Love a Lush Backyard and Garden? 1354 W. Webster in Lincoln Park

This 4-bedroom Victorian house at 1354 W. Webster in Lincoln Park has a big selling point: its lovely backyard.

And be sure to check out the stylish garage.

The listing says the backyard was previously featured on the Sheffield Garden Walk and has its own irrigation system.

The 1900-built Victorian house has 4 bedrooms, with 3 of the bedrooms on the second floor, and a renovated chef’s kitchen.

Carol Duran at Rubloff has the listing. See the pictures and a virtual tour here.

The Rubloff listing doesn’t have pictures of the garden/backyard, for some reason – so click here to see those pictures.

1354 W. Webster: 4 bedrooms, 3 baths, no square footage listed, 2 car garage

  • Sold in August 1996 for $355,000
  • Sold in June 1998 for $385,000
  • Sold in May 2000 for $592,000
  • Public records indicate it sold in 2003 but I can’t find a price
  • Listed in April 2009 for $849,900
  • Currently still listed at $849,900
  • Taxes of $9769
  • Central Air
  • Living room: 17×11
  • Dining room: 11×10
  • Office: 11×7
  • Kitchen: 19×11
  • Bedroom #1: 15×13
  • Bedroom #2: 11×10
  • Bedroom #3: 15×13
  • Bedroom #4: 11×11

128 Responses to “Love a Lush Backyard and Garden? 1354 W. Webster in Lincoln Park”

  1. Charming house with good upgrades in prime location, but the price is a little rich for current conditions, even in Lincoln Park.

    Based on comparables, I’d think %700K is more like it. We’ll see how fast it moves at this price.

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  2. and its next to the Streets and San ward office. Always what I wanted as my neighbor. All those garbage trucks staging and stopping. At least garbage should get picked up

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  3. logansquarean on June 23rd, 2009 at 6:26 am

    cute inside, the front is not so nice, what with being right up on the sidewalk (apparently) and squeezed by two taller buildings on either side.

    I like how baby has his own playroom! Two full rooms dedicated to baby! Oh. Wait, nevermind. Not supposed to harsh on people and their parenting choices… :-)

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  4. The listing states that this property has three full baths. Nice house and its spacious backyard makes up for its lack of curb appeal.

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  5. Looks like they have 2 kids, and you just can’t see the bed in the picture of the bedroom.

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  6. Although for whatever reasons the 2003 warranty deed says ZERO, this home has two mortgages, a first for $612k and a second for $114,750 for nearly $727k in financing. A tad bit ridiculous don’t you think? This is the prime example of funny money housing. Later today I’ll have my clerk look up the warranty deed and financing terms at the recorders office, let’s see what sorts of exotic financing this FB used.

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  7. Steve Heitman on June 23rd, 2009 at 7:41 am

    HD – I like how HD wastes good work hours on Cribchatter. No wonder he still rents 😉

    Bet the financing was pretty straight forward HD. There is a $612k mortgage at 5.125%. So crazy HD, so Crazy!

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  8. I should get a clerk to help me with my cribchatter research too!

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  9. Sorry for the typo. The house does have 3 bathrooms. The post has been corrected.

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  10. With all this cribchattering how does anyone get any work done?

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  11. Just walked by this property, I agree with dotcost, lots of garbage truck traffic. But the garage is solid and well kept up, good sign for the rest of the property

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  12. By the way, about wasting time. Look at the posting times, I didn’t even know you real estate types got up this early!

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  13. The garage could be new, the house is likely far older… And that photo makes the back yard look a hell of a lot bigger than it really is! It would barely be a place for my dogs to take a slash, let a lone have kids playing ball in the yard… that’s probably why they’re moving… GRASS IS NEEDED TO RAISE CHILDREN!

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  14. I got in a little before 8 and I had to make the coffee; I looked up this stuff while it brewed.

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  15. Steve Heitman on June 23rd, 2009 at 8:09 am

    HD cracks me up! Nice use of work resources! I am sure the shady bastard bills his clients for time spent on Crib Chatter. Attorneys are the scum of the earth. Opps, I am an attorney!

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  16. Steve, I would never bill a client for my clerk’s time researching cribchatter properties. Secondly, my clerk is a lazy piece of garbage who is related to somebody very high up in the firm and doesn’t do anything all day. this research might be the only thing my clerk does all day.

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  17. Steve Heitman on June 23rd, 2009 at 8:14 am

    “The garage could be new, the house is likely far older… And that photo makes the back yard look a hell of a lot bigger than it really is! It would barely be a place for my dogs to take a slash, let a lone have kids playing ball in the yard… that’s probably why they’re moving… GRASS IS NEEDED TO RAISE CHILDREN!”

    That is why you buy a home near a great park (Lincoln Park). Backyards are for lazy parents. Parks are for families socializing and kids have a great times with their friends.

    The difference between city living and the burbs!

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  18. Calling this a four bedroom is stretching it. Two of them have ceilings sloping down to about 4 feet high. So even though it says 11×11 you can only stand up in an area about 5×11.

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  19. Steve Heitman on June 23rd, 2009 at 8:17 am

    “Steve, I would never bill a client for my clerk’s time researching cribchatter properties. Secondly, my clerk is a lazy piece of garbage who is related to somebody very high up in the firm and doesn’t do anything all day. this research might be the only thing my clerk does all day.”

    So the partners in your company bill out your clerks hours to their clients. Shady attorneys always screwing someone. Scum of the earth:)

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  20. “:That is why you buy a home near a great park (Lincoln Park). Backyards are for lazy parents. Parks are for families socializing and kids have a great times with their friends.”

