As of December 31, 1999, total direct costs attributable
to the closing of insolvent thrift institutions over
the 1986–1995 period amounted to $145.7 billion.
"Well, Riverside County seems to be a kind of outlier. It bubbled up a bit later than many parts of SoCal, and the population there is not the kind of middle class folks you'd find in LA, Orange or San Diego counties. The general understanding I'm getting from my readings is that that area boomed up from working-class people with relatively low incomes getting access to massive loans via the ol' "stated income" 100% LTV interest-only ARM which resets in 3-5 years. There is just no way that a household pulling in $40K, $50K, $60K can afford to buy a $400K house, let alone a $600-800K house - in the Real World of Mortgages. 30% of $60K gross is $18,000/year $1,500/month, which on a "conforming" fixed rate 30-year loan (the kind we used to have, remember?) would buy you about a $200,000 house.
Some of these people have borrowed $750,000 with no money down at a "teaser" rate of 1% or 2%, which their $1,500 payment will cover. When that rate resets up to the 8.5% or 9.5% rate, that payment might jump up to $5,000, $6,000 or more - and many of them will be in a house that's depreciated down to $500K value, with the principal now being more than $750K because of negative amortization."
“Ernest Williams, a part-time Realtor in El Sobrante, has a client in escrow on a home in Vallejo. In late May, the client was prequalified for a loan up to $450,000 with nothing down and no income verification. The client has ‘impeccable credit’ and a FICO score over 750, Williams says.”
“On June 29, the client offered $417,000 for the house and his offer was accepted. When the mortgage broker submitted his application to a lender the last week in July, he was turned down. The application was submitted to two more lenders last week and was rejected.”
“‘He was declined because they wouldn’t do stated-income loans above 90 percent anymore,’ Williams says. ‘If he provided full documentation for his income, he wouldn’t qualify for the loan because he doesn’t make enough money,’ Williams says.”
The total mortgage market in the United States is roughly $10.4 trillion. Of that, a little over 13 percent, or about $1.35 trillion, is subprime — certainly a large sum. Of this, nearly 14 percent is delinquent, meaning late in payment or in foreclosure. Of this amount, about 5 percent is actually in foreclosure, or about $67 billion. Of this amount, according to my friends in real estate, at least about half will be recovered in foreclosure. So now we are down to losses of about $33 billion to $34 billion.
The rate of loss in subprime mortgages keeps climbing. In time, perhaps it will double, maybe back to $67 billion. This is a large sum by absolute standards, and I would sure like to have it in my bank account.
But by the metrics of a large economy, it is nothing.
Then consider that the D.C. and inner suburb (Arlington, Bethesda, parts of Alexandria and Falls Church) markets have been much healthier than the general suburban (Rockville, Fairfax, etc) market, which have in turn been much healthier than the outer suburban market.
"For a few years, the house fulfilled its traditional role: It was a place to sleep, to eat, to raise their two boys. "It was a blessing, a beautiful place," says Theodore Judice, a telecommunications worker.
Life threw some curveballs. Cassandra, a healthcare worker, had medical problems and left her job. Theodore had a year or two when he wasn't working full time. And, always, there were credit card bills and home equity loans to pay.
In 2000, they refinanced, drawing cash out in exchange for a bigger monthly mortgage.
Corona, and America, was soon full of people doing the same thing. Lenders have never been so careless with their loans, knowing they could easily resell them to Wall Street. With home values on the rise, houses took on a new role. They became ATMs where you never had to make a deposit but could withdraw endlessly, or so it seemed to many at the time.
Theodore would marvel at his neighbor's boats, their swimming pools, their toys. He and Cassandra did some remodeling -- getting the patio done, he remembers, was particularly urgent.
The offers to refinance came in the mail every day, sometimes two or three of them. Theodore would tear them up. Eventually, though, he would succumb.
The couple refinanced again in 2001, 2003 and 2004, borrowing larger sums each time. Each time they drew money out, Theodore would say, "We're not doing this again." And then they would need money, and they would do it again.
In September 2005, the Judices borrowed $447,500. Almost immediately after that, they put the house on the market for $480,000.
It was time to go: They had drawn so much cash out of their home they couldn't afford to live there anymore. The ATM had turned into a trap. With no equity cushion, they couldn't afford to cut their price either."
Arlington [Virginia] Home Sales, Prices Up in July
Home sales across Arlington County continued to show more buoyancy than in the region as a whole, with both total sales and average sales prices higher in July than a year before.
A total of 303 properties changed hands across the county during the month, according to figures released by Metropolitan Regional Information Systems Inc. That's up 7.1 percent from the 283 properties sold during July 2006.
Condominiums were dominant during the month, representing 161 of the 303 closed transactions.
The average sales price for all properties sold during the month in Arlington was $574,427, up 9.7 percent from a year before.
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