| Simon says: "Sub-prime lender meltdown, foreclosures | | | | many of these people aren't too good at balancing |
| everywhere-- what's really happening here on the | | | | their checkbooks, there are many things a homeowner |
| Westside?" | | | | can do to resist foreclosing. |
| Several evenings ago I walked past a group of men | | | | The number of homeowners who purchased |
| near a local coffee shop at 9th Street and Wilshire in | | | | properties on the Westside of Los Angeles with |
| Santa Monica, talking excitedly about the sub-prime | | | | sub-prime mortgages is estimated to be under 5%. My |
| mortgage industry "meltdown." One of the gentlemen | | | | personal mortgage broker has been in business for the |
| was sure it meant a significant increase in | | | | past 15 years. He has only done one loan with New |
| foreclosures. And another man said that he was | | | | Century, the largest sub-prime lender to close its doors. |
| looking forward to finding some great deals on houses | | | | Our housing inventory in Santa Monica is very low. |
| he was going to purchase. The way they were talking | | | | Only 197 houses and condos are currently for sale. |
| I began to get the impression that Los Angeles was | | | | Let's say there are 15,000 homeowner residences in |
| about to be littered with homeowners down on their | | | | Santa Monica and 5% of them are owned by |
| luck, losing their homes to the bank. | | | | sub-prime borrowers. If they were all in default at the |
| All of the geniuses who had sat out the "ridiculous" rise | | | | national rate of .5%, then we would have about four |
| in property values over the past six years, were about | | | | new homes for sale. If that number tripled, we would |
| to be finally proven correct. Dozens of presumably | | | | have about twelve new homes for sale. We are |
| well-heeled yuppies were about to find themselves in | | | | certainly not entering a time of crisis. |
| the bread line with the other homeless in Palisades | | | | Real estate values like mortgage defaults is a |
| Park. Disillusioned men and women would be looking | | | | geographic issue. Los Angeles has a foreclosure rate |
| out over the sunset, somberly enjoying their meals | | | | of only .1% above the nationwide average. This April, |
| courtesy of the local food bank. Their eyes gazing out | | | | Los Angeles had the lowest foreclosure rate of the |
| over the glittering Pacific Ocean towards Malibu, | | | | top five metropolitan areas in the nation, only 1 out of |
| dreaming of the day they could get their home back. | | | | every 997 households is in foreclosure. In Florida this |
| Well, that's not going to happen and here's why. | | | | March, the rate was 1 out of every 278 households. |
| Currently, only about .5% of sub-prime borrowers are | | | | There are things that can kill real estate values: war, |
| foreclosing on their homes nationwide, while about 13% | | | | natural disasters, economic calamity and the |
| are late on payments. That is just one in 200 | | | | concurrent closing of law firms, hospitals and |
| sub-prime homeowners who are actually in | | | | biotechnology and entertainment industry companies. |
| foreclosure. The fact that more than one in ten is late | | | | However, for now, a couple dozen sub-prime lenders |
| on their payments is testimony to the reason why they | | | | that feed on the financially disenfranchised is not going |
| were sub-prime borrowers in the first place. While | | | | to have any effect on our local real estate market. |