more interested in cheaper dollars just as you buy any other good company when stocks in general are low....which does require long term thinking... Averaging down the US dollar when combined with the increasing interest that the CB pays is a smart strategy as long as there is an upward movement sometimes in the future...... Buying the direct obligations of the US by averaging down and collecting the increasing interest rates is really not that speculative versus the other large plays in the world...corporations cannot print money...tax people...and issue debt backed by these capabilities.... Other factors that might be interesting is for the US public to become cash to cash players in currencies just like it was in Europe before the EURO....or what if the world walks closer to a central currency....this would provide even more smoothness... This would be very interesting because labor would then be a clearer 1:1 playing field....Labor would be paid its due anywhere in the world...would equilibrate.... The key for the fed now is the smoothness of change.... Its not that you get to the price you want...its how you get there....
Isn't the issue what businesses will do? I have heard that the prices are now so high that a two income, middle class family can now not even come close to affording a three bedroom home in much of SoCal. This is creating a nasty environment for "knowledge workers" and is already (or so I have heard) driving businesses away to other part of the country. When that happens, a correction could follow, right?
Really? Must be a regional thing, where I am I've never heard of such a thing for an owner-occupied residential mortgage. I'm surprised anyone would agree to such terms in a mortgage.
I agree. On a related note in some states if after a foreclosure sale there is a deficiency if the borrower can go to court and can show the mkt value of the house is below that of the mortgage the lender can not pursue a deficiency judgement. I remember reading about farmers years ago in the midwest that did have a clause in their mortgage stating that if the value of the farm fell below that of the mortgage the lender could foreclose and some lenders did foreclose. Seems fishy why a lender would foreclose if the borrower is still paying...
i have a feeling we will be hearing a lot about the fine print that no one bothered to read!!!!! won't surprise me in the least.
(KVVU) -- The real estate boom that sent Las Vegas home prices skyrocketing may be over, but the hangover is only getting worse. The party for many people ended on October 2, 2004 when Pulte slashed prices at its four Las Vegas Del-Webb communities by 20%. The second-largest builder in the Las Vegas area said home prices had topped out and called it an appropriate move that will help new homeowners. But what about the ones who bought before the price cut? A number of small mom and pop investors bought homes in Sun City Anthem, in the builder's Solera and Pinnacle Village developments. They claim Pulte burned them by inflating it's home prices and steering them to in house lenders who were all too happy to underwrite their dreams. Were they victims of an overzealous sales force? Or their own expectations? Or a little of both? Dyan Harmell, a Pulte home buyer, is drowning in a sea of debt. Her living room table is covered with bills and she's not quite sure how to pay them. "There are bills everywhere. House payments and debt," Harmell told FOX5. She's a long way from those heady days of Las Vegas' real estate boom, when she says Pulte's sales staff pushed and pushed her to buy. "They call you and say 'you are so lucky .. this just came across.. it's going to be worth 100k before it closes,'"said Dyan Harmell. "We came with the hopes of buying two houses. We left the first day owning four. Within the next week, owning 6 -- all the way up to 19." But Harmell's story is not unique. Walk around Pulte's Solera neighborhood and it's a ghost town. It seems as if "For Sale" signs are everywhere. Signs that many people who thought they'd make a killing in Las Vegas' real estate market are now trying to unload homes at deep discounts. A group of these homeowners claim Pulte Del Webb created artificial demand for it's properties by a sales staff that created a sense of urgency partly through questionable lotteries. "We were told there were 80 people in the lottery for 15 homes. And lo and behold, every single person we knew got a home in that lottery,"said Pulte home buyer Cathy Wodka. Some of those "lucky" enough to get a house were then directed into questionable mortgages. Allegations that are the basis of at least one lawsuit with more expected. Pulte declined FOX5's request for an on-camera interview, citing the possible lawsuits. In a written statement, the builder claimed "None of our employees, agents or representatives is authorize to make any representations regarding economic benefits to be derived from ... the sale of our new homes." The buyers point to sales literature from Pulte Del Webb's Sun City's so-called collection offerings with a prominent red sticker promising