Yes, I know, it has been way too long. But at least we are starting to see some signs that we were in a real estate bubble…right?!?!? I guess when major a major Wall Street investment firm gets bought for $2 a share, something bad happened. But more on that later…

I don’t even know where to start right now. So many ‘experts’ said so much ‘crap’ during those booming 5-8 years (depending on where you lived), that I can’t even begin to wipe the egg of all of their faces. Remember the SoCal real estate experts that said ’soft landing’ and worst case things will ’stay flat’ for a year or two then take off again? Remember all the big financial guru’s on Wall Street using mathematical equations and fancy derivatives to make crap loans look like ‘gold bars’ as they sold them to everybody who would listen? Remember when 70% ‘home ownership’ was a good thing? Remember when you could just refi every year and never have to worry about paying off your house because it always went up? Remember when ‘everybody’ was a real estate investor, agent, or mortgage broker? Remember when all was right in the world?

Come on people, as big of a mess as this is, it is REALLY very simple. By lowering the standards and using the stupid ‘American Dream’ tagline, millions of people who should not have been able to buy a home, entered the marketplace. These people had to use ‘creative’ financing (I/O, stated income, NINA, Option-ARM, I/O ARM, SISA, etc.) to ‘afford’ their property. This had the effect of pushing property prices higher which is ‘good’ for the people already in the game, but bad for families and others that had to ’stretch’ to be able to purchase a home they otherwise would have been able to afford. Once we hit that ‘70% home ownership’ (don’t get me started…more like ‘70% home mortgageship’), the standards couldn’t really be lowered ANY further to accommodate any more borrowers.

Personally, I could care less what percentage of the population ‘owns’ a home. Just like not everybody has the ability to be a doctor, not everybody has the ability to own a home. What if medical schools applied the same ‘ownership’ logic to med school??? I know they might want more doctors, but how far are you willing to lower the standards to allow 70% of the population to enter medical school???

Sounds crazy doesn’t it. But this country did the exact same thing, just with home ownership. They lowered the standards and let MILLIONS of people buy homes when they didn’t ‘deserve’ that privilege. So you have a millions of homeowners playing in a game that a few years ago they would not have been allowed to play in. They used their creative financing and depended on annual price increases to ’save them’ when they sold for profit when those payments adjusted beyond their reach. The only problem is that real estate did NOT continue to appreciate on an annual basis. In fact, it did something it ‘never’ does…it went down!!!! (insert big gasp here)

With refinancing out of the question (Got Equity?), and selling for a loss not an option, people started foreclosing. So as fast as many of these people entered the market, they started to leave. Now we are seeing foreclosure rates up 400% in many ‘untouchable’ areas. Moody’s has said there are almost 9 million homeowners that have mortgage balances equal to or greater than the value of their property. I see that number growing every month for at least the next few years. Property values are still NOT in line with income. Based on the lack of savings by the ‘average joe’, I don’t see many having the typical 10-20% down payments that are going to be required to purchase homes in the future as ‘risk assessment’ has returned to the market.

Another nasty little side effect of all that ‘easy credit’ can be seen in the auto industry. Here is a good article that covers the amount of people ‘foreclosing’ on their cars by just ‘giving the keys back.

Here is another gem for Gary ‘In the Bag’ Watts and the rest of the California ASSociation of Realtwhores. Looks like SoCal is down 17.9% from last year, and even the Bay area is down in the double digits as well. Since the median income in California is about 48k, does it suck when your clients property loses 80-100k or more in a year? Inquiring minds want to know. Do you just give them old copies of your newsletters, and tell them it will come back in the ’summer’? After all, I wasn’t so fortunate to own property that appreciated more in a year than I made from working. Who knew condos and tract homes wouldn’t continue to go up 50-100k per year forever?? Ok, maybe I did…but bloggers didn’t know what they were talking about.

