A Repeat Of The 1990s In California
The Voice of San Diego reports from California. “After a dozen people spoke to the devastating effects of foreclosures in the region in Thursday’s meeting of the City-County Reinvestment Task Force, one San Diego man told his own story. Andy Sobel said he’s facing foreclosure on his east San Diego condo, which he financed 100 percent in July 2004.”
“He said unsound lending practices landed him in that spot, and sighs from housing counselors illustrated their statements that they’re hearing from 10 such homeowners a week. But testimony from the mortgage lending side said blame shouldn’t be laid at the general foot of the industry.”
“‘We don’t feel that there are any bad loans out there,’ said Rob McNelis, a mortgage broker and Realtor who represented the San Diego chapter of the California Association of Mortgage Brokers at the meeting. ‘There are loans used in improper ways for the wrong people…And unfortunately, there are some unscrupulous brokers who took advantage of that.’”
The Union Tribune. “San Diego County neighborhoods with large minority populations have been especially hard hit with foreclosures and risky subprime loans, members of the San Diego City-County Reinvestment Task Force were told yesterday.”
“Steve Bouton, an El Cajon banking consultant, said his analysis of census tracts showed a clear pattern of subprime loans, higher-priced loans for people with tarnished credit or low incomes who are considered greater risks.”
“Andy Sobel of Rolando told the task force his lender was of little help when he began going through foreclosure on a one-bedroom condo he had purchased for $240,000. Sobel is trying to resolve his situation with a short sale.”
“Sobel took out first and second mortgages with adjustable rates to buy his home. He said he was forced to stop making payments when they began adjusting upward and the value of the condo declined.”
“‘They are going to help me now, but it is kind of too late,’ he told the task force. ‘I am losing my home I bought in 2004. I should not have been put in this loan.’”
The Tracy Press. “Life will likely get tougher for those who hope to get out of the shadow of looming foreclosures, according to some mortgage and real estate professionals.”
“‘There are no products now available for people to get out of these loans,’ said Scott Thompson of Mortgage Resolution Services in Carmichael.”
“Thompson said that he is especially critical of a mortgage industry that sold nontraditional loans, such as interest-only 100 percent loans, to people who didn’t understand the risk. ‘By any measure, the mortgage industry is failing miserably,’ he said.”
“Thompson said the sub-prime loans have a place in the world of home loans, but not in a market where prices are flat and nobody is building equity. ‘The problem is about to get progressively worse,’ he said. ‘In the Central Valley, the use of this loan product was higher than the national average, so this area will get hit very hard.’”
“Local real estate broker Ron Cedillo agreed that it’s getting tougher as lenders are stricter than ever on home loans. ‘What I’m finding is the programs that were available six months to a year ago have shut down now,’ he said.”
“The latest numbers from RealtyTrac show 837 homes are in some stage of foreclosure in Tracy.”
Inside Bay Area. “Fannie Mae and Freddie Mac pledged at least $20 billion to help homeowners caught in the subprime meltdown, but those in the Bay Area could be left out.”
“The loan limit on government-sponsored enterprise loans for single-family homes in California is $417,000. The Bay Area’s median home price in March was $639,000, according to DataQuick.”
“Since the loan caps are made by the federal government, there’s little Fannie Mae or Freddie Mac can do, said Fannie Mae spokesman Alfred King. ‘It’s going to be tough in some areas like yours,’ King said.”
“‘It’s cruelly cosmetic for California,’ said Ed Leamer, director of the University of California, Los Angeles Anderson Forecast. ‘It’s just restructuring, not debt forgiveness.’ Leamer said that even $40 billion is too small to make a difference.”
“‘This is going to be a drop in the bucket,’ said Kevin Stein, associate director for the California Reinvestment Coalition based in San Francisco. ‘This is not something available to the people who have been the most victimized.’”
The Sacramento Bee. “A housing slump that has wiped out countless millions of dollars in Sacramento-area home equity is soon to give a few million back.”
“Letters to 50,000 Sacramento County homeowners are being mailed today announcing cuts of up to 10 percent in their fall property tax bills, said Sacramento County Assessor Kenneth Stieger.”
“Thousands more homeowners in other area counties may see similar rollbacks. Yolo County officials say they may review up to 10,000 properties, and Placer County officials are eyeing recently built homes in Lincoln and Roseville.”
“Most of the homes that could see rollbacks were purchased during the housing boom. In Sacramento County, for example, median sales prices for all new and existing homes are at December 2004 levels, according to La Jolla-based DataQuick.”
“The rollbacks signal a repeat of the 1990s when recession and job losses pushed down area housing values and 30 percent of Sacramento County homeowners received property tax relief.”
“Stieger said nearly two years of falling prices have pushed many home values below their purchase prices. Most of the 50,000 affected homeowners will see reductions of 5 percent to 10 percent, he said. ‘It’s only right that taxpayers in that situation receive the tax break,’ said Stieger, a 22-year veteran of the Assessor’s Office. ‘The ones with the largest decreases will be those who bought in early 2005.’”
“Placer County Assessor Bruce Dear said he believes the bulk of reassessments “will come from starter housing, primarily Roseville, Lincoln, maybe a little bit of the Rocklin area. ‘We’re probably going to see instances of market value deterioration from a few percent to, it’s possible, 10 to 15 percent,’ he said.”
“Each percentage point represents about $2 million, according to the Assessor’s Office, meaning Sacramento County will see revenue fall by about $12 million for the fiscal year that begins July 1.”
“With home prices still falling, next year likely will be worse, said Geoff Davey, the county’s CFO. ‘A year ago we were starting to see signs of it. Now we’re really into it,’ he said.”
“‘I’m afraid many entities in this region that get the majority of revenue from property taxes have been reliant on growth that’s not sustainable,’ Davey said.”
The Modesto Bee. “Apartment rents remain relatively flat throughout the Northern San Joaquin Valley, according to just-released statistics from the RealFacts research group.”
“When rents are as low as they are in places such as Modesto, ‘renting is the wisest economic decision,’ Bates said. ‘Though homeownership is the American dream, just in terms of dollars and cents renting is more economical.’”
‘Median prices are 1.4% above a year ago but 1.3% below June’s all-time high of $642,500. Sales volume runs 23% below the year-ago pace. If that holds this will be the 19th straight month that O.C. home shoppers bought fewer homes vs. the year-ago period.’
I’ll drink to that!.
the BEN curve
price incremental change vs inventory over hang over time period
p= IN ch + t-1 bmbmnmb,fporpgmkpohmpmb
micro and macro formulas drive me nuts
Didn’t we hear from Andy Sobel in another article:
From today’s piece:
“Andy Sobel of Rolando told the task force his lender was of little help when he began going through foreclosure on a one-bedroom condo he had purchased for $240,000. Sobel is trying to resolve his situation with a short sale.”
