miss the latest, greatest article by Keith Jurow.
{with addresses for the two prior must read articles}
While this "scenario" played out possibly somewhat differently in the other sand states - Nev, Fla & AZ - what is clear is that "everybody was doing it". And, many of them, and most of U.S. got Pucked in the process.
Clearly, some were able to not only pull out all of their speculative equity, but many were able to "save" it in other investments. Far more were not, and are now - again clearly - looking at doing a strategic default to extricate themselves from the underlying debts.
Notice, IF they did pull out most if not all of their equity, the remaining HELOC that they have, is relatively very small. That loss they MIGHT have to still take. But, even with that loss, the total "profit" has been totally extricated.
IF they pulled it out in time, and reinvested it safely, they got away "like a bandit".
If they spent it on bling, they are now BK candidates.
WE are all "The Losers" in this house of card sharks.
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Madness of HELOC Lending During the Bubble Years
Aided by the seemingly limitless desire of banks to lend money, homeowners opened an incredible number of HELOCs during the bubble years of 2004-2006.
Nowhere was the madness of HELOC borrowing more astounding than in California. During the two key years of 2004 and 2005, a total of 1.43 million HELOCs were originated in California just for the purchase of homes according to figures received from CoreLogic.
Wait a minute, you say. That's more than the total number of homes sold in California during these years. Correct. A total of 1.25 million existing single family homes were purchased in California in 2004-2005 according to the California Association of Realtors.
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One example:
"The original sales price is not clear from my records, but it looks as if the buyers paid about $1,200,000 in 1997. There was a $900,000 loan which I assume was 80% of the total purchase price. The original owners were a couple, and after the point where only the wife is on title in 2004 -- presumably after a divorce -- the HELOC abuse became truly remarkable.
On 3/11/2004 the wife appears alone on title, and the first mortgage is $999,800.
On 8/30/2004 she refinanced with a $1,000,000 first mortgage.
On 12/28/2005 she refinanced with a $2,170,000 first mortgage.
On 2/1/2006 she got a HELOC for $250,000.
On 8/22/2006 she refinanced with an Option ARM for $2,500,000.
On 11/15/2006 she opened a HELOC for $490,000.
On 8/1/2007 she refinanced with another Option ARM for $3,225,000.
On 10/22/2007 she opened a HELOC for $500,000.
Total property debt is $3,725,000.
Total mortgage equity withdrawal is $2,725,200 during a four-year stretch."
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Home Equity Lines of Credit, the Next Looming Disaster?
http://www.realestatechannel.com/us-markets/residential-real-estate-1/housing-bubble-home-equity-lines-of-credit-heloc-second-mortage-lien-holders-home-foreclosures-bank-failures-the-new-york-times-keith-jurow-3122.php
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Is Massive Refinancing During Bubble Years a Ticking Bomb?
http://www.realestatechannel.com/us-markets/residential-real-estate-1/real-estate-news-mortage-refiancing-real-estate-bubble-fdic-financial-crisis-inquiry-commission-president-obama-home-equity-lines-of-credit-heloc-2633.php
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Investors Played a Key Role in Creating Housing Bubble
http://www.realestatechannel.com/us-markets/residential-real-estate-1/real-estate-news-real-estate-investors-real-estate-speculators-home-foreclosure-crisis-realtytrac-national-association-of-realtors-home-foreclosure-rates-in-2010-2136.php
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