View Full Version : California Real Estate
harveyc
08-04-2010, 03:11 PM
Disclosure: I had close to a 30 year career in lending, though commercial agriculture lending, not residential.
I get perturbed when I hear or read of folks bashing banks for real estate and general economy woes, etc. In my opinion, the problem is primarily due to greed by both lenders and consumers. Everybody was trying to get rich and the pyramid scheme fell apart.
This morning my wife and I closed escrow on a house in Stockton, CA, eventually intended as a second residence. The home sold for $305,000 in 2005 and was financed 100% with a first and second mortgage. The real estate market peaked around mid-2006 and in early 2007 the owners refinanced their loans and apparently took some cash out, getting a total loan of $314,500. Although they continued to hold their jobs, they decided in 2009 that it wasn't worth making payments on a mortgage much greater than the value of the home. About a year ago they moved out and took the appliances with them. It wasn't good enough that they weren't losing a dime walking away from the home, they had to commit a crime and remove appliances as well. In early 2010 we attempted to buy the home on a short sale but a mortgage insurance company (i.e., loan guarantee) would only release the owners from liability if they contributed $25,000, payable over 84 months. The owners initially indicated they would go ahead and do that but then had a change of heart. Their lender foreclosed and we just bought the home for $105,000. Probably a little above what it's worth in this condition, though it should be worth more than our investment once we make some repairs, etc.
So the lending agencies (bank, mortgage insurance company, Fannie Mae) has lost well over $200,000 and part of that is because some greedy owners ripped out the appliances.
If people bought homes as shelter rather than viewing them as "get rich" investments, I don't think we would have ever seen the ridiculous escalation in home prices nor the collapse in values.
Just my $.02!
momoese
08-04-2010, 05:25 PM
I hear what your saying, but don't forget those that who bought out of a strong fear that the bubble would not burst and they would never be able to afford a home. I'm sure a lot of those people took risky loans. Actually we have good friends that did and are now getting a divorce and will have to walk away from the house because they are so upside down. They did not buy out of greed, they simply ran out of room for their growing family and buying a home in Encino was cheaper than renting here on the west side. Also they can still afford the mortgage, well she can, but she wants out bad and is willing to trash her credit to do it. She's talked to several knowledgeable people and they agree this is the best thing for her to do as crazy as it sounds.
When we were home shopping in 2004 we watched the local housing market rise about 5-10k a week in our area on houses in our price range. We had already at the time decided to "wait it out" after being out bid by over 100k on a small house that we loved and was priced way above market already, and we offered 30k over asking! We were out bid so many times it was just sickening. At one point I had 1000 door knockers printed and distributed in the area we wanted to buy pleading for someone to sell us their home! lol Yes we were desperate! Luckily we changed our minds about waiting it out when we found this home on the advise of our realtor. Our home is still worth more than we paid due to our location, but most are not that lucky. Also we took a sensible 30yr fixed and refied a year ago. :)
harveyc
08-04-2010, 06:27 PM
Yes, not everybody has been greedy, but greed is a big part behind the escalation of prices. I also suggest that your friend's wife's willingness to walk away from the obligation is also a form of greed.
FYI - in California if a borrower refinances their mortgage and later "walk" on the obligation, the lender can obtain a deficiency judgment against them for the shortfall between the home's value and the loan balance. If the loan is the original loan used to purchase the home, the lender is not able to seek a judgment against the borrower.
sunfish
08-04-2010, 07:57 PM
I should have sold 6 years ago
Scuba_Dave
08-04-2010, 10:49 PM
Anything & everything in a house can be removed as part of a sale
Including light fixtures, floors, gardens & appliances
Usually houses are sold with these items included
But if you own the house it is not a crime to remove them
We bought a $1200+ stove for $400 from someone that still owned the house
They were selling off what they could since they owned 2 houses
Be thankful the copper was not stripped out of the house
Abnshrek
08-04-2010, 11:21 PM
I should have sold 6 years ago
Is that way of saying you have to many plants or not enough space Tony? lol :^)
sunfish
08-04-2010, 11:53 PM
Is that way of saying you have to many plants or not enough space Tony? lol :^)
To many plants,I'd never have enough space.
No it just would of been a good time to sell.People were buying anything they could get there hands on.
momoese
08-05-2010, 12:59 AM
Yes, not everybody has been greedy, but greed is a big part behind the escalation of prices.
