The Rational Thing To Do In California
The San Francisco Chronicle reports from California. “In the Bay Area, mortgage companies recorded 18,516 notices of default, up more than 140 percent from a year ago. Foreclosures rose nearly 315 percent to 9,206. As the slowing economy made it more difficult for Carlos Amaya to find regular work as a truck driver, the Amayas fell behind on their payments. The couple remains several payments behind.”
“Representatives of the company have called several times, refused to alter the terms of the loan and threatened to begin foreclosure proceedings, she said. ‘It’s my house, my kids live there,’ said Amaya. ‘I don’t want to leave the house, I love my house, and I’m trying to coordinate with them. Everything is refused when I call.’”
“Banks offering workouts can do only so much to stem climbing foreclosures, said Michael Carney, director of the Real Estate Research Council of Northern California. That’s because plummeting home values often mean borrowers owe much more on their loans then their property is worth, an issue that interest rates can’t address.”
“‘The ethical thing to do is to keep paying on the loan, but the rational thing, if it doesn’t look like your head will be above water soon … is to default,’ he said.”
The Mercury News. “The number of Santa Clara County homeowners who lost their properties to foreclosure last quarter jumped more than 500 percent, while those facing that fate nearly tripled.”
“Marlene Santiago, a foreclosure intervention counselor at Neighborhood Housing Services in San Jose, said about 10 percent of the clients whose loans she submits to lenders for possible modification get approved.”
“Santiago said most of the homeowners she works with now owe more on their mortgages than they could get for their homes. Given that, many would rather stop making their high monthly mortgage payments and find someplace to rent - sometimes at half the cost of their monthly loan obligations.”
The Marin Independent Journal. “Default notices in Marin surged more than 140 percent over the past three months. Marin had 284 recorded notices of default, during the second quarter this year, up from the 118 default notices during the period last year. Statewide, the number of default notices doubled.”
“Marin has posted 702 properties in various stages of foreclosure in the past four months, according to ForeclosureRadar. Nearly half of those properties - 337 - are in Novato, with San Rafael accounting for 193 distressed homes.”
The Press Democrat. “Lenders seized a record 788 homes in foreclosure in Sonoma County during the second quarter, up 46 percent from the first quarter and nearly five times the total from a year ago, DataQuick reported. Every week, lenders took back more than 60 homes from borrowers who had stopped paying their mortgages.”
“Sonoma County’s housing market is saturated with bank-owned properties and by homeowners who are attempting to sell and avoid foreclosure. ‘I have never seen this many of them in the 20 years I’ve been in this business. There appears to be no change in the immediate horizon,’ said John Binns, a CPS agent specializing in selling bank-owned homes.”
“Every week, more than 100 borrowers in Sonoma County fell behind on payments or stopped paying mortgages, triple the number from a year ago.”
“‘Generally the banks try to price properties at market because they’re always taking massive, massive losses on these properties,’ Binns said. ‘We’ve seen a very dramatic decline in pricing. It took place fairly rapidly as opposed to being drawn out over several years.’”
The Sacramento Bee. “Foreclosures again climbed sharply in the area during April, May and June as 6,075 more households handed keys back to the banks. The new numbers mean that 21,402 homes have been foreclosed on in the region since January 2007, according to DataQuick.”
“‘We’re not seeing it slacken off at all,’ said Pam Canada, executive director of Sacramento’s NeighborWorks HomeOwnership Center.”
“Mike Lyon, head of Sacramento-based Lyon Real Estate, still worries about a coming wave of higher-end foreclosures tied to ‘Alt-A’ loans, a category between prime and the riskier subprime loans. Many of those loans involve houses worth $350,000 to $750,000.”
“‘A lot of people won’t qualify for that,’ he said. ‘There’s the potential pileup.’”
The Tracy Press. “Kim and Juliet Chapman earned a combined $120,000 income last year. Finances were in order until Juliet was laid off from her bank job in March, after 20 years in the business. Now, it’s up to Kim to pay the bills with the $60,000 annual salary he earns as a San Mateo County employee - exactly half what the couple used to make.”
“At the same time, their home’s value has dropped drastically since they bought it in 2005. Then they took out a second mortgage last year to help with their son’s wedding.”
“Now, they’re too deep in the hole to think of a way out. ‘Things have drastically changed,’ he said, citing burgeoning gas and food prices and a $3,400 monthly mortgage payment as ample reason to contemplate Chapter 11 as a way out.”
“‘We’re thinking of retiring and starting over somewhere else,’ he said, ‘probably in another state.’”
The Monterey County Herald. “Foreclosures in Monterey County continue to climb at a record pace, with 847 homes lost to foreclosure in the second quarter, reflecting an increase of 443 percent over the second quarter of 2007. Notices of default rose by almost 287 percent, said DataQuick.”
“Sandy Haney, CEO of the Monterey County Association of Realtors, said it isn’t surprising that the coastal regions are showing increased default notices and foreclosures. ‘Your coastal regions are always more expensive,’ said Haney, ‘and people sometimes stretch to live there.’”
“Monterey County’s rising numbers may reflect another trend: a delayed reaction as stretched homeowners who initially tried to hang onto their properties decide to throw in the towel.”
“‘I think there’s been a mindset,’ said Haney. ‘A lot of people are walking away because it seems like the thing to do, because they can.’”
“But inventories remain high. At the end of June, there were 2,768 homes on the market in Monterey County, and distressed sales continue to drive down median home prices.’
“‘The deeper we get into this and the deeper the economy goes, their fingernails get short,’ said Haney. ‘They can’t hang on any longer.’”
“In the lower end of the market, where the distressed properties are concentrated, some brokers are beginning to see multiple offers again. Anything in between - the $500,000 to $900,000 range - is in what she calls ‘the no-man’s land.’”
“‘We woke up one morning,’ said Haney, ‘and it looked different.’”
The Union Tribune. “Distressed mortgages continued to drag on the troubled economy in June, as a record number of homes in San Diego County went into foreclosure. Mark Goldman, who teaches real estate finance at San Diego State University, said lenders are awakening to the realization that they need to modify more loans to keep the shaky home-mortgage system from collapsing.”
“Countywide, nearly 40 percent of all homes sold in June had been foreclosed on within the previous 12 months, he said. In neighborhoods where vacant, bank-owned homes dot the landscape, the figure can exceed 50 percent.”
“‘I think we’re seeing more mitigation,’ he said. ‘I think the lenders are so inundated with properties they are becoming more open to modifications and forbearances.’”
