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