Pixie Dust Sprinkled on Sonoma County...
...While Subprime Meltsdown.
The Press Democrat and Index Tribune are only noteworthy for the fact that when you have finished reading either or both you are actually DUMBER than when you started.
This is how the local press has covered the Subprime meltdown (the first domino to fall in the biggest margin call in history)
Notice the local information is either absent entirely or dipped in sugar hoping to hide the taste of the $hit they are trying to pass off as news. They are mostly borrowing their parent company's news feeds and AP reports hmmm... why the Lazy Ass Reporting?
Subprime Suspect: (apparently not written by anyone? as no reporter is credited)
"In 2005, economists were getting nervous as the real estate market reached stratospheric heights."
"They worried that values wouldn't continue to rise forever. They warned that when the bubble burst, people who had taken out mortgages in the subprime market would be most at risk of foreclosures.Unfortunately, sometimes economists are right.A survey released Tuesday found that home foreclosures are at an all-time high with 0.54 percent of mortgages entering foreclosure in the last quarter of 2006. For subprime borrowers, the foreclosure rate is 4.35 percent."
"In Sonoma County, 9.7 percent of all subprime loans were 60 days late on payments, compared with 11.8 percent nationwide."
Now didn't anyone tell them that trying to polish a turd would only result in becoming one with the stink and filth?
"Locally, lenders are responding by tightening requirements. This means people with poor credit history will find it more difficult to buy a home, even at the lower prices."
Bwahahahahahahahahahaha!!!! OMG! Holy Fecal Matter! bwahahahahaha!!! Now they have Fiated lower prices into being? Not yet, baby. Those lower prices are still WAY beyond the reach of most of the Loan Owners in Sonoma County. Only 7% of households... read that... HOUSEHOLDs could afford a median priced home. 70% took out toxic loans in 2005 alone. My bet is that 99% of that 70% cannot afford the loan they own.
Let me give you an example of what this is going to look like: (just delete "New Century" and insert the name of a local realtwhore agency or mortgage lender)
The supbrime and Alt-A meltdown hasn't even begun to hit Sonoma County yet. The prices will fall. But you haven't seen nothin' yet. There are thousands of Realtors and brokers with no work right now, no income, and lots of investment properties.
I’m a successful manager at New Century who just bought an expensive new house 8 months ago. The builder in my subdivision just lowered base prices by $80k, making me instantly upside-down on my 80/20.
I want to move back to my home state to cut costs but my savings has taken a hit over the last six months. I don’t have enough cash to sell at this time. To continue paying the mortgage I’ll need a job with high income…whether that’s in the mortgage biz or not. Sux because I’ve been with the company 8 years. I’m in a fine mess and any advice you all can give would be great.
by mtgdude007 March 15, 2007
It does not matter if you have perfect credit. The problem is that your salary does not cover the real mortgage payment you own.This margin call will slap the $hit eatin' grins off the REIC in Sonoma County, and hopefully the local press will get slapped silly too.
Gobbledygook (also no reporter credited)
"The Federal Reserve and the financial markets don't see eye to eye on liquidity. The Fed says it isn't scarce, but investors don't entirely agree."
"There are many facets to liquidity, making it difficult to define. On the most basic level, it refers to the growth rate of money supply or the availability of credit. It also means being able to trade one asset for another to help minimize a loss in value."
"A major source of liquidity has been financial innovation, in areas such as the mortgage and derivatives markets. That has greatly increased the ability to conduct financial transactions, according to Wachovia Securities senior economist Mark Vitner."
translation... Greenspan fired up the printing press and money began emerging from every orafice of our nation's lending institutions. Joe6Pak could fog a mirror and therefore get a million dollar mortgage. Frito-Lay drivers, Gardners, Barbers, the UPS guy all were living large like they shat Ben Franklins thanks to all the dope money firehosed into the economy packaged as Howmuchamonth Mortgage products.
So Financial Innovation: = Toxic Mortgages for anyone who could prove only that they had a pulse.
Ability to conduct financial transations: = No regulation forcing lenders to verify ability to repay from borrowers.
Really? This has to be regulated? The professionals, and I use this term loosely, need actual regulation to tell them to verify a borrower's ability to repay a loan?
"But when there is too much liquidity for too long, "people tend to do some very foolish things," he said, such as loaning money to individuals with spotty credit histories to buy homes more costly than their limited income would deem to be prudent."
ah yes... very foolish indeed.
"Renewed calls from central banks and financial regulators for tightened lending standards are finally starting to take hold, which many market-watchers point to as one of the drivers of the recent pullback in stocks after months of record-setting gains."
"the volume of subprime loans to individuals with shaky credit is likely to decline at least 30 percent this year, analysts forecast. That means a big slowdown in the economic effects of the $600 billion in new obligations created last year, according to Merrill Lynch."
"For now, liquidity isn't totally dried up, but it certainly isn't as plentiful as it was not too long ago. "
Good heavens. Whoever wrote this Pressdemocrat piece of $hit actually ended the article with that line. WTF?