The Orange County Register. “John and Grayce Coffman got a killer deal on their Fullerton home’s mortgage - just 1 percent interest for five years. It came after six months of complex, sometimes contradictory, negotiations with the nation’s largest home lender to avoid foreclosure. They couldn’t afford their previous loan.”
“Most borrowers probably can’t get as sweet a deal as the Coffmans. The reason: it was a mistake. It meant to offer 1 percent for the first year, with the rate increasing one percentage point for each of the next four years. It later decided to honor the error.”
“In an emailed statement, the company said: ‘A clerical mistake was made on the loan modification documents in favor of the Coffmans. Since it was our mistake and the erroneous documents had been signed, we are honoring the rate and modification terms for the full five years.’”
“The couple, who have owned their home since 1977, borrowed $552,300 from Countrywide in the summer of 2005. They got a loan that allowed them to select their monthly payment from four options. They repeatedly chose the cheapest option, which meant the balance they owed the bank grew.”
“By fall 2007, their debt to Countrywide had increased nearly $40,000. The Coffmans, who adopted six grandchildren (five still live with them) and are unemployed, admit they fumbled their finances. They refinanced several times, taking money out of their home and spending it on remodeling the house and on living expenses.”
“But they also said they were misled by Countrywide into a complex loan they didn’t understand - a charge the company disputes.”
“‘I have accepted 50 percent of the responsibility,’ Grayce Coffman said. ‘”But the other 50 percent? No way. These people knew what they were doing.’”
The Wall Street Journal. “As lenders rush to curtail their real-estate exposure and preserve sorely needed capital, they are triggering lawsuits from builders that say the banks have unfairly cut off their construction financing, stopped their projects midstream and forced their companies to the brink of bankruptcy.”
“‘Lender-liability lawsuits are coming. It’s only just beginning,’ says Michael Hackard, a lawyer in Sacramento, Calif.”
“Developer John Thomas says he had nearly finished building a 222-unit condominium and hotel project in Stockton, Calif., when his lender wouldn’t release the final $6 million from his $40 million construction loan.”
“The bank indicated on ‘multiple occasions’ that it would finish funding the loan, but never did, according to a lawsuit Mr. Thomas’s company filed against First Bank in Superior Court in Sacramento County. As a result, Mr. Thomas’s lawyer says, liens have piled up against the project, the condo units haven’t been completed, and the hotel has been taken over by a receiver.”
“J.P. Eliopulos Enterprises Inc., a home builder in the hard-hit housing market of California’s Antelope Valley, north of Los Angeles, is suing IndyMac Bancorp Inc. which is now under federal control.”
“The bank appraisal in December 2007 valued the project, the approximately 900-acre Joshua Ranch Development, at $17 million, down from an appraised value of $82 million in May of that year, says Andrew Eliopulos, the company’s CEO.”
“The bank estimated it would take about 18 years to sell 539 houses on the property, Mr. Eliopulos said.
That’s insane, he said. ‘I told them your appraisal is flawed. This bank is in trouble, and it just wants out.’”
“He says the bank had been pursuing personal guarantees that he, his wife and his 81-year-old mother signed when the builder took out the loans. IndyMac had been requiring that the builder pay the difference between the property’s $17 million appraised value and the $27 million loan balance, or pay off the loan in full, he says.”
“‘If banks want to get out of residential lending, that’s fine; let’s sit down and figure it out,’ says Mick Pattinson, CEO of builder Barratt American, based in Carlsbad, Calif. ‘But that isn’t being done. The rug is literally being pulled from under us and games are being played.’”
“Mr. Pattinson says Bank of America Corp. froze his $100 million credit line for seven months, while ordering a new appraisal of his properties. During that time, Mr. Pattinson says, his company paid down its credit line by $30 million, but then stopped making payments in March when Mr. Pattinson says he realized the bank was never going to unfreeze the loan.”
“Mr. Pattinson says that ‘after seven months, this country boy figured they weren’t going to allow us to use the credit line. I said, ‘No functioning line, no interest.’”
The Bakersfield Californian. “Two homebuilders unloaded residential tracts in Bakersfield last month for substantially less than they paid at the height of the boom, county records show.”
“The fire-price sales indicate some developers might be willing or eager to trim portfolios as land value here declines - declines that will be tallied in a matter of weeks, a county assessment official said.”
“Ennis Homes Inc., a regional builder based in Porterville, sold two southwest parcels for less than $1.5 million, county records show. Ennis bought the land in 2005 in a pair of transactions totaling more than $8.2 million.”
“KB Home, a national builder headquartered in Los Angeles, sold a northeast parcel for $765,000, records show. The company bought the land for more than $3.3 million in 2005. It’s at least the third such transaction locally since the market slipped.”
“The office is currently revaluing raw land and residential subdivisions held mostly by developers, said Tony Ansolabehere, assistant assessor. He expects ‘hundreds and hundreds of millions of dollars’ worth of property value to be shaved from the roll in the next few weeks.”
“Land that fetched up to $200,000 an acre during the peak is worth … well, it’s hard to figure, he said. If someone can get $50,000 an acre now, ‘they’re doing good,’ he said.”
“Some parcels valued at $20,000 an acre before the market run-up could sink back to that pre-boom value, he said.”
“‘Land prices have really fallen,’ he said, noting banks have foreclosed on vacant tracts and unfinished subdivisions, bringing down value further.”
‘Default notices in Marin surged more than 140 percent over the past three months. Marin had 284 recorded notices of default, during the second quarter this year, up from the 118 default notices during the period last year. Statewide, the number of default notices doubled’
I’m surprised at the MIJ. No pooh-poohing of the data? No pashaws? No UHS statements about how special it is there?
Wait, what’s that I hear? Is that teeth chattering FBs in Marin? Is it Appleton-Young rocking to and fro sucking her thumb, trying to think of what she’ll say at the next cucumber sandwich do in gods country?
So Marin’s default increase is well above the states! The spray paint is on the wall, Marin. Don’t say you weren’t warned.
NEXT!
All of Marin’s Truss Fund babies are gonna have to go find jobs now…
It usually written as “trust fund babies”, but since most of these folks are about to be trussed up like turkeys, I like your term better.
ROTFLMAO
They’re cooked. Now, I only predict a deep recession, but think about all of the previous ‘wealthy children’ of the almost wealthy. In general, after a downturn, most didn’t fare so well *unless they knew they were expected to earn their way.*
The average baby boomer inherits $50k (IIRC). That’s a nice car, not a retirement… But they’re planning on big inheritances to retire! oops…
Got Popcorn?