Not really much I need to say about Bear Stearns. They were the life of the party…while it was still going on. Now they are like the life of the party that drove drunk into a tree and got killed, and everybody at the party is ‘wondering’ how it happened. Duh…

A quick side note: lowering interest rates is NOT going to save housing. Housing rates were where they were because the banks quit pricing in risk. By pricing in the risk according to a borrowers ability to pay, interest rates could be zero, but the banks will have to charge a premium for the risk they are accepting by making the loan. It might feel good and help some people out, but all it is doing in the mean time is devaluing the US Dollar in the international market place.

I have more to talk about, but that will have to wait a bit longer. I have been terribly remiss in making new posts as I have been extremely busy, and this blog isn’t the priority or money maker it once was. This blog served it’s purpose for millions of readers BEFORE this collapse in housing started. Based on the thousands of e-mails I have received, it seems I helped out a LOT of people. I was upfront and honest the whole time. I didn’t get rich, but I sleep well at night. I don’t have the guilt of lying to property owners, investors, hedge fund managers, rating agencies, or the media so that I could make a buck. Heck, I guess some of them got so rich they probably don’t care. Guess I will never know.

Stay Tuned…

SoCalMtgGuy

Wow, what interesting times we are in right now! American’s largest lender Countrywide was teetering on the brink of bankruptcy. American Express has to write off a measly 480 million that borrowers didn’t/couldn’t pay. Citibank and Merrill Lynch are having some pretty large write downs. I mean, what is a few Billion here and there. What I find EXTREMELY interesting is this sentence regarding the Merrill Lynch situation:

“The loss was almost three times bigger than analysts estimated and resulted in the first full-year loss since 1989, sending Merrill down 10 percent in New York trading, the biggest decline since the 2001 terrorist attacks.”

Wait, the analysts were off? Never, no way, I don’t believe it. How could the all powerful analysts that completely underestimated the stock bubble miss this one too? How could all the MBA’s and Wall Street ‘geniuses’ screw this up to the tune of tens of billions of dollars? Maybe because they have a vested interest in keeping things going as long as possible. Either way, it doesn’t matter. Just take everything that the analysts, or any other person with a vested interest says with a grain of salt. Speaking of, how is Gary ‘In the Bag’ Watts doing right now? Haven’t heard much from him or Leslie Appleton Young lately. I guess 15% appreciation is NOT ‘in the bag’ this year. But what do I know…

What has been interesting up until this point is that ALL of the mortgage mess has been the fault of the ’subprime’ borrower. Now I know better, but you would think it was just the people with poor credit ruining the economy and the mortgage backed securities market for everybody. Then the news hits today “Wealthy may be next in line in home crisis”. Oh really? But I thought if you had a 700+ FICO score then you could easily afford the payment on a 1.2 million dollar mortgage?!?!? So credit score does not necessarily equate to income? Who knew?

That said, even if you could get a 100% 1.2 million dollar fixed loan at 6.5% your payment would be $7584.81 per month, PLUS taxes and insurance. I don’t know Chicago property taxes, but in California, that would be an extra $1200 a month. With insurance you are probably close to a total payment of $9000 a month. Even at a 50% debt ratio with NO other debt, you would need an income of 18k per month. To use the ‘old’ debt ratios of about 35% of your income to a mortgage, you would need to make $25k a month. I am not as familiar with the Chicago area, so I will apply this to California. A million bucks doesn’t buy much more than a tract home in many parts of California. The fact that you would need an annual income of 200k-300k for 30 years to truly ‘afford’ those houses is out of whack to what REAL incomes are.

The problem is that for the past few years, you could get 1-1.5 million dollar loans with NO money down, and very little documentation. The ‘creative’ financing with option-ARMs could make that $7000-8000 mortgage payment less than $3000. So THAT is how the ‘value’ of many of these properties reached those levels. Lets not even get into all the people that were living WAY beyond their means by living off their house of ATM.

Things in San Diego are definitely down. I was talking to a friend that used to work the VIP bottle service at one of the ‘high end’ downtown hotspots. She said things were ‘dead’ and that the amount of people that used to come in for $400 and up bottle service ($1000-3000 per VIP booth) has completely dropped off. That doesn’t mean a whole lot as it is just some anecdotal evidence, but I know for a fact that a lot of money that was being thrown around was from mortgage brokers and real estate agents. Now that those 10-30k monthly paychecks are not rolling in, it is hard to justify dropping $500+ bucks on a night of drinking at the club.

