Surf City home equity abuse: So many you can’t believe it

May 12th, 2009, 3:00 am · 33 Comments · posted by Marilyn Kalfus, real estate reporter

Larry Roberts regularly rips into the loan histories of “HELOC abusers” in his Irvinehousingblog.com. Obviously, he mostly focuses on that city.

He recently ventured outside of Irvine, though, so I asked him if he could quickly find some examples of people who went out on a limb using their Huntington Beach homes as ATM machines.

This guy is good. He went straight to the subscription service he uses to smoke ‘em out. It took him practically no time.

“As you can see, I found 5 big ones in 15 minutes,” Roberts wrote in an email he sent along with histories of the HELOCS — home equity lines of credit. “I only looked at 7 properties, so that is about 75% of the properties where people owe much more than they paid.

“I keep telling people how common these are, and I always wonder if people believe me,” he said. “How many do you want? There are so many you can’t believe it.”

Through his emails, I went on a tour of homes whose owners took out loan after loan after loan. One woman took out nearly a dozen of them, including refis and the revolving lines of credit.

“Here is one with $1,450,000 worth of genuine HELOC abuse going back to 1997,” he said of a Lake Park-area house.

“This one has some HELOC abuse and some serious Kool Aid,” he said of one downtown property. “They remodeled, refinanced out of their construction loan and pocketed about $850,000, and now they can’t sell it, so they are doing a short sale.

“What you commonly see is a first mortgage followed by seconds and HELOCs of increasing sizes (each one takes out the prior) until finally they refinance the first and consolidate all the smaller ones,” Roberts said. “It is like when these people run up 10 credit card bills and then use their HELOC to pay off all 10 before starting over.

“The whole thing was a Ponzi scheme of ever-increasing debt.”

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Surf City home "mood ring"

For the 22 business days ending January 8 -- DataQuick's freshest stats -- we tap into Surf City's homebuying mood with how local ZIPs fare vs. a year ago! ZIPs with GAINING median prices and sales are GREEN while MIXED trends are YELLOW and FALLING prices and sales are RED!

ZIP	Price	Ch.	Sold	Ch.
92646	$610,000	+6%	38	+9%
92647	$493,500	-1%	28	+8%
92648	$678,500	-16%	34	+17%
92649	$935,000	+8%	20	-17%

Overall O.C. home trends are HERE!

Roger says:

May 12, 2009 at 7:38 am

And what’s being done to these abusers? Oh that’s right nothing! They pocket a ton of money while the rest of us non abusers bail out the hole they dug the country into. This is why this country is in the tank, no responsibility, no accountability. It’s all about pointing fingers and making excuses like “well everyone else was doing it”. Spare me the sob stories about losing their home, family, etc, etc. Own up to your greed and stupidity. Pay the rest of us back!

jennychangf8 says:

May 12, 2009 at 12:49 pm

well said! But unfortunately even Obama is on the side of these greedy people!!
Jc says:

May 12, 2009 at 3:04 pm

But Roger
where were all those talking like you, during that period of time? I tell you what all were doing…CHEERLEADING The great financial moment without stopping to think for one minute…IS TO GO TO BE TRUTH.

I follow this orgies for a long time, since the 90’s when everybody were celebrating with PIZZA, AND CHAMPAGNE.

I knew there was a big Dark-Hole with no end, Because there was an Artificial Economy going.

So Now you all have to face reality, I was call Negative/Crazy/ I did know what I was talking about.

I know people like your discription, They were like “BONNIE & CLYDE” movie
Husbands, and wifes ransacking their homes financialy, by going to the banks asking for more, and I call that “ROBBERY” Without excuses. So their should be in Jail along with the bankers/Realtors/Appresairs/Loan-Officers, and Member of the Congress…of coarse don’t forget the Former heads of the white house.
And that was the actitude in General. So all I can say is good luck, and do your best.
Because there won’t be nobody in Jail…Sadly
mr appraiser says:

May 20, 2009 at 2:48 pm

amen roger.we need a debter prison back when people can force the good to pay for the ill responcible thats just like stealing.why should responcible people bail out losers who borrowed them selfs silly and now are being given sympathy.all these loser have other assets, all thier assets should go to pay off thier debt. no we should let them keep thier new cars,boats,n other properity they bought with the money they borrowed so the good people should be punished with your b s bail out.mr.socialist obama is so use to chicago a bunch of thiefs hes spreading this crap like crap on a corn field for votes by these losers…now the banks wont make loans at no price,can you blame them.every one makes them out to be the bad guys when some jerk off loser borrows 700k on a 400k house now has buyers remorse. you forced me too borrow that money so why should i have to pay what i agrreed to.the lawyers representing these cases need to dis barred and hung out finacialy.