    Actually, alleys are for lazy parents. I’m amazed how many kids I see playing in the alleys when there are parks nearby. We did it to a small extent when we were young (like, pre-teen), but to see teens playing soccer in the alley, eh, just sad…

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  21. Wrong again, this guy couldn’t get a job anywhere else in the world if his life depended on it.

    “Steve Heitman on June 23rd, 2009 at 8:17 am

    “Steve, I would never bill a client for my clerk’s time researching cribchatter properties. Secondly, my clerk is a lazy piece of garbage who is related to somebody very high up in the firm and doesn’t do anything all day. this research might be the only thing my clerk does all day.”

    So the partners in your company bill out your clerks hours to their clients. Shady attorneys always screwing someone. Scum of the earth:)”

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  22. When mortgage rates hit 9-10% (after our government decides to inflate away or default on its debt), what will happen to the $800k single family homes in Lincoln Park?

    There is a saying: ‘the market can stay irrational longer than you can stay solvent’. I think I’ll wait it out. It’s a nice home, though.

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  23. Steve Heitman on June 23rd, 2009 at 8:33 am

    Hey CB – I love your assumptions of 9-10% interest rates. Let me know where you see these so I can take advantage of this yield. I am only getting 1% on my CD’s right now and 9-10% looks great!!!

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  24. I’m all for interest rates going to 9-10%, that would mean that TBT is at about 400! $$$

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  25. House has a ~1100 sf footprint.

    The 3d bedroom looks a lot smaller than the claimed 10×11 and the 4th “bedroom” is set up (as it should be) as a family room off the kitchen.

    Btw, in what way is that a “CHEFS KITCHEN” other than by being *a* kitchen, which is the room in which chefs cook? Could someone please start a kitchen design business and trademark “chef’s kitchen” so we can stop that insanity?

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  26. I put on a chef’s hat before cooking my microwave popcorn. Hence I, too, have a chef’s kitchen.

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  27. What if a chef lived there? That’d make it a chef’s kitchen.

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  28. “Hey CB – I love your assumptions of 9-10% interest rates. Let me know where you see these so I can take advantage of this yield. I am only getting 1% on my CD’s right now and 9-10% looks great!!!”

    CD rates are only around half of mortgate rates, you financial genius.

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  29. OK here’s what I’ve uncovered:

    First of all I’d like to point out that of the 11 mortgages recorded on this property since 1998, no less than 10 of the 11 have been ARMS. Are ARMS a sign of financial sophistication for Lincoln Park residents? Or have they become a necessity to squeeze more house out of the borrowers monthly payment?

    Well, the current owner has $612,000 7/1 ARM, fixed for the first 7 years at 5.125% then adjustable every year thereafter based upon the 1 year LIBOR plus 2.5%. First reset is in November 2010. I cannot tell if the note is interest only; but given the difference $3,332 v. $2,614 … you decide.

    The second mortgage contains even less information other than it’s for $114,750. Again, you decide.

    I’m not saying these owners are poor or subprime or whatnot. What I am saying is that they, along with all the previous owners of this house, sort of stretched themselves to get into a home, they only planed to live there for a few years, used ARMS (and possibly IO loans to get buy as much as possible) and then flipped for a great deal of profit. This is passive speculation. This is exactly what these owners are trying to do just like everybody else; sell before the reset. Who knows what rates will be in Nov 2010 but they don’t want to hang around long enough to find out.

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  30. totally off-topic, but would anyone know if there is some sort of “general practices” code for IL real estate appraisers? we had an appraisal done and the comps the guy used (unlike our last appraisal) were homes that were similar, but on only half the land, as we have 2 lots.

    the market ain’t great right now, but you still have to pay to get 3,000 sq feet of land on the north side, so I want to appeal as apparently this will affect the terms of the new loan.

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  31. Isn’t it obvious? Chef’s kitchen simply means stainless steel appliances.

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  32. According to anon(tfo) and numerous others ARMs aren’t evil. They aren’t financial WMDs. Instead they are only used by sophisticated homeowners with complicated cash flow scenarios that justify their use.

    Hence of the ten ARM mortgages almost all of them must’ve been people with ample capital reserves who prefer liquid assets to non-liquid assets and weren’t speculating on interest rates whatsoever and who weren’t trying to squeeze more house out of their monthly nut….riiiiiight.

    Equally telling is you can still get 3.5% ARMs today and guess which kind of mortgage the buyer of this place will get?

    Housing speculation will not cease until ARMs cease and banks require a 20% downpayment. Its that simple.

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  33. Equally telling is you can still get 3.5% IO ARMs, even. Its really sad our financial system almost melted down due to rampant housing speculation, causing our economy to melt down, and the tools are still there to enable these passive speculators.

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  34. Skeptic:

    You can challenge the appraisal, but it probably won’t help much. Banks are now at the mercy of Home Value Code of Conduct in which appraisers are randomly assigned through Appraisal Management Companies(your mortgage broker/banker used to have preferred appraisers) and the laon officer has ZERO contact with the appraiser now.

    Google HVCC and appraisals to see what a disaster this is for consumers.

    The new regulation came out of Andrew Cuomo going after WAMU alledging they were coercing appraisers to inflate values. The new rules went into effect in May. The politicians hearts are in the right places, but their heads in another.

    What is happening since appraisers are goign to get paid regardless if they do a good job is that quality of reports is going down and cost to consumers is going up since now another layer of beuracracy is added to the process (appraisal management companies). More and more consumers are starting to get pissed.

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  35. Steve Heitman on June 23rd, 2009 at 10:04 am

    HD – Your assumptions are crazy. why see someone with a 7/1 ARM at 5.125% as a risk taker, I see them as financially smart. How much interest have they saved over the past 7 years and where would there are reset today?