Lets get back to the ‘wealthy’ people. You probably saw that the $3 billion dollar Cosmopolitan property in Las Vegas is probably going into foreclosure. I’m not sure, but I would bet that foreclosing on a $760 million dollar loan can hurt even the wealthiest of people. Who knows the details, but I believe that many ‘wealthy’ people made similar mistakes as ‘typical’ homeowners did, they just did it on a larger scale with a few more zeros.

I spoke with some people on Wall Street and at the higher levels of some financial companies. The outlook is not good. The dollar is dropping in value and the talk is that the big R is coming. NO, not recovery, but RECESSION. A contact of mine in capital markets said that the loans made in 2006 are performing HORRIBLY, with some delinquency rates hitting as high as 24%! And those loans won’t reset until the 2009-2011 time frame. The reason these loans are sooooo bad is because these were the loans made to people when the companies were doing ‘anything’ to drive volume. They got their volume, but the quality is terrible.

The downward price pressure is going to make things even worse. Just wait until late 2008 and 2009 when all the alt-a and A-paper 5-year ARMs from the boom times of 2003 and 2004 start to reset in the face of down property values. It is NOT going to be pretty, and this thing is going to be ugly for at least the next 5-10 years as this whole mess gets worked out. You cannot hand out 500k-1million dollar loans to people with such little risk assessment and expect things to end well. Even the people that can afford to ‘wait it out’ will have to do so for years. It is going to take a long time for incomes to reach a level that makes these recent home values attainable. If we go back to debt-to-income ratios at 40% or under, that will further put pressure on the markets as it will remove lots of ‘potential’ borrowers from the market. It needs to happen. It doesn’t make sense that people should have to spend 50-55% of their gross income on housing.

I know this post was a little scattered, but I hope it covers some of what has been going on. I have been following things, but I have been working hard on building the new business and doing quite a bit of traveling which has been nice.

Thanks again for reading my blog!

Stay tuned…

SoCalMtgGuy

I hope everybody had a Merry Christmas and is looking forward to fun New Year’s celebrations with friends and family.

For those of you that have been reading this blog since 2005, you know that my feelings regarding housing and the economy were not very positive as a whole. You cannot have hundreds of billions of dollars lent out to people that have no ability or inclination to make their ‘adjusted’ payment. Well, it seems there are a few more people that agree with me now…they just happen to be much ’smarter’ and have a much larger reading audience.

Here are 3 good articles to carry you through to the new year. Funny how these 3 articles were together on the front page of the Drudgereport.
Home prices post record annual drop… (duh…we knew THAT was coming!)

PAPER: Housing foreclosures largest since Great Depression… (I have asked people many times: when was the last time that Interest Only mortgages were popular? It was the late 1920’s…right before the Great Depression!!)

CHEER: Ambrose Evans-Pritchard: Bank Crisis may make ‘29 look ‘walk in park’… (Hmmmm… 1929 eh? See the previous sentence.
Stay tuned for more in 2008!

SoCalMtgGuy

I don’t have time for a long post right now, but I will expound on this later.

Today marks the day that America goes bankrupt in more things than just it’s finances. We are bankrupt in personal responsibility, integrity, risk assessment, and admitting our mistakes. But look at the bright side…I have found the ‘next BUBBLE’ that exists in pandering, blaming others, and crying to politicians to save people from their own poor decisions.

By pushing this off 5 years, you did nothing more than make this worse for the long term. We will not be able to get to the real market value of these ‘assets’ by government stepping in and selectively helping irresponsible people. Not to mention the message it sends to the rest of the country.