If I remember correctly, wasn’t he a teacher or something. He should have read his documents before signing and stop WHINING!
He’s been in his home since 2004 that is 3 years ago, why didn’t he refi into a traditional home loan since then, the market just crashed last year, he could of refied into something he can handle.
I second the “STOP WHINING” vote
He can try talking to Freddie Mac, who is coming with the 20B bailout. They’ll put him in a 30 year debt program, if he really wants to stay in his condo. But perhaps he was speculating, get caught, and now just want to get out. Does he own any other investment properties?
He said “I should not have been put in this loan”. What he should have said is “They should not give me any loan at all”.
If these somebeaches get bailed out, I think part of the terms should be they can’t sell their POS until their loan is paid off!!!!
In San Diego, there are many areas which have seen flat/falling prices since 2004. We were ahead of the curve which is why the devastation will be so brutal here.
Listen, I feel bad for the guy. I deliver pizzas, but an unscrupulous auto dealer sold me a 2006 Bentley Azure and now it is being repossessed because I cannot make the payments. I should not have been put into that car loan!
You people need to have more sympathy for us Walking (Brain)Dead.
“‘They are going to help me now, but it is kind of too late,’ he told the task force. ‘I am losing my home I bought in 2004. I should not have been put in this loan.’”
I should not have had to read that line of reasoning!
But yet, I could’ve decided not read on…………….Um, interesting……….
That fool is a social worker and had to know how bad that neighborhood was. He just figured he was on the 20% a year appreciation bandwagon. This is a classic case of buyers remorse because he paid a ridiculous price for a crappy apartment in one the nastiest hoods in San Diego.
San Diego is circling the bowl and the very first turds to go down the hole will be Rolando (where his condo is), City Heights (the neighborhood formerly known as East San Diego), Encanto, Sherman Heights, Barrio Logan, National City (Nasty City), Lemon Grove and all the other hoods just like them.
“‘We don’t feel that there are any bad loans out there,’ said Rob McNelis, a mortgage broker and Realtor who represented the San Diego chapter of the California Association of Mortgage Brokers at the meeting. ‘There are loans used in improper ways for the wrong people…And unfortunately, there are some unscrupulous brokers who took advantage of that.’”
———————————————————————————-
Wow. What chuptza. No blame at all for the mortgage industry. This guy had better be careful with this sort of nonapology. When tempers and angers really begin to flare, blame will land squarely at the mortgage brokers association. And with language like his, he’s all but asking for the world to attack and blame mortgage brokers. What an idiot.
“We don’t feel…”
So he feels good about predatory subprime loans that targeted minority buyers as future foreclosure victims, then? Racist.
Dude, what is it with people. A loan is just a loan. If it’s no good, don’t sign it! I bet he was presented with 5 loans from other lenders, that all said they would loan him about 120k based on his income. He CHOSE to get this loan. He wasn’t put there. I’d bet that he SOUGHT OUT that loan because it gave him the credit line he needed, at the rate he needed to get into the game. The real question is: why are/were minorities signing up in droves for no doc interest only ARM’s? Could it be a LACK OF EDUCATION? I would make a fair wager that if you compare foreclose rates to education level that is where you will find the most significant correlation, rather than race… The fact that a sales guy was being a sales guy doesn’t equal racism (even though it might equal a greedy bastard).
http://www.ocregister.com/ocregister/homepage/abox/article_1663939.php
Dwayne Anthony Kelly, 45, is also suspected of stealing more than $20,000 of copper wire
I think this is only the beginning of a crime wave.
These are the types of crimes you typically see in really depressed areas like parts of Michigan, Ohio, and Wisconson. This is actually very telling.
No kidding. Rob, old boy, praytell exactly WHAT the “proper use” and WHO the “right person” would be for $0-down, 50-year, .5% teaser, stated-income, option ARM? Some genius billionaire investor arbitraging rates or hedging his portfolio, I suppose? Too bad none of them were the ones actually using these loans.
“No bad loans” out there. The chutzpah these guys have is astonishing.
I think what the guy actually meant was that there are no bad loan products, not no bad loans. To say there are no bad loans is so absurd as to be beyond the scpe of reason, even for a representative of this industry.
And I suppose it is true. I can think of two or three situations in which a very low teaser rate that adjusts upward in a few years makes sense - a doctor who is going to stay in the area once her residency is over and she starts earning money like a real doctor, a professor and lawyer move to a new area where the professor has a job but the lawyer has to study for the bar before going back to a fairly high salary, etc. All this assuming they have a down payment. Of course, they could rent for a while too, but they could be good candidates for this type of loan product.
I even know one person (but only one) who was a good candidate for a no-doc loan.
People who have no prayer of affording the reset rate on an adjustable loan are never good candidates for these loans. Didn’t stop them from signing on the dotted line and didn’t stop the brokers from putting them in these loans and didn’t stop the lenders to just letting it all go on and on and on.
Maybe what he meant is, “There are no bad loan products, given proper underwriting.” Too bad the underwriting rule book was burned and buried a few years ago.
Maybe he meant, there are no bad loan products, just bad borrowers.
But bad borrowers, historically, could not GET loans.
As a farmer, I have spent many years paying off 100% (as in no down) production and equipment loans with a floating interest rate. During the 80’s one hit 11% before fallng! ‘Toxic’ loans do have their place, but only for brain-dead farmers who are so completely tied to their land through family history and sweat equity that leaving it amounts to suicide. In that instance, the risk of non-payment is almost zero. For almost anyone else, a lender has to be nuts.
Farming, the best job money can buy!
just like Jessica Rabbit: “I’m not really bad, I’m just drawn this way…”
yeah Robby boy, no bad bullets either.. it was just unfortunate that they were pointed the wrong way….
there comes a point when its just wise to drop the shovel.
got cash?
Adjustable rates are great for a falling rate environment, but when rates are at historic lowsthere’s not much room for that rate to adjust downward. I have used stated income as both my husband and I are self-employed and can write off most everything on our income taxes. I, however have always bought with 20% down as I like to keep my payments low. I don’t need to get a stomach ache every month writing out a big mortgage check. I also ran the worst case scenario numbers before walking into the signing…and I’m just Jane sixpack. It doesn’t take much brains to figure that out. BUT it does take a lot of stupid to not figure it out.