    I think anyone who would have taken out a 30 year fixed at (let’s guess) 6.25% would be very sorry they did. These people are moving within their ARM period and this could have been known and planned. Why would anyone who plans to move in a short period of time (5 – 7 years) pay unnecessary interest with a 30 year fixed? It is just plain stupid.

    So the question is HD, did this person make the right decision with the 7/1 arm, or would it have been financially beneficial to go with a 30 year fixed?

    I will go out on a limb and say this guy just saved himself $45k not following your advice. There is a reason you are a renter HD, you just can’t figure it out yet…

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  36. Steve,

    They speculated on interest rates and it worked out for them. Unfortunately for them with a relatively short holding period they also speculated on housing valuations, it remains to be seen whether that gamble will pay off.

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  37. “Housing speculation will not cease until ARMs cease and banks require a 20% downpayment. ”

    Dude, you’re frothing again. Adjustable-rate mortgages are not the villain–that’s four steps down the road toward “fractional reserve banking is evil”.

    Bag on I/Os; bag on Pay Option loans (ARM or Fixed); bag on teaser rates, second mortgages, nodoc loans, NINJa qualifications, sub-prime, Alt-A in all its forms, 80/10/10, 80/15/5, FHA, VA, Fannie/Freddie, and everything else, I can see your point. And I even agree with you on much of it.

    But adjustable-rate loans are not in and of themselves bad things. Fixed-rate mortgage:CD as ARM:any floating-rate savings vehicle. It’s not rocket science and it isn’t the source of problems.

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  38. Steve Heitman on June 23rd, 2009 at 10:10 am

    HD – The 2nd is a variable interest rate tied to Prime. Should they have fixed this rate when the loan was teken out or are rates lower now than then?

    Again, I would argue this guy made all the right financial decisions and saved himself a lot of money.

    HD – I am not sure you quite understand that life is full of risks and unless your are going to lock yourself in your mom’s basement (your rental), you will be faced with win / loss situations.

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  39. Steve Heitman on June 23rd, 2009 at 10:15 am

    Anon – There is also nothing wring with I/O loans. Financially intelligent people may choose to pur that principal payment into a savings account (where it can be accessed) and not paying down your loan. It is funny that many believe throwing money at a loan (where you payment remains the same) makes sense.

    What if you take out a 5% 30 year fixed today and then rates skyrocket to 10%. Would you want that money paying down a 5% loan or earning interest at 7 -8% in an ING account? What is the difference?

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  40. Steve, because your income depends on people stretching their budgets to buy expensive homes they cannot afford, I’m not quite sure that you understand that when this buyer’s ARM affords them a more expensive house, they help set the comps in the neighborhood for everybody else. The next guy comes along and says OH WOW I only qualify for this home if I too get an ARM because the last guy paid a price based on an ARM … and so forth which is why 10 of the last 11 recorded mortgages have been ARMS. ARMS drive up the cost of housing for everyone, they don’t save the borrower any money, and more likely, they didn’t have the money to save in the first place. If they were saving they would have a bigger down payment. The savings argument is a red herring, and it really means BUY A MORE EXPENSIVE HOUSE which drives up the comps for everybody else who doesn’t want to speculate.

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  41. “Anon – There is also nothing wring with I/O loans. ”

    Stevo–pay some f’in attention. I say that I can understand if ****BOB**** wants to bag on i/o’s, but that knocking ARMs is 4 steps toward crazy.

    Or are you really just that much of a troll?

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  42. thanks Russ. this is pretty annoying- there ought to be a place you can go to complain about complete incompetence in the appraisal arena.

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  43. Again, this is a diversion argument: These pipes are for tobacco only and are meant to be used for only the same. When we damn well know everyone is smoking weed out of them. THe same with option arms, IO, ARMS, etc. They’re used to buy more house and the extra ‘savings’ aren’t being arbitraged elsewhere to earn a higher interest rate. YOu sound like a scumbag mortgage broker Steve, was that your previous career?

    “Anon – There is also nothing wring with I/O loans. Financially intelligent people may choose to pur that principal payment into a savings account (where it can be accessed) and not paying down your loan. It is funny that many believe throwing money at a loan (where you payment remains the same) makes sense.”

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  44. One year LIBOR is 1.74 today. Do the math.

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  45. “there ought to be a place you can go to complain about complete incompetence in the appraisal arena.”

    Consider getting a separate loan for the vacant lot?

    Seems like a mistake to me, or extreme laziness. The first can be corrected, possibly even by just asking the appraiser, the second cannot, unfortunately.

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  46. “One year LIBOR is 1.74 today. Do the math.”

    It’s rolling everything into one overinclusive ball. Lumping in vanilla ARMs, properly underwritten, with every other sort of non-traditional mortgage financing is like saying “those Yugo’s were crappy cars, No one should buy cars made in Europe” (in reverse).

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  47. An ARM is a mortgage product designed to help borrowers purchase more expensive homes for the same monthly payment as a 30 year fixed. Same payment, more expensive (bigger, better, etc), same monthly price. The ARMs set comps. It drives up the cost of housing for everyone.

    Saying that ARMS are for the financially sophisticated are like saying the pipes for sale at Suburb are for tobacco use only.

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  48. Burt: the 1 year LIBOR was at 5.7660% in June 2006. What if this were a 2/1 or 3/1 ARM instead of a 7/1? DO THE MATH. This borrower was speculating.

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  49. Burt your argument is akin to saying if you daytrade your 401k and earn 3% one day thats awesome and daytrading your 401k should be encouraged as a best practice.

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  50. It was 1.34 in Mar 2004. What if they had a 1/1? Do you want to do this all day? You are the only one speculating – into their financial health.

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  51. As a lender, I can see what both HD and Stevo are saying. Both are right in this case.

