Times Poll: Only 20% favor foreclosure moratorium

A new L.A. Times/Bloomberg poll about the economy indicates only one in five Americans support Sen. Hillary Clinton's call for a moratorium on foreclosures.

Highlights, from the LATimes: "Most Americans are planning to spend their stimulus rebate checks to pay down existing debt or add to their savings, not to fuel the kind of consumer spending that would bolster the economy, a new Los Angeles Times/Bloomberg poll has found."

On foreclosure: Asked whether they support the Clinton anti-foreclosure plan (a moratorium on foreclosures and a rate freeze) or the Obama plan (tax credits for homeowners and a fund to help borrowers refinance), the results tilt heavily toward Obama:

The question was phrased, Which proposal do you prefer?
--Moratorium on foreclosures: 20%
--Tax credits/refinancing fund: 50%
--Both equally: 3%
--Neither: 13%
--Haven't heard enough: 6%
--Don't know: 8%

Asked whether the Bush administration "has taken sufficient steps to aid the housing industry and ease the affects of the mortgage crisis," or "has not done enough," most respondents (57%) faulted the administration for not doing enough.

The bloviation part: I've complained before about polls that presuppose the government should be aiding homeowners, and then ask respondents to choose the best way to do it.  That's the problem with this poll -- it pushes respondents to pick the best government policy, rather than asking the larger question of whether the government should be intervening at all. I suspect I know the way most of you would respond on that issue.

Thoughts? Comments? Email story tips to peter.viles@latimes.com.
Photo Credit: AFP/Getty Images

Comments

[sasjeh]

Isn't the solution simple?

As a bank you make sure you have low rates for your mortgages (fixed rates over the period of the mortgage). Then when clients apply, you might check their credit history, but more importantly, they have to prove how much they earn. Then as a bank you do all the nice (honest and realistic, you do not try to nickel and dime them) calculations if they can afford the mortgage. The clients need to be capable of a decent down payment (without cheating like using credit cards etc... it just tells you that these people might actually be capable of handling money), lets say about 10-20%.

I am sure that there are more then enough people who qualify as being such a costumer.

This way, no government intervention, but also as a bank you try not to make the situation worse then is already is. Because with these rates and their lack of willingness to give out mortgages, they are actually digging their own grave (or are they deliberately making everything worse so that government will be so stupid as to help them out?).

[eternal summer]

Peter, I completely agree with you. The government, banks, real estate agents, homeowners, and people who are going into foreclosure do not care that my husband and I do not own a home. As far as I can see they are not planning anything to help me buy a home either (and if someone starts talking about raising the jumbo mortgage caps, please tell me why I would want to move my family with 2 small children from the Redondo Beach school district to somewhere "affordable" like Hawthorne, Lawndale, or Gardena.)
I still don't get it and I'm sorry if I am rehashing here, but don't you need 200K-ish salary for a 600K-ish home (6% 30-yr fixed 20 dwn)?
I am not bitter-I am happy to be living where I live, but I just don't understand who is going to be buying homes here? We talked to a RE Agent in San Clemente who was rattling off numbers from 700K-2M like it was no big deal! And we make very good money & have some money for a down payment, but no where near $120K-which is what you would need!
Can you ask one of these real estate agents or some public figure who is going to be buying real estate if we don't have prices come down?
I am so confused!

[eternal summer]

PS:
Can't we have some solution where everyone benefits?
(not just the banks & homeowners)

How about some kind of tax break for the renters?

[Steve]

One more reason that Obam awill wipe out McCain in 08. GW and his friends do not have a clue and I am a Republican. McCain is just wasting milllions and a lot peoples time.

[mbob]

P-dog

Yo, you are right. Surveys that poll which kind of poison one should choose are, shall we say, skewed.

Back to sobriety, old clothes and porridge for breakfast. Historically, the mean price of an LA area home is 2X mean LA area household income.

Getting back to we once belonged is going to involve howls of outrage. But go we shall.

[Raul]

The best way to help home owners that can not pay their mortgages is to tell them the truth, their houses are worth probably half of what they paid, if they paid $500000 they have lost $250000 plus interests in 30 years they are going to lose $750000. the solution is to walk away, they are going to have more income available to expend and enjoy their life, the sooner you do it the better. If you are too stupid to do it for your family, do it for your Country, the faster this mess is over, the faster we will get back to normal. Oh and dont do what condo blue did, this is not over, it is not even the end of the first quater......

[anon1137]

A lot of crazy bailout plans are being floated around this week. I'm betting that any plan that eventually gets congressional approval will only help 5% of bubble buyers, and even then, the plan will be tied up in the courts while those 5% get foreclosed. It will all be a waste of time - the problem is too complex for legislators to handle, and they won't care after the election.