Neil
Here’s a trust fund for ya. When my father passed away (disabled vet) plot and head stone and caskit paid for by the government. I however was 24 E-4 in the Navy and broke. So me and my dads best friend spend the day digging the grave by hand. 6×4x6 is pretty hard to do in Alabama red clay while it’s raining. However I wouldn’t trade the experience for anything in the world. Ilearned alot about what isn’t important that day.
My condolences, no matter how recent or how long ago it was. That’s a really sad story. It also speaks many positive volumes about you that you grew from the experience.
IAT
You guys couldn’t even afford a shovel?
I concur.
I can’t help but remember that troll called ‘Marin is Prime’ who used to wax on about how Marin would never go down. Ha ha ha.
Thanks for bringing that up! The Marina is Subprime!
What will happen to Marin when the prime and Alt-A resets head towards their crest over the next two years? My guess: THE WORST IS YET TO COME.
Dude, you enjoyed this one way too much.
“So Marin’s default increase is well above the states! The spray paint is on the wall, Marin. Don’t say you weren’t warned.”
Even the yokels of San Mateo County are starting to sweat. “B-b-b-but we’re the PENINSULA! We can’t be losing value!”
I just laugh. But many still believe Google will save them all!
No San Mateo County it’s Genentech.
No=Northern
I had the pleasure of paying a visit to the Realtor (TM) who told me last month that “nothing goes down in Marin.” I asked her for a new flyer for the condo she was peddling for $382K–reduced from $415K in June! I enjoyed seeing the look on her face when she saw me. Based on rents, the condo worth no more than $275K.
Keep the popcorn popping,
Red Baron
Do the following to get through the depression: 1. Get and keep a job 2. Rent a place or live in an RV so you can be mobile for your job. 3. Save at least 25% of your after-tax income 4. Eliminate debt unless you could pay it off if you lost your job.
Red Barron,
1. Get and keep some new ideas 2. Rent a better closing line than “keep the popcorn popping” 3. Save at least 25% of your insight for other blogs 4. seriously, please stop with the same post over and over.
Smiling_in_SD:
Just don’t read his entries….
“I’m surprised at the MIJ. No pooh-poohing of the data? No pashaws? No UHS statements about how special it is there?”
Agreed, but the IJ still doesn’t put the proverbial nail in the coffin….700 homes in some stage of foreclosure, with only about 200 homes per month selling in May and June. Hmmm…with that skew, foreclosures will, at some point, really start driving the comps.
The IJ may not be passing the kool-aid anymore, but they’re certainly not putting 2 and 2 together as yet.
BEN!!
“”Wait, what’s that I hear? Is that teeth chattering FBs in Marin? Is it Appleton-Young rocking to and fro sucking her thumb, trying to think of what she’ll say at the next cucumber sandwich do in gods country?”"
Dang! (Leigh pulls her lung back into her body)!
STOP! OMG - tears of belly button popping laughter.
Man, you owe me a new blatter!
Great Visual!
Leigh
Just a reminder for all Bay Area Bloggers - We are having a fun get together this Saturday at the 3rd Ave. Pub Sports Bar and Grill in San Mateo!! This is a link to the address and some reviews: http://www.yelp.com/biz/3rd-ave-sports-bar-and-grill-san-mateo. I figure we can all descend upon the place at 3pm and stay until whenever… I called and they told me there are no reservations, but at 3pm on a Saturday we should have no problem finding seating. I hope to see a lot of you there!! If there are any questions please feel free to email me at bayareabubble@gmail.com.
We should have A LOT to talk about!! See you there!
Any Bostonians interested in getting together? …
The email addy doesn’t work.
I hope the event is still on….
Oh, I’ll have to stop by as I’m only a block away.
Santiago said most of the homeowners she works with now owe more on their mortgages than they could get for their homes. Given that, many would rather stop making their high monthly mortgage payments and find someplace to rent - sometimes at half the cost of their monthly loan obligations.
What ticks me off about this is that it inevitably ends up putting pressure on rents…..in an upward direction.
I’m not sure if it will really put a lot of pressure on rents, though, just because they recently built more housing units then there are family units. If you have a 15% vacancy rate, and that goes down to 5%, then there are still an excess of units. Then there are also all those condo projects that will most likely become apartment complexes when they’re finished. A lot of those projects are completing right about now.
Foreclosures put pressure on rentals that don’t cost much and don’t require good credit… people who’ve defaulted aren’t generally in great financial shape. This likely will put pressure on rents in some hoods..
But every foreclosure leaves a vacant home in it’s wake. Those homes will eventually have to be sold or rented out. Overbuilding is also a fact in many places. So i think empty properties will outnumber potential tenants for a long time..
imo, we’ll see years of stagnant prices during which rents are so low nobody will give them a second thought.. live where you want according to what you’re willing to pay.
I agree with Joey. If I didn’t like our landlord so much, I know we could extract a rent concession. But we are comfortable and it is one less place to live in and move to enroute to post-bubble ownership.
Foreclosures put pressure on rentals that don’t cost much and don’t require good credit…
Thing is, those that “don’t cost much” are typically just below the $1000/mo level. If there’s one thing that I have a hard time contemplating, it’s $1000/mo for a 1 br or even a studio apt.
I’d be inclined to move out of CA as quickly as possible, but my high-tech-affiliated career field keeps me anchored here for the moment. Ugh.
The Coffmans, who adopted six grandchildren (five still live with them) and are unemployed, admit they fumbled their finances.
—————————————————————————–
When you look up the term “stupidity” in the dictionary there’s a picture of the Coffmans…or are they under the term “Con Artists”?
I know. No jobs and they think they scored on a $500k house that’s falling like a rock?
No kiddin’. Debt is debt, and in the end this idiot went from 0 to 600K in the hole. And apparently even the 1% ain’t workin’ for them. In two years they went 40K backwards having to make the neg-am payment option instead of the fully amortized 1%. It’s pretty damn sad when your locked in at 1% and still have to dip into the neg-am kitty. Lame a$$ indeed! I say the dude ends up defaulting at the 1% anyway.
Ben, Chill,
Not only that, but at age 49 we just married off our youngest daughter ( it nearly killed me ) At 64 you can barely take care of yourself. If that. This really shows how crazy things got where underwriting is concerned. ‘Somebody’ signed off on this loan.
what did they do with over half a million in such a short time?
“The couple, who have owned their home since 1977, borrowed $552,300 from Countrywide in the summer of 2005.