Yes, in a recent interview we polled people on the street about their mortgage problems. Here are some quotes:
A. Dittohead: “It was them libruls in Warshington what gave me too much money.”
H. Throkmorton: “It was them mortgij bokers that gave me too much money. I want the president to bomb them.”
J. Smoker: “The Man gave me too much money. My civil rights got violated”.
M. Genx: “What’s this country coming to? I wasn’t born with a silver spoon in my mouth. The two SUVs, the vacation home at the beach, the cruises to Bahamas, the yoga classes, the special diet food, my cappucino machine, the kids classes and the nanny are all getting expensive. The government doesn’t care about us anymore.”
K. Racked: “It was them Iranians what got me too much money. Nuke Iran”.
So, by popular poll I think it’s quite obvious that these poor victims of corporate greed need some restitution for being ruthlessly exploited.
“‘We don’t feel that there are any bad loans out there,’ said Rob McNelis, a mortgage broker and Realtor who represented the San Diego chapter of the California Association of Mortgage Brokers at the meeting. ‘There are loans used in improper ways for the wrong people…And unfortunately, there are some unscrupulous brokers who took advantage of that.’”
Do all these guys watch the same DVD/online training courses? Corner a mortgage guy and it’s always the same response - it isn’t the product, it’s the persons fault, and yes we explained that they were committing financial suicide.
“‘We don’t feel that there are any bad loans out there,’ said Rob McNelis, a mortgage broker and Realtor who represented the San Diego chapter of the California Association of Mortgage Brokers at the meeting. ‘There are loans used in improper ways for the wrong people…And unfortunately, there are some unscrupulous brokers who took advantage of that.’”
Ah…not “bad”, merely “improper”….that certainly clears up any ideas that the mortgage brokers were acting illegally. It’s just semantics!
combo mort and realwhore = potential
mort+ RE + appraisor
now that’s a lawsuit
Loans don’t bankrupt people, people do!
Backstage, you beat me by 48 seconds with this comment (see way down thread). Great minds think alike!
Re: WVa shooting. Guns don’t kill people, doctors do.
Loans don’t bankrupt the city. City council members of San Diego do.
No bad loans out there, just bad mortgage brokers!!
Loans don’t start off bad.
They become bad when you don’t pay them. Duh.
Yeah, but I have little sympathy for all these borrowers who thought the good times were just going to continue to roll, so they pulled the trigger on a 100% no-doc option ARM to purchase the dream home they hoped to flip in 2 years for a tidy profit. Whoops, prices went flat or dropped and the ARM reset and now the real estate tycoon is going to lose everything. All of a sudden we’re supposed to break out the violin because this tool shouldn’t have been put in that loan. This guy, and folks like him, need to wake up and realize they aren’t victims, they are adults that need to be held accountable for their reckless financial gamble.
Tough break.
“This guy, and folks like him,…”
Lucky for him, the party in control of Congress is working overtime to make sure that he will not bear the full consequences of reckless financial gambling. We are all gamblers now, and the party in control wants to make sure we continue to gamble recklessly, rather than letting market forces restore sanity to household financial decisions.
a gop /rino jumped in on the savior mortgage machine
not to be outdone
When I go to Vegas, I don’t have a gambling problem, I have a winning problem.
Oh come on! When has Congress worked overtime?
When voting themselves a raise!
Let’s not forget the former party in control of the GOV setup the mindless minions in the first place!
Oh and don’t worry, the FB’s are not going to be bailed out. Politians from both party’s will pay plenty of lip service, but not much else, Unless of course your a big bank, or financial institution. Then welfare is OK.
No shi@! I’m sick of these 100% financing fools who act like victims. You gambled, expecting to make a killing on your “always goes up” real estate purchase. Since you had no skin in the game to start with, you owe what you LOST to the lender. Pay-up and quit whining.
““Steve Bouton, an El Cajon banking consultant, said his analysis of census tracts showed a clear pattern of subprime loans, higher-priced loans for people with tarnished credit or low incomes who are considered greater risks.””
Hmmm, am I missing something here? Aren’t the subprime people who abused their credit SUPPOSED to have higher rates? Or will that be the final bailout - your rate will be based on what you can afford? Those of us with high credit scores, a good downpayment and reasonable incomes for the loan amount we are taking out will pay higher rates because we can afford it. Those with poor credit and low incomes who buy McMansions they can’t afford will get 0.1% rates because it is all they can afford.
Yep, sounds fair to me. Right after we start arresting sober drivers for not getting out of the way of drunk drivers. I mean, they’re not impaired - obviously it’s their own fault if they get hit by a drunk.
Amen to that.
RE Bear: I just got off the phone with Emmet Pierce: (619) 293-1372; emmet.pierce@uniontrib.com, who wrote that article and said to him pretty much what you just said.
He told me that “the entire industry is against guys like you, they all have a vested interest in NOT seeing housing prices go down.”
I told him to do a story from our point of view. People with good credit who will be screwed by any type of bailout, he said he would consider it…People should write him to egg him on.
I also gave him the link to this site…
You better hope he doesn’t own a home in San Diego…it might skew his desire to write such a piece.
Thanks for that, dukes.
A “vested interest in NOT seeing housing prices go down” is equal to a vested interest in prolonging the pain.
Dear Mr. Pierce:
The entire industry can have any desires they want. They can want real estate not to fall in price, they can want buyers to continue to pay ten times their incomes for homes, they can want new buyers rushing in frantic not to be “priced out forever.”
However, wants and reality are far apart right now. The average buyer of the last three years is exhausted - financially, physically and emotionally. People cannot pay ten times their income for a home and hope to survive even one month of a personal downturn – unemployment via injury, illness, or lay off, death of a spouse, lawsuit, etc.
Prices cannot remain so out of whack from the traditional mean. San Diego cannot go from 4.2 times annual household income to buy a house in 2000 to 9.7 times in 2005. 9.7!!! What allowed this? Buckets of money given to anyone and everyone with little concern about it ever being paid back. The borrowers lied or got greedy and were given houses they neither earned not could afford. The lenders rode the gravy train and screwed over the investors who had no idea their 3% return bonds were invested in subprime lending. The government ignored it all because people felt rich even as their debt exploded.
I have a very high credit score, a great down payment and enough socked away to get through years of unemployment. Yet over the last four years in San Diego I have been unable to stomach the idea of buying a home as I would have to resort to “creative financing” in order to purchase a half million dollar shack as opposed to using the 30 year loans I used on my last two homes.
There’s plenty of blame to go around and lots of greed to fuel it. Now that houses are no longer appreciating for $100,000 a year there are plenty of victims to point fingers. Not one of whom thought to themselves “this is too good to be true, maybe I should rethink it?”
And Mr. Pierce, think about a bailout. There are 15,947 homes in San Diego in some form of foreclosure (according to RealtyTrac.) A one BILLION dollar bailout means each home will get $62,708. Of course, no new homes will go into foreclosure after today so this should suffice. No one will look at a bailout and think they never have to worry about repaying a loan because the Nanny State will help them out of stupid decisions. No one will abuse the system and cause funds to go where they should not. No – this is a perfect plan and I am so glad the REIC is there to help these people out whom they obviously care so much about. Yeah right.
