San Diego Housing Bubble News and Analysis

Sucks that they're doing this, but I'm not surprise at all. I this is just the beginning too. Who knows where this rabbit hole end.

Are most people that are defaulting on their loans filing for bankruptcy? I would guess most people are not, they just don't want to pay the huge payments on underwater assets. So in turn this only helps a small percentage of people in California.

Not good enough of an answer.

That is like saying a turd that only smells a little bad is just a little turd. It only affects a few sensitive noses.

Enough little turds and you have alot of big bad smell.

Good to see our government officials believe that spending more time and energy to prolong the inevitable is the best way to go here.

I know of several O.C. investors with large numbers of short sales pending (bought near to the top of the market and rented) that would love to take advantage of this somehow.

For some reason the Banks are still working with these guy's , hard to figure.

This is a good thing for all parties concerned. It allows for a forced modification of a home mortgage by a bankruptcy judge, a remedy that has long been available to the courts for virtually all other kinds of debts, including debt secured by non-owner occupied residential property. So for an investor that has many properties under water, this legislation will be meaningless.

Though I suspect that it will rarely be used, it will aid in providing stability to the market.

This just wreaks of desperation by the banker class that Schumer and Dodd represent.

This is "spun" to help the "people" but undoubtedly is to transfer losses to the taxpayer.

Obama just said that, "We’ve got to prevent the continuing deterioration of the housing market".

These people are not rational. These people are running the country. This is not good.

Yes, keeping housing unaffordable coupled with "shovel" jobs while people are losing their jobs in record numbers is a brilliant combination for putting the economy back on track.

Unfortunately our ruling class has no vision of what back on track should be besides over consuming on fake wealth brought on by fraudulent asset bubbles.

This wont assist them. I have a feeling this will only address a first home, and not "investment houses". They may be able to save one, but not all of them.

Stability. Definition:

I borrow money and buy assets.

If asset prices go up, I get rich.

If asset prices go down, I don't lose much.

Of course, it's no free lunch. Someone has to pay for every penny this "stability" costs. But if it's someone else who pays, then I'm OK. It's all for the good of the "economy" . L'economie, c'est moi. It's good to be the king.

Someone has to pay

That would be the lender. What is wrong with a greedy or stupid lender sharing in the losses? This will make future lending much more conservative, which seems not very bad.

If the lenders were all private, and got no govt support when loans went bad, then the lenders would indeed be learning from taking losses. Most of the money being loaned today either comes directly from the govt, or is backstopped by it, so the lessons are not being learned, and the taxpayers are picking up the tab (until inflation can be ignited, when conservative savers will start sharing the tab).

Unfortunately the same can be said for the automakers, banks, insurance companies and well... pretty much any other company who wants to join the TARP.

That's okay though... I was listening to some of the programs that cities will be spending bailout money on. Awesome stuff! A BMX track in Miami. A museum in Trenton...wow I cannot wait.

You forgot the adult entertainment industry!

Isn't there room under the TARP for them too?

Throw in a jar of Crisco and everyone can have a good time!

Crisco Twister under the TARP! Yahoo!!!

Quite a bit of misinformation on this thread... So, to set the record straight:

1. Investors ALREADY HAVE the option of reducing ("cramming down") mortgages by filing bankruptcy. Any debt (commercial loans, credit cards, non-owner occupied mortgages, etc) can be crammed down in bankruptcy, WITH THE EXCEPTION OF PRIMARY RESIDENCE MORTGAGES. If you believe this is weird, yes it is. Why don't investors take advantage of this? Because it's no fun. Foreclosure beats bankruptcy by a mile. In foreclosure you just lose the house (which is an investment anyways). In bankruptcy you lose the right to everything. The judge decides what assets you can keep, how much of your debts you must repay, etc. Definitely not fun.

2. What is a "cram down"? Say you owe $600K on a $400K house. Say you also have $30K in credit card debt. Well, the judge decides that only $400K is a "secured mortgage", and the rest ($200K) is unsecured debt, just like the $30K credit card debt. If the judge decides that the new $400K mortgage is within your budget, then you can keep the house. Also, if the judge decides that you can still afford to pay a portion of the $230K total unsecured debt, then you must do that as well. Realistically speaking, the unsecured debt is rarely paid back; if you could afford to pay it back, you wouldn't have declared bankruptcy in the first place. Again, bankruptcy is not a fun option, and foreclosure is usually the way to go.

3. Then, who could possibly take advantage of this? Answer: people in dire straits but who desperately want to keep their house. Not walk-aways, not flippers, not investors. People willing to go through the hell of bankruptcy to keep their house, and who could barely hang on by the skin of their teeth if their mortgage was crammed down.

In contrast, people who couldn't afford even a crammed down mortgage would lose the house anyways. At the other end, people who could afford to pay more wouldn't benefit either, as the judge would most likely ask them to pay the unsecured note as well.

The O.C. investors I was talking about (have 10's of homes with short sales pending) have been trying to get the banks to Basically to do a short sale to them but so far has not seemed to be working, but they are talking (I guess when you owe 5 mil or so the banks are willing to talk).