'60 Minutes' visits 'Foreclosure Capital'
By Jessica Swesey, Monday, January 28, 2008.Bookmarking Sites
"60 Minutes" on Sunday reached into the housing downturn and produced a 15-minute segment on the housing downturn and foreclosure crisis.
You can view the video segment here. ("House of Cards")
Some interesting bits from this piece:
1. The Valdez family -- about halfway through -- look at the prospects of paying a higher mortgage payment on a house no longer worth the amount of the loan. The homeowners, who face a substantial monthly payment spike, consider whether it's better for them to walk away at this point. We touched on this theme last week (See, "Know when to fold 'em, Know when to walk away") -- that somehow the stigma of going into foreclosure isn't what it used to be and is changing the attitudes of homeowners in trouble.
2. One of the sources 60 Minutes interviewed discusses the symptoms of greed that were at play not only from the lenders, but also from borrowers. Borrowers in some cases took out loans for more than 100 percent of the value of the homes they were purchasing, he said. When this happens and borrowers end up in situations where they have nothing vested in their homes and no equity to gain, this fuels more of the "walk away now" attitude that may be spreading throughout troubled neighborhoods (See #1.)
3. The "Repo Bus" in Stockton, Calif., a city now known as the "Foreclosure Capital" of the U.S., was launched as a way to take groups of bargain-hunter buyers around the troubled city to view bank-owned properties. A Stockton agent interviewed for the segment said he believes the foreclosure cycle is only about 40 percent through at this point and that the city still has a long ways to go.
The picture in this blog post was taken in early January in Stockton. The home marketed by Collins Realty, at 9057 Barbaresco Circle, is an REO property that sold for $550,000 in July 2006, again for $365,500 in October 2007, and now carries a list price of $379,990.
For more on the crisis in Stockton and an inside look at how real estate agents there are working the market, see the Inman News three-part special report, "REOs: An Insider's View of Bank-Owned Properties." (Available to members)
Readers: Is it this bad in your markets?
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Submitted by Anonymous on January 28, 2008 - 10:47pm.
I feel bad for those who got into trouble do to circumstances beyong their control (ie. lost job, health crisis etc.). But a good portion of these people gambled and lost. Now they walk away and we end up paying for their greed and/or stupidity.
Submitted by Anonymous on January 29, 2008 - 8:17am.
The program sensationalized the market for sure. But isn't that what sells tv advertising? The bottom line reality is too many people that should be in the "rental" category bought homes they couldn't afford. Stay positive real estate colleagues- things will turn around eventually!
Submitted by Anonymous on January 29, 2008 - 9:14am.
Sacramento's Natomas and Elk Grove in particular the Franklin Reserve area south of Elk Grove Boulevard (95757) make Stockton look like a "day in the sun" or a "walk in the park".
95624 1590
95757 881
95758 726
Total 3197 - Approximately 50,000 housing units.
http://www.realtytrac.com/MapSearch/MapSearch/MapSearch.aspx?criteriaTyp...
Natomas 95835 996
http://www.realtytrac.com/MapSearch/MapSearch/MapSearch.aspx?criteriaTyp...
Westlake (western part of 95835) 242
Submitted by Anonymous on January 29, 2008 - 10:05am.
SacramentoCrash - Note that RealtyTrac does not track the outcome of foreclosure actions - they simply publish foreclosure notices. As such the numbers you mention are less accurate than those used by 60 Minutes. That said the areas of Sacramento you mention are certainly experiencing significant activity.
Submitted by Anonymous on January 29, 2008 - 12:03pm.
Jessica,
This is really sad for so many people in so many ways. I have talked with other agents in such areas and complete neighborhoods are being ruined. Hopefully we can pull out of this sooner than later.
Luckily for us here in the Santa Barbara and Montecito CA areas, we don't really see too much of this...and for sure not on any level so drastic.
take care
Submitted by Anonymous on January 29, 2008 - 2:08pm.
I agree with the last poster - it's truly a tragedy for the individuals who are losing their homes and I, too, hope the situation can be rectified.
I apologize profusely if this has already been addressed on the Inman blog, but along these lines, The National Association of Realtors is taking a drubbing from AdAge, which is chastizing the NAR for its recent ad campaign. The writer says the campaign is an example of Realtors' self-promotion at the expense of clients and part of the reason today's problems exist.
Bob Garfield of AdAge:
“The campaign, in other words, is a perfect miniature of the inherent conflict of interest Realtors wallow in, like pigs in the sty, all the time. They have no incentive to perform due diligence for buyers. They don’t even have incentive to protect their clients, the sellers. Their only interest is in closing the sale. Seven percent of $500,000 is $35,000, no matter who else takes a bath.”
Submitted by Anonymous on January 29, 2008 - 3:19pm.
Not all home buyers took out stated income loans for their home purchase. Greed spurred on this home buying frenzing. I actually was getting ready to build a home but when the mortgage broker, I contacted only wanted to sell me a stated income loan with an adjustable rate and I said No! I never heard from him again. Guess he went on to greener pastures. It appears some necessary real estate lending regulations are sadly missing.
Submitted by Anonymous on January 31, 2008 - 9:47am.
It's very sad to see that people are loosing their homes base an unfair information from the lenders or their mortgage brokers. Their only interest is in closing the sale. I would like to see a non-profit organization with good suggestions an how to addressed this situation. The American-Dream is no longer a dream is a nightmare, and somebody has to be blame for it.
Submitted by Anonymous on February 1, 2008 - 10:07am.
Off-topic, but regarding Bob Garfield's AdAge quote, sticks and stones! Any agent will gladly explain how the agency representation and the cooperative brokerage system (the basis of the MLS) works. Too bad there are still folks out there who'd rather rant in ignorance than learn the facts. As another writer commented a while back, "Yet another person from outside the industry commenting on fees they don't understand." Gotta go, there's a mud-hole with my name on it to wallow in. Oops, that will have to wait. A client needs my help, first.