It’s too big sir, and there has been too much damage. There will be a correction (or to quote the movie _Courage Under Fire_, “There will be a reckoning.”) It may be slow and drawn out or it may be short and extreme, but prices will revert to the mean. They always have. There is no good RE news (well except for those of us who would like to own someday under reasonable terms.) The “Industry” cannot stop this because they caused it and really have no understanding of simple economic theory and why the fall will continue.
Most importantly, the true fiscal conservatives are here and we are growing in number each day. We will not quietly allow our wages/savings to be stolen to pay for the greed and stupidity of buyers, sellers, lenders and overseers. If wishes were horses the “Industry” could survive very well – by selling the manure they are excellent at tossing around.
BTW This comment has nothing to do with the gist of the story which has to do with minorities and predatory lending. This does not seem to be that hard to prove - it is all about numbers. Did a person with an equal (in the range) credit score, income, and downpayment get a similar loan to another person of any group being compared? If not, sue for discrimination.
However, the three people/families I know going through foreclosure right now are all white. The three people I know who had their lending documents switched from fixed to adjustable the day of the closing were all white. I think the predatory lending bypassed race, sex, religion and age. Adjustable loans have much, much bigger commissions. Period. Mortgage brokers did everything in their power to sell them. We will have to watch the demographics on foreclosures to see how it all shakes out, but I would not be surprised to see it pretty much match county demographics. The one exception is ESL borrowers – with the loan switching I’ve heard about I have no doubt they will be much more susceptible to having this happen.
SD RE Bear, did you send this to Emmet? If you didn’t, I will…good letter…
So what do you do if they switch the terms on you? Personally, I’d walk out of the office after telling them to go back to original agreement or I’d go somewhere else.
I guess my question is more about what happens with the RE transaction. Does walking away from the messed up financing mean you have to walk away from your deposits too?
NM my DH explained it.
He’s kind of stupid.
If this were true, mortgage lenders wouldn’t be going bankrupt. The “industry” would prop them up and Mozilo wouldn’t be dumping shares. Mozilo is “The Man” and these guys wouldn’t back out on him.
the rents that will tumble will be NEW BUILD condos/townhomes and sfh
Apartment rents remain relatively flat throughout the Northern San Joaquin Valley, according to just-released statistics from the RealFacts research group.”
Fine with me, I don’t have a problem with the idea of being able to rent a new house cheap. If it’s shoddy it’s not my problem.
Shoddy houses are expensive to heat and cool.
My landlady just signed me up for another year of renting! I’m going to wait out this bubble quite comfortably! That is, is Neil will share some popcorn with me.
There are ANY bad loans? What about the ones that were fraudulent? Those aren’t bad loans Mr. McNelis? Maybe he is refering more to a type of loan rather than a particular instance of said loan.
If people want to take these kinds of risks, I’ll be there on the down side to buy it back from the bank. You create the surplus, I’ll enjoy living in it.
how will wm and FRE / FNM decide which crapped out loan is “worhty” of saving ?
Whichever one benefits them the most by saving it.
Buy vs Rent in Santa Clara.
http://cbs5.com/topstories/local_story_109222714.html
Beginning in 2001, Santa Clara Valley rents dropped 25 percent as 200 thousand people lost their jobs.
Currently, with the tech economy booming again, rents are going up fast.
Lynn Marsh found that out when she and her husband moved to San Jose from England about six months ago.
“We’re paying $2,120 a month,” said Lynn Marsh. “I don’t know if that’s good or bad.”
Maybe shocking is the word. In the first quarter of this year, Santa Clara County had the highest rent increase among every major metropolitan area in the Western U.S.
The average Santa Clara County rent was $1,522, up more than 12 percent from last year. Smaller, but still significant increases were seen in San Mateo County, San Francisco and Alameda County.
At H.M.S. Property Management in San Jose, agents said Silicon Valley’s renewed job growth is fueling rental demand throughout the Bay Area.
“There’s a lot of jobs here,” said property manager Troy Hill. “A lot of new opportunities for people, so there’s a lot of new people coming. With the number of available rentals remaining about the same, when you have more people and the same amount of rentals — the price is going to go up.”
Adding to rental demand, economists noted recent home buyers are facing higher monthly costs than renters in the form of property taxes, closing costs, agent fees and down payments.
Because of these costs, for the first time in 15 years, renting may make more sense than buying.
“For a lot of our clients, they find that renting makes a lot of sense because there is a high turnover rate in the job market,” said Hill. “People are constantly switching jobs. Staying in a rental allows them the freedom to move without having to worry about tying up their funds.”
That’s exactly Lynn Marsh’s situation.
“We did look at housing but because we’re not sure how long we want to stay here, we don’t want to commit ourselves to buying a house over here yet,” said Marsh.
Despite the increases in rents, economists sayid rising home loan interest rates and fears of declining property values make rentals appealing to people who do not plan to stay in a home for many years.
more nonsense.
People are leaving Santa Clara county in droves.
Rents are not increasing.
Here are the census bureau numbers for Santa Clara County. Leaving in droves?
July 2006 July 2005 Increase
1,731,281 1,705,158 26,123
Hmm, lets see, a 1%YoY increase in population… What is the natural birth rate, about 2% increase? Wikipedia lists it as about 1.4% US wide, so net outmigration would equal about .5% to balance out your numbers.
http://en.wikipedia.org/wiki/List_of_countries_by_birth_rate
So while (by my estimate) 1 in 200 people are leaving the area is not exactly in droves, it sure isn’t net inmigration either.
“Despite the increases in rents, economists sayid (sic) rising home loan interest rates and fears of declining property values make rentals appealing to people who do not plan to stay in a home for many years.”
*******
And the last shall be first.
That above should be the first thing stated in the article - if it’s even true.
And that is that rents are going UP because NO ONE is interested in buying.
OK. I exaggerated.
Many fewer than in the recent past are interested in buying… those without common sense or forced by life circumstances.
Hate to break it to you, but I know a guy who manages a LOT of apartments, and he’ll tell you that the rental growth throughout the Bay Area has been stronger than it has been for years.
We’ll see if it lasts, but he’s a guy who has been in the business for decades in this area and has no reason to lie to me.
I posted this earlier today; take a look at this chart (thanks Patrick):
http://patrick.net/index_rent.html
Yes, I agree, rents rose especially quickly in Q2 a year ago (rising for the first time in five years).
However, since approximately one year ago, they have peaked and gone down (3 bed, 2 bed) or moderated and have been flat (1 bed).
