Jondi Gumz, Reporter at Large: Santa Cruz borrowers may not ben...

As Snidely Whiplash said to Nell, "Give me the deed to your land!"

Thank goodness for the California anti-deficiency statue, the mortgage debt relief act of 2007, and California's exclusion of cancellation of debt for income purposes on non-recourse debt.

(In other words, you can walk scott free and hang out in a home 6+ months w/o rent free until foreclosure)

Dude wrote:

Thank goodness for ... hang out in a home 6+ months w/o rent free until foreclosure

Some may differ with that view. Is exploiting the foreclosure process to live free in a house a good thing? If you aren't going to make the payments you contracted to make, why wouldn't deeding the house back be the right thing to do?

The above references are to the laws of this state; if you or others differ from that view why not lobby to change the law? That would probably help to mitigate the live-for-free situation I made light of, but would have other consequences as well.

disabuser wrote:

<quoted text>
why wouldn't deeding the house back be the right thing to do?

Looking at that specifically, its quite tricky. I am going to try for a short sale. Most of the research I did suggested that the lender won't listen to you until you're sufficiently late on your payments; the lender said as much to me in a letter (which was comical). A deed-in-lieu would be cleaner, but unfortunately the credit impact is the same as a foreclosure. The next best option is a short sale, but to get them to agree to it you 'have' to stop paying for a little while.

I agree.. that part of it is messed up.

Please be aware that "knowingly and willingly" halting your mortgage payments (so as to "qualify for a short sale") will, most likely, ruin your chances of any short sale approval.

I know this is harsh but, that's just the way it is.

Distressed home owners should consider "lobbying" the likes of Barney Frank and Chris Dodd (among others) in an effort to force them to correct the housing mess they helped create (along with Carter and Clinton).

the article mentions $1,569 as rent, versus $700,000 purchase price.

$700,000 clearly is for a house.

$1,569 gets you a 2-bedroom apartment at best.

How about comparing $300,000 purchase (condo) to $1,600 rent? That would not be so sensational, hm?

I have seen *rooms* advertised for over $1000 if close to the university and with a private bath.

Jondi Gumz is a terrible reporter. She tends to confuse the facts and fails to report the story the way it was intended. Hang it up chic.

no fan of jondi wrote:

Jondi Gumz is a terrible reporter. She tends to confuse the facts and fails to report the story the way it was intended. Hang it up chic.

at least she doesn't write the same boiler plate crap about how great the real estate market is here and that things are turning around... so buy now.... etc, etc etc...
she seems quite pessimistic, maybe even a bit critical, probably a good perspective these days

You know who is good, is the KPIG noon time Financial report by Jacob Lawrence (sp?) richpig.com I think. He does not pull his punches and has a very different point of view than the economic cheerleading that often accompanies these types of reports (be positive at any cost).

I must say that some of Jondi's writing is weak, but this article appears to be one of her better summaries of a complex situation.

Dude wrote:

<quoted text>
Looking at that specifically, its quite tricky. I am going to try for a short sale. Most of the research I did suggested that the lender won't listen to you until you're sufficiently late on your payments; the lender said as much to me in a letter (which was comical). A deed-in-lieu would be cleaner, but unfortunately the credit impact is the same as a foreclosure. The next best option is a short sale, but to get them to agree to it you 'have' to stop paying for a little while.
I agree.. that part of it is messed up.

My feeling is that the deed in trust is given in exchange for a buyer's control of the property and that making payments is the how you hold up your end of the contract. However I acknowledge that lenders are often not forthcoming when buyers are in trouble. As far as changes to the legal landscape, I wonder if there could be a process where a buyer could offer a deed in lieu of foreclosure to be effective at a date certain along with a request for a short sale. Lender would have to decide which they preferred; the property back or to have the existing owner help in its sale. The short sale option should include a requirement that lenders actually deal in good faith with that effort, which, from what I've heard is a problem.

As far as a deed in lieu of foreclosure, providing that payments were up to date at the point the property is transferred, having the same effect on credit as foreclosure, where many months of payments were not made, that is messed up. I'm not saying it should have no effect on credit ratings but to make those things equivalent simply defies common sense.

Lenders may think, as former Treasury Secretary Paulson, who made millions at Goldman Sachs bundling mortgages, did, that people should continue to pay if they are at all able. That is amazing hypocrisy from people who basically do just about anything regardless of the harm it does to others to make ungodly amounts of money, and would never accept some obligation that wasn't legally binding to act against their own interest. Furthermore that treats those who should have never borrowed and hence can't make their payment better than those who acted more responsibly in their lending. And it is those who were complicit in irresponsible lending and borrowing that created the situation where others would have to go against their own interests not to rid themselves of homes that are seriously underwater. The real estate bubble was a direct result of the abandonment of prudential lending standards.

ptiemann wrote:

the article mentions $1,569 as rent, versus $700,000 purchase price.
$700,000 clearly is for a house.
$1,569 gets you a 2-bedroom apartment at best.
How about comparing $300,000 purchase (condo) to $1,600 rent? That would not be so sensational, hm?
I have seen *rooms* advertised for over $1000 if close to the university and with a private bath.

She took the figure from the survey of large apartment complexes, not what most houses that were in the owner-occupied market would go for.

Who cares at this point? California's in pretty big trouble - so just bide your time.. in a few years we'll all be able to buy in Santa Cruz for 1/2 of what prices currently are.

Patience !

To quote Dr. Housing Bubble:

"After all the talk and trillions funneled into the abyss, the answer now looks to boil down to renting"

MIKE, you're the only poster using common sense. I've been to Santa Cruz many many times, and it is lovely. However, property values are way too high. In the last 10 years, I have observed the chasm between the Have and Have Not widen a great deal in Santa Cruz. Propery values must come down!