Yeah, the stock market is at record highs and gas is back to the low-low-low still higher than when Clinton was in office price of $2.50/gal, and we’re building a fence so I can pick lettuce for my second job instead of some undeserving Mexican, all hail the Bush Boom!

By David Streitfeld and Martin Zimmerman, Times Staff Writers
October 19, 2006

The number of Californians who are significantly behind on their mortgage payments and at risk of losing their homes to foreclosure more than doubled in the three months ended Sept. 30, providing the latest evidence of trouble in the housing market, figures released Wednesday show.

Lenders sent out 26,705 default notices — the first step toward a foreclosure — during the July-to-September period, up from 12,606 during the same quarter in 2005, according to DataQuick Information Systems.
Defaults are still well below their peak level of 59,897, which came in the first three months of 1996, as the state’s last housing slowdown was ending. But the report shows that the slumping housing market is taking a toll on more homeowners — especially those with mortgages that offer low initial payments at the cost of higher bills down the road.

“We were putting buyers in homes with loans they could not afford to sustain over the long haul,” said Bob Casagrand, a San Diego real estate agent. “If you’re a marginal buyer with an adjustable mortgage, you’re rolling the dice on the future.”

Foreclosures are rare when the housing market is strong and prices are rising. In those conditions, borrowers can usually sell their homes quickly, or they have enough equity to allow them to refinance their loans. But in another disquieting sign, DataQuick reported that 19% of the owners who went into default earlier in the year actually lost their homes to foreclosure in the third quarter, more than triple the 6% in 2005.

Don’t you just looooove the slam on Clinton, so cleverly squeezed in there. Because oh, yeah, 1996-2000 were horrible, depressed, jobless years for many Californians. When Bush causes foreclosure rates to triple, it’s “disquieting.”

I hate the SCLM so very, very much.

Anyway, let’s think about this conclusion in the piece:

Historically, we’re in a different place than we were then,” said economist Christopher Thornberg, who watched the ’90s slump unfold as a graduate student at UCLA and now has a consulting firm. On the downside, he noted, “we have never seen a run-up in housing prices like this and we’ve never seen these kinds of mortgages.”

Zhang agreed: “Back then, you put 20% down and got a 30-year fixed-rate loan. Now, we have a lot of people who got mortgages when they really shouldn’t have qualified.”

The short version: greed and an unwillingness to articulate the problem accurately got us into this mess. Greed on the part of the banking industry, which refused to accept its part in the creation of a jobs sector filled with positions that don’t pay a living wage. They still want the easy usury of the mortgage, and thus manipulated legislators to allow for more “flexible” regulations and more free ranging mortgage products. Which they sold to people who shouldn’t really be blamed too harshly for not understanding that the friendly banker telling them “it’s just like a regular mortgage, don’t worry about the fine print” was a theiving snake oil salesman.

The run up on home prices is also the fault of the mortgage industry. Once upon a time, no one in the middle class would’ve dreamed of moving into certain ’hoods or buying homes of such size. But thanks to the “flexible” mortgage product line, anyone with a halfway decent paycheck and a little gumption could qualify. And what happened next? Why, the CA homeprice wars, of course! In which people like my sister were lucky enough to pay over a half million for a bungalo that would’ve embarrassed me to live in here in the Midwest. Too bad a lot of people were unlucky, and didn’t cash out at the very height of the market like sis did. I wonder about the folks who bought their old home, did they use an ARM or similar product? Given the extremely modest nature of the home, I sincerely hope not.