“Rising rent!” cries from the MSM, the realtors, the landlords, etc.? Like it’s going to make me go out and buy a house tomorrow.
Who cares? It’s much better deal than buying for well into the future.
Also, employment info:
http://www.viewfromsiliconvalley.com/id302.html
“Several months ago, we invented our own new statistic: “CHARGE” jobs (Construction, Healthcare/ Hospitality and Retail, Government, Education). A distressingly large portion of new jobs continue to show up in this newly-invented category.
Of course, there’s nothing “wrong” with CHARGE jobs. Except they are the polar opposite of the types of jobs mainstream pundits proclaim are again being created en masse in Silicon Valley…
Conclusion:
There is no dispute total jobs are up y-o-y, which is the first time this condition has applied since 2001.
So what’s wrong with that?
A) CHARGE jobs are running just over 35%. This is an apparently-permanent shift of +6% (= 50Ku+) jobs into sectors paying minimal wages, subsidized by the tax code and/or not expected to actually turn a profit.
B) CHARGE jobs represent 45% of the new jobs. (CHARGE jobs are gaining share.)
C) If there were also 1,700 new “construction-related” (which is apparently over and above “construction” jobs) plus 500 “doctors offices and clinics” over and above “Health case and Social Assistance,” y-o-y CHARGE jobs jump to 59%.
The net is just over 500 non-CHARGE jobs per month.
Does that still sound like a Silicon Valley jobs recovery to you?”
[I'll answer the quoted author's question myself below:]
“No - it certainly does not.”
This is 100% true. Tech spending on headcount and capital is actually down. There is a disconnect between Reits and Workforce income.
Fact is what can be done has been done in High Tech SV, the next step which we already are entering is downward price pressure. This means cost containment and reduction.
Yeah, while I believe the rental market is better today than it was 2 years ago, my rent would need to at least double for me to even consider buying a place. For now, I’m content to rent.
Don’t forget the outsourcing to India and China! Good paying jobs have been leaving the country for 30 years+.
“At H.M.S. Property Management in San Jose, agents said Silicon Valley’s renewed job growth is fueling rental demand throughout the Bay Area.”
These people are lying big time. The majority of the Job over the past 5 years are low paying Goverment, Service
http://bayareanewsgroup.com/multimedia/mn/biz/jobs_report_042007.pdf
Actually, Santa Clara’s population change was negative a few years but now it’s positive again. July 1, 2006 estimate came in at 1,731,281 from 1,705,158
From July 1, 2005 to July 1, 2006
Births 26,724
Deaths 8,696
Net International Migration 23,586
Net Internal Migration -15,614
Total Population Change 18,028
I’d have thought they’d continue negative for several more years. This is surprising to me.
I will say that CA did see some changes
2005 to 2006
Net International Migration 266,295
Net Internal Migration -287,684
Total -21,389
basically our birthrate kept us positive but I don’t see infants signing mortgage papers.
Nor the infants’ parents, who tend to be mostly low-income illegal migrant laborers.
Beginning in 2001, Santa Clara Valley rents dropped 25 percent as 200 thousand people lost their jobs.
Currently, with the tech economy booming again, rents are going up fast.
Lynn Marsh found that out when she and her husband moved to San Jose from England about six months ago.
“We’re paying $2,120 a month,” said Lynn Marsh. “I don’t know if that’s good or bad.”
Maybe shocking is the word. In the first quarter of this year, Santa Clara County had the highest rent increase among every major metropolitan area in the Western U.S.
The average Santa Clara County rent was $1,522, up more than 12 percent from last year. Smaller, but still significant increases were seen in San Mateo County, San Francisco and Alameda County.
At H.M.S. Property Management in San Jose, agents said Silicon Valley’s renewed job growth is fueling rental demand throughout the Bay Area.
“There’s a lot of jobs here,” said property manager Troy Hill. “A lot of new opportunities for people, so there’s a lot of new people coming. With the number of available rentals remaining about the same, when you have more people and the same amount of rentals — the price is going to go up.”
Adding to rental demand, economists noted recent home buyers are facing higher monthly costs than renters in the form of property taxes, closing costs, agent fees and down payments.
Because of these costs, for the first time in 15 years, renting may make more sense than buying.
“For a lot of our clients, they find that renting makes a lot of sense because there is a high turnover rate in the job market,” said Hill. “People are constantly switching jobs. Staying in a rental allows them the freedom to move without having to worry about tying up their funds.”
That’s exactly Lynn Marsh’s situation.
“We did look at housing but because we’re not sure how long we want to stay here, we don’t want to commit ourselves to buying a house over here yet,” said Marsh.
Despite the increases in rents, economists sayid rising home loan interest rates and fears of declining property values make rentals appealing to people who do not plan to stay in a home for many years.
This is correct, no BS. There was a recession in 2001 and 2002, but the job growth is back.
Oh untrue, the job growth is in Goverment Service and Construction. No mention to high paid Tech jobs.
“Currently, with the tech economy booming again, rents are going up fast.”
Don’t let those rising rents or gas prices worry you. The Bernanke Fed has repeatedly reassured everyone that they will take vigilant measures to keep inflation under control. Higher Federal Funds interest rates (or higher inflation) are in the bag, but not both…
The Fed will fix inflation.
They’ll remove rent from the core CPI. Problem solved.
Poor little me…I should have never been given a loan like this. I agree Agents and Lenders are more concerned about their commissions, but these FB’s are just as responsible and I am getting tired of them acting like they were the victims when they were trying to get in the game as values were rising. Poor little me The FB - think I’ll go have a pity party, wanna come?
“I should not have been put in this loan”
He was walking down the street, minding his own business, when all of a sudden a mortgage broker picked him up an put him in a loan. A true victim.
I am so tired of hearing these sissy’s. What you don’t hear is a lot of these FB’s got in to these loans from Refi’s and they have 3 days to review docs before loans disburse. They knew what they were doing.
In 2005, we got to hear them boast about how they serially financed themselves from humble origins in Chula Vista to McMansions in Rancho Bernardo. Now that their luck has turned, they are clamoring for their Congressfolk to extract transfer payments from those of us who were priced out of the market by the unaffordable purchase prices that high risk loans forced down the rest of our throats.
Sounds good. Will u stake me 10k so I can go to Vegas and play some poker? If I lose, I go home. If I win, then I can brag about it and u get your 10k back. Deal?
“…from humble origins in Chula Vista to McMansions in Rancho Bernardo.”
Hey, I resemble that remark! (Except for the McMansion part)
2007 is going to suck.
-Rent
Sounds like my son when he road my brand new quad,
“Gee son what are all these scatches from?”