Read the comments at the bottom of this article about the situation. Looks like more people than just me are pretty fed up with things. Here is a quick sampling:

dear mr. president - i have been advised of a rent increase in my rental apartment - i can’t afford to pay the increase (and maintain my overextended lifestyle) but i wopuld like to stay anyway - do you think you could add a rider to your little mortgage rescue plan that saves my aprtment for me - thanks - oh and after that could you put a freeze on my cellphone bill - thats too high also.

boy are we all suckers for getting fixed rate mortgages -or waiting until we could afford a house before we bought it- or saving our money - or being fiscally responsible - who knew our president would be effectively subsidizing peoples mortgages - who knew that the government would bail out the people who bit off more than they could chew

I am absolutely disgusted by the pandering of our politicians…both to Wall Street and the borrowers that made poor financial decisions. We didn’t share in the profits for those 5-6 years of Real Estate bubble madness…but now it is OK for us to share in the losses.

There will be more to follow later on. I need to gather my thoughts, get some more work done, and get a workout in. I take personal responsibility for more than just my ‘financial’ health.

Stay tuned…this thing just got extended a few more YEARS!!

SoCalMtgGuy

I have been out of town for a rather large portion of the past 6 weeks. I have traveled all over the country and to our neighbors in Canada. I will say that it sucks to go to Canada and see “.90″ taped to cash registers so ‘we’ would know that the US Dollar was only worth 90 cents to them.
I don’t have time for a long post, and honestly I don’t know what else I can say that I haven’t already. I will reiterate that this ‘thing’ is going to be way worse than the Fed, Wall Street, and most analysts predict. I have said it many times before…the ‘data’ these people are analyzing is trash. They are analyzing numbers but have no idea what is really behind those numbers.  Remember a few months ago where many ‘experts’ said this was quickly working it’s way through the system?  Were they right?
Since it has been a while, let’s look a few things quickly:

Now have the Treasury Secretary Henry Paulson chiming in on the ‘mortgage mess’. I don’t know if these people really are clueless, or if they have a ‘financial’ interest in always being late to the party with their comments. I know they don’t want to start a panic, but would it have been so bad for them to tell people to only buy what they can afford when the real estate bull market was off and running? Come on people, this is NOT rocket science…it is basic high school math. I don’t have a lot of time, but let’s look at a few comments from Secretay Paulson.

Paulson said that government and the financial industry should provide immediate help for homeowners trying to refinance current mortgages before they reset at much higher rates.

Just how should government do this? Government gets money from 1 source…the taxpayers. So any type of guvment assistance is coming from taxpayer dollars. I reread the US Constitution again, and no mention anywhere about taking money from people that can afford their house and taxes, and giving it to people that cannot afford the mortgages that they legally signed onto. I don’t care what fancy terms the government ends up using, there should be ZERO bailout of banks or borrowers. I know there will be repercussions…just like doing 21 shots of vodka on your 21st birthday. It sucks when the party is over and you are are wrecked mess…but learn from it, and don’t do it again if you don’t like feeling like crap.

What I really want to get into is how the financial industry can help things. What are they supposed to do? The financial industry keeps getting pressured to ‘refinance’ borrowers no matter what. But tell me how the heck you are supposed to do that??? Let’s do something that is obviously old fashioned…let’s crunch some numbers!!!

Let’s look at a homeowner that is going to foreclose on their $450k ’starter home’. Let’s say they did a 3 year 100% interest only ARM at 5.5%. That puts their mortgage payment at $2,062.50 (not including taxes, insurance, or anything like that). Now let’s assume their mortgage adjusted and they have to start paying principal and the rate jumped to 6.5% (which could still be low…but for the sake of numbers it will be fair). Do not forget that because they made an ‘interest only’ payment for 3 years, they have to pay off the loan in 27 years. Let’s look at the new principal and interest payment at the higher rate for the $450k loan. The new payment for the next 27 years paying principal and interest is now: $2,949.99. Outch!!! I don’t know too many people that can afford another $800+ a month when their mortgage payment adjusts.

To make matters worse, not only are property values dropping, but so is the value of the dollar. Buying a $500k house that loses 20-40% in value is like getting punched in your stomach…combine that with the fact that the value of the dollar has conservatively dropped 10% is like getting kicked in the balls afterwards.

BUT, getting kicked in the balls isn’t so bad if you get a 160 million dollar ‘parachute’ afterwards. Yes, you know what I am talking about.

