So, come on and take a free ride (free ride)
Come on and take it by my side
Come on and take a free ride

All over the country, I'm seeing the same
Nobody's winning, at this kind of game

The Edgar Winter Group -- Free Ride

If people get to have free rides, don't you want to be one of them? Looks like great fun to me. I can see why everyone wants to own a house in California; you get a nice entitlement during the rough times, and you get free money during the good times. Where do I sign up? 

Recently, I exposed The Face of Housing Entitlement Today.

... from the LA Times article Many borrowers in default live for free as lenders delay evictions:   

Despite being months behind, many strapped residents are hanging on to their homes, essentially living rent-free. Pressure on banks to modify loans and a glut of inventory are driving the trend.

[Patricia and Eugene Harrison, who bought their Perris home seven years ago, have lived there since October 2008 without making any payments on their mortgage. (Irfan Khan / Los Angeles Times / February 19, 2010)]

Do you think any unemployed renters who are failing to pay rent are living that well? Full dinner plates, a solid roof, mementos and permanent storage, comfortable surroundings; we endow these entitlements on those who own. ...

If you can sign your name to a mortgage, you no longer have to fear homelessness, and your level of entitlement increases significantly. ...

[Pictured above: Unemployed renter and family who failed to sign loan documents and squat in a house] 

Many people astutely observed that squatting is more common in Riverside County, mostly due to higher levels of unemployment, but Irvine is not immune to its effect. In fact, people squat in Irvine houses just as they do in the valley of the dirt people, and in the case of today's featured property, it is much, much worse.  

Irvine's Housing Entitlement 

I first profiled today's featured property back in September of 2009 in the post Bluebell, a shocking example of gaming the system here in Irvine.

• The owner of today's featured property paid $465,000 on 10/23/2003. She used a $372,000 first mortgage, a $93,000 second mortgage, and a $0 down payment.
• On 12/30/2004 she refinanced into an Option ARM for $486,500.
• Two months later on 2/3/2005 she opened a HELOC for $67,000.
• Total property debt is $553,500 plus 3 years of missed payments, negative amortization, and fees.
• Total mortgage equity withdrawal is $88,500.

Consider what this woman accomplished:

1. She put no money into the transaction. None.
2. She extracted $88,500 in just over one year. That is nearly the median income in Irvine, and that money came to her without tax withholding.
3. She has lived in the property since 2003, and in the full term of ownership, she has not made payments totaling what she pulled from the property.

I admit to feeling foolish. I looked at property in late 2003, and I deemed it too expensive. It never occurred to me that anyone could accomplish what this woman has done, or I might have followed in her footsteps. I feel like an idiot struggling to actually pay for my housing costs when I could have obtained a free ride for the last seven years. I hope lenders know that California borrowers are learning their lessons well.

Foreclosure Record
Recording Date: 02/08/2010 
Document Type: Notice of Sale (aka Notice of Trustee's Sale) 

Foreclosure Record
Recording Date: 12/03/2008 
Document Type: Notice of Sale (aka Notice of Trustee's Sale)

Foreclosure Record
Recording Date: 08/28/2008 
Document Type: Notice of Default 

Foreclosure Record
Recording Date: 08/08/2007 
Document Type: Notice of Rescission 

Foreclosure Record
Recording Date: 05/25/2007 
Document Type: Notice of Sale (aka Notice of Trustee's Sale) 

Foreclosure Record
Recording Date: 01/24/2007 
Document Type: Notice of Default  

As I noted six months ago:

The owner of this property stopped making payments sometime in late 2006. It has been over two and one-half years [now three years] since this owner stopped paying, and she is still listed as the property owner, so one can assume she still occupies the property. That is two and one-half years without a housing payment—a bill we will all pick up as taxpayers at some point. How does that make you feel? Did you pay for your housing since 2006? I did.

The place looks very lived-in. Despite not paying a mortgage or rent, the owner looks in no hurry to leave.

It is a mess but not a packing mess... 

How many of you who have been paying for your housing are living this well? 

Irvine Home Address ... 14 BLUEBELL Irvine, CA 92618

Resale Home Price ... $469,900

Home Purchase Price … $465,000
Home Purchase Date .... 10/23/2003

Net Gain (Loss) .......... $(23,294)
Percent Change .......... 1.1%
Annual Appreciation … 0.1%

Cost of Ownership
-------------------------------------------------
$469,900 .......... Asking Price
$16,447 .......... 3.5% Down FHA Financing
5.00% ............... Mortgage Interest Rate
$453,454 .......... 30-Year Mortgage
$97,297 .......... Income Requirement

$2,434 .......... Monthly Mortgage Payment

$407 .......... Property Tax
$150 .......... Special Taxes and Levies (Mello Roos)
$39 .......... Homeowners Insurance
$114 .......... Homeowners Association Fees
============================================
$3,145 .......... Monthly Cash Outlays

-$402 .......... Tax Savings (% of Interest and Property Tax)
-$545 .......... Equity Hidden in Payment
$32 .......... Lost Income to Down Payment (net of taxes)
$59 .......... Maintenance and Replacement Reserves
============================================
$2,289 .......... Monthly Cost of Ownership

Cash Acquisition Demands
------------------------------------------------------------------------------
$4,699 .......... Furnishing and Move In @1%
$4,699 .......... Closing Costs @1%
$4,535 ............ Interest Points @1% of Loan
$16,447 .......... Down Payment
============================================
$30,379 .......... Total Cash Costs
$35,000 ............ Emergency Cash Reserves
============================================
$65,379 .......... Total Savings Needed

Property Details for 14 BLUEBELL Irvine, CA 92618
------------------------------------------------------------------------------
2 Beds
1 full 1 part baths Baths
1,508 sq ft Home size
($312 / sq ft)
2,000 sq ft Lot Size
Year Built 2000
4 Days on Market
MLS Number S608286
Condominium, Residential Property Type
Oak Creek Community
Tract Acac
------------------------------------------------------------------------------
LIVE THE DREAM IN THIS MAGNIFICENT 2 BEDROOM PLUS LOFT/OFFICE, 2.5 BATHROOM OAK CREEK HOME. SOME OF THE MANY FEATURES INCLUDE RICH, STRESSED HARDWOOD FLOORS THRU-OUT MAIN LEVEL, 2 MASTER SUITES, CUSTOMIZED WINDOW TREATMENTS, STAINLESS STEEL APPLIANCES, LARGE CENTER ISLAND WITH BAR TOP, TILE COUNTERS, PLUS A PRIVATE BACKYARD, WALKING PAVERS AND LUSH, MATURE SOFTSCAPE. DON'T MISS OUT ON THIS BEAUTIFUL HOME!

Live the dream? Yes, my dream is to live in this house for several years at no cost. Can you do that for me?

BTW, what is this picture supposed to show me? And are you tilting your head to the left?