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Irvine Housing Blog

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Most loan owners who experience foreclosure claim victim status

Posted: 27 Apr 2011 03:30 AM PDT

In an appauling display of collective victimhood, a recent rally of loan owners and formerly owning renters came together to bond over their victim status.

Irvine Home Address ... 4391 BERMUDA Cir Irvine, CA 92604
Resale Home Price ......  $415,000

And some say this can't be real
And I've lost my power to feel tonight
We're all just victims of a crime
When alls gone and can't be regained
We can't seem to shelter the pain inside
We're all just victims of a crime

Avenged Sevenfold -- Victim

Whenever someone does not want to take responsibility for their own actions, they claim victim status. Our society is rife with this nonsense. Each time we bail out one group or another, we enable and encourage victim thinking. People portray themselves as a victims, and if a critical mass accepts these people are victims, then political pressure mounts to give them money. Perhaps I should start a taxpaying renter victim group to see if we can garner some government gold?

Rally: Most homeowners who experience foreclosure are 'victims'

Published: Wednesday, April 20, 2011 10:23 p.m. MDT -- By Amanda Verzello, Deseret News

SALT LAKE CITY — Utah is fourth in the nation in home foreclosures, and it's mostly the mortgage industry's fault.

Well, I do agree that lenders are more culpable than borrowers. But just because lenders are more responsible doesn't relieve borrowers of all responsibility for their actions.

That was the message voiced by politicians and activists Wednesday at a rally on Capitol Hill organized by the Utah Foreclosure Crisis Coalition.

Foreclosure prevention workbook? This is asinine. Do we really need a workbook to tell people to pay their mortgage? Wouldn't making their mortgage payment be the best form of foreclosure prevention? Are people so thick that they need this explained to them?

I could write a much shorter workbook. It would only be one page. The text would read, "Don't buy a house you cannot afford."

"They are not perpetrators," said Sen. Ben McAdams, D-Salt Lake, of the thousands of Utah homeowners who have recently gone through foreclosure. "They are victims."

What about the HELOC abusers who irresponsibly borrowed and spent their homes? What about the borrowers who strategically default? Are they victims, or are the banks their victims?

A report recently released by Irvine, Calif.-based RealtyTrac indicated that foreclosures were filed for one in every 98 Utah households during the first three months of this year.

Some people borrowed more than they should have, McAdams said, but they're in the minority.

Oh, really? Responsible borrowers are not losing their homes. The people who are losing their homes are those who over borrowed. Those who borrowed prudently and lost their homes due to a job loss are the minority.

"By and large I don't think that's the average person being foreclosed upon," he said. "The person who's losing their home today is somebody who lost their job because of the financial crisis."

McAdams said he thinks the mortgage industry—with its "predatory" lenders—should be more heavily regulated, but that lawmakers can't do it all.

"This is not an easy problem to deal with," he said. "What's needed, though, is leadership."

When victims have no rational policy they can get behind, they fall back on the nebulous, "we need leadership" bullshit to rally support.

One way distressed homeowners can find help is by meeting with a counselor whose services are provided free of charge through at least 11 organizations approved by the Department of Housing and Urban Development.

AAA Fair Credit Foundation counselor Ryan Carver said 94 percent of the homeowners who seek counseling from his organization are able to avoid foreclosure and that other centers should boast similar success rates.

Afton January, foreclosure prevention coordinator for Utah Housing Coalition, said counselors can help homeowners make "the wisest decision for them" when facing the possibility of foreclosure.

In the real world, strategic default is the wisest decision for most loan owners. Somehow, I doubt that reality is part of the foreclosure prevention counseling.

But due to federal budget cuts, the counselors may not be around for long.

"Our funding runs out in June," she said. "Some of our agencies have already seen these effects."

So that's why this rally is being put on. A group of bureaucrats implementing a bad idea are rallying support from the victims they are enabling so they can keep fostering the victim mentality. I hope their budget gets cut to zero.

The housing counselors have saved the state a lot of money—approximately $147 million between 2009 and 2010—which is why the lack of funding so unfortunate, said Linda Walker, housing supervisor for Salt Lake Community Action Program.

WTF is this woman talking about? How have they saved anyone any money? Perhaps the banks are thrilled they got a few more payments out of a select group of loan owners, but I don't see how spending money on foreclosure prevention saves the state anything. 