I actually saw an article where they used the word ‘trillion’ to describe the amount of potential damages caused by this ’subprime’ mess. Sadly, I am not surprised one bit. Every level of government in this country from the city, state, and federal level is in debt. They spend on emotion and not on logic. And somehow we are surprised when businesses and individuals do the same. The only difference is that individuals cannot just ‘print money’ or use the power of the ‘gun’ to generate higher tax revenues.

Anyway, I am going to continue posting here as I have time. Don’t worry, if and when something major happens, I will be here to discuss it.  Don’t worry, I am following what is going on.  This thing is going to take YEARS to pan out, so don’t lose sight of that.  I am focusing on my other business, and things are going well.

Stay tuned…

SoCalMtgGuy

I don’t have time for a long post right now, but I wanted to get my quick thoughts on the 50 basis point rate cut.

Sadly, this will only make things worse in the long run. Unless the median income reaches into the 6-figure range over the next 1-3 quarters, this 50bp rate cut isn’t going to save the housing market.

It will be nice for some businesses and aspects of Wall Street, but remember that lots of people got their ’sweet’ interest-only loans and ARM’s when the Fed Funds rate was at 1%. If they couldn’t afford a fixed rate loan when the fed rates were over 4 points lower, how can they afford it now? I know that mortgage rate are not completely tied to this number, but you get the point.

It is really simple: there is a huge disconnect between income and property values thanks to creative financing and little to no risk assessment.

Sadly, this goes WAY deeper than subprime. We have not even had the option-arm loans start to do their recasting and we have not had the worst crop of loans that were made in 2006 come to light yet. Just wait until all the crappy loans that were made to ‘keep things going’ in 2006 start to default. A lot of these loans are Alt-a and even A-paper. Just because you are an ‘A-paper’ borrower, doesn’t mean you have the INCOME to afford your loan. (especially when it adjusts!)

Let’s not forget that a lot of properties in the major ‘bubble areas’ have already had their gains from the past 2-3 years erased. I know people that bought 3.5 years ago that are ‘upside down’. Sadly, I also have a lot of friends with 700+ credit and good jobs. They can afford their 5yr I/O loans now, and for the next 2-3 years, but if property doesn’t appreciate, they will be hurting. Their payments will jump, and they are already upside down, just hoping things will turn around in the next 3 years. Unfortunately, I think they are mistaken and will only be further in a bind as they owe a lot on a house that is worth much less than their mortgage. What is the market going to do when all these ‘A-paper’ borrowers making 80-100k start getting behind on their payments??

The pundits and analysts can bat this thing around for the next few months and tell you that it is ’subprime’ and that is has ‘worked it way out’, but there are a good 2-3 more waves coming. There will be blood in the streets by 2009 as we enter a recession that was completely our own doing.

‘We’ threw out risk assessment and gave anybody with a pulse (and a lack of integrity as lying about income was a necessary part of ‘qualifying’ for many of these ’stated’ loans) a loan for whatever they wanted. It was easier to get a 500k mortgage than a line of credit at Circuit City.

Like I have said before. I know what is behind the data that all these ‘analysts’ are reading. I know what is really in the mortgage paperwork, no matter how Moody’s or anybody else ‘rated’ it. This thing gets worse for at least 2 more years before it gets better.

Stay Tuned…

SoCalMtgGuy

I am so MAD you don’t even know!!!!!!!  I don’t even know where to start.  I will just make some bullet points and talk about them.  I just want to get this post up quickly as I need to go make some money….not for myself, but for our new ‘populist’ society that is more focused on pandering to the group, than protecting the individual.

As you probably know, President Bush spoke this morning on the ‘mortgage issues’ this country is running into.  Then I had the ’pleasure’ to hear the HUD secretary speak as I was starting to type on my computer.  More on that fine bureaucrat later. 

