Sonoma Housing Bubble

Pulling the cork out of Sonoma's bubbly housing foolishness

Thursday, March 15, 2007

Savings And Loan Redux???

I figured it would just be a matter of time but who would have thought that it would have happened so soon. I guess it took the articles about the bubble finally popping and the massive default rate of the sub-prime borrowers to get their attention, but it looks like "help" is on the way.

U.S. lawmakers will have to consider providing aid to about 2.2 million subprime mortgage borrowers who are at risk of defaulting and losing their homes, Senate Banking Committee Chairman Christopher Dodd said today.

``The impact of losing 2.2 million homes I suspect will be in a lot of areas of our cities and towns that are already pretty hard hit, so we clearly want to look at that and legislate,'' Dodd, a Democrat from Connecticut, told reporters in Washington after a speech to the National League of Cities.

Foreclosures involving homeowners who took out subprime loans from 1998 until 2006 could cost $164 billion, Dodd said, citing a December study by the Center for Responsible Lending in Durham, North Carolina. The government needs to provide at-risk homeowners ``forbearance or something like that to give them a chance to work through and get a new financial instrument here that they can manage financially better,'' Dodd said

They're talking about an infusion of 164 billlllllllllllion dollars, when what is really needed are about 164 billion !Q points. To put these numbers in perspective the cost of the Iraq war so far is something like 173 billion dollars. Ok? Ok.

Ok, now what about those people who've been prudent, and sat the bubble out and kept their crdit card holder zipped? That is the question.

Federal aid ``would come at a cost,'' said Douglas Duncan, chief economist at the Mortgage Bankers Association. ``It has to be paid for and the question is would the 34 percent of homeowners who have no mortgage be willing to pay taxes to support the bailout of people who traditionally have not managed credit well?''

It's interesting that many people who have been careful, get into financial trouble because, of illness, death, divorce and job loss. Things that happen beyond their control. One can be wiped out in a flash by the discovery of a few errant cells. What do we do to help them. Nothing. Tough luck. There is no program for them. They lose. Now there might be one for fraud and stupidity?

I am far from being a hardass. But I am truly flummoxed here. Should someone be saved because they didn't read the paperwork or do the math on the most expensive purchase most people ever make. Or because they lied on their documents, or their RE agent or mortgage broker did. Already I've seen ads online for class action suits against banks and lending institutions. The appeal is always, "Have you got a loan that you don't understand? Is your martgage going up up and up? We can get you all your money back." I think a lot of people are going to be watching what happens with this case

Helllloooooooo!! If you have a document you don't understand that is going to be taking a chunk out of your butt for the next 30 years, DON'T SIGN IT, get someone to explain it to you! Or am I making too much sense.


At 3/15/2007 03:56:00 PM , Anonymous marinite said...

Athena, I could not agree with you more. The hipocrisy of such a bailout is staggering (and predicted long ago and now that it is in the news we get to discuss it in full). And if such a bailout were to happen (and I doubt it will but what do I know?) this will be the first time I would give serious thought to not paying my taxes out of protest. Bailing out people for willing (for whatever reasons) paying stupid-crazy prices for houses and/or being just plain greedy while at the same time not doing so for people who, like you said, get into financial trouble for legitimate reasons (e.g., due to a divorce, illness, etc.) is just plain hipocritical.

Ironically, RE apologists on my blog used to comment that absurd house pricing was justified as it was all due to our wonderful capitalist, free-market system. (Nevermind the fact that housing is anything but a free-market.) I wonder what these same people would say now that the vaunted free-market is smacking them on the down side?

At 3/15/2007 04:09:00 PM , Blogger moonvalley said...

Marinite I've been steaming over this all day, which is why I put up the post. Time for deep breaths. arrrrgh.

At 3/15/2007 04:14:00 PM , Anonymous marinite said...

Sorry, I should of addressed my comment to "MV" then.

At 3/15/2007 04:32:00 PM , Blogger moonvalley said...

it's ok, most of the posts are by Athena, but I've been more active than usual this last week as I got some work turned in and have a little time. I miss your blog by the way.

At 3/15/2007 04:37:00 PM , Anonymous marinite said...

Athena or MV, check this out:

Where was this sage advice a few years back?