Zeus slowly and carefully surveyed the land for a fitting target.. the bolt of lightning held at the ready.. and he spots the Coffmans.
joeyinCAlif,
Well… if you WERE going to lean on imaginary equity, summer of 2005 would have been it!
If this isn’t pure evidence that loans were done against RE and not to the under-lying borrowers, their credit and financial resources, I don’t know what is?
I believe these people should be on the street. They blew over 500k in 3 years. That’s an astonishing accomplishment.
yeah .. but i hate to say blowing off $500K in 3 years is no great feat.. it’ll make me sound like some wealthy elitist who can easily imagine such a thing.
There is some comfort in the idea that the 500K was most likely distributed over a wide area and now resides in many people’s pockets.. maybe some is in yours and mine.
sfbubblebuyer,
OMG ( and I don’t say that often ) that’s right! Wow. Even with a nasty drug habit that is something of an accomplishment. No way you could drink your way through that. If they were on the Pick-a-Payment Plan, well let’s just say we know where the money ‘didn’t’ go.
They sold at the top! They cashed out took the money and if they had invested the money in a commodity fund, currency fund or emerging market fund; they would be considered geniuses.
The Coffmans bought the house for 88,000 in 1977.
1440 Post Rd Fullerton CA 92833
Looks like they did a Heloc instead of a new loan because the taxes didn’t go up for 06,07.
With the exception of wanting to pay for this house AGAIN, I’d say they are not the dumbest people we have seen.
To bad for this part because they are screwed,
“By fall 2007, their debt to Countrywide had increased nearly $40,000.?”
They are con artists who know how to work the system! There’s no other explanation
PB - Am I still supposed to be watching for an e-mail from you or did my provider lose it?
Sorry — I actually meant to contact CA Renter (I was temporarily confused because I met you both at the same time at Ben’s Carlsbad gathering). Happy to communicate with you by e-mail, though not sure if I want to impose on Ben’s scarce time to make connections for us.
“At the same time, their home’s value has dropped drastically since they bought it in 2005. Then they took out a second mortgage last year to help with their son’s wedding.”
Anyone that would take out a second mortgage to ‘help’ with their sons or daughters wedding is a bonafide idiot in my opinion. They are reaping what they sowed, no pity from me. You gotta pay to play.
Not that many years ago the ONLY reason a person would take out a second mortgage was for an out of the blue emergency.
Not to mention, it costs way, way, way less to marry off a son as opposed to a daughter. A son costs you a tux rental, a dress, a couple of hotel nights, a rehearsal dinner and maybe transportation. That’s it.
Our wedding cost less than a grand, INCLUDING the $625 dress.
I really have no sympathy for anyone who can’t pull off a wedding within a budget.
Note to Sammy:
Between Yahoo and Google, you can pretty much find just about any web page that has been published over the past year. Those quotes from yesterday? They were just copy and paste jobs. You can look them up using Ben’s calendar (since I copied the time/date stamp for you), or by using one of the popular search engines. Who’s delusional now?
Get a life.
“It meant to offer 1 percent for the first year, with the rate increasing one percentage point for each of the next four years.”
yep…with banks still making these kind of deals we definitely got a looooooooong way to go.
2012…2013…2014?
http://www.signonsandiego.com/news/business/20080723-1343-bn23aguirre.html
San Diego city attorney is suing BofA, among others, to make San Diego a “foreclosure sanctuary.” I wonder what this will do to the number of lenders willing to loan money to San Diegans in the future. Actually, I don’t have to wonder, really.
100k 3-bedroom houses for everyone!
“We want San Diego to be a foreclosure sanctuary.”
Why would a bank agree to such an arrangement? Since most FB either lied on their application, re-fied the house, or both, aren’t most loans now of the recourse type? In that case, can’t the bank just get its money back by having the FB’s paycheck garnished for the rest of his/her life? I see no reason why a bank would choose to give up its principal rather than make the FB pay back the money that was borrowed. The house has nothing to do with it. It’s the money that matters.
There’s something in there.
Garnish
Refried
Emporor Norton x.2, where are you?
In California, in order to get a deficiency judgment the bank would have to go through judicial foreclosure (i.e., file a lawsuit and prosecute through trial). It’s expensive and takes time (about a year). Those are actual out-of-pocket expenses for the bank (the lawyers aren’t cheap). Plus, in a declining market, waiting a year or more to get that property back vs. a few months for a non-judicial foreclosure likely results in the bank getting less for the property when it re-sells it if it does a judicial foreclosure.
And, since the banks did the loans on stated income and stated assets, the banks aren’t really in a position to know which borrowers to go after - who really has the assets or income to pay a judgment? They have no idea. Plus, they could go through all of that and then still lose out if the debtor declared bankruptcy. Sure, the bank could try to get the debt ruled non-dischargeable due to fraud, but that requires basically a mini-lawsuit within the bankruptcy. Again, that’s expensive for the bank.
I’m not saying that banks won’t go after some of these folks; I think they will. But I think the number will be relatively small because the bank will do a cost-benefit analysis and conclude that it is in the bank’s interest to do a non-judicial foreclosure (i.e., trustee’s sale) and be done with it. Just my $0.02.
“Since most FB either lied on their application, re-fied the house, or both, aren’t most loans now of the recourse type?”
There are plenty of first time buyers that misstated income, but we’ve also seen many examples of lenders that modified the income of borrowers, created phony documents, etc. in order to make loans and collect a commission.
I think it’s a stretch to say that most FB’s lied on applications regarding income. It was quite possible to accurately state your income and still get a huge loan given how many multiples of income lenders were willing to lend.
I’d rather see more effort in going after irresponsible, greedy lenders. Will the irresponsible lenders really be aggressive in trying to collect recourse debt if it invites greater scrutiny of their lending practices and their own fraudulent activities? For the responsible lenders, this shouldn’t be a problem. For the others?
This move has a “Keep Hope Alive” fragrance to it.
Lots of noise meant to keep FBs hanging on, to keep them making their house payments.
I’ll have to read the article. ( I thought they must have meant that every home there will be foreclosed? ) That way everyone will have something in common and then Bigfoot can come down from the hills and be their leader.
Bigfoot lives in the forest, preferably the Pacific Northwest as the mild temperatures and bountiful rain are conducive to its lifestyle. Bigfoot would of course first free the animals from the zoo and then move onto the business of the humans.
