San Diego Housing Bubble News and Analysis

Congrats on the sale! I was wondering what happened.

Yeah, this is going to get really ugly once the lawyers get involved. My bro-in-law is a bankruptcy attorney, and has been telling me scary stories. I've tried to convince him to post some of the more crazy ones here, but so far he's just too busy. He did mention a workshop that he could attend if he was interested in getting more involved with the mortgage scam suits. Again though, he's just too busy with bankruptcies to chase related mortgage fraud cases.

Call me crazy but I would think there is a lot more money in suing billion dollar financial entities than cleaning up the messes of over extended consumers.

I think it has to do with time and effort: he's not got the time to attend the workshops, the effort is far greater on large lawsuits, and the pay-out isn't for a long time. I think once he gets his head around the consumer stuff, he'll get stuck into the other side of things.

Regarding the consumers: they are in waaaaaaaaaaaaay over their heads, and what he sees everyday is something unforseen (illness, job loss, divorce etc.) is throwing people who were living on the edge, right out of their homes. Very sad.

Thank you for the congrats! It was touch and go the whole way. I wish I could feel happy but unfortunately a good friend was just diagnosed with leukemia and it made me push all of the home sale matters out of the wayside and remember what's real and important.

Anyway, handling large class action lawsuits is very labor intensive, especially for a solo practitioner. Next, the attorneys for the corporations will throw up a huge defense and "paper" the small guys so they can't see the light of day. Ultimately, the big corporation(s) will, as we are seeing already, go "belly up" and they will seek bankruptcy protection. They will just dissolve and there will be nothing left. You surely remember the saying . . . "you can't get blood out of a turnip" or some such nonsense. Even if one does win, the masses who joined the class action suit will dilute any settlement dollars handed out.

The thing I find interesting is that there are obviously attorneys out there hearing that people (and a number of them) are having serious financial problems due to the ARMS.

I heard something on radio about ARM lawsuits also.

Yes, consumers are in way over their heads. I know an older guy who is retiring to AZ. He was planning on selling his house for $750k. He proscratinated in getting the house on the market because work that the house needed. Now he's chasing the market down. I'm afraid that he'll be lucky to get $450k on his 1970s house -- the debt he refinanced himself to. Scary! House equity and Social Security is all he has.

I really feel that with the baby boomers ready to make their exit from the working force, they are going to tax what is even left of Social Security. Hmmm. Home equity gone. Social security gone. We are in a mess. We are going to have soooo many people who are in a serious financial mess.

Why my friend (aged 55) who just developed leukemia is now facing huge hospital bills. Her husband just underwent knee surgery and isn't working and won't be going back to work. She has some retirement dollars put away, but that was for retirement. It was never planned to be used for day-to-day living NOW and expensive medical treatments.

We are going to have some many people stuck. Stuck in their homes, stuck with huge mortgages, stuck with losing their home, stuck with . . . well, just stuck. Stuck sucks.

The Ant and the Grasshopper

http://www.dltk-teach.com/fables/grassho...

That's why you have children. Duh! In the end, no one outside your family really cares about you. I think that millions of older people are going to find that out in the next 20 or so years.

If I'm broke when retired, I'll go live with the kids.

Yep, I've been hearing those commercials as well.

Things are proceeding just about the way I expected them to. Don't know about nation-wide, but San Diego's (real) crash will happen when exotic loans disappear (and they will).

It starts with the education of the general public about just how bad these loans are. The "main-stream" media finally catches on to the market and shows stories about foreclosures caused by mortgage resets on exotic loans (like Channel 8 news just did last week). Then it continues when opportunistic lawyers plaster ads all over the place about suing over these loans (further putting it in people's minds that these loans must be "bad"). That will cause many people to reconsider when the lender plunks down that "only option" in front of them. The water cooler talk changes from "My friend made $60k in 6 months on their Carlsbad condo" to "My friend has to sell because she can't afford the mortgage payments, but her condo isn't worth what she owes on it anymore, so she can't refi like the lender said she could when she first got that IO loan and she doesn't have the extra cash to pay off her mortgage when she sells, so she might lose her home".

Then finally, the lenders themselves, with pressure of lawsuits from "uninformed" borrowers, scams that finally come to light, and the inability to sell the loans as securities due to their terrible performance, will withhold these loans entirely except for those for whom they were originally created... the wealthy; who properly use them as a leverage tool, not a sole means to "afford" a primary residence.