At 3/15/2007 04:54:00 PM , Anonymous marin_explorer said...

Where was this sage advice a few years back?

There was no reason to prematurely alarm the homebuyer when there was LOTS of money on Wall St. to be made!

At 3/15/2007 04:58:00 PM , Blogger Athena said...

Oh you guys!!! the biggest margin call in history and the first dominoe falls and I am the biggest slacker in the world.

All insight, wisdom, and wit is currently being brought to you all by MoonValley. I thank you all for flattering me and believing I am as talented as she... but this one is all her. I've been raging internally for DAYS and just haven't had the ability to post. Thank you very much to MV and to all the readers for stepping in and keeping the conversation going!

Marinite... come back- get your blog back up there!!!!

At 3/15/2007 05:02:00 PM , Blogger Athena said...

and OMG... I saw this today...

“Subprime lender Jim Howe in Racine, said most defaulting borrowers he sees are people who bought and borrowed beyond their means. ‘It’s not the lenders. They’re just going by their (regulatory) guidelines and doing what they can do,’ Howe said. ‘Now you’ve got the people who got the loans not living up to their obligations.’”

WTF?!?!?!? Are you KIDDING me?

Does this guy really call himself a lending professional? Do professionals really need to be REGULATED in order to verify proof of repayment ability or income before lending a BUTTLOAD of money to the great unwashed?!!? Are you EFFING Kidding me?! When I get some time I am SO posting on this one.

So now it is the fault of the regulators who failed to mandate that lenders needed to see reasonable proof of ability to repay loans they give?

No... Dude... there best be NO effing bail out for anyone on this one.

These Jackholes made their bed, now they can lay in it!!!!

At 3/15/2007 05:08:00 PM , Blogger Athena said...

Oh and where is our local EFFING Press on this?

Notice they are strangely quiet. Want to keep it all in the family and swept tidy like under the rug. Nopey Nope Nope... no fraud going on here in Sonoma County. Good grief... time for some good old fashioned investigative journalism.

There were plenty of quotes from the idjits at our local banks about them not making the subprime loans but they definitely got them for their clients but didn't hold the notes themselves.

I can't WAIT to see the real exposure to SVB, Exchange Bank, Redwood Credit Union.

How many of the loans did they pass off and will they be forced to buy them back?

Oh... AND... OMG... look at the new local developments already in the crapper.

Montini has a bunch of see through houses... lock boxes, and empty as Capone's vault. There is a new wishful thinking development sprouting up on Hwy 12 in Sonoma. A ton of realtwhore spec building sitting, waiting and rotting... the chithole chanate village, and the downtown urban living plans in Santa Rosa... ummm... you do know that most of the smaller developers were financed here locally with commercial real estate loans from our local banks right?

Right... what comes next, baby?

At 3/15/2007 05:19:00 PM , Blogger moonvalley said...

what comes next better not be a bailout. I'm getting my pitchfork and torch ready just in case. Thanks for the kind words btw. I've only been slacking off here for the last several months. It was really my old neighbor telling me that he'd bought another house the other day and is thinking of adding a third! I hate to see people suffer for ignorance...but cripes! Pay attention why dontcha when you're dropping six figures on a property......oooooh, that's right it isn't your money....however it will be ours if there's a bailout.

At 3/15/2007 05:25:00 PM , Blogger Athena said...

Your neighbor is unbelievable! Hey... can you and hubby do dinner tonight? email me if you can.

At 3/15/2007 05:34:00 PM , Anonymous marin_explorer said...

I really need to get up to Sonoma and see if I would sniff a change in the air. Perhaps I'll see fewer smug RE acolytes and Maybachs rolling around--and a conspicuous lack of "There is no bubble" signage in Realtor windows?

Are they now serving SchadenFreude as a side dish at the wine bars?

At 3/15/2007 05:59:00 PM , Blogger moonvalley said...

ooooooo...sorry, just doing last minute corrections on this script...we'd love to see you though just shoot me an e-mail a little in advance and set something up. Are you in town?!

At 3/15/2007 06:06:00 PM , Blogger Athena said...

sent you an email. LOL... :-D also just realized it is 6pm and already dinner time and I just finished lunch. Was still thinking it should have been around 2pm. Good grief!


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