Skip to comments.Welcome to subprime's ghost town
Posted on 03/29/2008 7:34:41 PM PDT by Lorianne
A year ago Irvine, Calif., was still riding high on the subprime boom; then almost overnight the industry and more than 4,000 good paying jobs vanished.___ IRVINE, Calif. (CNNMoney.com) -- The subprime mortgage meltdown has shaken the entire U.S. economy. But nowhere might the impact be as stark as Irvine, California, a planned community nestled between Los Angeles and San Diego.
A year ago at this time, Irvine was home to 18 subprime lenders, including many of the leaders in the field, such as New Century Financial and Option One. Then, in what seemed like the blink of an eye, 4,100 good-paying white collar jobs were gone, or roughly 2% of the city's work force.
And while that may not sound like a huge number of jobs lost, the ripple effects of the collapse of what was once a vibrant industry has extended far beyond the mortgage lending arena.
Irvine had become the center of the subprime industry almost by accident. As the business of writing mortgages to riskier borrowers grew rapidly in the middle of the decade, many top employees at the established subprime firms struck out on their own, setting up shop nearby.
(Excerpt) Read more at money.cnn.com ...
Here’s another mortgage mess horror story. It’s really sad.
Hi Lorianne, I lived in California and the mortgage companies and banks were giving mortgages at no money down for goodness sake. If you don’t put anything down you just can’t afford the place to begin with.
Well, IF I dropped 10K in Vegas, would you please cry me a tear?
It's not sad, it's not a mess, it's not a horror story, and it's long overdue.
I sold my place there in 06. Watching it on zillow.com is sad for the current owner, but praise God that I got out when I did.
And it will just get worse as the ultra-liberal government of California keeps driving businesses and individuals out of California, with excessive taxation and socialistic regulation.
They are fools and idiots who ALWAYS shoot the goose that lays the golden eggs -— welcome to liberal socialism.
Greed gets out of hand, and some innocent folks always suffer. Texas went through it in the late 80s - early 90s. But the subprime lenders were, generally, a bunch of bottom feeders.
“It’s not sad, it’s not a mess, it’s not a horror story, and it’s long overdue.”
Bump for the most accurate take on this.
I will add that it IS sad if hard-working Americans who play by the normal mortgage rules, have to pay for this crap.
Did I say “if”....?
I think the latest phrase making the rounds is “No bailouts for dumbasses”.
When you work, you work a week, two weeks, or more if you are in sales, with no money up front or as you go. In a way, you give your employer zero down.
I don't see why houses shouldn't be financed just as cars, fridges, aircraft or anything else.
I get a kick out of people saying they lost ‘their’ house. Unless you got title, it isn't yours, and you can not ‘lose’ something of ‘yours’ that wasn’t ‘yours’ to begin with.
Hi, I see you are from Massachusetts, Well I lived in Mass. for a long time and not one bank would ever give a loan with zero down. Geez how did you get your house ?
Big deal. You want to play then plan to win and lose.
Win big, lose big....... it is all part of the game. If you are a weak a$$ you’ll cry... and bbbbbuy gold.
No, the house was theirs. They had loan in which the house was used for collateral that they forfeited when they didn’t pay the loan.
I know, I’m splitting hairs here.
Anyways, very few banks here do traditional in house note holding. A few, but only for select customers.( Why give up prime, steady returns, eh? )
I'd say that eighty percent are done by, or end up in a mortgage company. Who has the loan often changes in a year or so.
Lastly, Mass is in a weird place right now and long term is really sick. No population growth. Zero. Also population is getting elderly. Also, home occupancy rates are declining, that is the number of people in a house. So, the near long term is looking grim. No young people, no people, who the heck buy’s these houses the next decade?
All PsOS!! I had a low opinion of real estate agents for years. Now, all that was simply confirmed. What I’m really mad about is the Fed, the U.S. taxpayer, bailing out Bear Stearns and seeing a**holes like Kudlow defending the bail out!
I know someone who works in Irvine. She said during the weeks of the New Century meltdown, you would drive by the Irvine Porsche dealer and it was flooded with lease returns. They would come in the morning and literly dozens of porsches were parked on the street in front of it and on the lot with the keys shoved in the mail slot with notes basically saying, “take it, we can’t pay for it anymore.”
I’ve witnessed this meltdown first hand as well. I work for a major US bank that is a heavy mortgage house. One of the groups I supported was the mortgage backed security broker dealer. It’s been sureal watching the whole thing unfold and that whole division crash and burn.
But when times where good, it was staggering how much money they were making and how quickly the deals were coming in.
But all based on liars loans aka alt-a and subprime toxic waste.
The only real relief would be nothing short of a constitutional amendment that would ban property taxes on a primary residence, and force the tax burden to be shared equally among renters and owners.
Anyways, the important thing is to have an economy where these people can get back in the game. Other place in the world, and the history of man, one chance one time, often for generations. Not good.
Most people come good and come through. Loans and debts are good things.