Enlightenment says:

May 12, 2009 at 9:50 am

It is this type of abuse that requires a public caining, and permanent mark on their credit report.

SC2 says:

May 12, 2009 at 7:47 pm

Obama wouldn’t stand for that. He would give them more money as you cain them, then reset their credit scores to 850. Hello….. change.

Liar Loan says:

May 12, 2009 at 9:51 am

He is telling it like it is. And real estate can’t turn around until this bad debt is flushed from the system.

Amazed says:

May 12, 2009 at 10:37 am

I had a neighbor do this, very openly…people like this should be punished!!!!

Brain says:

May 12, 2009 at 10:44 am

Despite what bulls will tell you, this isn’t just cherry picking, either. So much of this went on that you don’t have to look very hard to find it.

For those of you who did NOT abuse your home equity like this during the bubble: thank you!! I really hope the best for you! Thanks for not stealing my taxpayer dollars through your own bad decisions, thanks for being financially prudent, and thanks for being responsible. It’s a sign of how backward our times are that I should feel the need to actually thank people for being responsible and not stealing from taxpayers.

Carol says:

May 12, 2009 at 11:35 am

I think the serious abusers, not the ’stupid’ ones, need to have their names published. Give them some kind of public punishment.

snarf says:

May 12, 2009 at 4:29 pm

I agree, Carol, but honestly, I don’t think most of them would even care. They’d probably be eager to pose for the cameras…of course, they were tricked and didn’t understand the documents…
mr appraiser says:

May 20, 2009 at 2:56 pm

CAROL the list would dwarf the bible,this is the land of THE free money and no responcibility.would it not be justice if the ones that paid got free money instead of the over indulging greedy pigs

sal says:

May 12, 2009 at 12:45 pm

This is very hard to swallow. These people are essentially stealing hundreds of thousands of dollars, even millions.

jennychangf8 says:

May 12, 2009 at 12:47 pm

Welcome to America!!!

Jc says:

May 12, 2009 at 3:29 pm

I would say

Welcome to California

Wells says:

May 12, 2009 at 3:40 pm

MULTIPLY THIS BY 10th OF THOUSANDS ACROSS OC , RIVERSIDE, SAN DIEGO AND LA. THEN FOUND ONE OF THE EXPERT REAL STATE THIEVES FROM YOUR FRIENDS AND POST AND ARTICLE SAYING THAT THE BOTTOM IS NEAR!!!!!!!!!!!!!!!!!!
WE PROMISE TO BELIEVE YOU AND LANSNER.
HAHAHAHAHAHAHAHAHAHA HA!!!!!!!

caseclosed says:

May 12, 2009 at 6:41 pm

Obama will bail out the banks and the home owners that ref time after time will get some help but the people that got homes just befor the fall will eat it as Obama doesn’t need there vote he has the free loaders locked in.

Irvine Reader says:

May 12, 2009 at 6:56 pm

“For those of you who did NOT abuse your home equity like this during the bubble: thank you!! I really hope the best for you! Thanks for not stealing my taxpayer dollars through your own bad decisions, thanks for being financially prudent, and thanks for being responsible. It’s a sign of how backward our times are that I should feel the need to actually thank people for being responsible and not stealing from taxpayers.”

Hey, you’re welcome. I’m glad I didn’t abuse my responsibilities either. But the real thing that ticks me off is that all of us that are living within our means and did not take advantage of all the craziness are now getting screwed. Those who abused the system are getting all the breaks. It doesn’t seem to pay to be responsible and honest.

It’s just wrong.

popcorn says:

May 12, 2009 at 7:19 pm

Remember the HELOC abuse affects other lines of credit. It has affected interest and dividends for folks that manage their wealth responsibly. Savings, CD’s and other instruments are down.

syscom3 says:

May 12, 2009 at 7:00 pm

Someone had to loan them the money, knowing full well they couldn’t repay.

Those are the real crooks.

mr appraiser says:

May 20, 2009 at 3:01 pm

sicko com3 go f#*! yourself your just a loser pointing the finger again.why would any one loan money that would not be repaid. you must be part of the promblem no go get a job n pay us back you excuse making thief..

chucko says:

May 12, 2009 at 7:49 pm

HA1 they just want to move from thi sh++ hole, give em a nice home in az, we’re dumb enough!!

eltyra says:

May 12, 2009 at 8:34 pm

That is (was) precisely the problem syscom3. No one was actually out any money, especially the mortgage co or bank, until 4Q of 2007. Then the beast bit back. Now, insted of letting it bleeed to death as it rightly should, we’re all paying for it. My chldren and grand children as well as yours, will be covering the a$$ of every broker, LO, appraiser blah blah blah all the way to the top of the financial food chain.

