Following years of big profits for bankers and home builders in this state, one-fifth of all outstanding U.S. mortgages by dollar value — and a higher percentage of risky loans — are written on homes here. Of the 25 metropolitan areas with the largest home-price declines in the past 12 months, 16 are in the state, according to Zillow.com, a real-estate research Web site.
Those woes weigh on the financial system. Though California represents about 12% of the nation’s population, its homes account for 34% of the loans in a typical mortgage-backed security, according to Fitch Ratings. “California doesn’t have a Wall Street problem. Wall Street has a California problem,” says Christopher Thornberg, principal at Los-Angeles based Beacon Economics and member of the California Controller’s Council of Economic Advisors.
“Ms. Pedroza figured that with her husband bringing home $3,200 a month as a house painter, the family could afford the monthly mortgage payment of about $2,000.” Groan! Who in their right mind would sign up to a monthly mortgage payment of $2,000 with an income of $3,200? What were they thinking? And the lender who made this loan was totally irresponsible. Now the markets have fallen and we have all suffered losses in our home values as well as retirement savings. Somebody should go to jail over this.
Yes, those who ok’d these predatory loans SHOULD be jailed. I know several mortgage officers who lost jobs because they refused to join in the shark frenzy of these past few years. They didn’t want to issue mortgages, but had tremendous pressure applied from supervisors to do so. Why? Because the banks/brokers were selling them up the chain, ‘bundling’ them into ‘insured’ derivatives, and then trading them on the totally unregulated credit swap markets. It was a fiasco, and the top 1% (you remember them, the ones that now control 23% of US income, the worst gap since 1928) profited. On top of that, the Bushies made sure that 1% got a fat tax break, while the wages of the middle class have actually stood still since 2000. And now today Greenspan tells Congress he “sees a flaw in the free market,” he “shouldn’t have trusted the banks” to NOT be greedy?!?!? HE and HIS won’t suffer, he has his fat government pension and a wealthy wife! HE SHOULD BE JAILED!
Greenspan should be brought here to Los Banos and be forced to listen to those families who were hurt so badly because of his policies. In a city of 34,000, there are approximately 1,200 homes which are abandoned, in foreclosure, or at risk of foreclosure, and some of those families are now homeless.
Some of the comments above are signs on what kind of “Nanny-State” or perhaps even more so “Nanny-Culture” the US has become. ALL where in on this on both sides of the table! But I guess it is either the total lack of modern history knowledge and/or just lack of coomon economical sense, on both sides, that has led to this tradgedy. People have lost their homes and mortage officers their jobs and I guess that is punishment enough for their lack of knowledge and reality. Perhaps all ought to be jailed for sheer stupidity!!