“The defendants knew the loans offloaded onto Allstate were a toxic mix of loans given to borrowers that could not afford the properties, and thus were highly likely to default,”
Thus starts a $700 million lawsuit filed by Allstate against Bank of America, Countrywide, and Angelo Mozilo and other officers of the former Countrywide Financial.
This is going to be interesting on two fronts.
First, if this lawsuit gains traction, the door for corporations, pension funds, and unions that have bought up the mortgage debt that was misrepresented could be opened up to the attorneys. The feeding frenzy that is going to be going on could be epic and devastating to the lending institutions that packaged up the bad debt and sold it as quality products.
Second, there is a great chance that Angelo Mozilo is going to be crushed by this lawsuit. The former Countrywide CEO thought he had survived the legal troubles that from his actions in the meltdown of his company. He is now living the life of Riley thinking all his troubles were behind him. Now he may be the target of the 3 piece suited sharks.
We have watched the corruption of the real estate and lending industry over the past decade. Now that the truth is out the big dogs are coming to get their revenge. So what that 3 million families will have their credit destroyed and their futures imperiled. They were not able to go after the big boys like Countrywide and Bank of America.
But these same companies took advantage of even bigger targets, the huge pension funds and insurance companies. As we see with Allstate, they have the attorneys and money to fight the battles the little guys have to walk away from.
This should be very interesting to watch. Get your popcorn.
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A modern, green home design was made by Chrystalline Artchitect for their client, Ms. Tan. This house is located in Jakarta, Indonesia, a crowded city with hot environment due to its complexity. The sustainable design was focused on the way to overcome the hot environment and natural lighting.
As the green construction was focused on good air flow inside the house, this house was designed in a such way, so the level difference between guest room and master bedroom can provide a constant air flow towards the garden section which is located in the east side. With this garden position, all of the house parts’ openings are directed to it. This is done to avoid sun’s heat on sunset time from the west. The slanted landscape also support the air flow through the inner part of the house. The landscape also works as a camouflage on the lower level guest room, as it emphasize on the east side of the structure which will appear like a one-leveled building with is only the master bedroom.
A massive surface was created on the west part of this green building, acts as a hot buffer for the openings of master and guest bedrooms. This surface provides lower openings that can decrease the intensity of sunlight, so the temperature can be kept in a good condition. This surface is covered by marble stone, creating a beautiful accent for the house.
The west side of the building consists of service rooms, which include a powder room, stairs and a master bathroom.They are particularly designed as a hot buffer too.
The inner courtyard was designed to have a maximum opening as far as 12 m, completed with frameless glass. This condition provides no view blockage, creating a feel of larger space and blending with the nature. On the side of the yard, right below the children’s bedroom, a pond was built a long the main room. These areas provides the air circulation and natural lighting for the eco friendly living. A TV acts as the central point of the room, hanged on the wooden void.
A cantilever stair with frameless glass railings is connecting the upper floor with the living room in the second floor. Bedrooms at the upper floor are connected by a bridge that transverse in the middle of the void. The air grill on the roof glass above the main stair becomes the out way for the circulating air from the main room to the upper floor.
By these green house designs, good air circulation of the house can be achieved and a healthy environment can be provided in the middle of a crowded city in Indonesia.
All my bags are packed I'm ready to go I'm standin' here outside your door I hate to wake you up to say goodbye But the dawn is breakin' it's early morn The taxi's waitin' he's blowin' his horn Already I'm so lonesome I could die
So kiss me and smile for me Tell me that you'll wait for me Hold me like you'll never let me go Cause I'm leavin' on a jet plane Don't know when I'll be back again Oh babe, I hate to go
These economic woes are prompting families to leave the state. With new household formation near historic lows as we get off the Ponzi juice, there is little tangible demand for housing, and prospects for this demand increasing appear weak.
December 27th, 2010, 3:20 am -- posted by Jan Norman
In the past nine years, almost 108,000 more people have moved out of Orange County than moved in, according to newly released data from the state Department of Finance.
Source: California Dept. of Finance
If everyone wants to live here, why are so many people moving out?
The out-migration was higher in 2005 through 2007, which would coincide with the soaring price of Orange County housing. Between 2009 and 2010, 6,475 residents moved out, but the county’s population grew 28,190 because 12,223 people from foreign countries moved in, the Dept. of Finance said.
Since 2000, Orange County’s population has increased 335,882, the Dept. of Finance estimates. That growth comes from residents of other nations, legal and “unauthorized” as the department labels them.
Loren Kaye, president of the California Foundation for Commerce and Education, does the calculations for the whole state in this article for Fox & Hounds Daily. California gained 350,000 residents from 2009 to 2010, he reports but 72,484 more people moved out of state than moved in from other parts of the United States. The gain was from more births than deaths of current residents and foreign immigrants.