price increases. Another brochure for three other home models lists closing prices next to it's base price. The message homeowners say they got - you'll make money before you close. Pulte called it a way of showing the "savings a buyer can realize by buying a home that is nearing completion." Matt Di Orio works for Nevada's Real Estate Division. Di Orio says Pulte home buyers have contacted his office about Pulte's sales techniques. While he won't make any judgements, he says Nevada statutes are clear about what real estate sellers can and can't say. "In fact, there's a certain disciplinary action that could result in guaranteeing profits in the future," said Matt Di Orio. But what the sales literature didn't mention was a coming 20% price cut. Buyers like Howard Jos-Berger were left with a home that dropped $100,000 dollars in value a few days after he bought it. "The sales manager admitted to us that he knew the prices were going to be lowered on the 27th . . . the day we closed," said Jos-Berger. As for Harmell, she's trying to figure out how to make December's payment of $30,000. "For the last year I've had my whole family at risk. My mother, who's 83, my daughter. It's a lot of pressure on me. I thought I was being smart but they outsmarted me," Harmell told FOX5. Did the company create demand and price hikes for it's new homes before cutting prices on October 2nd? That's the basis for one lawsuit and the allegations coming from a group of investors. They claim Pulte set up a system which seemingly approved anyone and everyone for a mortgage. Marty and Jan Moss bought two Pulte Del-Webb homes as investments and are now trying to unload one of them before it tanks the couple financially. "I was surprised we were approved for all these homes and I bet if we were applied for two or three more, they would have approved them," said Jan Moss, a Pulte home buyer. The Moss' and other Pulte home buyers, who are now out hundreds of thousands of dollars after Pulte slashed it's prices, claim they were duped by what they say were artificially high prices. Prices supported by some apparently questionable loans. Dyan Harmell bought 19 homes with 4-million dollars in mortgage debt. Pulte's in-house lender continued to sell her homes even as she showed a loss on her rental income . . . her sole income. "They had me close Monday, Wed, Friday on two houses each so it wouldn't show up on my credit report," said Harmell. In her sales agreement, Harmell agreed to sue an in-house lender or pay $5,000 more per home - a violation of federal law. In Pulte's written statement to FOX5, the home builder called the clause in Harmell's contract a mistake "that was corrected" and that home buyers are under no obligation to use it's mortgage company. But buyers Charlie and Cathy Wodka told FOX5 a different story. "We were told we had to use Pulte Mortgage and Pulte farmed us out," Cathy stated. Attorney Sean Claggett's office filed suit against Pulte and he's representing a dozen other buyers in what he expects will be legal action against the home builder, it's lenders and appraisers. "Pulte homes gave incentives to use Pulte Mortgage. Pulte Mortgage would receive a one percent fee for transferring the loan to preferred lenders, those preferred lenders would come back with an appraisal that would match the price that Pulte homes was selling," said Sean Claggett. Scott Bice, commissioner of Nevada's Mortgage Lending Division, says home buyers share some of the blame for getting into questionable mortgages. "It's tough for me to hear consumers say 'I've been harmed, I've been harmed.' When, in fact, they have some responsibility to say NO," said Bice. But it appears saying no wasn't a part of the discussion between Pulte, it's lenders and buyers looking to get in on a hot market. So, what's next for the empty developments? Ironically, some analysts say a next wave of investors may be the ones to profit if and when people like Dyan Harmell are brought to foreclosure. Nevada's Department of Mortgage Lending Practices say while Pulte's in-house lenders have been the subject of complaints, the number is not out of line with other mortgage companies. FOX5 asked the FBI if it's conducting any mortgage fraud investigations attached to Pulte Del-Webb financing. The FBI calls Nevada a hot spot for mortgage fraud but as a matter of policy won't comment on any specific investigations. If you are someone in the market, there are a few things you can do to protect yourself and your future home: First, if your real estate agent tells you this home is going to appreciate by a certain amount - don't believe it. Real estate can be a good investment but no one knows what the future market holds. Second, get an independent appraisal from someone who will give you the cold hard facts on what a piece of property is worth. Third, be realistic about your financial situation. Don't buy rental property unless you can handle the payments. Sometimes a home can rent out in a day . . . sometimes it can stand vacant for months. http://www.kvvutv.com/Global/story.asp?S=2637422&nav=2NiwTjR3