This country has ‘lost it’.  There are no consequences for making bad decisions anymore.  Build in the flood plains and don’t buy flood insurance, don’t worry, the government (read: taxpayers) will take care of you.  Same thing applies now to housing.  Don’t read the fine print, don’t understand what you are signing, didn’t get rich with ‘no money down’ real estate, no problem.  We will create even more taxpayer funded bureaucracy by having some bureaucrats write some convoluted mortgage legislation that will dictate who gets help and who doesn’t.  Like our current tax code (we need the fair tax), this legislation will be poorly worded and have more ‘holes’ and ‘gray areas’ than the moon.  It will be rushed out to the market and it will feel ‘good’ for the politicians helping out and obviously for the people that get to keep their homes with OPM (other people’s money - IE the taxpayers).  How are you going to determine who ‘knew’ what they were doing, and those who ‘didn’t'?  I’m sure everybody will be ‘honest’ and the people that ‘knew’ they couldn’t afford their loans will step forward and take their lumps and not try to take advantage of the ’special’ government program.  Are you kidding me???

In one breath Bush says ‘no bailout’, but I guess ‘bailout’ only means ‘direct grants to homeowners’ as proposed by the likes of Hillary and her other Democratic counterparts.  Using legislation and creating special government backed loans (all backed and funded by the taxpayers) to help people refinance apparently is not bailing people out.  Reforming the tax code so that when lenders ‘write down’ the mortgage on properties that have declined in value, that won’t be taxed as income anymore. 

Quick example:  you buy 450k home.  You have trouble making payments.  You refi or negotiate with lender and the property is now worth 350k.  That 100k that the lender ‘forgave’ is currently taxable as income.  But under the proposed change, that would be a free ‘100k’.  I know that taxes are a pain (see FairTax.org) but why should somebody get a ‘free’ 100k or whatever the amount is, and not have to pay ANYTHING on it.  Again, it is another ‘reward’ for making bad financial decisions. 

I’m sorry, but listen to me VERY CLEARLY here:  THIS THING IS FAR FROM OVER.  THIS IS WAY WORSE THAN JUST ’SUBPRIME’ LOANS.  NONE OF THESE BANDAID SOLUTIONS ARE GOING TO HELP THIS PROBLEM THAT HAS BEEN CREATED.  These politicians and analysts have NO IDEA what went on the past 5-6 years and the sad thing is, they think they averted disaster. 

This was evident when the HUD Secretary Alphonso Jackson spoke on CNBC (PLEASE WATCH THIS VIDEO from CNBC).  After listenting to this guy, I was NOT impressed one bit with our government.  I read Alphonso’s biography, I was left wondering why somebody with a financial background isn’t the HUD Secretary.  He has political science undergrad, masters in education administration, and then he got his law degree at some point.  Anyway, PLEASE watch the video above.  Here are few choice quotes I got from the HUD Secretary: 

“We will do everything in our power to help those persons who didn’t read the fine print”

“We have been discussing this for months, we believe we caught this in time” 

“We got it and corrected it in time, if this had gone into 2007/2008 we would have a more extensive problem.” (we ARE in 2007 there Mr. Secretary!!)

“I still believe we are going to have a soft landing”. 

Maybe I don’t know how to read a calendar, but I am pretty darn sure that we are about 2/3 of the way through 2007!!!  So, yeah, I would say we already have an extensive problem and governement is doing what governement does best…REACTING late with a legislative, burearucratic, tax-payer funded solution.

ARGH…as I’m typing this, it just flashed up that congress is proposing a 300 million dollar bailout.

I WILL BE posting more on this topic.  These ‘experts’ and politicians are saying so many incorrect things, I don’t know where to start right now.  Either way, just think about this:  what happens when the alt-a, a-paper, and OPTION ARM loans start to default?  It is coming, it will just be later on in 2008-2009.  Mark my words…this mess is way worse than just ’subprime’.

Sorry, no bailout for Wall Street, or homeowners.  No bureaucratic legislation either.  The FREE MARKET has, and will fix this problem.  If Wall Street can’t make money from the loans, they won’t make them!!  Once this thing runs it’s course, people WILL be more responsible next time around.  PAIN has a funny way of helping people learn from their mistakes, but if there is no PAIN, there is no lesson.  Wall Street made billions for a few years there, now they need to ‘give it back’ so to speak.  AGAIN, NO BAILOUT FOR HOMEOWNERS, OR WALL STREET!