The Dept. of Finance based its estimates on driver license address changes, birth and death records, tax return data, Medicare and Medi-Cal enrollment, immigration reports, elementary school enrollments and number of people living in group quarters.
The projected $28 billion state budget deficit with shortfalls in excess of $20 billion a year anticipated by the California Legislative Analyst’s Office
Unemployment that is 30% higher than the national average (12.4% in November)
California’s credit rating is among the lowest in the U.S.
California’s loss of 1.3 million manufacturing jobs
California’s 41st ranking in creating scientific, technical, engineering and math jobs
“In just a couple of decades, California has gone from being America’s economic start, a destination for ambitious people from around the world and abundant with opportunity, to home of some of America’s most depressed communities,” Watkins wrote.
And what's worse is the supposed prosperity of the last couple of decades was built on a foundation of Ponzi borrowing on inflated home prices.
“California isn’t broken,” replied State Treasurer Bill Lockyer and Stephen Levy, director of the Center for Continuing Study of the California Economy, in this Los Angeles Times opinion piece. Among their arguments:
California’s state government general fund expenditures are $2,246 per person less than 10 years ago.
The state’s number of businesses per capita “held steady” from 2000 to 2009.
The state’s share of domestic film industry jobs is 45% in 2010, compared to 44% in 2000.
Businesses moving to other states accounted for “just 1.7% of California’s job losses” from 1992 to 2006, according to the Public Policy Institute of California. (It did not include data for 2007 to 2010.)
California’s gross state product grew 27.2% from 1999 to 2009, higher than the U.S. as a whole.
“California no doubt faces serious challenges. But our obstacles are not insurmountable,” Lockyer and Levy wrote. “California has the most diversified economy in the country. It has the most diverse population and the youngest.”
With all these people moving out, who is going to be buying Orange County homes?
Irvine Ponzi of the day
I have my own indicator of when the housing market will recover: the day I can't find a property for sale with HELOC abuse. I have contended for years now that mortgage equity withdrawal and peak buying has created far more debt than borrowers can comfortably pay without continued Ponzi borrowing. Until the Ponzis are wiped out, they will implode a few at a time and continue to put distressed properties on the market.
Most distressed Ponzis are waiting for house prices to come roaring back so they can resume their unconstrained borrowing and prolifgate spending. That isn't going to happen. The weight of distressed inventory is going to keep the market from apprciating for quite some time.
Today's featured property was purchased for $494,000 on 12/8/2003. The owner used a $444.600 first mortgage and a $49,400 down payment.
On 12/23/2004 she refinanced with a $455,000 first mortgage and obtained a $73,312 HELOC.
On 12/28/2006 she obtained a $572,000 Option ARM with a 2.25% teaser rate.
On 6/26/2007 she obtained a $123,500 HELOC.
Total property debt is $695,500 plus negative amortization.
Total mortgage equity withdrawal is $250,900.
Total squatting time 11 months so far.
Foreclosure Record Recording Date: 08/30/2010 Document Type: Notice of Sale
Foreclosure Record Recording Date: 05/27/2010 Document Type: Notice of Default
Home Purchase Price … $494,000 Home Purchase Date .... 12/8/2003
Net Gain (Loss) .......... $116,060 Percent Change .......... 23.5% Annual Appreciation … 3.8%
Cost of Ownership ------------------------------------------------- $649,000 .......... Asking Price $129,800 .......... 20% Down Conventional 5.07% ............... Mortgage Interest Rate $519,200 .......... 30-Year Mortgage $135,455 .......... Income Requirement
$2,809 .......... Monthly Mortgage Payment
$562 .......... Property Tax $0 .......... Special Taxes and Levies (Mello Roos) $108 .......... Homeowners Insurance $0 .......... Homeowners Association Fees ============================================ $3,480 .......... Monthly Cash Outlays
-$482 .......... Tax Savings (% of Interest and Property Tax) -$616 .......... Equity Hidden in Payment $257 .......... Lost Income to Down Payment (net of taxes) $81 .......... Maintenance and Replacement Reserves ============================================ $2,720 .......... Monthly Cost of Ownership
Cash Acquisition Demands ------------------------------------------------------------------------------ $6,490 .......... Furnishing and Move In @1% $6,490 .......... Closing Costs @1% $5,192 ............ Interest Points @1% of Loan $129,800 .......... Down Payment ============================================ $147,972 .......... Total Cash Costs $41,700 ............ Emergency Cash Reserves ============================================ $189,672 .......... Total Savings Needed Property Details for 35 COLUMBUS Irvine, CA 92620 ------------------------------------------------------------------------------ Beds: 3 Baths: 1 full 1 part baths Home size: 1,507 sq ft ($431 / sq ft) Lot Size: 5,000 sq ft Year Built: 1978 Days on Market: 249 Listing Updated: 40310 MLS Number: P731953 Property Type: Single Family, Residential Community: Westpark Tract: Othr ------------------------------------------------------------------------------ According to the listing agent, this listing may be a pre-foreclosure or short sale.
