The Subprime Foreclosure Crisis: How Does California Get Out?

Where can I get the first two parts of this series? Very interesting -- Lori

While all of this is great news for the those who took out Sub-Prime lending, this doesnt seem fair to those of us that have struggled to maintain good credit and took a 30 year fixed loan. I dont think its fair to bail out the people that caused the market prices to run up in the first place, by buying homes they couldnt afford in the first place. I say let the market balance itself out without government intervention.

I agree with Jason R., and would go further. A bailout is unfair also for those who stayed out of the housing bubble, i.e. those who paid rent. A bailout of anyone would send a very clear message: "If there is a bubble, jump in! Because if it goes up, you win; if it goes down, you are bailed out; and if you stay out, you either don't gain or you pay taxes for a bailout. Jump in and don't be a sucker". It is a totally unconscionable proposal. Come on, these people who took these crazy loans new the high risks! Let's stop playing victims!

Unfortunately, legislation is not the answer to the current crisis. What needs to happen is the marketplace needs to correct itself and if that means an abundance of foreclosures and subprime lenders sinking then so be it. This has been an inevitable situation since the creation of the subprime market, it has been delayed over and over again because of the constant creative mortgages being introduced to people that should not have been approved for financing in the first place. Its a cyclical marketplace, foreclosures will soar and prices of homes will plummet, thereby creating a new batch of homeowners, and prices of homes will again rise and interest rates will fall. But for right now the marketplace has got to cleanse itself and rid itself of homeowners that cannot carry their payments, rid itself of lenders that cannot survive the implosion of the market. If the government steps in, they are simply just again delaying the inevitable, the bottom line is there are people that own homes that have no business owning homes and the government will then need to foreclose on homes of the people that they bail out right now and they have no clue about the industry and it will create a worse situation.......Laissez-faire!!

I have to agree with most of the comments on this board. This does feel like a slap in the face to the fiscally responsible. Let the market correct.

A major problem is the price of homes in California is not affordable for the average family and if they buy a home, they are overextended making them easy prey for these loans. The people who sold these homes are walking away rich, the lenders are rich and now the poor saps that just wanted to have a home for their families are stuck with overpriced houses. Unfortunately it is a lesson that needs to be learned. Don't buy something unless you can afford it. If everyone stuck to this, the market would flatten out and homes would stop selling at outrageous prices.

The comments on here are judgemental and insensitive. When you admit you're human, make a mistake and then have to get what loan you can for you and your family, then see how lofty you are. If it was your mom/ brother/ daughter being foreclosed on, you're going to give them that advice? Oh, and I work for a sub prime lender.

Why should the irresponsible fools who took sub-prime loans get bailed out after the housing crash? After the dot.com crash did we bail out those people who lost in the stock market?

Oh- while you are bailing out all these so-called "victims," How about tossing to the rest of us (who actually have been scraping to save for a house....) an extra $100K??????

Lori T: Insensitive? Huh?

Common sense tells you not to get in over your head - that is....don't use credit unless you can pay it back.
Use fundamentals...save for a down ---etc.
I don't want to pay tax$ out to people who are financially illiterate.

Oh - and to answer the question - "how does CA get out?" I suppose the same way it got in....via market demands and trends. The trend is down now - so let the market correct itself!!

CAN I PLEASE HAVE A CLEAN 100-K...I WAS A GOOD BOY AND DID NOT DO ANYTHING STUPID. CAN I GET A GOOD BOY 100-K? OR IS IT JUST FOR DUMMIES?

After looking at these comments I see a lot of hard earned responsible people that from the numbers is becoming a rare thing. You should all be proud of yourself for being able to express such thoughts with out guilt. What I wish is that there were more of us looking out from that point instead of what appears to be become the majority of which will be these so called saps. I do think that along with your comments you all could share where you learned this responsability from. i remember in my 20's a younger cousin taught starting at 16 by my aunt with a checking account then credit card etc and by 21 had perfect credit and a score in the high 700. myself, i was taught that checks were there to get collectors off your back and you sometimes robbed peter to pay paul. Of course credit ment nothing to me but a way to get stuff for free cause how important was it if you had cash. and ofcourse by 22 and tons of late payments on a car loan from a good company and denial after denial convinsed me that this was a flawed teaching. And humbaly asked my younger cousin for help to learn how to do what i didn't even know was so very vital. her responsible teacher(mom) with perfect credit i later on watch become older very quickly as my uncles heart attach followed by take of of his company of 40+ years was bought out 6 months before retirement then forced to take such a cute in it just to keep it. thank Heavens they had a home to fall back on since auntie job relocated to the east coast without her and still had medicle bills and college to pay for. then the only job she seem to find was homedepote after Xerox. he got partime at an antique store and now with a helpful refinance that at the last minute with no time for mistakes or ther credit would suffer had to except a subprime loan that they could just like in the beginning get by then be more aware of peoples real goals and make sure things were covered in writting and to ask more questions about things that didntmake sense but its just a formality just sign here the clock is ticking.These were those so hard lived for to reap bennifits they were due since they did it them selves from pride and self sacrifice. and then afterwards they begin to see just how much they didn't see they never new to look for but now they due with tarnished credit jobs for teenagers ang a house that had been so close to paid off but it will be again in 15 years. if nothing else ever happens but humm my cousin will be getting married next year. to bad they just cant help like they wanted to because they didnt know they had to be looking for something that they didnt know could happened. maybe instead of being so upset that someone else might get a free ride and you dont because you were good you could be proud of yourself and share it with other because pride can be a good thing if you dont taint your own accomplishments by wanting others to learn a lesson cause its not fair. fair doesnt mean equil does it. it means that the issue or situations get what is required to allow the bennifit or outcome be the same. a person that is blind gets to bring a dog with them places a sightful person cant a dog is a dog so why is it not allowd somewhere and how does it get changed because some blind has it. only the justification changed because now it is a necessity. a c students needs more help than an a student does to pass a test but is that fare to punish an a student with less one on one becasue they know more? if you see need and desire as the same then its not fare but a person blind by the idea of hey why cant i have it just because they dont have parents why do i lose time with mine so they can be with them. becase there parents saw a need and that loss was greater than that of less time with there kid. but they could have said wow poor kid owell thats what they get for starting that fire under their bed at 2 years old, they should have thought about how dangerous fire is and then they would have parents. dramatic i know but i hope some can see what im trying to say. they have to live with that mistake or that ignorance just as you live with your pride of sacrifice and hardwork. Just hope you dont fall in the cracks someday of black and white. because like it or not there is alway a grey area. and through very hard work and lots of suffering and discapline that i wouldnt want anyone to go through but learn from seeing, we own a home on 5 acres in california and are proud of ourself and feel that we should hold the hand of others sometimes because thats what people do. i dont want to have others suffer more in achain reaction just because it was easier for them its always easier forsomeone unless nothing ever came easier for any of you than someone in your life.