I’m curious to find out if this stops foreclosures in San Diego City proper or the whole county. He is the city attorney, though I’m not aware if there is such a thing as the san diego county attorney. Well, as long as La Jolla is part of the foreclosure sanctuary, it will not be stigmatized as a place where foreclosures happen. If you thought using a salad fork for the main entree was gauche, wait until that REO sign is firmly planted on your front lawn. What will the neighbors think? The country club will be all a buzz with your business and people will start questioning your golf handicap. If you can’t take care of financial house, how can you keep track of your golf score?
REBA doesn’t allow signs in front of homes in LJ! That’s been going on forever. I, however, do also wonder about whether Mike’s plan will affect the whole county. I don’t live in the city limits (I live in another city), but — if I didn’t “throw like a girl” — I could throw a rock and hit the city limits. Since buyers in S.D. city won’t be able to get a mortgage, will my house value go up?
“We are asking that any additional foreclosures be stopped and that the parties come together and work out a reasonable alternative based on the values of these properties today so we can stop the spread of this foreclosure disease,”
Now it’s a disease…absolutely no sense of personal responsibility…it’s really shameful…
Here’s some spreading disease, maybe a malignancy of the highest order.
Countrywide has a home “listed” nearby (I have alluded to it some time ago here), that it still will not price. They took it back after previous occupant bailed on interest-only note.
The real estate a(ge)nt doesn’t have the asking amount.
“Few more weeks. They are getting an appraisal,” she says.
It is on the MLS.
There is no price.
The bank did put up big NO TRESPASSING OR YOU WILL BE PROSECUTED signs in the front windows.
Maybe there is truth to the anecdotal evidence that this institution doesn’t want to seek prices until their stupor clears, market settles, whichever comes first.
“100k 3-bedroom houses for everyone!”
Thats funny, but really I don’t see how any house would sell. Why would anyone ever make a payment again.
Even if you have to move, why sell if you are not making the payment, just collect rent.
Only in America can you borrow hundreds of thousands of dollars, not pay it back, and still be a victim.
Bingo!
Looks like everyone is starting to turn on each other.
Let the feeding frenzy begin.
Yeah, tell the WSJ you stopped paying interest on what you owe. Good luck trying to get a loan for the next 20 years.
I’m really shocked at what a good job the government has done in turning the public against the banks. There were hundreds of comments on the NYTimes debt article and the huge majority seemed to blame the lending institutions. Hardly anyone blamed to borrower. The consensus seemed to be that she shouldn’t have gotten loans or credit cards. There was a smattering of complaints about the government should have been regulating the banks. Everyone in debt was hoodwinked by the banks. I just don’t get it - I don’t recall seeing any footage of herds of people being lead by gunpoint to to take loans, get credit cards, refi, or spend indiscriminately. Divide and conquer usually works pretty well.
The banks are stewing in their own broth, and it smells bad, too.
–
IMO, lender is the responsible party.
Son of an all-purpose businessman and moneylender,
Jas
“IMO, lender is the responsible party.”
exactly. lenders gambled. know your limit - play within it.
Yep, I’d like to own a burning stake and pitch-fork franchise just about now……
Whoops,
What I mean is the builders are turning on the bankers, the bankers are turning on the builders, the consumer is turning on the bankers and builders, the builders and bankers are turning on the consumer.
Like I said, let the feeding frenzy begin.
Aw, man.
Our electric bill went up 41% this month!
from 88 Cents to $1.24
(this message delivered using the energy of the Sun)
Lad, my new place has active solar h2o, nice. Also passive heat and double lock entry, wood stove, thermal curtains, etc.
But I hope to not be here when the snows hit, BIG snows here.
Lostie,
Good to see you posting gal.
Thanks, good to be back.
that is so cool..
just wondering.. how much did the panels, controllers, batteries and installation cost.. and how much, if anything, did public utility customers contribute?
This was one of hardest hitting collection of news for Bay Area in recent days. Here are the key takes.
1. Santa Clara county foreclosures and NODs up by multiple times.
2. Sonoma county situation worst in 20 years.
3. Rich coastal areas seeing major problems.
4. Overall Bay Area foreclosures and NODs up, up and up.
5. Marin, OMG even Marin ! Ha !!
And what’s in store ?
1. Alt-A loan problems haven’t started hitting with full force yet.
2. Only 10% in San Jose are able to re-negotiate their loans. Rest might simply walk away.
3. Similar situation in Monterey county.
Forget about being near bottom. Bottom is not even visible.
But where I live (Cupertino) sheeple are still buying. Near asking price and still at bubble prices. The sheeple stupidity is simply astounding.
You have to wait until the 6th inning before prime lending gets severely restricted. By then, the PTB will be out of bailout plans, so I think prime will fall much faster than subprime and Alt-A did. Subprime took forever, Alt-A is clipping along nicely. I think prime will go rather quicky.
Danville/Alamo/Walnut Creek too… Sad, but true…
Argh, I keep posting this. All of those areas have experienced significant declines, and continue to do so.
Not significant enough… Everyday I get listings of up to 20 + houses all listing for $1mil +. A significant reduction would be the properties listing in the $500 - $600k range. Then we are talking!!
Totally right EBR, I’m renting in Pleasanton, and prices in Dublin / Pleasanton still remain stupidly high. When will we get declines like Brentwood /Mt House?
Yet, the stock market continues to hold steady. What gives? Folks are still clueless out there. I mentioned to my sis that mortgage rates were going up, and she replied that it confirmed that banks were doing better now, and the future was bright. WTF? I explained that because banks were taking such a financial hit, they had to increase their rates to cover the risk of future defaults. She kept pointing to the stock market…. arghhh….
Look, it came tumbling down. Even the crash back in the Great Depression had legs back up. When it broke through 11k on the way down, we were almost guaranteed a leg back up. We’ll wobble around, maybe brush 12k, then tumble back down again.
You’re right, though Black Friday happened in October 1929, I think the real pain started in about 1931/1932. I’ve read some interesting accounts of folks who lived through that era, everyone assumed for months thereafter that the crisis would pass.
The stock market will do, what it can do, to cause the greatest amount of pain to the most amount of people. In this case, it will be getting the schmucks very long and then pull the plug. Just another bear market rally on the way to 8000.
From my viewpoint, the new ’short sales rules’ have stopped firms from lending large blocks to short. When this market tanks, if it does tank, there will be a lot fewer shorts to buy breaks. The market will fall harder and faster.
You are right about the banks. I was astounded mopes bid WAMU to 6.50 and am still astounded that Bank America is over $30. Don’t people read the quarterly notes? Bank of America “we authorize our BOD to buy our common stock back”; notes “we don’t have any money and are under provisioned for commercial lending reserves.”
