The Family Treehouse

Here is a quick rundown on how my immediate family has been affected by the housing bubble. Increased affordability has helped my mom and dad (separately) become homeowners again, but unfortunately it will be a struggle for my younger brother to hold on to his home.

• Mom, Santa Maria CA, just bought a home with her long time boyfriend, paid cash, retired.
• Brother, Aliso Viejo CA, has lost all equity on the home he and is wife purchased in 2005. Their ARM will adjust in 2 years, to approximately 50% their income. It will be difficult to work something out with the bank since they took out a 2nd when purchasing the home.
  
• Father, Puerto Vallarta/Stocton CA, moved to Mexico from Stockton around 5 years ago, now purchasing a bank owned home in Stockton. Currently under contract. Retired.
  

Stealing Minutes for Buying Time

Things are busy here. It's the end of our fiscal year, and I have also been traveling more than usual. Luckily Paul has been filling in.

We are also doing homework on a couple homes we are considering. More details to come.

I visited my Dad in Stockton last weekend at their new place. Haven't been down there in a long time. His wife suggested that the bars on the windows and around the front of the yard in the neighborhood are a decorative flair preferred by Hispanics.....I have to say I have never heard this before. But since they are the ones that have been living in Mexico, I wasn't about to contradict her. In any case, no shortage of vacant homes in the area.

Gotta run.....

The Irony of the Fall

It is ironic that the financial institutions, who are now going, hat in hand to Washington, still insist on playing hardball with their troubled borrowers, and those attempting to buy their properties.

Lack of oversight and public scrutiny exacerbated this financial meltdown as banks hastily approved loans and threw cash at anyone that could “fog a mirror”. So forgive me if I am incredibly nervous about the haste at which this rescue plan is coming together. Shouldn’t we subject the financial sector to the same scrutiny that they subject their troubled borrowers to?

From my feet on the ground perspective, the banks are making things worse by holding on to assets when they get a "reasonable offer." For example, the foreclosure my father purchased for under $140k in Stockton had a much higher bid on it back in May. We know because, the gentleman who put in the bid stopped by and asked what he paid for it. Our personal experience has been similar. Banks are holding out for more $$ only to pass up offers that will be considered generous in 6 months when they finally capitulate.

So my proposal is this…..If troubled borrowers are going to be given better terms by the Fed, how about we also make provisions that banks must make every attempt to sell their homes to people who will actually occupy them. This would help stabilize communities, and give first time buyers a fighting chance against all the investor money. It also puts something on the table for everyone…not just the ubiquitous homeowners.

Of course my favorite idea comes from Tanta of Calculated Risk:
"What I really really like is the idea of subjecting CEOs to the same petty humiliation everyone else gets treated to. I suggest that for every separate asset these CEOs sell to the government, they be required to write a Hardship Letter over a 1010 warning (that's a reference to the statute forbidding lying in order to get a loan) explaining why they acquired or originated this asset to begin with, what's really wrong with it in detail, what they have learned from this experience, and what steps they are taking to make sure it never happens again."

A Family Tree of Renters

Recent events made me realize I have very few immediate family members who actually own a house in California. Both my husband's and my family are long time Californians (3 or so generations).

So here goes...

My Side -
Grandpa - Rents (a renter ever since I can remember)
Mom - Rents (sold in fall of 2006, not sure if she plans to buy anytime soon)
Dad - Moved to Mexico to retire since CA was too expensive (previously owned in Stockton)
*Brother - Purchased a couple years ago in Orange County.
Uncle living in Sac - Rents (but recently moved in with girlfriend who owns)

Hubby's Side
Parents - Rent (owned many years ago)
Brother-in-Law & family - Renting (never owned)
*Grandma - Owns

So this is around a 25% ownership rate in my close family. Nowhere near the national average. Hopefully the market correction will allow most of them to be owners.....as I know many of them would like to be (especially my in-laws)....but they were also smart enough not to buy into the get in way over our heads now or be left out forever hype.

Frustrating Foreclosure Findings

Last year my father bought a foreclosure in Stockton. It wasn't an easy process. The bank was slow to capitulate, the realtor was pushing a lower offer that she was double ending etc.

With many other homes for sale on his street, my father is now attempting to purchase another foreclosed home for his mother (my grandma) so she can be nearby, but still feel independent. After much wrangling with my grandmother, he still had the bank to contend with. When he went to sign the papers on this modest home, he was in for a nasty surprise. The bank (BofA)included an addendum, which was over 15 pages, and was downright atrocious about it (giving a 2 hour window to sign etc.). As much as this home made for the ideal situation for my grandmother, I was pleased to hear that he walked away. In my mind, no home is worth signing away all rights and releasing all liability (and then some), the way they require in their addendum (especially on a home priced less than 100k).

We were in a very similiar situation and eventually walked as well. Our take away from the process, when bidding on a foreclosure, ask for the addendum up front.

House Swap?

Looks like desperate times call for desperate measures. I spoke with my dad over the holidays (who doesn’t know about my secret life as a RE blogger), and he was telling me how they were trying to work out a “house swap” with someone in El Dorado Hills.

Background: Dad sold his home in Stockton, and moved to Puerto Vallarta to retire about 6 years ago. They have been trying to sell their home in PV for the last 2.5 years. With the proceeds, they want to buy a cheep home in the states for summers (they were looking in Pollock Pines) and one in Mexico for the winters. If they were to do the swap, they would simply move back to the States.

Luckily, my dad has found some of the online tools like Zillow, and has realized that these people are still asking 2005 prices for their home. All of the folks he has been in contact with are underwater on their homes and looking for a way out.

En Venta (for sale)

Well, I wasn't exactly successful at cold turkey. I caved about mid week and went online to see if we hit the 17,000 mark.

Some brief real estate observations from my trip:

Lots of speculative real estate for sale south of the border (Puerto Vallarta). My father moved down there with his wife 4 years ago, because California (Stockton) was too expensive for them to retire. They are trying to sell their place (for 2x what they bought it for), and have had it on the market for over 2 years....along with the rest of the neighborhood.

Nothing like seeing living conditions in a third world country to make you appreciate even the humblest of houses in the Central Valley. I feel rather disgusted with my wish list knowing theirs includes things like electricity and drinkable running water (apparently they shut off the public water overnight).