Here is what the PD Ripped from the L.A. Times
"A record number of homeowners entered foreclosure at the end of last year and more are making late mortgage payments, especially those with high-risk, subprime and government-financed loans, according to a quarterly survey released Tuesday by the Mortgage Bankers Association. "
"New Century Financial Corp. on Tuesday said it was under investigation by federal securities regulators as the New York Stock Exchange suspended the Irvine-based company from its stock listings. In San Diego, Accredited Home Lenders Holding Co. said it was laying off workers and looking at "strategic options" as its financial woes worsened."
"The national survey showed that 4.95 percent of average mortgage loans had late payments, compared with 4.67 percent the previous quarter and 4.7 percent a year before. It was the worst showing since spring 2003."
"The fraction of mortgages entering foreclosure during the fourth quarter of 2006 climbed to 0.54 percent, the highest since the association started reporting in 1972. The previous high of 0.50 percent occurred in the second quarter of 2002 as the country was recovering from a recession."
"The survey covered about 80 percent of the mortgage market, more than 43.5 million loans, including 33.3 million prime loans, 6 million subprime loans and 4 million government loans."
This is the $hitpile passed off as local reporting:
"The storm that is battering high-risk mortgage lenders is being felt in Sonoma County, where lenders are tightening standards for loans that almost 1 in 10 buyers needed to purchase a home."
"In another blow to the county's housing market, families with poor credit or those who can't afford down payments will find buying a home more difficult than just a month or two ago, when these so-called subprime loans were still widely available. That could reduce demand for homes in a market that has been slumping."
Um... but there was no bubble here. Common knowledge that up to the last month or so the market was being supported by families with poor credit and no downpayment, but why should that be a problem? Crap- if these people would just pay their bills on time then the party could continue huh? Is this the thinking behind this kind of fecal matter that goes unquestioned by the idiots that make up the true believers of the Real Estate Only Goes Up religion?
'"You're seeing a lot of the banks now that were offering 100 percent financing reducing that to 95 percent. Some banks have just ceased underwriting those loans," said Roger Farah, Santa Rosa branch manager for Mission Hills Mortgage Bankers."
"John Klein, branch manager at Charter Funding in Santa Rosa, has turned away more than a handful of home buyers the past month or two because they no longer qualify for loans under the tighter underwriting standards."They really can't afford what's out there," he said."
"The crisis in the subprime mortgage sector grew Tuesday as the Mortgage Bankers Association reported that more homeowners are defaulting on their loans."
"Sonoma County, however, may be able to weather the storm better than most other regions in California, according to data issued Tuesday by First American LoanPerformance, a San Francisco mortgage tracking firm. Only 7.9 percent of the county's home loans are subprime mortgages, well below the national average of 14.7 percent, First American LoanPerformance reported."
FICO scores aren't worth diddly if you can't cover the bills when your payment resets.
Hope you are ready to put your money where your mouth is, because I am going to save this trash quote and trot it out and ride it all across this county when Sonoma County really hits the crapper.
"Subprime loans traditionally have been issued to buyers with spotty credit or erratic incomes. Banks expanded their use by relaxing qualifying standards, such as allowing buyers to state their income without providing detailed documentation. The loans grew in popularity in Sonoma County among buyers who had to stretch financially to buy homes as prices soared during the first half of the decade."
tell them what the percentage rate is on Alt-A in the county. That comes next folks. Alt-A is already circling the bowl and while 7.9% of our 70% with toxic loan products may have been Subprime, the rest were still toxic waste loans packaged as affordability products to people with Fair credit and Good credit who COULDN'T AFFORD THE HOUSES THEY WERE BUYING!!!! Subprime is merely the first domino to fall. The Alt-A's and Primes will not be left unscathed and they will become those who need the subprime market that will no longer exist for them.
"Once in a house, homeowners count on rising values to generate the equity necessary to refinance into a longer-term loan with a lower interest rate."
oops! Looks like the funny money dance doesn't always work and turns out you do have to have a job that pays you enough to pay off your debts after all! Who could have imagined that? Doesn't Tinkerbell live here? Why in the world should a borrower have to pay out of their own pocket for the money they borrowed for a house. Doesn't the house pay for itself?
"Foreclosure activity has been soaring here and across the nation as more homeowners in financial difficulty face losing homes. The number of default notices lenders sent to Sonoma County homeowners more than doubled in the fourth quarter of 2006, compared with the same period in 2005, and was the highest in nearly a decade, according to DataQuick Information Systems."
"The loss of buyers relying on subprime loans could be offset by resurgent buyer activity in response to falling prices, said Sandy Geary, broker and owner of Re/Max North Bay Realty in Rohnert Park."
Sandy Geary is the new winner of the HUA Award.
""It's a little tighter. We have had lenders be a little more picky on their documentation. I have had deals where the deals took a little longer," she said. "But I think people are going to be very surprised at what's going to be going on in the next few months. Anything that is priced right is selling in a reasonable amount of time and sometimes with multiple offers."'
"With more lenders facing greater losses, Wall Street investors are pulling back from purchasing mortgage-backed securities. One result is more stringent lending standards."I can't tell you how many lenders we've gotten letters from in the past week," said John Klein."
"What had been a gradual tightening accelerated the past month or so. Lenders had been demanding higher minimum credit scores. The latest move has been eliminating 100 percent loan financing."
'"They feel it's going to slow down the amount of delinquencies," Roger Farah said. "If it's harder to find lenders that are willing to accept those loans, then it is more difficult to help those buyers. I think it's going to have an impact on the market."'