[An aside: where in the world does the US government find the billions it is proposing to use for these plans when we're spending $500M/day to kill Iraqis, our schools can't afford pencils, and children can't get medical care??]

[IToldu2CashOut]

It makes me sick to think the goverment is going to use tax payer money to bail out the crooks and morons who caused this mess. If the government wants to help it should stream line the process of bankruptcy and council people on how to get out of their home so prices can drop and someone who was responsible can buy the house. Prolonging the crisis or giving away houses while legitimate home owners and renters pay the bill is not the answer. Please write your senators folks. Don't fall for the line that everyones neighborhood will turn into foreclosed on hoovervilles. People are eager to buy again once prices drop to affordable levels (20-50%). Houses won't stay empty for long once prices drop. The question is will that take a year or five?

[buz]

Hillary is a devout socialist so of course her solution to EVERY problem will be based on big government involvement. To the hammer everything looks like a nail and gets the same response.

[Susan]

"I suspect I know the way most of you would respond on that issue."

Peter, are we getting that predictable? :)

[Laker]

Hands off the market.
Supply will meet demand (affordability). Thus prices of homes will converge to their mean.
I want to note something very important. Every asset bubble has a bull trap - the price is falling down and suddenly, it peaks up a little for some short time, and after that the big major crash comes.
If you follow the Nasdaq in 2001, the LA housing boom-bust of 1989-1991, and many other examples of asset bubble, you will see such a bull trap. Cut this short, Right now, we have NOT yet seen it, and we shall see it. For those who want to know where/when is the bottom, you need to wait for that bull trap and then see the nasty free fall that will follow. I know some of you guys that are looking to buy will fail to recognize it, and will jump on board. I warn you, and i would say "I told you so...."
whenever i see the bull trap, i will know that the major down is coming and will "get" myself ready for the bottoming, This summer has some opportunity to become bull trap - we shall see.

[Willie]

You know what is scary? There is no way out of this mess, unless, the banks are willing to forgive 1/2 the loan and then refinance the balance without interest. I don't see this happening, so all of this talk about bailouts is bull!

[Fourth Generation]

Did we learn anything from Japan meltdown? Listen thefaster we correct the housing price the faster the economy will readjust itself. Let's get the pain over with fast.

[Maggie Knowles]

"The bloviation part: I've complained before about polls that presuppose the government should be aiding homeowners, and then ask respondents to choose the best way to do it. That's the problem with this poll -- it pushes respondents to pick the best government policy, rather than asking the larger question of whether the government should be intervening at all. I suspect I know the way most of you would respond on that issue."

Peter here's an even LARGER question - how about the government intervening when coporate lobbyists try get legislation passed that dismantles the consumer protections that used to be in place to prevent predatory lending practices? Nothing wrong with that kind of intervention is there?

[Roger Moore]

eternal summer,

This problem is called "creeping normalcy" or, more cruelly, "boiling a frog". It happens when systems get out of whack a little bit at a time. Each step is small enough that people don't pay too much attention, and they get used to it. But the cumulative effect is big, so it's only when you take a step back and look at the big picture that you realize how bad things have gotten.

A classic example is LA traffic. Traffic this year isn't much worse than it was last year, and last year wasn't much worse than the year before. We get used to it and accept that it's going to take forever to get to work. It's only when you sit back and remember traffic from 10 or more years ago that you realize just how bad things have gotten.

House prices have undergone a somewhat similar process. They grew by bigger jumps, but the process took long enough that people have gotten used to it. Prices are so out of touch with reality that we get fooled. People ask for $400K for dumps in bad neighborhoods and our initial reaction is that it's reasonable because we're used to seeing those places listed at $500K. It's only when you stop to run the math and realize that $400K isn't remotely affordable to anyone who lives in that neighborhood, or look at the history and see that the same house sold for $150K 6 years ago, that you realize how insane the market really is.

I suspect that realtors are especially vulnerable for two reasons. One is that they have a vested interest in high prices, since high prices drive up their commissions. The other is that they're immersed in the business. They see those crazy prices- and houses actually selling despite the price- day in and day out. They're working in la-la land, so it's no surprise that they're out of touch with reality.

[puckhead]

Eternal Summer, you choose to live in one of the most expensive parts of SoCal (the SouthBay) and you complain that you can’t afford a house????? There are lots of communities outside of the SouthBay that has good schools where houses are much much much more affordable. Simi Valley and Valencia have very good schools and houses at ½ the price of the SouthBay. Parts of Cypress and Fullerton have very good schools also and lower housing prices. Closer to the SouthBay, Torrance has good schools also. Many people make it seem like there are no housing options other than their ideal location or a crack house. There’s many options in between in SoCal.

[Rob]

I am an 18 - 35 YO delusional male product of my liberal arts college. I vote with my heart, and wear it on my sleeve. Peace for all, because I know deep down Terrorist just want a big hug. Hope is the cause and Hope is future. Some day you will all understand and think the way I do...OBAMA, OBAMA!