Bye, bye Miss American Pie Drove my Chevy to the levee but the levee was dry And them good old boys were drinking whiskey and rye Singing this'll be the day that I die This'll be the day that I die
Oh, and there we were all in one place A generation lost in space With no time left to start again
My interest with American Gothic, a classic of American art, began when it was first proposed as the cover to The Great Housing Bubble. I liked the use of American Gothic because it has become a symbol of Mr. and Mrs. America. The work was painted in the Great Depression, which is part of the reference of the book title, but with some modernization we see how today's American family is deeply underwater on their mortgage -- a mortgage that was their reservior of unlimited spending money. Parody's of American Gothic are fairly common, and I have assembled many pieces of parody art and added my own words to bring out the American Ponzi.
There are early housing bubble cartoons with Mr. and Mrs. America. And my own attempts to capture Mr. and Mrs. Ponzi.
Mr. and Mrs. America got caught up in an easy money lifestyle fueled by cheap debt.
Mr. and Mrs. America are facing low property values and mortgage payments much higher than staying in a rental.
Once they quit paying, they got to stay rent-free in their houses for a very long time.
Our society was changed forever.
What were we to do about the low house prices.
People want houses because they want to get rich owning them.
Nobody wanted to be left out.
Free money brings entitlement. People get because they deserve, not because they earn.
Many people found their poor decisions landed them in a difficult predicament.
And now I leave you with American Ponzi: Redefining a cultural icon.
If you bought a property in early 2008, do you have any reason to believe your house is worth more today?
Home Purchase Price … $807,000 Home Purchase Date .... 5/29/2008
Net Gain (Loss) .......... $(18,340) Percent Change .......... -2.3% Annual Appreciation … 1.5%
Cost of Ownership ------------------------------------------------- $839,000 .......... Asking Price $167,800 .......... 20% Down Conventional 5.07% ............... Mortgage Interest Rate $671,200 .......... 30-Year Mortgage $175,110 .......... Income Requirement
$3,632 .......... Monthly Mortgage Payment
$727 .......... Property Tax $267 .......... Special Taxes and Levies (Mello Roos) $140 .......... Homeowners Insurance $145 .......... Homeowners Association Fees ============================================ $4,911 .......... Monthly Cash Outlays
-$891 .......... Tax Savings (% of Interest and Property Tax) -$796 .......... Equity Hidden in Payment $333 .......... Lost Income to Down Payment (net of taxes) $105 .......... Maintenance and Replacement Reserves ============================================ $3,661 .......... Monthly Cost of Ownership
Cash Acquisition Demands ------------------------------------------------------------------------------ $8,390 .......... Furnishing and Move In @1% $8,390 .......... Closing Costs @1% $6,712 ............ Interest Points @1% of Loan $167,800 .......... Down Payment ============================================ $191,292 .......... Total Cash Costs $56,100 ............ Emergency Cash Reserves ============================================ $247,392 .......... Total Savings Needed
Property Details for 27 OROVILLE Irvine, CA 92602 ------------------------------------------------------------------------------ Beds: 3 Baths: 2 full 1 part baths Home size: 2,333 sq ft ($360 / sq ft) Lot Size: 5,131 sq ft Year Built: 2002 Days on Market: 98 Listing Updated: 40476 MLS Number: S632323 Property Type: Single Family, Residential Community: Northpark Tract: Mnd2 ------------------------------------------------------------------------------ Exceptional 3 Bedrooms, 2.5 Baths home plus tech center. Located in the heart of resort-style community of Northpark on a cul-de-sac & interior tract location. Highlighted features: Oversized backyard with custom Outdoor fireplace, BBQ island, and Patio cover. Professionally Landscaped with citrus trees, roses, bougainvillea, cypress trees and Custom Hardscape. Elegant Maple Hardwood floors, Chef's Gourmet Kitchen features double ovens, built-in refrigerator, five burner cooktop, Granite kitchen counters and Large Center island. Maple raised panel Cabinets, Eat-in kitchen, Family room with hearth, Karastan designer carpet, Designer paint colors, Plantation shutters, Crown moulding, Arched doorways and Architectural windows throughout bringing in lots of natural light. 10' Ceilings make a dramatic Formal living and Dining room. Master Suite with walk-in closets, & French doors leading to balcony. Porte Cochere motor court driveway and two-car garage for extra parking. Excellent schools!
“The defendants knew the loans offloaded onto Allstate were a toxic mix of loans given to borrowers that could not afford the properties, and thus were highly likely to default,” 