Have a nice LABOR DAY weekend.  Something to think about:  how many people that are having trouble with their mortgages will be working on Monday to help pay the bills versus just taking the day off??  I’m sure the ‘bailout’ talk is really motivating people to work hard and make their mortgage payments.

Stay tuned…it is going to be a bumpy road for the next few YEARS!

SoCalMtgGuy   

I told you it was only a matter of time until the politicians started talking BAILOUT for people that bit off more than they could chew. They can’t have it both ways (or can they). They can’t have 70% ‘home ownership’ (more like home mortgageship) on one hand, and then use taxpayer money to say that nobody loses a house on the other. The thing is, 70% of the population probably shouldn’t be owning a house, and certainly not at the prices that many of them paid. The coming ‘foreclosure boom’ is going to realign the home ownership percentages to more realistic levels and realign housing prices to levels that reflect incomes.

Creative financing, no risk assessment, and loose credit created this monster…risk assessment, tighter credit, and traditional financing (fixed rate loans paying principal) will rein it back in. If the mortgage industry and the secondary market didn’t discard risk assessment the past 5-6 years to get these ‘high risk’ people loans, they would NOT be defaulting today.

If the homeowner isn’t responsible for being able to make the payments they agreed to make, then who is? Seems that many politicians see it as the taxpayers problem. Senator Dodd feels that:

“Americans should not lose their homes, through no fault of their own.” - Senator Christopher Dodd

Apparently, biting off more than one can chew is no longer an individual problem, it is society’s problem. Who knew that the ‘leaders’ of our country were so against personal responsibility. Aside from the capital gains tax, ’society’ didn’t really benefit from the massive property appreciation, so why should society have to foot the bill for the ‘bad investments’ that were made.

Sadly, it isn’t just politicians on the national level that are screaming BAILOUT! Seems that Los Angeles City Councilman Richard Ararcon wants CITY, STATE, and FEDERAL funds to bailout CITY homeowners that cannot afford their mortgages!! Read it here if you don’t believe me. Let me rephrase that for you: some local politician wants local, state, and national tax dollars to help the people in HIS area that cannot meet the mortgage obligations they undertook as individuals. But wait…it gets better!

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.

WOW…a “state of emergency”. I thought hurricanes, earthquakes, or other natural disasters that were outside human control constituted national disasters. Not a bunch of people that were looking to ‘hit it big’ buying overpriced LA County real estate with mortgages they couldn’t afford.

“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.

Just to make sure I didn’t miss anything, I looked up the US Constitution again, and I saw NOTHING about the federal government stepping in and providing ‘emergency assistance’ to people that made poor mortgage decisions. If I missed something, would somebody please point it out to me.

“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.”

I think we better kick a several thousand home owners in the butt…not the taxpayers! They either need to learn from this experience by filing BK and going through that process, or pick up a 2nd, 3rd, or 4th job to fulfill their financial mortgage obligations. I know there are some people that had things happen out of their control (accidents, deaths, etc.) but for the people that were looking for “No Money Down Real Estate Riches”, welcome to ‘investing’. You take risks…and you reap the rewards, or suffer the consequences (until politicians step in…or at least that is the way it appears).

Now, that said, since Councilman Alarcon wants EVERYBODY in the country to pay for just the people in ‘his city’ that cannot afford their mortgages, I think that even people outside of ‘his’ district should let him know how you feel. Here is his e-mail address: Councilmember.alarcon@lacity.org. After all, he wants YOU to pay for his constituents mistakes!

Finally, I don’t know how much good it will do, but I have been informed of on online petition that is against any mortgage bailout. Here is the link if you do NOT want a government bailout of homeowners that are going into foreclosure: NO BAILOUT PETITION.

Remember, if the bailout starts, it is going to get ugly. Instead of working a little bit harder when things get tough, more people will fold and take the bailout. Let’s not forget that we still have ‘two more shoes to drop’ so to speak, so this is just the beginning of things getting ugly. You better think real hard if ‘bailout’ is the way you want to go.

Stay tuned…

SoCalMtgGuy