Nearly all the speakers at the rally said foreclosures don't just affect the people who lose their home, they affect whole communities because of consequences such as a decrease in property maintenance and an increase in crime.

"We are all victims of the housing crisis," McAdams said.


Yes, we are all victims of the housing crisis. A true victim is someone who through no fault of their own has to endure hardship resulting from the actions of others. People hit by drunk drivers are victims. A false victim is someone who suffers due to their own bad decisions. Alcoholics and drug addicts fall in the false victim category. Loan owners are responsible for the outcomes of their choices. They signed loan papers, and they failed to meet their obligations.

Unfortunately, there is one group of true victims in the housing mess: renting taxpayers. Those of us that didn't participate are being victimized by dumbass programs like these that take taxpayer dollars and squander it. We did nothing to warrant our money being stolen by the government and given to loan owners. We are the victims here.

The ATM got cut off 

Ponzi schemes go on as long as lenders provide more borrowed money. And as we all witnessed during the bubble, lenders will often take this to an extreme. Instead of pulling back in 2004 when prices were already far too high, lenders came up with the Option ARM as an "innovation" in finance that allowed them to push prices even higher.

Borrowers became adept at obtaining and spending this money, and many became dependent upon that income to support their entitlements. The owner of today's featured property is one such Ponzi borrower.

  • The property was purchased on 7/2/2002 for $300,000. The owner used a $285,000 first mortgage and a $15,000 down payment.
  • On 5/2/2003 the house was refinanced for $289,000.
  • On 8/9/2005 a new $400,000 first mortgage was underwritten.
  • On 21/11/2006 this property was encumbered with a $417,000 first mortgage and a $70,500 HELOC.
  • Total property debt is $487,500.
  • Total mortgage equity withdrawal is $202,500.
  • Total squatting has been for at least 17 months.

Foreclosure Record
Recording Date: 09/08/2010 
Document Type: Notice of Sale   

Foreclosure Record
Recording Date: 05/06/2010 
Document Type: Notice of Sale   

Foreclosure Record
Recording Date: 02/05/2010 
Document Type: Notice of Default

Do you ever wonder if I will run out of these? I suppose once they all lose their houses to foreclosure, I will see a few less Ponzis. Or maybe not.

Irvine House Address ...  4391 BERMUDA Cir Irvine, CA 92604   

Resale House Price ...... $415,000

House Purchase Price … $300,000
House Purchase Date .... 7/2/2002

Net Gain (Loss) .......... $90,100
Percent Change .......... 30.0%
Annual Appreciation … 3.6%

Cost of House Ownership
$415,000 .......... Asking Price
$14,525 .......... 3.5% Down FHA Financing
4.78% ............... Mortgage Interest Rate
$400,475 .......... 30-Year Mortgage
$89,842 .......... Income Requirement 

$2,096 .......... Monthly Mortgage Payment 
$360 .......... Property Tax (@1.04%)
$0 .......... Special Taxes and Levies (Mello Roos)
$86 .......... Homeowners Insurance (@ 0.25%)
$461 .......... Private Mortgage Insurance
$65 .......... Homeowners Association Fees
$3,068 .......... Monthly Cash Outlays

-$342 .......... Tax Savings (% of Interest and Property Tax)
-$501 .......... Equity Hidden in Payment (Amortization)
$26 .......... Lost Income to Down Payment (net of taxes)
$72 .......... Maintenance and Replacement Reserves
$2,323 .......... Monthly Cost of Ownership 

Cash Acquisition Demands
$4,150 .......... Furnishing and Move In @1%
$4,150 .......... Closing Costs @1%
$4,005 ............ Interest Points @1% of Loan
$14,525 .......... Down Payment
$26,830 .......... Total Cash Costs
$35,600 ............ Emergency Cash Reserves
$62,430 .......... Total Savings Needed

Property Details for 4391 BERMUDA Cir Irvine, CA 92604
Beds:  2
Baths:  2
Sq. Ft.:  1432
Property Type: Residential, Single Family
Style: One Level
Year Built:  1972
Community:  0
County:  Orange
MLS#:  W11050229
Source:  CRMLS
Status:  Active
On Redfin:  5 days
great location! walking distance to Irvine High and shopping area. at a quiet cul-de-sac. the owner has upgraded it with new paint and laminate flooring in living room and hall way a couple of years ago. kitchen is bright and is adjacent to the backyard. the den can be altered into a bedroom since there is closet in it.

real estate home sales


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