In A Hole? Stop Digging

Many of the repos I scoped out last summer, before making an offer on my current home, are still on the market. And the banks are continuing to get stupid, rejecting offers for a matter of a few thousand dollars.

Example: my neighbor two doors down, was in trouble and tried to short-sale his home. On the market for six months, he finally got an offer for $259,000. The bank rejected the offer, and countered for $261,000. The buyer walked.
Unable to sell, and the bank unwilling to truly grasp the situation, the owner went repo. The house has been vacant for three months, asking price $235,000.
That's right.
After rejecting the offer, the bank now owns the house and is having tremendous difficulty selling for $24,000 cheaper than the offer they rejected.
Also, as the owner of the house, the bank is additionally liable for the property taxes and association fees that go with it. Every day they own it, they lose money, as taxes are prorated on a per day basis. Figure in the cost of the dude who shows up once a month to whack the weeds, and the liability insurance they are obligated for, and it all adds up to one very stupid bank.

But it's not just one bank. I hear similar stories from my neighbors almost weekly.
My neighbor, who didn't actually own the house, offered to buy it from the bank at market rate (about 60K more than it's current asking) prior to foreclosure. They wouldn't work with him. Flat out refused.

Now that all this stuff is cheap, many folks who were not able to buy at inflated prices can now afford to.
The problem is overly tight lending requirements. The banks got burned by overly loose requirements, and have overcompensated in the other direction.
It's just very difficult to get funding now. And FHA is not making it any easier. They've just upped the required down payment, squeezing even more people out of the market.

This has actually been going on this way for a while. Lenders are too skittish. I gave the escrow company $3000 to start the process last year. FHA came back at me, and wanted to know where I got $3000.
Huh?
Same job for 17yrs. They already knew my level of income, and my current rent payment. Was it really that unusual for a gainfully employed middle-aged guy who had zero credit cards, no dependents, and minimal expenditures to have a couple of months worth of rent languishing in a bank account for a rainy day?
To please them, I had to show my bank statements for a year, just so they could see how such a reasonable sum of cash was acquired.

If they would stop giving prospective customers a hard time, and start lending to people with a steady work history and a halfway decent credit score, most of these empty homes would have people in them by now.
These are very cheap prices considering the size of California wages. Any two-earner couple with average paying jobs can easily afford a home of their own. IF the lending was loosened up to reasonable standards.

But it seems the finance people are chasing away the smaller and reliable good money after playing fast and loose with the large and reckless bad money.
Meanwhile...
Repos stack up, further depressing the already below market cost of reselling them. And the longer the banks holds the properties, the more money they will continue to lose.
It's a vicious circle of their own making.

California: To Hell In A Bucket

This is my ex-neighbor's house.
Originally purchased, newly built, in February,2007
It went back on the market, as a repo, ten days ago.

Five bedrooms, 3 bath, 3490sf.
Original purchase price: $486,000
Current asking price: $218,000

Earlier phases of this development were sold for about $100,000 more than these before the market started to show signs of softening. Those are showing heavy rates of repo as well as these in my tract are.
Currently, out of twenty homes on my side of the block, fourteen have already been resold as repos, are currently bank owned, or are soon to be returned to the bank.

This is part of the problem in California's budget mess:
Anybody with a working brain could tell you that 15-25% yearly increases in home values was not a sustainable situation when you actually stop to figure in the types of lending practices that were driving the housing market.
In California, property taxes are based upon most recent selling price of the home, not current market value. The tax is equal to 1% of assessed value. Also, a home purchased for a higher price is entitled to a reassessment at lower values when the market takes a dip.
SO, everybody in my neighborhood just had their property taxes cut in half, or better.
Increases in assessed values cannot be recaptured at higher than 2% per year. At this rate, assuming these properties do not change hands, it will take 36 years before these homes can be taxed at their original selling price, and this process cannot even begin until overall property values begin to rise.

So, all those $500K homes are now being taxed as $250K homes (or less), resulting in tragic losses of projected income for the counties and the state who rely upon it.

With the economy basically in the shitter, and unemployment above 10% and climbing, there will be fewer people able to afford the inflated prices their mortgage reflects, and more overpriced homes will continue to flood the market.

California, being governed by the weakest and feeblest minds politics can buy, took advantage of the housing boom years, and all of the windfall tax revenue increases as nearly every pre-existing home was flipped at the ever increasing prices.
Yeppers, you guessed it: they inflated government spending, added new programs, and rewarded their political benefactors.
And they did it with orgasmic delight, never stopping to think that the party keg just might run dry.

Water Boarding?

Mr. Dilettante, Stinger, and myself saw this wicked looking contraption at Mall Of America. Must be some kind of enhanced interrogation device.

Not sure, but I think you first have to open it up, and then put the suspect in here.








Close the lid and turn it on...



And then wait for the confessions to spew forth.

I think I could go for something like this.
I'll tell you everything... just don't turn it off!

Twin Cities Diary

Saturday morning, King David picked me up and we met for breakfast with fellow bloggers Mr. Dilettante and The NightWriter. Some cool place in downtown St. Paul called Key's Cafe. I've already mentioned the pancakes,didn't I? And the coffee?
First cup of coffee I've had since surgery (the swallowing is improving), tasted great, and I surprised myself by drinking the whole cup.

I can imagine that I must have been putting on quite a show for the guys, choking down itty,bitty bites of pancake and small sips of coffee, but they pretended not to notice.

Later that afternoon came the event we were all gathering for: what just may be the first blogger wedding in history.
Short version of the story: Ben and the NightWriter became friends after meeting on the blogowebs. Ben soon became even better friends with NightWriter's daughter, the Mall Diva (reportedly, she owns something like 63 pairs of shoes!). A courtship ensued, leading to last weekend's blessed event.