“Dad the thing just flipped over on me”
“‘They are going to help me now, but it is kind of too late,’ he told the task force. ‘I am losing my home I bought in 2004. I should not have been put in this loan.’”
As if someone force-fed this loan down his throat. Dipsh$t.
‘I should not have been put in this loan.’
And the lender should not have held the gun to his head and forced him to sign the papers, either.
That “I should not have been put in this loan” terminology bugs me too. Where’s the “active voice” in that sentence? Did the giant hand of Option One reach down from the sky and pluck the guy off the sidewalk, only to drop him in front of a loan officer who forced his hand to sign the paperwork?
How about some personal resposibility….”I should have done my homework and refused this loan,” or, “I should have realized being a homeowner was too much of a stretch and SAID NO.”
The victimology is too prevalent in most of these stories! I have compassion fatigue!! Bring back debtor’s prison…
oh noes!
people are being put in loans…all over the country!
I agree wholeheartedly. The organization that lent him the money probably says the same thing, “I should not have been put in this contract”. But somehow he and the lending organization both signed the paper. I guess they each feel like the other put them into the agreement. I agree with the poster who asks if someone had a gun when this deal was signed?
I am from, Madison, WI, one of the most liberal areas of the US. I strongly believe in protections to prevent corporations from taking advantage of people and destroying the environment. But this guy signed the sinking contract! You can’t protect people from being stupid. At the time this guy thought it was a good deal. I can’t see a single good reason not to enforce this contract.
If the GSE puts up a fund of $20 billion to refi some of the subprime, that doesn’t add up to very many loans at $500,000 per loan. Something like 40,000. It doesn’t make a dent. They can offer loans at conservative terms to qualified borrowers and see if there are any takers. It is not a bail out, it is press coverage to reassure the world that our little subprime is “contained”. Publicity, smoke and mirrors.
Also, per Syron, that $20B is supposed to be over a 2-5 year period, so we’re looking at $4-10B per year. Not much considering the amount of mortgages out there. Oh, and Syron also said that some of that may go to new purchases, so that’s even fewer FBs that can get refi help. The GSEs are merely offering a token so that everyone will feel better and get off their backs for a little while.
Right, compare this to the $25B per MONTH of ARM resets (this month) that will gradually rise to $50B/mo by December.
I was “mining” my data from last year, and I remembered that I had $/sq. ft. numbers and sales numbers for Los Angeles County for the past year:
Month: #sales $/sq. ft.
03/06: 6838 400
04/06: 6083 395
05/06: 6613 399
06/06: 7180 405
07/06: 5813 401
08/06: 6653 405
09/06: 5588 397
10/06: 5489 396
11/06: 5167 398
12/06: 5405 399
01/07: 4855 396
02/07: 4392 402
03/07: 5550 406
I also had one data point for 2005:
09/05: 7760 383
It looks like that the best sales month last year was June, so it will be interesting to see how LA does in June this year.
Mortgages don’t kill people… people kill people.
Did anyone ever put you in a loan? Inquiring minds want to know.
I woke up one morning, in the gutter in Tijuana, with an empty bottle of tequila in one hand, and signed closing docs in the other. I swear I can’t remember how it happened!
“San Diego County neighborhoods with large minority populations have been especially hard hit with foreclosures and risky subprime loans, members of the San Diego City-County Reinvestment Task Force were told yesterday.”
Were subprime lenders predators who deliberately targeted minority households for loans that put them in the path of future foreclosure? Or did they actually do these households a favor, by giving them the chance to briefly enjoy the fabulous benefits of owning a far more expensive home than their earnings stream would have enabled them to purchase under traditional loan underwriting standards? I guess that depends on whether you ask that question for subprime loans made before 2005 or after 2004.
“the people who have been the most victimized”
OK, media people, not all people going into foreclosure are “victims”. Was Andy Sobel complaining in 2004, when he got his loan? No. Then he looked like a frickin’ genious, buying an appreciating asset (or so he thought) with none of his own money.
For SF area, rent increasing is correct. I just increase my rent by 3%. People make more money in the Bay Area, it’s the opposite of OC.
Huh? So are you assuming that salaries also increase by 3% or more annually in the Bay Area? Just wondering…
BayQT~
No, I use the CPI to ask for rent increase. I’m sure raises are higher. Apartment rents go up even faster than 3%. My friend said it went up nearly 6-7% for her.
rental asking prices are rising here, as well as the number of rentals on the market. however, once they have been sitting empty for 6 months they seem to start lowering the prices. 4 empty apartments sitting since January in my complex. They keep bringing the prices down, and still they sit empty, though I asked for and was approved for a rental decrease of $150 off the new “asking” price. That amounts to an over all $300 decrease in my rent, and it was cheap to begin with.
asking prices will only go up for places that aren’t experiencing vacancies… yet. Yet is the magic word.
“Thompson said the sub-prime loans have a place in the world of home loans, but not in a market where prices are flat and nobody is building equity.”
Do I sense a bit of a disconnect here? It seems he is insinuating that subprime loans have a place in a market where prices are skyrocketing at double-digit rates of inflation. I agree — that “place” was the root cause that drove prices to levels that nobody can rationally afford, and that set the stage for the current housing bust.
The correct way to do a bail-out:
If it can be demonstrated that the homeowners is indeed a victim (loan officer falsified records without homeowner knowing because the homeowner REALLY couldn’t AFFORD the home, etc.), then do this:
1. The homeowner gets 60 days mortgage free to find a rental to live in.
2. The homeowner gets a note in his/her credit file saying ‘nothing happened’, a get-out-of-low-fico-score-due-to-foreclosure-free card if you will.
3. The loan originators, banks, and investors get the house.
This is fair to me…if the family “couldn’t really afford the house to begin with”, why would anyone feel an obligation to KEEP them in the house. If it was TRUELY predatory lending, then they never really should have been able to buy that house to begin with.
Press the reset switch for the borrowers, as if they had never bought. Cry foul on the originators, lenders, and MBS investors, and leave THEM with the depreciating asset.
Again, why should someone be allowed (and even HELPED) to keep a house that they couldn’t REALLY afford to begin with?
I like my “reset” idea, it’s fair for the buyers, and it makes the laon industry have to pick up the pieces.
Things will work themselves out without government intervention. BUT, if you believe in the idea of a credit score at all, why should reckless borrowers have their’s artificially propped up?
Here’s my idea without spending any of my tax money on government intervention:
1. Foreclosure takes time (as always)–the borrower will have time to find a place to rent. If they choose not to find a place to rent, well, that’s another bad decision on their behalf;
This is where I vehemently disagree with you:
2. Homeowner gets a big ding on their credit report–they were aggressive, borrowed more than they could pay back, and/or didn’t read the loan documents. They are virtually the definition of a bad credit risk, they SHOULD have a bad credit score. A guy who has a 620 FICO and decided not to take the exotic loan because he didn’t think he could repay it should have a better credit score than the guy who had a 620 credit score and then decided to borrow more than he could afford. Your idea is inherently unfair to the responsible and rewards irresponsibility.