“From my viewpoint, the new ’short sales rules’ have stopped firms from lending large blocks to short.”
and bank stocks have rallied plus the fannie mae bailout,
If this fails and the market tanks again I will delay my RE bottom calling.
And what’s in store ?
1. Alt-A loan problems haven’t started hitting with full force yet.
When the Alt-A loans hit… the West coast is going to be rocked. However, I’m not sure how many of the banks can survive that long… Oh, I know of some that will certainly survive, but I’m talking about the ones that like to do lots of mortgages… They’re pretty toast.
Are we in the 3rd inning yet?
Got Popcorn?
Neil
Has anyone ever noticed that Hank Paulson bears a striking resemblance to and sounds like Lex Luthor? Maybe even Darth Vader without his mask?? I was watching him on Fox Business last night and I could not get these thoughts out of my head!!
Billy Hank reminds me of Lurch.
I can see that. Drain some blood and add a few inches and you’re right there.
Well, Dubya looks a lot like Chet Atkins, who would’ve been a better prez, he can lead pretty dang well.
W = Alfred E. Newman
Roidy
Which Lex,
The movie Lex, or Lex on Smallville?
Personally the one on Smallville is sexy.
“Mr. Pattinson says Bank of America Corp. froze his $100 million credit line for seven months, while ordering a new appraisal of his properties”
This clown ruined encinitas and most of san diego.
I hate these stupid companies.
Here is his site for my area.
Go away, little man.
http://www.barrattamerican.com/homes/region.php?r=4
Agreed!!
That looks horrible! I hate them too, and I haven’t seen what they did to the land and communities - just their website. Choose your Stepfordville and your floor plan and your financing package.
- Good luck on that one
-So what does the FB get out of this? Their new “low” interest rate is ablated by the fees, and with no possible future profit, why continue to pay the high monthly payment?
-$68 billion out of an approximate $3 trillion problem. Just enough to cause more inflation, but not enough to save our dear patient (Mr. Housing Market), who has apparently fallen off a cliff.
-Ooo, goodie!
-Yeah, because you know that all administrations are very careful to make sure that regulations are enforced. God knows no one broke the law at any time during this bubble.
-But if the borrower doesn’t have enough income to make the payment, then he/she is not conforming, right? RIGHT?
-How is this not just an obvious ploy to prop up house prices long enough to get all these Congresspeoples’ houses sold?
-Whatever happened to 20%?
-In order to save these corrupt, bankrupt monopolies, we have devised a plan that assumes they will make good on a future promise to pay!
-Is that a conflict of interest? Just asking.
Increase the Federal Housing Administration’s role. The FHA could insure up to $300 billion in new 30-year fixed rate mortgages for at-risk borrowers in owner-occupied homes if their lenders agree to write down their loan balances to 90% of the current appraised value of their homes.
How would this work? Get a new appraisal and then 10% below that? That would be further off current comps.
If the bank gets the property back they sell it at 100% of the current value and pay a 3% commision. So, they’d go with the better deal.
I’m wondering if they will use current market rates or old appraisals or does it say write of 10% of loan balance?
I haven’t read the bill…I really have no interest at this point…but I will say this…1.) They just saved California’s housing market. 2) If that passes as it sits especially with the grant for states to buy houses …you just opened the door for more fraud that will make what we went through look like child’s play…
Please explain how this bill has saved the California market.
We are 15bn in the hole, 3-5% will be required for a down payment. Even if the people are allowed to stay in their home, how would they still be able to afford the reduced payments? How many banks will be willing to go along with this plan? Numbers thrown around state this bill will only save 400,000 people. What will keep a state from taking the grants and use it for some other purpose.
The people who can buy will not buy at today’s prices. Prices are still too high and will continue to be too high for the majority of us.
You miss the point…they want to get people off the fence and start buying again this is what this is about…and they will have done just that by raising the FHA limit by 200k
‘They just saved California’s housing market’
Funniest comment on the HBB blog in months. Goodnight Rumplestiltskin.
This is nothing more than a way to move the foreclosures to the new RTC without killing the banks.
Nobody, well maybe just a tiny few, will be helped to stay in “their” homes.
Housing prices will continue their trend lower until incomes can afford to make the payments. Anything they do is just pushing on a string.
Yea, I know….we’ve disagreed on this before…but go do the numbers 300k for example that’s a 10,500 downpayment… if the seller pays points to buy down the rate and assists with closing the payment is $1750 + roughly another 450 for taxes and Insurance….that’s gardner and security guard + wife money here…that will soak up a lot of inventory quickly…compound that with the fact that FHA allows for money to be put on the app that doesn’t have to be documented…puhleesseee…you won’t get half the depreciation in prices that you should….if the Senate signs off the bottom will come quickly…
Do some research on what it takes to qualify for a FHA loan before you laugh…and don’t even get me started on the land banking that HUD will do with the remainder of the excess inventory…and now the States will have a grant to landbank as well LOL
You need to do a weekend topic on that….
Big V - thanks. Saved me some analysis.
Yes, thanks Big V …..good analysis . I’m digesting the bill and a lot of thoughts are coming to my mind, but I will not comment at this
time .
“Now, FHA will be required to increase prices on all customers or eliminate its refinancing program for subprime borrowers at a time when they need it the most,” Preston said.
Rock, meet hard place…
I’m stunned by that “90% of current appraisal” proposal. So someone who had a neg-Am at ~120% of original purchase price in an area that’s dropped ~33% is looking at the lender forgiving HALF of their debt!
Ok.
Got Popcorn?
Neil
Big V,
You forgot the most important thing! The FBs still have to have the payment based on the new loan less than 33% of their monthly gross. While a principal reduction will definitely move them in the right direction toward affordability, tons of people who bought on option arms to push the boundaries of affordability won’t be able to qualify now that they have to amortize the loan.
CCC
I commented on The Mercs website today regarding Bush signing the housing relief bill. It didn’t last 5 minutes before they pulled it.
But if people ARE still buying in the bay area and now relief is on its way for people to refinance into affordable loans, then I have to wonder how much more prices can fall here.
See my long comment above. They would have to qualify for the loan with their income, they would have to pay fees, their lenders would have to agree to it, there isn’t enough money behind it. There is no way the government can stop this Frankenstein.
