Weekly News Round-Up
The big debate these days seems to be when the foreclosure mess will come to an end. RealtyTrac reports that foreclosures in California went up 20+% in March, totally 65,000 properties. That’s 65,000 people that lost their homes, some of which I hope are mortgage lenders who are partly responsible for this mess in the first place. It also means that there are 65,000 listings on or coming on the market, many of which are handled by lazy agents who put forth no effort to sell the foreclosed home, thereby contributing to the decline of neighborhoods due to neglect, vandalism, and constantly lowering prices. (Yes, the lenders also contribute to this growing problem.) According to a report on MSNBC.com, ARM resets will crest in May or June. Rick Sharga, RealtyTrac’s vice president of marketing was quoted as saying: “Once we’re through that batch of loans, the worst will have been worked through the system.” One can only hope.
At times, I think there is just too much alarmist reporting, too much doom and gloom about what lies ahead. Waiting for the shoe to drop is not good for our blood pressure. But I am often concerned that in a rush to be first to report a trend or prognosticate a tragedy or financial fiasco, that the media creates self-fulfilling prophecies. Yes, I want to know if a tornado is coming my way tomorrow (based on factual information), but I don’t want to know that maybe, at some undetermined point in the future that possibly X could happen (based on nothing more than a guess or assumption). Slate had an article this week, “Here Comes the Next Mortgage Crisis,” but I ‘m not sure I agree with all of the tenets of the article. It talks about prime borrowers with interest resets, which will affect upper middle-class homes. I think there is an underestimation of these homeowners and their intelligence and income level, not to mention their dedication (and dare I say “status”) of owning their home. The SF Chron had a map of Bay Area foreclosures recently, and I noticed that the higher-end areas had little to no foreclosures to speak of. They were smarter than the sub-prime lenders. And the homes in these areas are not losing their value, like they are in more middle- and low-end neighborhoods. I don’t think we are going to see another full-scale meltdown in these areas. Hopefully that is just not wishful thinking.
Interesting posts over at MyBudget360.com. First we have “California Mortgage Rates Still High: Examining Actual Mortgage Products in Today’s Market and the Family Budget Impact,” something we should all read. And then there is the post on California home prices and mortgage loan caps. “California Median Home Price, $373,000: Maximum federal government loan limit of $729,500. Does that Make Sense?” What do you think, does it make sense?
Our litigious society is at it again. Last Saturday, our Alameda County writer reported on the San Diego case where a couple sued their agent and broker, alleging they were duped into overpaying for their new home. They lost that case. Now the Las Vegas Review-Journal reports of a Nevada man suing his lender, which according to the plaintiff’s lawyer is based on the lender failing in their “fiduciary duty to explain all borrowing and buying options, and to give home buyers professional recommendations on their best interests.” The article also mentions similar lawsuits in 5 other U.S. states. We all want someone to pay for this mess, but who should it be? Borrowers who did not inform themselves thoroughly before making the biggest decision of their life? Agents who brokered the deals? Lenders who maybe disregarded due diligence?