When these loans finally disappear as a mortgage tool for the masses, we are left with the good old standbys. Standard ARM's and Fixed rate mortgages. Then the nightly news will get to bust out the long forgotten "Affordability Index". That index indicated what percentage of people in the city could afford a median priced home using a fixed rate mortgage at current rates.

Hmmmm... The last time I heard from that index, we were somewhere around 9%... In 2003! (I think prices have gone up just a little bit since then) My guess for today would be around the 5% - 6% range and getting worse if interest rates go up any more.

So, unless someone from La Jolla or RSF is interested in buying your "median" priced Clairemont 3 br 1 ba house, I think you might just be screwed for a while.

So well put, Sdrebear!

gold_dredger_phd, you better thank heavens you aren't one of my in-laws.

I've already informed my husband that if his mother decides to move in with us, the kids and I are moving out. She's the architect of her own distaster of a life and she can live in it.

sdrebear--

liked it!

LBC

A friend told me stories yesterday about two of his friends. One bought a condo here in SD. He just experienced a reset and is in deep trouble because he can't refinace. The other story was about a friend in another CA city who bought a condo conversion. She came home the other day to discover that it had reverted to apartments.

I had a conversation with anther friend who said that for the first time in years she is hearing, "You are so lucky you're renting."

The watercooler talk has started and it won't be long before everybody knows somebody in trouble.

Talking about living with the kids, I know some immigrant families who live 8 to 10 people in a house. They are happy that way because there's always someone to help out. So there's something to be said about living with kids. I also read that the elderly live longer healthier lives with family around. It would never work for me because I'm used to have my own space. Even having a housemate would be a big problem.

I've already informed my husband that if his mother decides to move in with us, the kids and I are moving out. She's the architect of her own distaster of a life and she can live in it.

haha, I think a lot of people feel that very same way.  

Wow, that's a comment, PD, 'You're so lucky to be a renter.'

I haven't heard that yet, but keep my comments to myself, given that many folks that I work with bought homes over the last two years, have borrowed against homes purchased long ago, etc.

Aw, Perry, kids and company aren't bad; you'd get used to it.

the main problem in CA is prop 13. It keeps property taxes artifically low for long time property owners.

the main problem in CA is prop 13. It keeps property taxes artifically low for long time property owners.

"The watercooler talk has started and it won't be long before everybody knows somebody in trouble."

I agree totally. The last time I got my hair cut, which was in November, the woman who cuts my hair, who is bright, personable, but not especially formally educated seemed to agree with me that housing prices are going down. She had a friend who bought a condo she couldn't really afford with an exotic loan and tried to convince my stylist to do the same, who luckily for her ultimately decided not to. I think her reasons were more based on not wanting to change neighborhoods and liking her current situation/roommates/neighbors, but since she's from SD originally she's seen the ridiculous run-up in prices.

Her friend who bought in is in definite trouble. It really put me in a position of mixed emotions, because so often individuals experience personal pain in order for a system to correct itself.

I am starting to hear the bearish water cooler talk, too. Many homeowners already realize they are in for a RE market downturn, albeit most of them think the drop will not be substantial (less than 15%) or prolonged (a couple of years).

More and more often I hear self-soothing mantras like "I don't care how much my (newly bought) house is going to depreciate. I live where I love". This approach has some merit for their mental health, if true and if they really can afford the payments. It does sound a little suspicious when comes from a serial flipper though...

Jeffrey Berns does option ARM lawsuits. I heard his ad on radio while driving and promptly noted the phone number.

Tell the people you know who have those loans to contact him. They may have have a cause of action.

Tel: 866-959-4LAW(4529). Option #2. I called that number and for some reason it takes about a minute of silence before the call goes through.

Perhaps Kelly Bennett of VOSD could interview him and give us the scoop on the lawsuits.

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From the website:
http://www.jeffberns.com/

Jeffrey Berns has been a licensed practicing attorney since 1987. We have helped thousands of individuals who needed our assistance to protect their rights.

Our investigators are focusing their attention on the banking industry and the loans they were providing to members of the public. We are investigating loans that allow for a minimum payment to be made that does not cover the full cost of the loan. These loans allow for low payments to be made but keep increasing the amount you owe the bank. When that amount hits a certain point you no longer have the ability of making the lower payment. We have some clients who have seen their payments triple.

We work on a contingency fee, which means we only get paid for our services if we are successful in getting you a recovery.