Agreed, we paid way more for a small house than I think we or anyone should have due to the uber fast run-up set about by the shady lending and people either wanting to make a quick buck or just trying to get into the market while they could.
I also suggest that your friend's wife's willingness to walk away from the obligation is also a form of greed.
Well I didn't even begin to touch on the whole story but I assure you if you knew you wouldn't say that. She really has no choice, and it has nothing to do with greed.
BTW, congrats on the new home purchase!! :bananas_b
harveyc
08-05-2010, 02:06 AM
You and I and millions of others are having to pay because of folks that walk away from their obligations. If someone simply is unable to pay, that's a different matter. Greed might not be the best description, but too many are just looking out for themself.
harveyc
08-05-2010, 02:16 AM
Anything & everything in a house can be removed as part of a sale
Including light fixtures, floors, gardens & appliances
Usually houses are sold with these items included
But if you own the house it is not a crime to remove them
We bought a $1200+ stove for $400 from someone that still owned the house
They were selling off what they could since they owned 2 houses
Be thankful the copper was not stripped out of the house
Sorry, Dave, but you are wrong. Fixtures are part of the collateral pledged for the loan and preservation of collateral is required. Destroying or wasting the lender's collateral is a crime. One of the loans held by a former employer of mine had collateral where someone removed two miles of irrigation lines. We reported it to the Sheriff who was eager to file criminal charges against our borrower but we had no way of proving the borrower committed the crime.
See some search results:
WikiAnswers - In foreclosure is it illegal to take appliances and fixtures with you that did not come with the house (http://wiki.answers.com/Q/In_foreclosure_is_it_illegal_to_take_appliances_and_fixtures_wit h_you_that_did_not_come_with_the_house)
Cops: Evicted man trashes house in foreclosure - Chicago Breaking News (http://www.chicagobreakingnews.com/2010/05/cops-evicted-man-trashes-house-in-foreclosure.html)
Lots more for your reading: is it a crime to remove appliances from house in foreclosure - Google Search (http://www.google.com/search?q=is+it++a+crime+to+remove+appliances+from+house+in+forec losure&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a)
You may have unknowingly committed a crime yourself in buying the stove.
I don't have to be thankful the copper wasn't stripped from the house. The prior owner should be thankful as he'd have that much larger of a deficiency judgment against him. The house would sell at a much steeper discount if it had wiring removed and/or been vandalized. I've seen plenty of those types of homes but not as many as I had thought when I first started looking into buying another home.
Jack Daw
08-05-2010, 04:34 AM
Is that way of saying you have to many plants or not enough space Tony? lol :^)
No, Tony just has a stupid neighbour, who thinks that Tony keeps taking pictures of her and her family to later... I don't really know what you cna do with that. :ha:
momoese
08-05-2010, 09:40 AM
You and I and millions of others are having to pay because of folks that walk away from their obligations. If someone simply is unable to pay, that's a different matter. Greed might not be the best description, but too many are just looking out for themself.
Everyone looks out for themselves, you and I included. No one is going to take a beating for the better or everyone else.
harveyc
08-05-2010, 09:47 AM
I do things all the time that I'd rather not do. If I promise to do something, I do my best to do what I said I'd do. I always try to do what I think is right, not what benefits me the most.
Scuba_Dave
08-05-2010, 09:50 AM
Actually when you sell a house you can stipulate what is & is not sold with the house
Plug in apliances are not required to be sold with a house unless stated in the sales agreement
You also have to prove who took the appliances, copper etc
harveyc
08-05-2010, 09:59 AM
Dave, read my first post again.
Fannie Mae did not remove the appliances. The prior homeowner removed them before the home was foreclosed on. The refrigerator is no big deal but removing built-in appliances like range/oven, dishwasher, and hood fan are all fixtures that are part of the real estate collateral.
You didn't specify if the stove you bought came from a house being foreclosed on by the bank or not. Removing fixtures from the collateral requires the lender's approval, though they obviously don't care as long as they get paid off.