You mean we’re NOT all gonna die?? How are all the doom-pimps gonna make a living?
True in a sense, Leisler, but...we the taxpayers are paying up the kazoo for not only the bailout of Bear but for the economic downturn exacerbated by the greed/sub-prime.
the venue of Irvine in this mess is no accident
in terms of per-capita ratios (# of sub-prime mortagages per each 1,000 homes sold in last five years)
the tri-county region - Orange (where Irvine is located), and adjacent Riverside and San Bernardino counties in Mexifornia - represents one of the major centers of the sub-prime mess
Don’t wish too hard for more population, Leisler! The illegals will be flooding to MASS if they aren’t already...
You have FRmail.
What percentage of alt-a loans are still good? How about subprime?
They are here, and in the decayed, dying towns. It is one of the things that are fluffing up the demographics. We are losing young, educated young people and getting uneducated, social service eating illegals. And yet the State gov says everything is fine and the bond marked loves us. Ah, yeah, right. Much like an AIDS person says they are on a diet and being fat is bad.
The people I feel sorry for are the ones who bought houses in CA at a much inflated price, make their mortgage payments on time, do all the right things, and see the value of their homes declining rapidly. It’s really bad for people who have to sell their homes right now, due to a change or transfer in their jobs. These people will have to go to the closing (if they’re able to sell their houses) with their checkbooks in hand.
Most people...except Americans who have no business buying a home and illegal aliens who leave their homes in the middle of the night, leaving taxpayers to pick up the tab...
Sorry to hear that (that “They are here” already), but I already know that. And it’s 40 million-plus, not 12 million you hear the open borders a**holes quote so often. At least 18 million alone in CA, another 10 million in Texas...
Seems like it’d be hard to finance a house over five years.
But the buyers would, if the terms were five years at $10K a month. That’s a bit (like, say, seven large) beyond the average Houstonian homeowner.
Stockton, Ca will be one such ghost town.
Forward to the so-called mortgage crisis.
Buy it. So what if you can't afford it. It will be worth twice as much in a year, then you can flip it and get rich. It's a no-brainer.
The no-brainer part was right on.
I have little sympathy for a greedy fool who commits to a contract to buy something he can't afford in the hope that he will be able to sell it for a fat profit before the day of reckoning.
Since 95% of people with mortgages are servicing them satisfactorily,the 5% who aren't hardly rises to the level of a crisis.
No matter how much the MSM pumps it.
I was going up there regularly a year ago, and it was quite a boomtown. Every unbuilt space seemed to have construction going on. If I go there now will I see tumbleweeds blowing through the streets?
“The people I feel sorry for are the ones who bought houses in CA at a much inflated price, make their mortgage payments on time, do all the right things, and see the value of their homes declining rapidly. Its really bad for people who have to sell their homes right now, due to a change or transfer in their jobs.”
they - those that must move - are a small minority of those who meet the rest of your criteria
and they are not without options
one option is to get a renter into a five-year or longer lease on the house they need to sell
in most cases, if they get the bulk of their monthly obligation on it, then, that home and its rental income is seen by lenders as an investment and usually does not prevent them from buying another home in their new location
even when it is not seen that positively, the rental income keeps foreclosure at bay while they make whatever residential adjustments they need to in their new locale
when the market turns around, which it will, they can quit leasing it and try to sell it again
for everyone else who met your criteria, the ‘loss’ is an unrealized ‘loss’ - a paper loss - which may in fact be reversed by the time they decide to sell
One of the things I think about is square footage per person. It jas got to be way, way up there. What was considered a OK house when I was a kid is now thought of as tiny.
I used to work for New Century in their IT department.
This guy’s estimate of job losses in Irvine is way off, probably by a factor of 3.
In Orange County, there was probably 20,000+ jobs in total from the sub-prime mess.
Most people found jobs right away, however, right now, there are plenty of people with mortgage-only backgrounds who are struggling to find jobs in Orange County.
You can pick up a house in Detroit for $20,000.00.
Hell of a deal, if you don’t mind Detroit. (I mind.)
more than most realize...i don’t have exact numbers but it’s not horrible as the media portrays...
Or as horrible as some around here portray it.
exactly...it’s bad, but seriously easily over 90% or more are paying on time in many many places across the country.
Bottomline, some unscrupulous loans were made, some bad decisions by folks, some ridiculously unsound loan programs that were invested in by many and poof, bad stuff...it’s not surprising but also not a dooms day scenario...give it two years and we’re all back to a pretty normal housing market where houses are affordable and equity will grow at a more normal 3-5% in most places vs 200% in some places like AZ/CA, etc...
It’s a good old fashioned market correction as much as many many people don’t want to hear it, it’s true.
Real estate agents? Uh,I think the article is about the mortgage industry.
Don’t worry, as I am sure you can easily find one of those “set the mood” articles written by a young journalist, that will blame “greedy” real estate agents for the sky falling on your wallet.
They probably had a lot of “gloom and doomers” poor-mouthing the real estate boom. That’s what I keep reading here on FR. /sarc