I didn’t see anywhere that they banned stated loans…or what equates to it in FHA terms…ie: where they allow mattress money and all kinds of ways to document income…nothing was done here…it just lipstick on a pig…except this one is gov’t issue…realtors and loan officers are jumping for joy at the news…a couple of fraudulent appraisals and we are back in the game…LOL
This is what I was saying all along ,that the corrupt systems had to be cleaned up or the same game is played . People who are not in the business just don’t understand that aspect like you do .This is why I tear my hair out with the stupidity of these clowns .
One big problem with the re-finances is the writedown to 90%. My understanding is that the bill does not directly address the situation where there is a second mortgage (e.g., a piggy-back or HELOC) from a second lender. In getting the principal down to 90% (assuming you can even get a bank to agree to this, since they will have to book the loss immediately), the first lien lender will want the second (and other lower tiers) to write-off 100% of their liens since they were in first-loss position, while the lower tier lenders will want to each lender (including the first) to write down the liens pro rata (resulting in the first lien lender taking an even bigger write-off). There’s no mechanism to force any of these lenders to do the write down, so for anyone with loans from two or more lenders, I just don’t think they’ll have any luck.
Oh, and to add insult to injury, the lenders who do agree to write down the loans to 90% of FMV, also need to cough up cash of 3% to FHA. It will be interesting to see how many lenders are actually willing to do this. My gut tells that not to many will. Besides the immediate hit (write-down plus 3% fee to FHA), if the lender was also servicing the loan, then they potentially lose all future servicing revenue, too, after the loan is made by the FHA.
I’ll just keep wondering about this… Is it write down 10% of the loan value or 10% of FMV on the asset.
The assets have already fallen a lot. Are they going to write down another 10% from that? Plus a 3% fee?
The borrower also has to qualify?
Well, after months of wondering sounds like Ben was correct. This is not going to effect much. Perhaps when it was concieved the banks thought values would not drop this far or would hold steady. So, delay and inaction have helped us.
Hopefully, long term, this takes out the FHA and further lowers prices.
Correction - apparently the House did recently add a provision for seconds and other lower tier lenders. They can agree to have their lien completely wiped out in exchange for a share of future appreciation. Not sure if they’ll go for that or not.
According to CNN/Money (for whatever that is worth), loan is written down to 10% off of the current appraised value. Under the bill, the borrower would need a new appraisal anyhow, since the lender has to pay 3% to FHA based on the current appraisal.
Well, then why would the bank do this?
If the comps are already in the toilet, why bother to take another 10% hit plus a 3% hit that looks like a realtor commision?
Do the people have to qualify for the new loan? Under what standard? I can’t see this effecting Alt A with all the people that can hardly afford the neg Am payments.
I think much of the subprime carnage has already happened. The crisis is now about the altA loans. The large percentage undocumented liar loans with neg am payments. These people are greater than 20% under water at recast. Then take a hit to 10% under market value? Losses like that will put lenders under really quick.
Wonder if this is about the few billion in grants that are going to be available to governments? What will they do with them. Perhaps this is what this bill is all about.
I expect in the wheasle wording the banks will try to pass off writing off 10% of the loan value or cook the appraisals and hope FHA is unaware.
The FNM/FRE has the potential to do significant damage though. Not sure though… temporary powers for the treasury to buy stock of FNM and be ahead of the bond holders? Why not just buy the bonds from the bondholders at a discount. Give preference to pension funds.
Everyone knows there will be no future appreciation. You know, like when your boss promises she will appreciate you later, but not right now? It’s like that.
I think the reasoning is that the banks would prefer this to foreclosure. If you assume that the banks will sell the property for 20% less than “market value” as a foreclosure, getting it off their hands for 13% less than “market value” might be attractive.
The way I understood it on NPR (ATC or Marketplace) it was 10% of FMV.
“4 billion to States to buy foreclosures” ,in the bill . Do they mean 4 billion for 50 states which would mean 200billion ,or do they mean 4 billion for every State in the Union to split up ?
300 billion put at risk ,in a declining market, whereby appraisal practice and underwriting was not addressed .
As mrincomestream mentioned ,the real estate agents are back at the races and jumping up and down because the corruption in the system was not addressed .
“from 88 Cents to $1.24″
Knew that was going to happen. You can’t have NatGas and Coal go up and not have a price rise. Looks like your solar is going to pay itself off faster than you thought.
Just wait until the Texans figure out that the biggest most expensive buyout of a utility actually comes with a larger electric bill for the people. Keeping a house cool in Texas has a heavy price tag and it is only going to get worse.
I’m having trouble making my car payment… Think the lender would alter the terms of my loan?
I don’t get why these people think the lenders are obligated to change the terms of their loan to help them out. You can’t pay? Get out. It’s not their fault you got in over your head.
No, they’ll just take your car, which may still be worth more than the loan.
If your car was worth far less than your loan, the banks might make a deal to increase their recovery.
Most lenders are actually acting fairly rationally….now. Taking steps to maximize probability of survival first, and probability of highest recovery second.
Strangely enough, in most cases, the borrower is going to be much better off to hand the keys to the bank, regardless of what the bank is offering in terms of a deal.
Now, 1% for 5 years is different, that is probably less than rent for the same house.
“Mike Lyon, head of Sacramento-based Lyon Real Estate, still worries about a coming wave of higher-end foreclosures tied to ‘Alt-A’ loans, a category between prime and the riskier subprime loans. Many of those loans involve houses worth $350,000 to $750,000.”
“‘A lot of people won’t qualify for that,’ he said. ‘There’s the potential pileup.’”
+++++++++++++++++++++++++++++++++++++++++++++
Strange because I’m not worried, but actually eager with anticipation to the coming onslaught of Alt-A foreclosures. I sense that people are beginning to realize that $500K is a boatload of money and with mortgage rates likely to surpass 7% in the next few months, there just aren’t enough buyers with the monthly income to support that pricing.
I haven’t been here this week, so dunno if these have already been posted, and we usually aren’t talking about in-town LA condos, but I sure get a kick out of this:
http://la.curbed.com/archives/2008/07/larchmont_lofts_drops_sales_plan_goes_rental.php
This is a high-profile building that was trumpeted all over town and originally attempted to be sold as condos priced from about $800K to $1.5 million. They did not sell ONE. SINGLE. UNIT. over the course of several months.
I live about 3 blocks away in a rent-controlled apartment, and I’m paying about 1/4 what they’re asking for the LOWEST rent in this concrete crapshack. There are about 10 apartment buildings in the area offering far nicer apts for less than $3K/mo, and even some condos in nicer buildings going for $500K or less (and falling, some of them are starting to be offered for rent).
