I have been covering the option ARM fiasco for a very long time now and as I have highlighted before, this is very much a California problem. Apparently I’m not the only one that has realized that option ARMs are a ticking time bomb just waiting to go off. None other than our own […]
I have been covering the option ARM fiasco for a very long time now and as I have highlighted before, this is very much a California problem. Apparently I’m not the only one that has realized that option ARMs are a ticking time bomb just waiting to go off. None other than our own attorney general, Jerry Brown is going after the top option ARM banks and servicers. He has a few of the same questions that we have. How in the world are banks going to deal with the coming recasts? Have banks done anything since the crisis has started in addressing these loans? Inquiring minds would like to know.
The AG has been busy in the last year. He went after toxic mortgage poster child Countrywide successfully and recently, has gone after State Street. Jerry Brown recently came on CNBC regarding State Street:
Source: Zero Hedge
If anything, the AG is one of the few people that is actually going after the crony bankers and Wall Street for their financial robbery against the U.S. We should be saluting the AG for this. Instead, CNBC with their typical pandering and cheerleading for Wall Street tries to make a mockery out of the interview:
“I don’t dispute that $56 million is a lot of money, I don’t dispute the merits of the suit but you had a big press conference, you’re coming on C….N….B….C…. all this surrounding publicity over this $56 million, what do you say to people who look at this and say this is a perfect example of the demagoguery that attorney generals [sic] use when they want to run for governor.”
This is precisely what is fundamentally wrong with the financial press. Here we have a public official who has gone after Countrywide, is going after State Street, and is now openly questioning the practice regarding option ARMs that are arguably the worst loan products ever devised and CNBC has the gall to mock him for “$56 million” because in their journalistic circles, this is a tiny amount that only the proletariat would worry about. Contrary to their comrade circles, $56 million is a lot of money plus, there is the need to stop the financial thievery that has engulfed this country. Who else is going after these institutions legally? I realize that next year is a big election year and Jerry Brown is the front leading Democrat but come on financial press, we should be seeking out folks like this and Elizabeth Warren who are actually on the side of the consumer.
So what is in the letter you ask?
As I just recently noted and the AG recognizes, most of the options ARMs are here in California. We also recognize that nothing has really been done to remedy this issue. The AG is merely asking the top 10 bank and servicers of these loans to answer what they have been doing in regards to option ARMs. They have until November 23rd to respond which is plenty of time for them to type in corporate legalese “we haven’t dun a damn thing AG!” It’ll be interesting to see what happens since it appears the AG is diverting from the White House and Wall Street plan of extend and pretend and is actually pushing toward principal reductions. In other words, something banks have been fighting against vehemently.
I appreciate the AG understanding the issue before it implodes and recognizing that this is a major issue for the state. Sure, some realtor and housing cheerleaders have been ignoring shadow inventory and these toxic mortgages but I’ll side with the AG on this one. Instead of CNBC thinking $56 million is chump change, I’ll side with people who seem to be fighting on the right side instead of shilling for Wall Street.
And if you think the actual housing insanity is done in California, you have got to get out and smell the roses. Or if you prefer, you need to get your self into a 400 square foot condo. Today we salute you Santa Monica with our Real Homes of Genius Award.
Santa Monica – The Westside Miniaturized
The coveted Westside is on the radar of many SoCal blogger readers. Many forget that SoCal is a gigantic region with over 20 million people. Some forget that in the Inland Empire, it is easy to find homes between $100,000 to $200,000 yet evidently prices haven’t collapsed in their tiny niche markets so therefore the housing correction never happened. If we look at the Westside in terms of overall SoCal sales, it is but a tiny fraction of the overall market. And in this niche online force of readers, many are secretly lusting over their piece of Santa Monica real estate. Well the wait might be over for you my friend!
I pulled this place up on Zillow and it is listed at 390 square feet (ZipRealty has it at 400 square feet). Now really, are we going to argue about 10 square feet? The only one that may have an objection to this number might be your pet cat but otherwise, we are talking a rather small location.
Officially there is no bedroom on this place. It does have 1 bathroom which is useful in a home. For $258,900 I think most of us would expect that at the very minimum. But of course, this condo has the obligatory HGTV paraphernalia:
The place has been listed on the MLS for 179 days. Now you would expect anything under $300,000 to fly off the shelf in Santa Monica but it might be hard to show that you are a certified “baller” when you bring your date back to a 400 square foot condo. In the battle of location versus size, what will come out ahead? Only in Westside would you have these kind of battles.
At least we know that we have a bathroom though:
I may not be doing this place justice. Let us read the ad:
“Amazing asking price for this charming cottage style bungalow in the heart of santa monica. Subject to lende’r approval but approval is now in final stages of full approval and is imminent!! Do not miss, second & final negotiator has established this acceptance price!! Unit overflows with light and charm,bamboo floors,new eat-in kitchen with granite counters and new cabinetry.All new bath with pedestal sink & tiled floors. Huge private outdoor patio with redwood fence.Garaged parking space.”
Huge private outdoor patio? Bamboo floors? Granite countertops? Where do I sign! One small thing of course. This is freaking 400 square feet for $258,900! You’d get more room by getting a roommate and a regular apartment. Let us assume we decide to buy this place with a FHA insured loan and 3.5 percent down:
Down payment: $9,061.50
Monthly PITI: $1,726
Now is this place worth it? You tell me. As a bachelor gig to show the “310” this might not be bad, but certainly no family is going into a 400 square foot place. The price is certainly doable for Santa Monica. Yet you have to ask whether this price will hold in the long-term.
In many other places in the country with $258,900 you’ll be getting a nice McMansion. But this is California and as we have shown with option ARMs, we do things very differently here.
Today we salute you Santa Monica with our Real Homes of Genius Award.
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Real Homes of Genius: $258,900 for a Condo in Santa Monica? One Catch. It is 400 Square Feet. Attorney General Has Eyes Set on Option ARMs.
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