    The reality is that MOST people DO NOT take the savings and invest the money for a higher return or pay down other debts. Ask any mortgage broker what happens to most subprime type borrowers when you do a cashout and help them get out of debt. They are usualyl back in debt a year or two later – hence the serial refinancing. There are plenty of times you refinance someone and save them like $750/month and instruct them to use the money to pay off credit cards or other items – most never do. Instead they figure they can now afford a $750/month car note.

    However, there are also some borrowers who do take advantage of the savings. I have NUMEROUS clients this year that took i/o’s, 80/20’s and have done quite well with those products. HD, just because something is recorded does not mean it is still that way. Quite a few borrowers took the savings they got from these products over the years and have since paid off or significantly reduced 2nd mortgages or built up cash reserves. Quite a few of these borrowers are restructing (paying off 2nds or large portions of their 1st mortgages during refinancing right now).

    As it has been consistently stated, these products were fine until they were pushed on joe sixpack as an affordability tool which they were never designed for.

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  52. Steve- the difference is ING is definitely not paying 7-8% right now on anything. Just saying you can’t compare taking out a fixed 5% today (plausible) OR a 7-8% savings acct (not plausible). Especially when earlier in the trhead you were making fun of someone for hypothetically throwing out 10%.

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  53. “Seems like a mistake to me, or extreme laziness. The first can be corrected, possibly even by just asking the appraiser, the second cannot, unfortunately.”

    extreme laziness, I think.

    our banker asked for an explanation/correction and got none. is it out of line for me to contact the guy directly? I think his problem is there probably aren’t very many similar properties, but I shouldn’t get burned due to that. I can’t get separate loans as the lots are bundled together, but clearly it’s an absurd claim to say the extra 3,000 sq feet isn’t worth ANYTHING.

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  54. Arms are fine, 3/5 year I/O’s are the “toxic instruments” for specuvestors…

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  55. “As it has been consistently stated, these products were fine until they were pushed on joe sixpack as an affordability tool which they were never designed for.”

    So the ten out of eleven mortgages recorded against this place were all not for “joe six pack” but rather “financially sophisticated investors with uneven cashflow” scenarios? Riiiiight.

    Sorry dude the proof is in the pudding. 10/11 = the mass market was speculating with ARMs, at least as far back as eleven years ago.

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  56. Steve Heitman on June 23rd, 2009 at 10:45 am

    HD – You are really showing your colors. You probably are the guy who locks in your People Gas rate (at a higher than current rate) to protect against future increases.

    If you only plan to stay in a house for 5 years than paying an interest premium to lock into a 30 year fixed is just plain stupid. It is a waste of money and there is nothing you can say to justify it as rationale.

    Sorry HD, but I hang around with people who manage interest rates as an economic tool and not to maximize their purchase price. Who would over pay for a place because their monthly payments would be lower?

    You dumb!

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  57. skeptic,

    Cnbc just announced that realtors are complaining about the new Home Value Code of Conduct. According to them, homes are being valued “artificially low” by appraisers and causing lots of sales to fall through.

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  58. ARMS are just fine as long as interest rates don’t rise or you plan on selling/refinancing in a few years…

    ooops heard that one before too.

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  59. “You probably are the guy who locks in your People Gas rate (at a higher than current rate) to protect against future increases. ”

    Thats called hedging Stevo and is perfectly economically rational. You being an unhedged speculator with a preference for risk I don’t expect you to understand hedging or why people/institutions do it.

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  60. ” I can’t get separate loans as the lots are bundled together, but clearly it’s an absurd claim to say the extra 3,000 sq feet isn’t worth ANYTHING.”

    Well, there’s your problem. It isn’t a separate lot, but it still meets minimum-size requirements for a buildable lot in the applicable zoning? Have you considered a PIN split?

    Of course it’s worth something–indeed, I’d happily pay $200k* to have an extra 15′ of lot–but it’s nothing compared to what it would be worth if it were “buildable”.

    If you decide to contact him, do it ALL via email–so you have a “paper” trail that you can honestly assert was your only contact with him.

    *I’d rather pay $100k for 30′, but that’s a pipedream.

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  61. Steve Heitman on June 23rd, 2009 at 10:49 am

    So here is a summary – Financial products (ie. arms / i/o, ect) make the rich richer and drive the joe six-pack into bankruptcy. Seems an a simple IQ test should be given before a person can take out a loan.

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  62. Bob:

    None of us know the situation that these homeowners are in.

    The spread between a 30 year and ARMs was large enough that many borrowers considered the savings to be worth the risk. There were some points in between ’01 and ’06 where borrowers refi’d multiple times in a year because rates were falling so rapidly. It wouldn’t surprise me that there have been 10 mortgages between ’98 and now.

    With that said, my guess is that they probably did cash out to pay for renovations, landscaping, etc.

    Everyone who has a mortgage and trying to sell their home isn’t some speculating FB just like every renter isn’t some $8/hr jewel bag boy. The assumptions and speculation on here are hilarious.

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  63. ARMS hardly make the rich richer

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  64. “ten out of eleven mortgages recorded against this place were all not for “joe six pack” but rather “financially sophisticated investors with uneven cashflow” scenarios?”

    Man, you’re conflating Pay Option with vanilla ARMs (again/still). No one has said ANYthing positive about pay option mortgages in this thread. Just because the rate on the note adjusts, doesn’t mean the payment isn’t fixed for 7 (or 3, 5, or 10) years.

    It’s hard to take your frothing about ARMs seriously when you talk about two completely different products over and over again.

