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Welcome to subprime's ghost town
CNN Money ^ | March 28, 2008 | Chris Isidore

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 ...


TOPICS: Business/Economy; US: California
KEYWORDS: forclosures; irvine; mortage; subprime
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1 posted on 03/29/2008 7:34:46 PM PDT by Lorianne
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To: cripplecreek; AuntB

Here’s another mortgage mess horror story. It’s really sad.


2 posted on 03/29/2008 7:36:23 PM PDT by Clintonfatigued (Those in the national Republican leadership do the work of three men- Moe, Larry, and Curly.)
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To: Lorianne

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.


3 posted on 03/29/2008 7:41:02 PM PDT by mojo114
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To: Lorianne

Well, IF I dropped 10K in Vegas, would you please cry me a tear?


4 posted on 03/29/2008 7:41:59 PM PDT by Mark (Don't argue with my posts. I typed while under sniper fire..)
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To: Clintonfatigued
Here’s another mortgage mess horror story. It’s really sad.

It's not sad, it's not a mess, it's not a horror story, and it's long overdue.

5 posted on 03/29/2008 7:43:30 PM PDT by elkfersupper
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To: Lorianne

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.


6 posted on 03/29/2008 7:44:34 PM PDT by IllumiNaughtyByNature (Senator McCain, what did GWB promise you back in 2000? And you believed him? BWAHAAAAA!)
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To: Lorianne

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.


7 posted on 03/29/2008 7:45:11 PM PDT by EagleUSA
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To: Lorianne
I think I read about this when I was a kid.


8 posted on 03/29/2008 7:46:20 PM PDT by OCC
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To: Clintonfatigued
Here’s another mortgage mess horror story. It’s really sad.

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.

9 posted on 03/29/2008 7:57:52 PM PDT by PAR35
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To: elkfersupper

“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”....?


10 posted on 03/29/2008 8:01:22 PM PDT by EyeGuy
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To: EyeGuy

I think the latest phrase making the rounds is “No bailouts for dumbasses”.


11 posted on 03/29/2008 8:06:21 PM PDT by glorgau
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To: mojo114
You must not have much moder (last 1000 year ) experience in business. There is not one product or service provider that doesn't do zero down business. Either to build, or get, or establish new business, to carry old establish business, move stock piled merchandise...the list is endless.

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.

12 posted on 03/29/2008 8:10:44 PM PDT by Leisler
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To: elkfersupper
Yep.

L

13 posted on 03/29/2008 8:13:34 PM PDT by Lurker (Pimping my blog: http://lurkerslair-lurker.blogspot.com/)
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To: glorgau
What's the bailout? One guy gave, the other couldn't pay, the house he never was the owner of is taken back.

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.

14 posted on 03/29/2008 8:14:11 PM PDT by Leisler
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To: Leisler

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 ?


15 posted on 03/29/2008 8:17:27 PM PDT by mojo114
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To: Lorianne

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.


16 posted on 03/29/2008 8:21:37 PM PDT by Porterville (I hasten karmic justice through revenge.)
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To: Leisler

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.


17 posted on 03/29/2008 8:22:19 PM PDT by Hawk1976 (Free Tibet!)
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To: mojo114
I asked, about 20 years ago, one of the wealthiest men in Massachusetts about getting money. He said he hadn't, and his father handn’t been to a bank in decades. By the way, the guy was doing such business, it didn't occur to him, and he wasn't aware of financing an auto.

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?

18 posted on 03/29/2008 8:30:10 PM PDT by Leisler
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To: Lorianne

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!


19 posted on 03/29/2008 8:31:33 PM PDT by levotb
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To: Lorianne

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.


20 posted on 03/29/2008 8:32:08 PM PDT by Proud_USA_Republican (We're going to take things away from you on behalf of the common good. - Hillary Clinton)
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To: Lorianne
The only real victims of this subprime mess are all the people who paid their mortgages on time who have seen their property taxes skyrocket as a result of the inflated values of houses that the subprime loans made possible.

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.

21 posted on 03/29/2008 8:33:43 PM PDT by pnh102
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To: Hawk1976
Borrowing against home property is one of the greatest tools of wealth creation, and pretty much is only known in the West.

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.

22 posted on 03/29/2008 8:34:18 PM PDT by Leisler
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To: elkfersupper

You mean we’re NOT all gonna die?? How are all the doom-pimps gonna make a living?


23 posted on 03/29/2008 8:34:34 PM PDT by Larry Lucido (Still looking for UART at FX1050)
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To: Leisler

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.


