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