"What do you mean 'we', Kemosabe."
Posted on 08/24/2007 7:02:51 PM PDT by Lorianne
Housing experts painted a grim picture of Los Angeles' real-estate market Tuesday as City Councilman Richard Alarcon called for city, state and federal funds to help bail out city homeowners who can't pay their mortgages.
Warning that the region is embroiled in a foreclosure upheaval, Alarcon said he's also considering asking lawmakers to declare a state of emergency to direct state and federal money to counseling and loans for people about to lose their homes.
"We're in a crisis. We don't need bureaucrats who are going to sit on their thumbs and not get things done. Who do we go to in federal government to ask for emergency assistance to help solve this crisis?" Alarcon asked city housing officials Tuesday during an emergency hearing on foreclosures.
"It seems to me we'd better kick the federal government in the butt to get into action to help us solve the problem, and I don't think we're doing any kicking now."
The hearing came as economists were chewing on new default numbers that show the trend is worsening. Foreclosures hit a record level in California last month and officials said 1,074 homes were foreclosed on in Los Angeles County - up more than 600 percent from last year.
Notices of default, the first step in the process and usually taken when payments are at least three months late, increased 145.3 percent, to 4,009, in L.A. County.
The Inland Empire continues to be one of the most affected areas in the state. Last month, the San Bernardino/Riverside counties region had 1,697 foreclosures, an annual increase of 832.4 percent. Default notices spiked 198.2 percent, to 4,720.
For all of California, foreclosures soared 517 percent, or 7,240 properties.
The numbers have fueled growing concern, with consumer advocates in Sacramento on Tuesday to push for a moratorium on foreclosures.
Some federal legislators also are pitching a bailout for homeowners facing default as their adjustable-rate mortgages shift to higher rates and their monthly payments significantly increase.
Alarcon has proposed using city money for an emergency-loan program to help homeowners on the verge of foreclosure.
But he and housing advocates acknowledged that the problem is growing so quickly that $5 million or so in city money would only help a fraction of the homeowners in default.
"We're seeing people who borrowed $600,000 and can only afford $300,000," said Lori Gay, president and CEO of Los Angeles Neighborhood Housing Services.
Her group tracks foreclosures through a title company and has recently seen an average of 400 default notices and 100 foreclosures each week in Los Angeles.
"If the city does not take a leadership position ... your numbers are going to stay where they are and get worse," she said.
But some are more wary of local government involvement.
"Is there a fix? It's hard to imagine the fix for people who have to pay $1,500 more a month and don't have a way to pay it," said Dan Blake, director of the San Fernando Valley Research Center at California State University, Northridge.
"It's a real dilemma. People bought houses they couldn't afford and can't make their payments now. Does local government want to subsidize people who made an irrational purchase?"
Others have opposed bailing out mortgage lenders and buyers who engaged in risky loans while the market was hot but are seeking help now that housing prices are stagnant.
"There has to be some element of personal responsibility here," said David Wolfe, legislative director with the watchdog group Howard Jarvis Taxpayers Association. "Is that a good use of taxpayer dollars to, in effect, bail out people who should have known the consequences of those mortgages when they signed them?"
But Alarcon argued that people should be concerned about the larger impact mass foreclosures will have on the community and the ability of people to qualify for homeownership.
"When you step back and look at it, this is a societal problem," he said. "We have created a negative situation for everybody."
Take Evalyn Burnie, 51, who was born and still lives in the same Pacoima home her family has owned for decades.
She refinanced the home in 2004 to help cover medical bills as she battled breast cancer. During the treatment, she lost her job.
So when her loan adjusted to a higher rate after two years - and Burnie's $831-a-month mortgage jumped to $1,055, and later to $1,200 - she was in trouble.
Her relatives have helped cover many of the monthly payments so she won't have to sell the longtime family home. But when she sent the lender a $1,400 check, the bank sent it back.