I am 65 and have over 43 years in the real estate and construction industry. I saw the "crashes" '74-'76, '87-'89, and now again in '05-'07; they have the same thing in common, 500% or more increases in the Fed Rate to "control inflation" Each time the stock and bond markets went wild and the investments banks cut and ran on loan commitments to S&Ls and other lending underwriters, still paying themselves multi-million bonuses while the housing, lending, and auto industries laid off hundreds of thousands of workers. Not enough, so the energy companies raised the price of fuels (ALL)and gave themselves bigger bonuses while I waited in long lines, but Venezuela still has $0.24/ga gas!
I have done over one billion in work in the US and Japan and clearly understand the basic markets. You cannot keep this pattern up, as your children and grand children will not even expect a shot at "The American Dream". To me, if a person or spouse gets laid off, has a medical emergency, and falls "behind in their payments" in some manner due to cash flow problems, they automatically become a second class citizen. Whack goes the stupid credit rating and if they have equity in their home it now becomes inaccessible.
Be very honest, how many people do you know that have a high level of savings? Americans have equity and not savings. Note that the countries with the highest savings levels DO NOT have high property ownership (China, Japan, mid-east??) Get real, you are being victimized by credit ratings over which you have only luck based control. If a homeowner is blocked from reaching the equity in a home, especially due to reporting by his own mortgage company, how does he ever catch up. Most foreclosures involve some equity, some involve a ton of equity.

If you really believe in Laissez-Faire then look into why the Fed raised the prime rate over 500%, and where did the money go/ Wall Street is looking good!!! NOTHING in our environment, business or otherwise will survive 500% increases, except bonus programs. Write your Congressperson and ask them to preserve the American Dream for your children, obviously you missed it, especially if you buy these exchanges above advocating "Let them eat cake". No, I am not retired>

This is ridiculous, I am one of those you were financially responsible, had $100K for a down payment, and a credit score over 780, and I still was smart enough to stay out of this market, realize that overbidding to buy a house in a bad neighborhood was a bad idea. I realized that just because I was approved for $640,000 loan didn't mean I should sign for it because I would go "house poor". I knew the mortgage was out to get me and when I was left to pay the bill every month they wouldn't be there to bail me out. So what did I do, I rented and saved my money to the point where I could actually afford my mortgage. I'm still not at that point yet, but I'm not crying for help, not crying for the Gov't to give me an extra $100K so I could afford my own place. But know these idiots, and yes I say idiots that bit off more than they can chew are getting leverage. I should just go and buy a $2,000,000 mansion right now, get to the point of foreclosure and tell the Gov't to pay off my mortgage. That's basically what they are saying. Give this jackasses money and penalize the people who did not gamble. I mean when I go to Las Vegas, and lose $1000 on the craps table, I don't expect the Casino to give me my money back? Why should these people expect the Gov't to do the same? This is complete B.S. and all I'm saying is that it is time for people to write letters opposing the Gov't from helping!!!

Whoa...folks, while I agree that we should not reward stupidity, have any of you considered the impact these foreclosures will have on your community? The flow of money from the housing market impacts our jobs (whether we're in the industry or not) and our standard of living.

The increase in personal spending (stupidly because people were cashing out their equity) was spent in your store, your auto dealership, your restaurant, your coffee shop, etc...resulting in an increased demand for employees to meet the increase in sales. What happens to your job when that's taken away?

We do live in a village folks, and what impacts you - impacts me. Think about it.

I'm sitting here reading all of the comments made and realize that a lot of you don't care about those around you. You'd rather see families in the street than do what they can to keep a roof over their head. We sold our 1st house and made a bundle. Every dime of that sale went into home #2. It was scary looking for home #2, prices were so high, but we were overjoyed when we were "told" that we qualified for $550,000. My husbands credit is strong, mine challenging. Our combined income $125,000. Everything happened so fast. Our 1st house sold in 3 days on a fast escrow. We agreed on a home, a lot lower than what we were so called qualified for. Going through the paperwork we noticed the terms of our loan and got scared. I knew it had to be my fault. All the mistakes I had made when we were young and struggling. But a phone call into our mortgage person put us at ease. No worries, you will be able to refi in 2 years and not have to worry about the jump in interest. Didn't happen. Things are so bad now, getting a refi is hard, all the equity in our home is gone, and finding financing above 80% doesn't exist. What is sad is that our debt ratio isn't bad. I actually worked hard to improve my score. So I guess, according to a lot of you, we are losers. People we pay taxes too! And if some of the hard earned money I give each year to our country can help me and others out, so be it. I don't think it's right that you are judging so many and you don't know anything about what got them where they are.

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