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  65. anon(tfo) let me repeat myself about ARMS:

    An ARM is a mortgage product designed to help borrowers purchase more expensive homes for the same monthly payment as a 30 year fixed. Same payment, more expensive (bigger, better, etc), same monthly price. The ARMs set comps. It drives up the cost of housing for everyone.

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  66. “Everyone who has a mortgage and trying to sell their home isn’t some speculating FB just like every renter isn’t some $8/hr jewel bag boy.”

    No, not $8/hr bagboys, but the renters do all live in Uptown studios despite (alleged) 6-figure incomes.

    It’s a joke, folks.

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  67. Steve Heitman on June 23rd, 2009 at 10:57 am

    HD – You are a financial moron!

    Have your clerk look that one up :)

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  68. “Everyone who has a mortgage and trying to sell their home isn’t some speculating FB”

    Apparently there were enough of them to impact the broader economy pretty significantly:

    http://www.calculatedriskblog.com/2008/10/q2-2008-mortgage-equity-withdrawal.html

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  69. “Well, there’s your problem. It isn’t a separate lot, but it still meets minimum-size requirements for a buildable lot in the applicable zoning? Have you considered a PIN split?”

    the lot has a separate PIN, the bundling is as my house sits a few feet over the lot line in the middle, and as I get a break on it for property tax purposes.

    but it’s not buildable (except for me to expand my house on to it, which I will down the road).

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  70. GDP with and without Mortgage Equity Withdrawals (MEW):

    http://www.calculatedriskblog.com/2006/09/gdp-growth-with-and-without-mortgage.html

    Looks like the ponzi economics game of RE speculation is over for the time being, with the government doing anything in their power to try to re-flate mortgage valuations/prevent the collapse.

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  71. Uh huh.

    “Steve Heitman on June 23rd, 2009 at 10:57 am

    HD – You are a financial moron!

    Have your clerk look that one up :)

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  72. Steve Heitman on June 23rd, 2009 at 11:02 am

    HD – I will offer you this great rental deal. I know you only want to live in my rental unit for 5 years, but I am willing to lock in the rental rate for 30 years if you agree to pay a 25% premium from what I would charge you for a 5 year term.

    Are you in?

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  73. I’ll be asking for rent concessions Stevo

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  74. Steve Heitman on June 23rd, 2009 at 11:04 am

    “GDP with and without Mortgage Equity Withdrawals (MEW):

    http://www.calculatedriskblog.com/2006/09/gdp-growth-with-and-without-mortgage.html

    Looks like the ponzi economics game of RE speculation is over for the time being, with the government doing anything in their power to try to re-flate mortgage valuations/prevent the collapse.

    This is because lenders gave loans to anyone. Take out the easy lender standards and the housing boom would have never have happened. ARMS and I/O pruducts should be u/w as if they were fully amortizing and at a historic average of interest rates. Doing this will ensure people can afford the products they are taking out…

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  75. “anon(tfo) let me repeat myself about ARMS:”

    HD:

    I’ve been avoiding engaging your points b/c, while I disagree, it’s at least a reasonable view, and nothing I say is going to change your mind on this one. I’m sure you won’t go back and re-read, but each of my posts on the subject in this thread has quoted someone else (mostly Bob).

    The first, first mortgage we had was a 7/1 ARM b/c the spread to a 30-F was too big (like 150 bips, but I don’t remember for sure). Not that we couldn’t have “afforded” it, but we wanted the increased flexibility and didn’t see any point in paying more interest.

    You want to stop putting borrowers in the “wrong” mortgage product? Make it illegal to offer different levels of commission/bonus based on the type of mortgage given.

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  76. Steve Heitman on June 23rd, 2009 at 11:06 am

    Don’t you get it HD, that scenerio is the same as someone paying a higher interest rate to get a 30 year fixed if they only plan to stay for 5 years. It is wasting money!

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  77. Hey Stevo I think we agree. If they adjust the loan qualifications and DTIs to mimic fully amortizing loans at some average interest rate, then I see no problem with ARMs.

    Of course that solution makes too much sense and would put a crimp on too many financial products ( = less profit for financial services industry => bad for them => oppose it => get their lobbyists to influence our legislators to defang it) so will likely not be implemented.

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  78. “mimic fully amortizing loans at some average interest rate, then I see no problem with ARMs.”

    A plain vanilla ARM is a “fully-amortizing loan”.

    A 7/1 ARM is a 30-year amortizing loan with a fixed-rate for 7 years and then a rate adjusting annually based on the spread set out in the note. Nothing exotic about it.

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  79. ARMs and I/Os are underwritten at the fully amortizing rate these days. HELOCs are also underwritten a substantially higher payments than the actual payment.

    Anon, FHA pays more commission than any mortgage product. however, FHA was not the loan of choice during the boom for a number of reasons. ARMs and 30 year loans generally don’t pay any different. The only loan that encouraged brokers/bankers to put borrowers in by paying more was an option arm and that was only if you could put the 3 year prepayment penalty on it. Otherwise, it didn’t pay squat.

    What the banks learned from the housing mess (well, they really haven’t learned it…)

    FICO scores are a poor predictor of loan performance
    If you give borrowers an inch, they will take a mile (fraud and speculation with stated income loans)
    For the most part, the public is quite stupid
    Ivy league educated investment bankers aren’t really much smarter than mortgage brokers with GEDs

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  80. Fair enough anon(tfo)

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  81. Actually the i-banker and mortgage broker behavior was anything but stupid and was entirely rational. They were incentivized to maximize short term remuneration to the detriment of the long-term viability of their institutions. The regulations weren’t in place to prevent this at the time and still aren’t in place today.

    Looks like more regulations are coming for mortgage broker comp but it appears the i-banks again via lobbying have defanged any attempt so far to better align incentives with long term performance.