To further bloggerize the whole affair, the groomsmen were all friends who Ben had met the same way, with King David serving as Best Man.
Full wedding coverage, live blogging by Mr. Dilettante, photos, commentary, and it's aftermath can be found here.

A great occasion, great weather, and some genuinely good people made the whole day a truly memorable one. And I had the opportunity to meet in person so many of the same people who I've either read or befriended on line: King David and Mocha Momma, Mr. & Mrs. Dilettante, NightWriter and the Rev. Mother along with their daughters Tiger Lilly and The Diva, Ben, Bike Bubba was there with his lovely wife, Brad and Jennifer Carlson, Stover, Surely Dave and many others.

Sunday was spent with Mr. Dilettante and his family. A trip to Mall Of America, where we met up Stinger, who also happens to be Mr. D's kid brother.
Together, the three of us man folk had one finger nail polished to a nice sheen while we fended off the insistent sales pitch of the young gal who was trying to sell something we didn't want or need.
But at least she was kinda cute, not that it helped her cause any.
I also had the opportunity to challenge an adorable, if overconfident, young Cheesehead to some competitive skeeball in the arcade. Beat him twice. A foreshadowing of this years football season,maybe?
(Hey, Mr. D... the offer is still open if you want to get rid of him.)

Afterwards, Mr. D showed me around the region, including a trip over that bridge that collapsed a year or two ago. I'm still here, meaning it didn't fall a second time. I think they got it figured out now.
Later was a rare experience for me: Sunday Mass where english wasn't a second language. How is that possible?
After a long visit with the Dilettante family, some good conversation, and music (Mr.D knows his tunes) it was time for me to let them have their lives back.
As we parted ways, he summed it up: this isn't goodbye. It's see ya later, and bring a fishing pole.
Yes, another trip needs to be in the making.

Monday was spent monopolising King David's life. The Royal Family lives outside the city, in a little Mayberry kinda place called Rockford. Small town America on full display, with a Memorial Day parade (I like parades, and marched my share of them), solemn observances at the town cemetery, and quaint stuff like that. It was cool.
Point of interest for Jade: the high school drum section was mostly girls. Even the three or four quads were girls.
I liked the sign posted outside the local bar: "Firearms not Permitted". By contrast, California posts things like this at the state line.


And then it was on to Cabela's, after a trip past a local bison farm. The bison didn't seem to enjoy being gawked at, and made sure I was aware of that fact with one of the smaller bulls attempting a mock charge.
We don't have Cabela's here in California, but we got Bass-Pro Shops. Very similar, but I liked the Cabela's better.
We spent hours in there. Kinda like a Disneyland for middle-aged guys. Who needs roller coasters and life-sized cartoon characters when there are all those guns to handle, stuffed trophies to admire, and a game fish aquarium to amaze you?

King David and his family wore out whatever was left of me from the day before. Once again, another full day, lots of laughs, stories, and good feeling all around.

I can't overstate it. I had a wonderful weekend, great visits, and cemented solid friendships with solidly good folks. And thinking that I almost didn't make the trip, I'm sure glad I did.
Can't wait to return and have some more fun.
And next, time I will bring a fishing pole.

Thoughts On The Twin Cities

The Mall Of America: Big WOW! If you get the chance, you really do need to see it. But just once. Don't go back.

It wasn't cold at all. I don't know what those folks are complaining about.

I spent most of Tuesday exploring the seedy underbelly of downtowns Minneapolis and St. Paul. Minneapolis was dirtier and darker, but still, nothing like the ghettoness we've managed to build in Los Angeles. Not even close.

You can't go two blocks without passing yet another lake.

Keys Cafe in St. Paul has great coffee, and serves up a wickedly tasty strawberry-banana pancake.

Crazy and silly beer regulations concerning alcoholic content and point of sale.

Not everybody speaks as they do in "Fargo", but enough do to make it amusing.

Somalis are everywhere.

For a metropolis, it's really rather small. Even during rush hour, traffic isn't near as bad as I thought it would be, and light enough to make southern Californians envious.

Jetting Off, Again

I will be gone from the keyboard for the weekend while I gather with friends to celebrate the nuptials of Ben and the Mall Diva on Saturday, followed by a couple days' exploration of the Twin Cities region.

If I'm not back by Wednesday, just tell the cops that Mr. Dilettante and King David are most likely the "Persons of Interest" they should be looking for.

The Jerry Brown Era Is Looking Better Than It Used To

Now the voters of California have spoken, and defeated all four of the governor's budget proposals, the budget cutting will have to begin.
And along with it, the moaning and whining, while those who have been rebuked have already set out to change the rules that would nullify any future wrath the voters are sure to feel.
It's a fixed game, where democracy is but a charade, and judges rule according to the whims of the power brokers.

If you've been watching the news you heard all the commentary, but the commentary is incomplete.
I can go into detail explaining how what was once such a prosperous place went so badly bad in the last 15-20 years, but such an endeavor would require me to turn this blog into a California Political History blog, take weeks of postings, and further bore the snot out of my readers, none of whom are in California.

I will say this: this place is broken beyond repair. The state has become ungovernable, and nothing can save it short of splitting it up into separate entities. Personally, I'd propose making three states out it.
That won't happen in my lifetime, and when it does, it will begin with the gunfire of secession in the far north.

Other solutions would require a state constitutional convention. Also a bad idea, since the power brokers of any convention would be the same clownish special interests who looted the place to begin with.

If you want to know what happens when One-Party Rule, socialist ideals, and public employee unions collude, just look at California.