"They want to know why I'm not making consistent monthly payments, but I'm only staying afloat with the help of my family," Burnie said. "Cancer is a battle, this is a battle and it's not that I don't want to pay them. I've tried."
After the four-hour hearing Tuesday, housing experts said education and counseling are crucial.
Many original lenders have sold their mortgages to secondary firms, and borrowers now in trouble have a hard time finding and negotiating a loan-restructuring plan with the new mortgage holder.
Nonprofits and housing advocates can help, but they need funding.
Alarcon said he will ask the council to endorse several measures, including asking the federal government to help fund more homebuyer-assistance programs and make adjustments that would lower the cost of mortgages for Angelenos.
He also wants legislation that requires mortgage education classes for first-time homebuyers.
Foreclosures soared 800 percent both in Los Angeles County and the state in the second quarter, with the state recording a record 17,409 homeowners losing their properties. That number totaled 2,581 in L.A. County, according to DataQuick.
No relief is expected.
"We're in for another quarter of record activity," said John Karevoll, DataQuick's chief analyst.
Leslie Appleton-Young, vice president and chief economist at the California Association of Realtors, said some adjustable loans taken out in 2005 and 2006 still have to reset, and it could result in more homeowners being unable to make their payments.
In fact, the market might not start rebounding until late next year.
"We have definitely not seen the bottom yet," she said. "I know this is not going to be a quick turnaround."
Let me get this straight ... this politicians wants everbody to bail out people in HIS city. Why stop at Federal ??? Why not have have a global and gallactical bail out?
Not just his city, his people. This Rat is a reconquista mexican socialist.
Regards
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
I’m absolutely in favor of bailing out homeowners who are having trouble paying their mortgages, and there’s a great way to do it: stop spending money on government programs that subsidize stupidity and leave that money in taxpayers pockets.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
No, no and no.
F no
NEVER.....decisions have consequences.
I wonder who bails out taxpayers after they’re broke from bailing out illegals and others who live at our expense
"What do you mean 'we', Kemosabe."
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
No problem!/s
“House Payments Fall Again
$310,000 Mortgage for $999/Mo. Paying too much? No credit check reqd.
www.lowermybills.com”
Just say NO!!!! The dangers of ARM and other “tricky” mortgages are clearly stated. Adjustable means they can (and often do) go up.
If the homeowners were cheated, than they should get their debt cancelled. But so far, there has been no compelling reason proven for the government to get involved.
"What do we have for him, Johnny?"
"...they want to eliminate the mortgage but don't know how to advance the notion without sounding ridiculous..."
The dirty little secret of Liberalism..." VERY well put.
I could believe that it’s actually the plan for the “reconquista” types to deliberately try to break American taxpayers, the better to socialise this country for their own purposes.
What really ticks me off about this story is how they pick out the one person with a real sob story as if she were typical of the homeowners in trouble. Most of them were people who thought they were going to get rich from rapidly increasing home prices, and now the bubble has burst.
So why don’t we just pool all our money and dole it out according to who has the biggest house payment? This is basically what they are advocating.
No, no, and no. We were so very careful when signing our mortgage contract. We paid the mortgage for decades, and now the home is ours because we were not overly-ambitious but realistic. No one had to bail us out because we were responsible. Must we now bail out those who are more irresponsible?
Must we now bail out those who are more irresponsible?
Yes, if their numbers reach a “critical mass.” This is not a moral issue or a matter of rewarding stupidity. If a bail out is coming, it would be strictly for pragmatic reasons.
What a wonderful idea.
Take from those who are living within their means and borrowing what they can pay back, and redistributing it to those are living large and got in way over their heads in debt.
The bubble has burst in the LA housing market, that many properties on the market should cause prices to fall rather dramatically. The city homeowners who will lose their houses should be able to rent at a reasonable price, I don’t think that this is any kind of humanitarian crisis, just a financial one to those who just got in way over their heads.
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