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  82. Which brings us full circle to this seller who financed his property with not one but two ARM mortgages, put very little down, and is now stuck with the all too familiar “sell or refi within X years” scenario.

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  83. Steve Heitman on June 23rd, 2009 at 12:13 pm

    HD – Just admitt you are an idiot. It would save us all a lot of time.

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  84. Ya’ll need to get a life. Nerds. Same people out here everyday, trying to impress each other.

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  85. Admit nothing, deny everything, and just shut the hell up.

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  86. Steve Heitman on June 23rd, 2009 at 12:24 pm

    So he basically just agreed. Thanks HD!

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  87. Room sizes inflated by realtor, who is ignoring applicable reduction in occupiable floor area due to sloping ceilings. Livingroom and diningroom areas are small and difficult to furnish. Kitchen features Home Depot quality foil-face white cabinets, stacked to utilize ceiling height but not “gourmet” or “chef’s kitchen” caliber.

    Back elevation of house reveals true working-class nature of this home handyman quality renovation of a small victorian “worker cottage”. I admired it’s quiet front facade along a busy street, but agree that the location doesn’t support the price tag, nor does the interior or the backyard. Sorry.

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  88. Here is the problem with ARMs in today’s environment. Say Joe Buyer purchases a place with a 5 year ARM because Joe Buyer only intends on living in the home for 5 years. Fast forward five years and now Joe Buyer decides he doesn’t want to move. Interest rates are in the double digits thanks to hyperinflation and Joe Buyer’s rate is about to reset. Yes there are probably caps, but Joe Buyer’s housing cost will still significantly increase.

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  89. Steve Heitman on June 23rd, 2009 at 1:26 pm

    Hey MJ – There are an a lot of “ifs” in your scenerio. Can’t live your life thinking the worst will occur. A lot of people get in car accidents everyday but I am not going to quit driving just in case the worst happends.

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  90. That’s great advice Steve, can you please give us some more? You are so wise.

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  91. Steve Heitman on June 23rd, 2009 at 1:41 pm

    I am not wise HD. I simply understand risk vs reward in financial decisions. If your world the only investment that makes sense is riskless returns or what would be the US treasury (not risk less anymore).

    The person you identified above risked the worst case scenerio and was rewarded a big savings on interest rates. He won in this case. Sure there will be some that lose but that is the game of financial returns.

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  92. Steve Heitman on June 23rd, 2009 at 1:41 pm

    Did you clerk research whether you are an idiot or not? I would love to know what he/she found.

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  93. So you’re saying a home is an investment? I thought a home was supposed to be a secure place to live and sleep at night….

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  94. Homdelete or anyone else,

    How do you find out other people’s mortgage information, and how much is left on it? Thanks.

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  95. “How do you find out other people’s mortgage information, and how much is left on it?”

    The original mortgage amount can be found on ccrd.info; you need the PIN. You can also get a copy of the recorded doc for 5(?) cents a page, or you can go to the recorders office and look at it for free(?).

    How much is left can’t be answered, but if the recorded mortgage has interest rate and other terms spelled out, you can pretty well guess that most have not been paying extra on the first mortgage (yeah, in a small but significant number of cases, you’ll be wrong, but whatever).

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  96. I’m only a block away from the recorder’s office. Go to the basement in back and search the computers to see the actual recorded doc.

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  97. Stevo highlights an interesting point. He is correct in his summary below and ex-ante it appears they made the right move by speculating because our government kept interest rates artifically low for so long.

    Now the question is three/five/seven/ten years from now will this still be the most optimal financial decision for ARMs originated today? I recently read a quote that predicting interest rates is like predicting the World Series in January and thats quite right, so thats the big variable.

    What those speculating on interest today have in their favor is the recent momentum that it _was_ the optimal thing to do in the past decade, courtesy of the Fed. So I wouldn’t be surprised to see a bunch of people pile into ARMs these days as until interest rates rise all data indicates its the optimal financial decision.

    “The person you identified above risked the worst case scenerio and was rewarded a big savings on interest rates. He won in this case. Sure there will be some that lose but that is the game of financial returns.”

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  98. “I’m only a block away from the recorder’s office. Go to the basement in back and search the computers to see the actual recorded doc.”

    Can’t we just post the info here and you get your clerk to do it for us?

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  99. In essence our government, via various policies and agencies was rewarding speculators and speculation not only on underlying real estate valuations but also interest rates.

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  100. My clerk looking stuff up is no different than G having the interns in his office pull together data for his posts.

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  101. “In essence our government, via various policies and agencies was rewarding speculators and speculation not only on underlying real estate valuations but also interest rates.”

    Now, now. The Fed is an independent entity. The interest rate aspect isn’t the fault of the “government”, per se.

    It was Greenspan’s fault.

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  102. Bob, most borrowers these days are getting 30 year fixed loans. They wised up to the risks, but the yield curve is also relatively flat sot hat ARMs have not been dramatically cheaper than 30 year loans like they used to be. In short, the risk is not worth the reward today.

    When rates are at rock bottom you should get a 30 year as rates have no where to really go but up, but when rates are higher, the ARMs make sense due to the high likelihood of rates falling in the future.

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  103. “The Fed is an independent entity”

    Yeah so were Fannie and Freddie, now they are explicitly the government.

    And given the Fed is awarded a monopoly power over money and the money supply, they are a quasi-government agency. Also the FHA & the VA are government entities as well. Guess which loans are making up a huge percentage of the market today? These.

    In short America deserves this, for electing officials over the years who couldn’t help but butt in and try to micro-manage housing in the US. They thought they could legislate economic forces out of existence and ensure equality of outcome. Look where it got us.