It wasn’t just homes either, think about it, how often during that time period did you here the words “so and so’s quarterly loss was $$$ million” (or billion). Thousands of businesses operating at a loss for years in a row. I remember reading a story about a mid- west theater chain that was going under because it couldn’t get a refi of their debt which was OVER 600 MILLION dollars. A theater chain??? come on.

A very sad stage in American finance. As soon as the players realized, they had found a way to give away $$$ without ever be held responsible for it, the gates weren’t mearly thrown open, they got ran over.

Pied Piper says:

May 12, 2009 at 8:49 pm

I guess I’ll refi and buy a big gass guzzling pick up truck, Mmm maybe some tatoos for me and the wife. Oh yea, the breast implants will look great on her as she rides the snowmobile, watercraft, sand mobile and hummer too. Oh, must not forget to blame others for my current economic/social defaults. Oh…kids got every distraction money could buy! ‘CEPT LOVE.

Les says:

May 13, 2009 at 4:48 pm

The greedy Banks and Mortgage Companies are just as much to blame as the home owners. GREED pure and simple. Think of the added lexicon to our language: Liar loans, heloc, stated income, arm, ect. Isn’t America great?

I want my bail out too. But wait, I acted responsibly, so I don’t qualify.

May 13, 2009 at 6:09 pm

We need to publically cane HELOC abusers, and mark their credit history with this abuse for 20 years.

stuwilbur says:

May 14, 2009 at 9:03 am

RepubliKlans are so wrapped up in their hatred for Obama that they will intentionally learn nothing from all this, and will be continually screaming so loudly that no intelligent discussion can happen. Many, if not most, Democrats are guilty, TO VARYING DEGREES, of “feeding at the trough” of private/election financing and sleazy anti-democratic [small "d"] behavior, but for sure MOST, but NOT ALL, Republicans are so wrapped up in the idea that the hated Dems are Communists and agents of the devil, that they will never be willing to help solve what is truly a systemic and societal, multi-multi-faceted problem. True shame on those, of every party, who won’t be constructive and make America into the great place/idea it could be, and [somewhat] what it once WAS. You can’t scream at the world to respect us, that has to be earned.

Joe says:

May 14, 2009 at 7:11 pm

Obama will increase your taxes to pay for all this.
- tlc8386 says:
  
  May 16, 2009 at 10:20 am
  
  our taxes will go up no matter who is in office someone has to pay for this total mess—blaming and hating who is in office now is a waste of your energy
tlc8386 says:

May 16, 2009 at 10:19 am

Totally agree with you–just watching cnbc you see them all screaming with no understanding of what was created how it can be resolved and what must be done. We must go back to honesty, caring about each other instead of trying to rape each other. Greed has destroyed America–the take all for myself days are over. Everyone must get down to reality.
mr appraiser says:

May 20, 2009 at 3:09 pm

hey slipery the democraps are the ones that made it illigal to use a persons credit or ability to pay a issue hence millions of 500k loans to 8$ WORKERS..YOU GET WHAT YOU PAY FOR..OR HERE YOU GET WHAT YOU DONT PAY FOR

observer says:

May 14, 2009 at 10:13 pm

Good thing the Goldman Saks and Citi could rely on the Rino’s and Demoncrates for the first bailout of $700 billion, while Obama publicly opposed the first bailout. Once in office, $800 billion more bailout, then a 2-triillon over budget was quickly passed.

What’s the difference between the two parties — financially not much. Same old gang calling the shots - Goldman Saks and Citi folks just doing another rotation. Looks like the taxpayers and auto unions will be left holding the bag. What happened to the auto unions reward for their hard work and support?

OCTrojan says:

May 24, 2009 at 10:34 am

People, why are you mad at the “abusers”? The banks practically threw money at them. “Here, here’s $500,000, pay us back whenever but in the meantime we’ll give you a 3% annual interest charge and then as your house goes up in value, sell it if you want.” Sounds reasonable to me: banks were encouraging HELOCs based on the belief that values would continue to go up.

As “stupid” as borrowers may be, who was it that actually spent $$$ to find these stupid people and convince them to borrow?

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