Scuba_Dave
08-05-2010, 10:07 AM
You are not required to have any of those items installed in a house
Or required to leave them in a house when you sell it
You can take anything that plugs in
My stove is plug-in
But you are not required to have a stove in a house, hard wired or not
Dishwasher can be plugged in or hard wired
But one is not required in a house
Same with a microwave
My washer & dryer came with me when we moved
As did the microwwave (over stove), stove & fridge since they all matched
Not against the law to remove them
Unless they were specifcially listed on the loan ....not included
I could cook my meals on an outdoor grille if I wanted
Laundramat is around the corner
We don't have a dishwasher, If I put one in I can remove it
Appliances are replaceable items
momoese
08-05-2010, 11:21 AM
I do things all the time that I'd rather not do. If I promise to do something, I do my best to do what I said I'd do. I always try to do what I think is right, not what benefits me the most.
Sometimes the right thing to do is what benefits you and your family by removing yourself from a dangerous situation. Catch my drift?
harveyc
08-05-2010, 11:57 AM
Dave, you are wrong. Did you read any of the links above? What do you base your statements on? Things don't need to be specifically listed on your loan to be collateral. If they are "affixed", they are a fixture and are collateral. Spare me the arguments, I worked in this business for close to 30 years.
harveyc
08-05-2010, 12:04 PM
Okay, Mitchel, I've got it. I was basing my comments on your statement that your friend could still afford the payments. Many people "walk" simply to transfer their loss in value to the lending institutions.
A good friend of mine bought his house near the peak and I warned him against it. He was so eager to buy a house that he bought one that requires a two hour commute to work. His father-in-law sells real estate and told him he couldn't lose and I told him his father-in-law apparently hadn't been in real estate long enough to see how people had been wiped out before. I sure didn't predict it would get as bad as it has, though. In any event, my friend has been tempted to walk away since his home is now worth about 60% of what's owed on it but he realizes he made a commitment and still is fortunate to have a good job and can afford his payments and continues to do so. I believe society would be better and, possibly, real estate prices might not have declined as much if more folks were responsible like my friend.
Scuba_Dave
08-05-2010, 12:05 PM
I worked for a bank for 5 years
They aren't required
If they aren't specifically listed on the loan agreement they are not collateral
Not even required to be installed in the house
And I doubt removing them caused anywhere near $200k of loss
The Real Estate market caused the loss in value
WikiAnswers ?? Gimme a break
MediaHound
08-05-2010, 12:43 PM
Hopefully things turn around soon.
This housing market caused a lot of problems for a lot of people.
harveyc
08-05-2010, 02:19 PM
I hope prices increase some, but not a lot, even though I'd benefit from it as we plan on selling this house in a little over six years away after our son is out of high school. The lower prices make it affordable for folks that would not otherwise be able to buy a home, like my nephew. I'd like to see all of the vacant homes get sold and occupied so that new home construction could help create more jobs.
harveyc
08-05-2010, 02:53 PM
I worked for a bank for 5 years
They aren't required
If they aren't specifically listed on the loan agreement they are not collateral
Not even required to be installed in the house
And I doubt removing them caused anywhere near $200k of loss
The Real Estate market caused the loss in value
WikiAnswers ?? Gimme a break
The laws on fixtures may be different in some states and bank forms are slightly different, but all deeds of trust in California I've seen on billions of dollars of loans include a clause that specifically covers all fixtures. They do not need to be included on a separate agreement unless they are considered to be "personal property", such as a free-standing refrigerator when a UCC filing would also be filed with the Secretary of State (County Recorder in some states). If fixtures were in the house when the loan was obtained or used to replace such items, they are encumbered by the by the deed of trust.
Based on this Florida court ruling, it appears mortgages there can also cover fixtures.
Some items aren't clear so a UCC filing would be taken on such items along with a security agreement or loan agreement. At my former employer, we often took UCC filings on dairy milking equipment. I've never seen any lender in California take a UCC filing on built-in residential appliances. I was paid very well in my prior career and oversaw loan reviews because I was considered by many to be very knowledgeable and fair. I grew tired of pushing paper and enjoy my less profitable farming work much more.
I estimate the removal of items from the house we bought, including some closet doors, as reducing the value of the home by about $10,000, though it may have been more than that just because of the general appearance it left the home in.
Fannie Mae instituted a formal policy recently where they will review recourse loans (i.e., refinance loans) to determine if it's worthwhile to seek a deficiency judgment. I hope they follow through on this as it would help reduce the practice of borrowers removing collateral and increasing loan losses.