    I hope home ownership percentage goes BELOW where it was before creation of the GSEs, not because people can’t afford to own their own place, but because the new generation wises up and refuses to pay exorbitant sums just to fund some entitlement minded baby boomers retirement.

    What a freaking joke that you should be able to expect a 1% real rate of return just for signing your name on a dotted line and living there. With the power of compounding we all now know that ponzi scheme can only last so long.

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  104. Oh yeah and for a personification of the ridiculousness of the government getting involved in housing consider the personal housing situation of our Treasury secretary, who “owns” a 1.6MM house he can’t currently sell so is renting out at a loss.

    Boy that must be some bureaucrat salary to be able to afford a 1.6MM house. Me wonders if turbo Timmy is himself using ARMs? Guess they figure if they’re gonna bail out speculators and fraudsters it takes one to know one and Timmy is the man for the job.

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  105. “What a freaking joke that you should be able to expect a 1% real rate of return just for signing your name on a dotted line and living there.”

    right, it’s called depreciation for a reason.

    it’s like thinking your car gets more valuable as you put more miles on it!

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  106. Steve Heitman on June 23rd, 2009 at 3:02 pm

    There were 13 properties that closed in LP over the past few days. I ran through and would list if I had the energy. Do you guys understand that the average return for people who purchased between 1999 – 2003 and sold this year is 2.8%? Is that a bubble?

    Where is the damn bubble in LP???? I have been waiting forever and I can’t find it!!! Sure there are a few that way overpaid in 2006 and 2007 but the majority are doing great and can sell for a nice profit.

    Who told you things were stable? Who loves their broker over the past 5 years. That is right, my clients do!!

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  107. “Sure there are a few that way overpaid in 2006 and 2007 ”

    Stevo, you know as well as we all do that it was more than “a few” and that people overpaying is the definition of a bubble.

    PLus, what’s with the gap b/t “1999-2003” and “2006 and 2007”? If you include 04/05 buyers, what happens to that average rate of (nominal) return?

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  108. Steve Heitman on June 23rd, 2009 at 3:22 pm

    Should I find a few for you from today’s closing list?

    Okay I will!

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  109. “Should I find a few for you from today’s closing list?

    Okay I will!”

    Thx. But my question was not about what transactions you are looking at, but what you are excluding and why.

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  110. Off-topic, but fun:

    Feds: Fraud used to get loans for Streeterville condos

    http://www.chicagorealestatedaily.com/cgi-bin/news.pl?id=34523

    10 people working together getting $17.2mm in loans on 7 condos and 2 THs in a single development.

    Can you guess which one?

    INVSCO. Of course. ’cause they got a big check at closing. THen they’d flip them to their co-conspirators. Awesome.

    33 W Ontario.

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  111. Mortgage/RE fraudsters are like roaches: when you catch one you know theres a hundred more lurking in the shadows.

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  112. Interesting choice of years, I wonder what happens to that number if you back out 1999, or include the “gap” years of 04/05

    Considering the avg rate of inflation over that period of time was approx 3% that means what again?

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  113. I really want to see a breakout of how much the foreclosure crisis is really just a mortgage fraud crisis. There is already enough antecdoctal evidence to show that some 50% of foreclosures are speculators/investors – many of which are fraudulent in some way. However, what is interesting to me is that we have policy being written around foreclosures being little old ladies being taken advantage of by big bad banks, but no one really looks at how much these types of cases are really what is behind the foreclosure crisis when we hear stats about how much foreclosures have increased, etc.

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  114. Yep Russ… and now that everyone knows mortgage fraud is not a crime… no chance this happens ever again.. ROFLMAO!!

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  115. “I really want to see a breakout of how much the foreclosure crisis is really just a mortgage fraud crisis. ”

    Depends on if you define “mortgage fraud” as (1) fibbing about stated income and owner occupancy (or whatever), yet intending to pay the loan, even if that was an intent not based entirely in reality or (2) full-blown fraud, like these guys, with a plan from teh start to extract as much cash as possible in a short period of time and never make a payment.

    If (1), then I would guess that 2/3 of more of the increase in foreclosures relates to “mortgage fraud”. If (2), then I think it’s a lot lower–like sub-25% of teh increase.

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  116. I am really referring to #2. There are a ton of these cases where these organized rings of people have caused dozens of foreclosures. Although, I agree with you that #1 is probably highly correlated.

    The most common scam is where they are borrowing someone’s credit to buy an investment property. They basically pay Joe Dumbass say $5k to fillout a mortgage application as his primary residence. The seller of the property gets an appraiser to inflate the value to say $200k when in fact the home is realyl just worth $100k. The lender writes the mortgage for $200k and the seller keeps the $100k in profit. Out of the $100k, he pays Joe Dumbass his $5k. Joe Dumbass agrees to the scam thinking there is going to be a “renter” and all he is doing is joining an investmetn club. The renter never shows up and the property eventually goes into foreclosure because Joe Dumbass can’t pay the mortgage on it. The banks start investigating and finds out that there is a lot of commonality with Joe Dumbass foreclosure and several other foreclosures – the mortgage brokerage is the same (or developer in the case of INVSCO), etc. Then the ring is busted.

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  117. One of my previous ass hole “Jr. Trump” landlords moved to 33 w ontario around 2006. Glad to see that toolbag lost his shirt and then some… bahahaha

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  118. “the mortgage brokerage is the same (or developer in the case of INVSCO), etc.”

    Careful–I don’t think that Invsco was in on any fraud, notwithstanding the fact that their 2/2/2 promotion would be extremely attractive to a fraud crew.

    for example (drawn from the crain’s article): Ringleader buys 5 condos from Invsco under 2/2/2 using 100% financing with Pay-Option mortgages; receives ~$60k per unit at closing (rent + assessments + taxes for 2 years); pays assessments and minimum mortgage payments twice; “sells” unit to straw buyer who also uses 100% mortgage for 20% over inital purchase price. If you have a title co in your crew, they dummy up the payoff letter from Lender #1 and your crew walks with the full amount of the loan *plus* $50k or more from Invsco.