-XOXOXO

[JohnnyB]

We never really hear the basic realization from these, our "leaders", that homes are WAY, WAY over-priced. The result of a fed, banking/lending and wall street induced bubble. It's always about rate resets and now recently declining values.

Forget moratoriums, tax payer bailouts and freezes... we all know that's not addressing the price issue, other than to prop them up for a little longer (which doesn’t help the homeowner!). Glad to see most are not buying into Clinton's “overwhelming debt preservation trap” proposals.

Obama has a much better approach, but his plan for re-financing should also include the crucial home price RE-APPRAISAL. Without these re-appraisals… along with re-assessing the basic underwriting standards underpinning the contract (income, etc.)… the viability of that continued home ownership is in jeopardy and nothing is really solved.

Everyone in our leadership needs to come to terms with the fact that these home values were artificially raised in a sophisticated scheme that set up the environment/incentives in which this would inevitably occur. They need to communicate it truthfully to the American people. Those who follow this issue beyond their own door already know this to be true.

The curtain has been pulled back on that scheme/environment.

SHORT TERM:

Let folks that cannot continue paying - and who were not properly vetted to begin with - out of their mortgage… without penalty (on the credit or in bankruptcy). They can then transition back to renting (even in another single family dwelling). That actually HELPS them. Then put the home back on the market with a re-appraisal and when someone who can afford it (with proper underwriting) buys it, we have price discovery.

We cannot base our strategy on wrenching and squeezing small drops of blood from a field of dried out stones even as those stones are sinking into the ground.

Let folks that can continue paying – if they can get the principle re-appraised and mortgage re-financed – the opportunity to do so. This is where a helpful, closely accounted for (mostly industry financed) FUND actually makes sense.

The price discovery can be facilitated in a more transparent, orderly manner or it can be manipulated in a veiled, hap-hazard and ultimately ineffective manner.

Or, we can re-affirm the banks/wall street scheme of bundling our country’s mortgages into a complicated morass of securitized derivatives, leveraged to drive up values, by throwing up our hands and asking THEM to save us on their own and with more of the same...

[dave]

The merits or lack thereof aside, one has to wonder if a national foreclosure moratorium would even be legal. A foreclosure is, essentially, a judicial proceeding. It's a function of local courts -- a debt grantor initiates a civil proceeding to satisfy a defaulted debt. That's outside of the federal government's purview. Declaring a foreclosure moratorium is like declaring a moratorium on jury duty -- it sounds interesting, but the legalities are dubious at best.

[firesale]

RAUL is correct when he writes:

"The best way to help home owners that can not pay their mortgages is to tell them the truth, their houses are worth probably half of what they paid, if they paid $500000 they have lost $250000 plus interests in 30 years they are going to lose $750000. the solution is to walk away, they are going to have more income available to expend and enjoy their life, the sooner you do it the better. If you are too stupid to do it for your family, do it for your Country, the faster this mess is over, the faster we will get back to normal. Oh and dont do what condo blue did, this is not over, it is not even the end of the first quater......"

BUT IT NEEDS TO GO FURTHER... ALL THOSE WHO
WALK AWAY NOW NEED TO BE HIT WITH A SPECIAL
DECADE (OR LONGER) 500 POINT DROP ON THEIR
CREDIT SCORES SO THAT THESE IRRESPONSIBLE
MORONS WON'T BE ABLE TO PURCHASE WHEN THE
BOTTOM IS REACHED AND BUYING AT SANE PRICES RESUMES.

LET'EM BURN!!!... LET'EM RENT!!!

[I Am Not Dead, So This Must Be LA]

Obviously we all agree that prices must come down. What I don't understand is why some people think that this has anything to do with government. Unless the government has the ability to increase our pay by 20-30% or lower the prices by that much NOW, it is more the responsibility of the Real Estate industry as a whole to decide how long they want this "crisis" to last. If the industry would just reduce the prices to what they know people could afford and not worry about the loss (they will lose it anyway, it's just a matter of how long they are willing to wait), people would buy, inventory would go down, prices would start to creep up again (although probably not at the insane rate of 2001-2006) and then they would have the liquidity they so desperately need. As an added bonus, since people were able to buy a house, they would start SPENDING again. But I guess that is too simplistic a solution for the industry to act upon and it is easier to blame Bush and the rest of government for not saving people from themselves. It should not be surprising I guess since we are the generation that had to put warnings on hair dryers so that people would not use it in the shower!

[Laker]

Rob: "Terrorist just want a big hug....."

Rob, I guess you are smoking better stuff than you pal Lawrence Yun....
Big hug...they will kill you, you mother, your kids, and sadly even their kids, since they have no respect to life. non what so ever.