3. The owner of the note gets the house.
This is fair, and this will happen WITHOUT any government intervention. The gov should spend their time and effort trying to figure out how to make Social Security and Medicare permanently solvent. That’s a real problem that deserves a lot more attention than it’s getting.
The funny thing is, I agree with you. I’m just trying to find a semi-reasonable plan for those who think that people going through foreclosure are “victims” and want to “help them out”. I think that the MOST that these people should get is a “reset” to their credit histories. There is no reason they should get to keep the houses (no reason except for political posturing).
My two problems with the reset of the FICO scores is:
1. What I mention above, it punishes the responsible; but also
2. It’s going to make it difficult for the mortgage industry to get back to normalcy.
If I’m a lender relying on credit score as a measure of who my borrower is, and I have hundreds of thousands or millions of guys who have had their FICO score automatically propped up, I’m going to ask a lot more questions of EVERYONE in order to distinguish those who recklessly borrowed and walked away before and those who did not.
Will the real 620 FICO score stand up???
I need a free house. I’m a Commie. Got one kicking around?
You are right, and the complete absence of any such proposition from the current Congressional talk-a-thon shows that the Congresspersons are bought and paid for by REIC.
In my evil little heart, I really want the FB who was part of the process of driving up prices so I can’t afford anything to suffer more than that, but I could live with it.
How on earth do you prove the records were falsified without the buyer’s knowledge?
‘I like my “reset” idea, it’s fair for the buyers, and it makes the laon industry have to pick up the pieces.’
I like any “bailout” proposal that “contains” the subprime mess to the high risk lenders and borrowers who created it.
Neat idea, but it should all be dependent on:
4) Successful prosecution of loan officer for mortgage fraud. Or at least, complete cooperation of the FB in the case.
The loan industry can “pick up the pieces” all day long, and they’ll just consider it another cost of doing business and raise their rates for everyone else. Federal prison time is the only way to deter this kind of behavior in the future.
oh noes, not higher interest rates, the FED needs a monopoly on controlling rates!! HAHAHAHAHA risk premiums return to the market!!!!
Prices are driven even lower by increased costs of mortgage service. Savers marginalize the fed as the free market intended! Now we just have to find a way of preventing “Helicopter drops” of money to inflate the crap out of everything, and all our patience pays off.
Hey AG - come over for a visit and tell me what you think.
http://centralcoasthousingbubble.blogspot.com/
SLO Bear! Perhaps the central coast market has turned! I just noticed that the Coldwell Banker back office on Morro Bay Blvd, which was listed for rent ever since last October, is not listed any more! Egad, MB may be booming again. Seriously, though, the asking prices for the scheetboxes in NMB have not gone down.?!?!
Bailout schmellout,
The system is not broken, and does not need repair. The kool-aid drinkers partied, and now they have no more booze. Let the recovery pass as it should….through the bowels and esophagial canals of the buyer and lender.
““Sobel took out first and second mortgages with adjustable rates to buy his home.
- He said he was forced to stop making payments when they began adjusting upward
- and the value of the condo declined.”
What does a ‘declining value’ have to do with making your payment?
It means he can’t borrow more against the house that he’d been relying on in order to pay his mortgage… what gets me about these homeowner comments is the complete lack of personal responsibility in all this. He’s bought into a ponzi scheme and yet he goes on about how he was “put” into a loan. As though he didn’t have any choice in the matter!
He said he was forced to stop making payments
That happens to me alot to, creditors call and say make another payment and your dead, keep your money we don’t want it, we will make the payments ourselves! I hate when that happens.
LOL
Don’t know if this was posted already.
http://www.ocregister.com/ocregister/homepage/abox/article_1663939.php
“I should not have been put in this loan.”
So what? As I always like to say:
“Easy cometh, easy taketh away.”
Does anyone have an opinion as to when noticeable problems are going to start showing up in alt-a? (Like we hear about subprime).
Because that could put the kibosh on any talk of bailout.
Consult the Credit Suisse chart (google “ARM reset schedule”). You will see that the big wave of foreclosures for the next 12 months is likely to be mostly in the sub-prime sector. Big wave of foreclosures on better-grade loans not due till 2010-11.
They already are. Read Calculate Risk’s blog for the blow by blow.
Capital One
M&T Bank
have taken hits from bad Alt-A loans.
Thanks guys.
OK, so now some realtors say that these people should not have been put on these loans. Where would prices have gone to, then? Not off the roof, I bet.
Then, of course, these people who should NOT have obtained these loans would have been ‘priced out forever’, too!
This is idiocy at its very best.
And I am sorry to say this, but the people affected by subprime are not all the poor. If I were rich and had gotten into the flipping game, I would have used an option ARM loan. After all, the gains were not made from paying off the mortgage, but the rise in prices.
“‘We don’t feel that there are any bad loans out there,’ said Rob McNelis, a mortgage broker and Realtor who represented the San Diego chapter of the California Association of Mortgage Brokers at the meeting. ‘There are loans used in improper ways for the wrong people…And unfortunately, there are some unscrupulous brokers who took advantage of that.’”
Loans don’t bankrupt people. People bankrupt people.
How about a negative cash flow subsidy program. Homeowner tells gov’t how much he is negative every month and gov’t makes up the difference. That way housing prices are saved, and kids don’t get kicked to the street. Wait a minute, I rent, when do I get to buy?
Sounds like the ultimate welfare program!
do I get food stamps and a check too (you know, beer money….)
“Wait a minute, I rent, when do I get to buy?”
It’s not the government’s problem that you are fiscally prudent. That will teach you!
It’s not the government’s problem that you are fiscally prudent
I had earthquake coverage on my house when the Northridge quake happened, my friends did not and were actually able to get money from the government that did not have to be paid back, I was not eligible! btw the damage on my house was estimated at $9,750.00 by State Farm-my deductible was $10,000.00. I dropped the policy and “let it ride” for the next 11 years before I sold.
Andy Sobel: NO ONE cares about you!
Put your tail between your legs and move on.
Thats it! I am going out and shopping for a new car and house on Sat. Soos I can get some of that bailout money.
Sounds good. I’ll buy the beer.
System will bail out distressed homeowners, while people that caused the crisis continue with high-roller lifestyle…
“The Merrill Lynch Lifestyle Index, a measure of stocks linked with luxury brands, climbed 22 percent last month from a year earlier and more than doubled in the past five years. “
And when will the cutoff date be for distressed homeowners? 2001? 2005? Or just a new safety net for everyone from now on. How many times can I use my debt cancellation card?