Scuba_Dave
08-05-2010, 03:43 PM
So did the bank replace everything since they were required to under law?
...No
Not required
harveyc
08-05-2010, 07:40 PM
Dave, where did you come up with the idea that the bank is required to replace collateral removed by their borrower? The borrower pledged fixtures as collateral and removing them is a violation of the deed of trust and a criminal action (as one of the first links I posted showed). I purchased the subject house "as is" at a discount to what I or others would have been willing to pay if the fixtures were still in place. Fannie Mae will probably seek and obtain a deficiency judgment against the borrowers (the borrowers had been warned of this when they refused to contribute funds as a form of settlement with the lender when we were in escrow to purchase it as a short sale a few months ago). I doubt that the lender or Fannie Mae would seek criminal charges since there is no benefit in it for them, though I imagine they would consider it if there was extensive damage like the case in one of the articles posted in my first set of links.
Scuba_Dave
08-05-2010, 08:07 PM
When did you prove it was removed by the borrower ?
harveyc
08-05-2010, 09:03 PM
Dave, when did you ask me to prove it to you?
The borrower's real estate agent who had listed it for him as a short sale earlier this year told me his clients had removed the appliances and sold all of them except a heating pellet stove. When I was in escrow to purchase it as a short sale the prior owner/borrower did agree to return the pellet stove to me as a condition of the sale. He initially agreed to execute a note to his lender (or Fannie Mae) as they required for their approval of a short sale but he changed his mind and broke that contract also. His real estate agent is now taking him to small claims court. I get the feeling that you'll still support his actions for some reason.
Scuba_Dave
08-05-2010, 10:58 PM
So you do not know they took the items out
Selling belongings to make ends meet is not against the law
Nor did doing so reduce the value to any degree
The Real Estate market did that
harveyc
08-05-2010, 11:16 PM
Dave, you don't seem to catch on very well and just argue for the sake of arguing. Yes, I know they removed the items. Their real estate agent that they hired told me they had and the prior owners told me that they would return the pellet stove at one time. I guess maybe some banker removed it and delivered it to them???
As I posted in examples above, it violates the deed of trust to remove fixtures without consent of the lender. Whether it's to "make ends meet" or otherwise, it is a violation of the deed of trust (or mortgage in the Florida case posted above).
Maybe you have crooks for friends as you seem to like supporting this sort of activity which has cost taxpayers money.
Steve L
08-06-2010, 07:45 AM
Dave, Harvey is 100% correct. I've been a banker for 36 years, am the president of one now. If the home being sold contained appliances, central air units, etc. and was appraised with same, and it was mortgaged, those items are considered part of the house and CAN'T be removed. It is felony theft if so done.
Steve
harveyc
08-06-2010, 09:39 AM
Thanks, Steve; boy you're sure brave. I thought bankers were all in hiding these days after being being made villains the press. Anybody that is generous like you in giving away pups will hopefully be spared such attacks! :D
I'm very glad I got out of lending when I did as many of my employers customers are dairy farmers who have had a terrible rough time the past two years, losing huge sums of money. I'm glad I avoided having to deal with that.
Steve L
08-06-2010, 10:18 AM
Thanks.
buckeye5755
08-07-2010, 08:58 PM
I'm a Banker too, and one of the things I deal with is Property Damage claims that we hold the Mortgage on. We too will look at the Finance Agreement to see what was included in the Mortgage. We aim to ensure the home's value is restored when damage takes place, and of course most homeowners would love to get the job done as cheaply as possible to keep the extra money. We always get told "were the big bad greedy bank", but when you give someone $200,000 to buy a house, it is damaged to the tune of $50,000, meaning it is only worth $150,000 if they walked away today, is it really smart to release that money to them, rather than release it to the Contractor responsible for repairing it, at the owner's choosing? But I guess I'm just greedy. lol.
As for the Real Estate crisis, their are some lenders who made some poor judgements in offering products that were risky, but in essence, if you are old enough to buy a house, read your loan agreement, sit down and figure the payment yourself, and make an adult decision on whether or not you can or cannot afford it. I have never to this day read a loan agreement that I could not decipher and acknowledge possible payment changes, rate increases etc. It shouldn't be easy to buy a house, and shouldn't be a decision someone makes if they aren't 100% sure that at time of closing, they can afford that house if the payment changes to the highest possible amount.
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