24 posted on 03/29/2008 8:35:11 PM PDT by levotb
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To: Lorianne; All

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


25 posted on 03/29/2008 8:35:41 PM PDT by Wuli
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To: Leisler

Don’t wish too hard for more population, Leisler! The illegals will be flooding to MASS if they aren’t already...


26 posted on 03/29/2008 8:36:56 PM PDT by levotb
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To: Proud_USA_Republican
In the woods of New Hampshire, in North Carolina, the mountains of southwest Colorado, and in Nevada, I have seen the ruins of entire towns that are no more. It happens. Nothing special about it.
27 posted on 03/29/2008 8:37:48 PM PDT by Leisler
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To: Leisler

You have FRmail.


28 posted on 03/29/2008 8:38:20 PM PDT by mojo114
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To: Proud_USA_Republican
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.

What percentage of alt-a loans are still good? How about subprime?

29 posted on 03/29/2008 8:38:44 PM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: levotb

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.


30 posted on 03/29/2008 8:41:06 PM PDT by Leisler
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To: Wuli

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.


31 posted on 03/29/2008 8:48:59 PM PDT by basil (Support the Second Amendment--buy another gun today!)
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To: Leisler

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...


32 posted on 03/29/2008 8:57:17 PM PDT by levotb
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To: basil
If you look into what people pay for houses as investments, add payments, taxes, upkeep. Throw in wear and tear and style/fashion changes.....It is ugly. A lot of people I don't even bother educating them as they are believing they are making a fortune. It is kind of like what is the point in telling them you saw their daughter working a street lamp when all the time they thought she was going to business school.
33 posted on 03/29/2008 8:58:41 PM PDT by Leisler
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To: Leisler

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...


34 posted on 03/29/2008 9:00:31 PM PDT by levotb
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To: Leisler

Seems like it’d be hard to finance a house over five years.


35 posted on 03/29/2008 9:00:52 PM PDT by Xenalyte ("A cat can give birth to kittens in the oven. That don't make 'em biscuits." - Quanell X)
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To: levotb
Only government can force the failures of other parties upon us, as we all know. Since failures will always occur, and since we have socialist government into the future, we should just kind of expect to smell of the dumpings. Maybe smile, or clank our chains.
36 posted on 03/29/2008 9:01:47 PM PDT by Leisler
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To: Xenalyte
Um, it would be expensive, but by and large, I don't think the finance companies would care.
37 posted on 03/29/2008 9:04:12 PM PDT by Leisler
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To: Leisler

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.


38 posted on 03/29/2008 9:07:09 PM PDT by Xenalyte ("A cat can give birth to kittens in the oven. That don't make 'em biscuits." - Quanell X)
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To: Leisler
I have seen the ruins of entire towns that are no more. It happens. Nothing special about it.

Stockton, Ca will be one such ghost town.

39 posted on 03/29/2008 9:09:33 PM PDT by Vince Ferrer
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To: Lorianne
Remember the dot-com boom? Get in, you can't lose, the stock price will triple in a year. It's a no-brainer.

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.

Boo Hoo

40 posted on 03/29/2008 9:11:32 PM PDT by Octar
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To: Lorianne

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?


41 posted on 03/29/2008 9:12:32 PM PDT by John Jorsett (scam never sleeps)
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To: basil

“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.”

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


42 posted on 03/29/2008 9:12:37 PM PDT by Wuli
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To: Vince Ferrer

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.


43 posted on 03/29/2008 9:26:41 PM PDT by Leisler
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To: Lorianne

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.


44 posted on 03/29/2008 9:45:35 PM PDT by SoConPubbie (GOP: If you reward bad behavior all you get is more bad behavior.)
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To: Lorianne

You can pick up a house in Detroit for $20,000.00.

Hell of a deal, if you don’t mind Detroit. (I mind.)


45 posted on 03/29/2008 9:50:26 PM PDT by JRochelle (Obama & Bob the Builder, "Yes we can!")
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To: Moonman62

more than most realize...i don’t have exact numbers but it’s not horrible as the media portrays...


46 posted on 03/29/2008 10:10:56 PM PDT by phatus maximus (John 6:29...Learn it, love it, live it...)
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To: phatus maximus

Or as horrible as some around here portray it.


47 posted on 03/29/2008 10:11:46 PM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: Moonman62

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.


48 posted on 03/29/2008 10:43:40 PM PDT by phatus maximus (John 6:29...Learn it, love it, live it...)
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To: levotb

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.


49 posted on 03/29/2008 11:10:29 PM PDT by Garden Island (US out of Iraq!.....And into Iran, Syria, and Pakistan!)
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To: Lorianne

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


50 posted on 03/30/2008 6:26:38 AM PDT by jiggyboy (Ten per cent of poll respondents are either lying or insane)
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