But wait! There’s more!
http://la.curbed.com/archives/2008/07/another_one_universal_lofts_now_a_rental_building.php
This stuff keeps up me and The Fiancee are gonna snag us a very very nice place for very very cheap in a couple years.
Are you frickin’ kidding me?
http://biz.yahoo.com/rb/080723/bankofamerica_foreclosures_lawsuit.html?.v=7
“San Diego sues Bank of America to halt foreclosures
Wednesday July 23, 8:18 pm ET
By Marty Graham
SAN DIEGO (Reuters) - San Diego’s city attorney said on Wednesday he filed a lawsuit against Bank of America Corp (NYSE:BAC - News) and its Countrywide unit to prevent the mortgage lenders from foreclosing on homes in the city, which he aims to make a “foreclosure sanctuary.”
City Attorney Michael Aguirre plans to file similar lawsuits against Washington Mutual Inc (NYSE:WM - News), Wells Fargo & Co (NYSE:WFC - News) and Wachovia Corp (NYSE:WB - News) in an effort to make the lenders negotiate with mortgage borrowers facing foreclosure.”
That’s it. When’s the next plane to New Zealand!
“San Diego sues Bank of America to halt foreclosures
In other news, The banking industry no longer offers loans in San Diego.
Won’t work…
Got Popcorn?
Neil
Shades of the great depression here.
Ohio decided to ban foreclosures so people stopped paying. Prices were crushed for a long long time.
Then there was the Minnesota Mortgage Moratorium case, where Minnesota lenders challenged Minnesota’s suspension of foreclosures on the ground that it violated the Constitutional prohibition against impairing the obligation of private contracts. Which, of course, it did … but the Supreme Court held that the government could go ahead and do it anyway.
This Blaisdell decision, IMO, was the beginning of the end of the United States as a constitutional republic. Agree with the reasoning of the moratorium or not, the fact is that the Constitution said no, and the Supreme Court said yes. Since then, the Supreme Court has strained at constitutional gnats (does the First Amendment prohibit a city from requiring exotic dancers to wear pasties?) and swallowed a big shaggy camel, turning the Commerce Clause into a virtually unlimited government police power (did you know that feeding grain grown on one corner of your farm to chickens kept in another corner involves “interstate commerce”? See Wickard v. Filburn) and rendering the Obligation of Contracts Clause a dead letter.
Blaisdell has been heavily criticized recently, but never expressly overruled. Maybe that’s because there has never been a real estate crisis equal to what was seen in the Great Depression — until now.
Maybe — just maybe — another challenge under the Obligation of Contracts Clause to a plan like San Diego’s “foreclosure sanctuary” abomination will be raised and Blaisdell will get a long-deserved overruling. But with Justice Jellyfish, aka Kennedy, as the swing vote, I have my doubts that what the Constitution actually says will make any difference.
Its getting werid huh ?
“Given that, many would rather stop making their high monthly mortgage payments and find someplace to rent - sometimes at half the cost of their monthly loan obligations.”
Something just occurred to me: could consumer-spending go up as more people opt for jingle-mail, and thus have more funds available every month due to renting at half-price?
If interest rates went up I’d have money to spend at my leisure.
Bring back the 7% interest rate.
Of course unicorns are real and everybody has a soul mate!
Yes.
I know of one anecdote already where the family was struggling to keep up with fuel prices for commute, mortgage, etc. even with multiple jobs.
They got some advice from a friend of mine to simply walk away. They did. Now they rent close to home and are under much less financial stress. I guarantee you they have more disposable income to spend on other things.
That is one counter-balance to this disaster–yet countered again by job losses…
“Something just occurred to me: could consumer-spending go up as more people opt for jingle-mail, and thus have more funds available every month due to renting at half-price?”
Not necessarily. Before walking away, it’s not unusual to deplete cash reserves and max out other types of credit. Paying off that other debt in combination with paying more for food, gas, etc. still doesn’t leave much for other types of consumer spending.
You go from a situation where the consumer/borrower was spending more than they were making each month to cover the mortgage payment to living within their monthly income once they go back to renting. Unless there is room to borrow more, there’s unlikely to be anything left over for additional consumer spending.
maybe, as long as they aren’t in sacramneto
‘18:22 PDT SACRAMENTO — Gov. Arnold Schwarzenegger plans next week to slash the pay of more than 200,000 state workers to the federal minimum of $6.55 per hour to deal with the state’s budget crisis, according to a draft executive order obtained by the Chronicle today.’
No I’m not making this up
Deflation raises its ugly head.
i’d have figured they’d raid the state employees pension fund again.. i suppose not.. or not yet. Or maybe Arnold is setting it up..
Here’s a flashback to January 13, 1992 ..
State employees blocked the driveway to the capitol’s garage to protest looting the fund and packing the board, and they overwhelmed their representatives with calls, telegrams, and visits. Wilson threatened them with salary reductions, furloughs, and layoffs of up to 20,000 workers if they succeeded in foiling his plans.
[snip]
In the end, the California legislature prevented Wilson from reconfiguring the board but let him have the $1.6 billion from the pensioners’ cost-of- living account anyway.
http://money.cnn.com/magazines/fortune/fortune_archive/1992/01/13/75954/index.htm
Speaking of wages, found this fascinating list of the top 10 over paid jobs– CEO meet RE agent:
http://streetsideinvestor.com/index.php/category/business-finance/
that’s a tricky question.. If income remains the same, someone who was already spending every dime they make cannot spend more. They can spend it on different things.
The question in my mind is: If a bank or a lender never gets it’s paws on any of the “left over” money, what is the effect on the economy?
No interest is paid on the deposit (a minus). No interest is earned by lending it out (a minus). No business will use the money to grow, hire employees and purchase stuff (a minus). Fractional reserve banking won’t multiply the deposit by a factor of 1.9 (?) and inject the .9 back into various borrower’s pockets, from there to be spent on stuff (a minus).
i’m gonna conclude (wild guess actually because i can’t get my brain around it) that when money is not churning away within the lending/borrowing banking system, money is not growing and the net result is there will be less money spent in the overall economy.
The San Francisco Chronicle reports from California. “In the Bay Area, mortgage companies recorded 18,516 notices of default, up more than 140 percent from a year ago. Foreclosures rose nearly 315 percent to 9,206. As the slowing economy made it more difficult for Carlos Amaya to find regular work as a truck driver, the Amayas fell behind on their payments. The couple remains several payments behind.”
AND YET….the average home price in that area is what again?? Yeah…go figure.