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  119. Steve Heitman on June 23rd, 2009 at 8:29 pm

    “Considering the avg rate of inflation over that period of time was approx 3% that means what again?”

    That there is no bubble! No big gains = no big losses!

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  120. “INVSCO. Of course. ’cause they got a big check at closing. THen they’d flip them to their co-conspirators. Awesome.

    33 W Ontario.:

    Indictment on US Attorney’s Website cites M&M Millenium Management Company…not Am Invsco in 33 W. Ontario case. Not sure if there’s any dots to connect M&M to Invsco, but we are all losers because of these losers.

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  121. lol..anon(tfo) is hereby certified to teach mortgage fraud 101.

    But its actually a lot easier lesson learned from reading some of the properties profiled and mortgage histories on this site.

    Its my guess in the past and that remains true to this day that most of the bigwigs have fled the country already and will remain wealthy and beyond prosecution in their home countries (eastern europe).

    Haha yeah the eastern european mob and other criminal organizations were perpetuating mortgage fraud before the bubble collapsed. And I guess some say no doc loans were a bad idea? LMAO!

    You skew numbers though Russ in many cases its my guess that Joe D. is actually an _acquiantance_ of mortgage fraudster. As in ‘Joe D’ is from Lithuania and mortgage fraudster is too and they speak the same tongue.

    Of course crime syndicates defrauded via no-doc loans: no-doc loans by their very nature relied on stated and non-verified facts. It was all a bunch of fiction. No SSN, verifiable income history or anything else required.

    Just show up and get a check for 5% the appraised value of your property at closing and a mortgage for 105%. That sounds fantastic.

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  122. “, but we are all losers because of these losers.”

    Sad but true.

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  123. “Indictment on US Attorney’s Website cites M&M Millenium Management Company…not Am Invsco in 33 W. Ontario case.”

    As I note in another post–no evidence Invsco had anything to do with it OTHER THAN presenting an attractive nuisance with the 2/2/2 deal. Honestly, one could make out a decent argument that Invsco should have known the likely result of such an offer. But even if they should have known, I am dubious about it giving rise to a cause of action.

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  124. There were 22 condo/TH closings in mls for LP the week of 6/14/09-6/20/09. The 22 included 2 REO sales, 4 new (or only previously rented “new” unit) and 1 for which I couldn’t identify a 2006 prior sale price.

    For the remaining 15 sales, I calculated the annual “appreciation/depreciation” (CAGR) since the prior sale.

    In nominal terms, 6 showed annual depreciation without adjustment, and 7 showed annual depreciation with 6% transaction costs deducted.

    The prior sale prices were then adjusted for inflation utilizing the BLS CPI figures (change between sale month and 5/09, the most recent avail.) This resulted in 14 of the 15 showing losses in real dollar terms, both with and without transaction costs.

    But who cares about “real” dollars, anyway?

    Here are the 15 sales with prior sale month/yr, nominal annual appreciation/depreciation (CAGR), nominal CAGR with transaction costs, real CAGR and real CAGR with transaction costs:

    540 W BELDEN #2D 03/08 -6.19% -10.79% -6.31% -10.90%
    626 W BELDEN #2 11/06 -5.63% -7.88% -7.79% -10.00%
    353 W DICKENS #4W 07/04 -2.15% -3.38% -4.54% -5.74%
    1137 W WEBSTER #2 08/06 -0.81% -2.97% -2.48% -4.60%
    2650 N LAKEVIEW #4105 10/05 -0.66% -2.32% -2.56% -4.19%
    2767 N KENMORE #3 07/06 -0.51% -2.57% -2.17% -4.20%
    1335 W ALTGELD #2C 08/05 1.16% -0.46% -1.07% -2.66%
    2448 N SEMINARY #2B 03/03 1.18% 0.17% -1.22% -2.20%
    800 W LILL #402 03/01 1.55% 0.79% -0.80% -1.54%
    429 W GRANT #A 03/05 1.56% 0.10% -0.81% -2.24%
    2746 N WOLCOTT #2N 09/03 1.67% 0.58% -0.84% -1.90%
    550 W SURF #307 05/02 2.02% 1.14% -0.44% -1.30%
    2214 N Lakewood #2214 03/04 2.12% 0.92% -0.43% -1.60%
    1644 N Mohawk #A 04/01 2.26% 1.49% -0.09% -0.85%
    2043 N HALSTED 11/94 6.72% 6.26% 4.13% 3.69%

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  125. Steve Heitman on June 24th, 2009 at 2:21 pm

    Oh G… you are so silly!

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  126. [G’s data]

    Pulling out only the one’s bought in Stevo’s 99-03 period we have:

    2448 N SEMINARY #2B 03/03 1.18% 0.17% -1.22% -2.20%
    800 W LILL #402 03/01 1.55% 0.79% -0.80% -1.54%
    2746 N WOLCOTT #2N 09/03 1.67% 0.58% -0.84% -1.90%
    550 W SURF #307 05/02 2.02% 1.14% -0.44% -1.30%
    1644 N Mohawk #A 04/01 2.26% 1.49% -0.09% -0.85%

    Doesn’t approach 2.8% (as claimed by Stevo), no matter the weighting, but maybe he was talking a different set of sales.

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  127. Wife and I tried to go to two open houses for this property based on listings in Chicago Trib. Both times we showed up, no realtor, no open house. If I were the owner, I’d be less than thrilled with the service I am receiving.

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