Sonoma Housing Bubble

Pulling the cork out of Sonoma's bubbly housing foolishness

Friday, March 30, 2007

Wazzup , No Docs?

Nothing good I'm afraid. it seems now that the horses' ass is disappearing over the fence, they've gone barn door shopping.

With as many as 460,000 California homeowners reportedly at risk of losing homes bought with sub-prime mortgages, a top California business regulator called Monday for a ban on certain risky and controversial lending practices.

At issue for Department of Corporations Commissioner Preston DuFauchard were home loans being issued without lenders fully verifying the prospective buyer's income and employment status. These so-called stated- income loans have contributed to the collapse of the sub-prime mortgage market, he said.

"It's a real fluid situation," said DuFauchard, who has asked Gov. Arnold Schwarzenegger whether the commissioner can require about 8,000 mortgage and commercial loan lenders in the state to fully verify a prospective buyer's income and employment status to ensure that he or she can afford a loan.

Wow! What a novel idea. To actually try and figure out whether or not someone can afford and gigantanormous loan. Responsibility?! What will they think of next?!

Of course that will require some oversite, but surely we have folks in the massive state government to do, don't we??
Leonard said he would welcome stronger oversight of mortgage bankers' underwriting guidelines by the state.

The Department of Corporations, he said, has only 25 examiners on staff and "and clearly doesn't have the resources to stay on top" of the situation.

Oops! Our bad!

Meanwhile, we've been writing a lot lately about potential bailouts of all the f'ed Borrowers out there. Well, this mornings' LA Times brings a little perspective to that idea.

From the Captain To The Crew....

Put Those Bailout Buckets Away!
It's the old law of the sea. It seems like when push comes to shove the government is planing on letting all those f'ed Flippers go down with their Titanic MacMansions. Glug glug. I would imagine that

Borrowers, don't hold your breath for a bailout.

As mortgage delinquencies soar, many consumer advocates and political leaders are calling on government to help what may ultimately be millions of homeowners facing foreclosure.

But the modest federal and state aid proposals advanced so far suggest that most people struggling with onerous loan payments are unlikely to get government assistance.

The Bush administration has ruled out a blanket program to help homeowners stave off foreclosure, reasoning that it's "not an appropriate role for the federal government," White House spokesman Tony Fratto said.

And at the state level, "there is only a limited amount we can do for people who are affected right now," said Assemblyman Ted Lieu (D-Torrance), chairman of the Assembly Banking Committee.

By one estimate, as many as 460,000 people in California — and 2.4 million nationwide — could lose their homes because they are unable to make payments on high-cost sub-prime loans or to refinance them to more favorable terms.

The threat of a foreclosure wave, and government's limited ability or willingness to respond, could put added pressure on lenders to renegotiate loans that might otherwise end in failure.

And remember all that talk erstwhile presidential candidate Dodd was tossing around about bailing out homeowners, now it seems he's talking about it not so much.

"Dodd has been extremely clear that he is not talking about any kind of bailout," a spokesman for the senator said.

One problem with even suggesting a broad-based rescue plan for homeowners who are underwater is that any bailout of borrowers also would be viewed as a bailout of their lenders — potentially including some lenders that allegedly preyed on home buyers during the housing boom.

The risk lenders now face is that they may have to foreclose on many homes and sell them for much less than the amounts loaned — and eat the difference.

Gee, really? Selling a house for less? It almost sounds like, un-Americun, ya' know? Maybe they're been reading the blogs, maybe they've seen all the pictures of torches and pitchforks and angry non-borrowers refusing to pick up the slack for the Slackers with the no doc loans. Not to mention whos' ass we'd really be covering.

I also was a little curious this morning as to how things were looking close to home. when i went searching for subprime news in the SRPD I came upon this little item..

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.

Guess that musta been happening while I was napping with Michael jackson in my hyperbaric chamber cause I sure as hell don't remember any economists warning least in public. Back then it was all "Buy buy buy!!! Don't get priced out!"

That's what I remember.

They further state:
In Sonoma County, 9.7 percent of all subprime loans were 60 days late on payments, compared with 11.8 percent nationwide.

So, this is good????

Who exactly is responsible for all this??? Oh yeah. Those guys.

So, they're worried that anxiety in the financial markets could spill over into the broader economy. Really?

"I want to emphasize that national banks are not dominant players in the subprime market," testified Emory Rushton, senior deputy comptroller in the Treasury Department's Office of the Comptroller of the Currency, which regulates nationally chartered banks.

"Unfortunately, regulatory oversight tends to be less rigorous in precisely those parts of the financial system where subprime practices seem most problematic," said Rushton.

A patchwork of federal and state regulatory agencies holds jurisdiction over financial companies, putting many subprime mortgage lenders outside of stringent regulation, Rushton and other regulators said.

Yet, acknowledged Roger Cole, head of the Federal Reserve's banking supervision division: "Given what we know now, yes, we could have done more sooner."

So let me get this straight, the big national banks sat this sub prime cluster f'k out? Do tell. Then that must be some other Wells Fargo Bank they're tallking about here.


At 3/30/2007 03:53:00 PM , Blogger Athena said...

Oh now the so called "experts" crawl out from under their rocks with warnings? Give me a break. The PD seems to only seek out people who will blow sunshine up their a$$es! They are beholden to the REIC in the county and they go to great efforts to avoid printing anything approaching the truth about RE in Sonoma County. What they do print they massage until it is barely recognizable. They are BS artists.

At 3/31/2007 12:13:00 AM , Blogger Dimitris said...

Eh what's up no doc. Brilliant!


At 3/31/2007 10:10:00 AM , Anonymous tom stone said...

"a fluid situation" boy am i glad i didn't get any of that fluid on my hands... it's REAL stick,and the smell.. take a look at the expected 460k people who are expected to lose their mention of those who have beenin heloc heaven,no alt-a...and of course "prime" borrowers won't be affected.

At 4/01/2007 12:55:00 PM , Anonymous marin_explorer said...

"no mention of those who have been in heloc heaven"

Yes, I also wonder at the larger extent of financial risk among SFBay area residents. I can only guess at the crushing burden to come for even well-paid "homeowners" saddled with reset mortgages, heloc-funded "lifestyle upgrades" and other dubious financial decisions. But, so many Bay Areans think they'll escape the downside unscathed. I have serious doubts.

At 4/01/2007 02:02:00 PM , Anonymous tom stone said...

The heloc problem is going to be a big blow,the Alt-a is starting to melt down already,we are looking at 4$ a gallon gas,and stagflation is here.and the big news is that we haven't seen many resets,or recasts yet.the first BIG wave is in will be real surprising to a lot of folks with helocs when their house drops in value,their heloc payment hits double digits,and they owe more than the market value of the home they have "owned" for more than a is REALLY WEIRD talking to some of these people,they can understand the home next door losing value,but not can actually get a bit scary...they visibly vibrate from the cognitive dissonance sometimes,if that happens i suggest they get a second opinion ,and refer them to good 'ol harry.

At 4/05/2007 04:31:00 PM , Anonymous Anonymous said...

Back then it was all "Buy buy buy!!! Don't get priced out!"

Back then? That's STILL the Party Line!

And you DO know what the definiton of "expert" is:

Expert: A has-been (ex-) drip under pressure (spurt).


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