Ever since those cards in my wallet stopped working to pay for things, I’ve been having financial trouble. My civil rights are being violated.
Makes sense, seeing as how the ultra-rich population in America has exploded over the past several years. From Super-rich population surges in 2006 (a Reuters article released on Apr 17):
“The number of U.S. households with a net worth of more than $5 million, excluding their primary residence, surged 23 percent to surpass one million … In 1996, there were only 250,000 U.S. households in the “ultra-rich” category … ‘The past few years have been nothing but astounding for wealthy Americans,’ said Catherine McBreen, managing director of Spectrem, a consulting group that researches the affluent and retirement markets.”
That figure seems really high to me. There are 300 million people in America and I have heard 70 million households but let us assume 100 million households (three per household). That means that 1 in 100 households or 1 per cent of households would be in the ultra-rich category. Am I missing something?
At first sight, the following item on the outsourcing of the CIA to contractors (multi-national corps headquartered in the middle east?) may not seem related to housing bubble but both of these events are related to the loss of national sovereignity (ie the loss of America to corporations and financial institutions). Since we will soon have millions of bankrupt households in US, expect anarchy followed by an eventual dictartorship.
http://www.time.com/time/nation/article/0,8599,1613011,00.html
‘The entire [CIA] budget is being flushed down the drain — into contractors’ pockets.’
Get your tin foil hats here, step right up! Don’t be the last, they’re not making any more aluminum ya know!
“Though homeownership is the American dream, just in terms of dollars and cents renting is more economical.” Duh. When I can buy a house by paying in dreams of homeownership (instead of dollars and cents), let me know.
I thought the American Dream was just about having the opportunity to make something better of yourself, not the right to “own” anything. Man, I didn’t learn anything in school!
yeah. If owning a house is such a good investment, why does the government have to subsidize it with a mortgage tax deduction?
I know alot of “Andy Sobel’s” - a couple of years ago these guys were crowing about their newly discovered “investment” ingenuity. Now they’re all victims of an unscrupulous lendng industry that forced them into bad loans.
“When I can buy a house by paying in dreams of homeownership (instead of dollars and cents), let me know.”
Oh, I see you’ve heard of our latest new mortgage product; “No Down, No Interests, No Payments Ever Plan” specifically designed to help penniless wishful thinkers get into the home of their dreams gently and without waking them up. Well, at least until we’ve charged our commission and made it out of town safely, that is….
Bates Motel?
“When rents are as low as they are in places such as Modesto, ‘renting is the wisest economic decision,’ Bates said. ‘Though homeownership is the American dream, just in terms of dollars and cents renting is more economical.’”
“Local real estate broker Ron Cedillo agreed that it’s getting tougher as lenders are stricter than ever on home loans. ‘What I’m finding is the programs that were available six months to a year ago have shut down now,’ he said.”
Who is this douche? Stricter than ever? Give me a f*ckin’ break.
“Sobel took out first and second mortgages with adjustable rates to buy his home. He said he was forced to stop making payments when they began adjusting upward and the value of the condo declined.””
Doesn’t sound logical to a monkey’s ears. Monkey asks since he was forced to stop making payments, who force him????
“Hear no evil, see no evil, speak no evil” monkey just wants to know. Unbelievable.
Unless Sobel is really a specuvestor.
Something I’ve been thinking about for the past few days & I’d like the opinion of other posters, especially the attorney-posters here.
Since the govt seems intent on turning FBs ARMs in to FRMs — fixing their monthly payments at below-market rates, maybe we need to fight fire with fire.
I’m sick and tired of trying to make prudent decisions, only to have the PTB suggest bailing-out the speculators at our expense. If they insist on rewarding stupidity and high-risk behavior, we need to react.
Is is possible to file a class-action lawsuit on behalf of renters (and any other affected party) against the government/HUD/FHA/Fannie & Freddie, etc.? I’m thinking that if the already-subsidized “homeowners” are getting tax breaks and more mortgage subsidies, we renters ought to get some of the same. If the govt is going to fix FB’s payments, they should also fix renters’ payments. The govt should pay for any rent increases.
Maybe if we hit them with a discrimination lawsuit (remember, we “jealous, bitter renters” are a historically poor group as well, as compared to “homeowners”), we might get their attention.
In addition to that lawsuit, we need to file another discrimination lawsuit on behalf of stock/options/commodities/currency traders as well. If the govt is going to prevent housing speculators from losing money, they need to prevent other speculators from losing money as well.
Any way this would work?
BTW, the goal of this would be to scare the PTB into dropping any plans/ideas for a bailout.
I think they need to understand that they are opening a Pandora’s box if they attempt to save the FBs from their own foolishness.
I am sure that the mortgagees that were granted these loans that they “should have never been put into” were told up front that the interest rates, and thus monthly payments, would adjust and increase. They were likely also told that they could refinance in the future (true), provided that the home did not drop in value (also true). The mortgagee’s reply was assuredly, “well, real estate never goes down, so this loan is a great deal.”
Now that they realize that they made a bad assumption about the appreciation of real estate, they must blame everybody but themselves.
I also can’t understand what the big loss is. These homeowners lived in a home for a few years paying monthly mortgage rates that were probably equivalent to prevailing rents. They may “lose” the home to foreclosure, but realistically, (in California anyway, where mortgage deficiency judgements are not allowed) how much are these people out? Nothing more than they would have had to pay to rent a home had they not taken out a “toxic” loan.
Sure you could. You can sue anyone for anything. Whether you would be successful is another matter, but I like the idea. It’s a novel approach and might get some publicity. The problem is you won’t be able to prove any “damages” per se. Sure, theoretically you have them, but too many factors affect the market to say bailouts resulted in you not being able to afford a home, nor do you have a “right” to an affordable home. I specialize in family law not RE law, but just my thoughts. Anyone else?
Thanks, fencesitter! Not trying to actaully win any damages. Just thinking that we need to do something to wake up the politicians & let them see where their “bailout” talk might end up.
Fannie Mae and Freddie Mac pledged at least $20 billion to help homeowners caught in the subprime meltdown, but those in the Bay Area could be left out.
The loan limit on government-sponsored enterprise loans for single-family homes in California is $417,000. The Bay Area’s median home price in March was $639,000, according to DataQuick.
Yes, YES, YES!!!!!!!!
Sob…weep…violins.
Obviously, WE have to bail out these poor victims.
Sob…weep…violins…
“The American Dream” is a credit card that never has to be paid back.
yea and only illegal immigrants qualify for that….
hop skip and jump away from all debts back to their home country.