The other Bernanke headline: 2 million vacant homes

More headlines from Fed chairman Ben Bernanke's speech today:

--At the end of 2007, there were "more than 2 million" vacant, unsold homes in the United States. What are those houses doing? Bernanke says they are "putting further pressure on house prices and housing construction."

--What a foreclosure costs: "A recent estimate based on sub-prime mortgages foreclosed in the fourth quarter of 2007 indicated that total losses exceeded 50 percent of the principal balance, with legal, sales, and maintenance expenses alone amounting to more than 10 percent of principal."

--What's happening to sub-prime borrowers: "We estimate that the interest rate on a typical subprime ARM scheduled to reset in the current quarter will increase from just above 8 percent to about 9-1/4 percent..."

--One more thing: If you're near a radio between 1 p.m. and 2 p.m., lock it in to 1070 AM -- I did a quick interview today with my favorite radio show in L.A., the  KNX Business Hour with Frank Motek.

Thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: EPA via LATimes.

Comments

[lefty]

well guys, you can get 40% off on a house in a place you don't want to live! lol hey it 's time to jump into metro L.A.!! don't settle for anything less, you know it's the best! here's a shout-out to all you people who moved away and want to come back!

[MyLessThanPrimeBeef]

Lefty, my files show that he's a known member of 'LA First' People, or LAF People.

Everytime I see a LAF, I can't help buy laugh.

[fezco]

Good Job Peter.....
Your quick interview sounded great with Frank.
Cheers

[Maggie Knowles]

RE: KNX - heard your interview - it's great to hear someone say that we need realistic ways to deal with these problems, as you did in your interview. As I said in a previous comment, it's great that someone like Bernanke is presenting a solution that can actually work and it doesn't involve a government bailout. It's worked out between lenders and borrowers. I would just add that borrowers can be made responsible to pay back the difference if they ever sell the home at a profit.

[Truth2Pwr]

For once I agree with Bush. There is nothing to be done here except put in some earplugs to muffle the squealing. Simply put, Humpty Dumpty ain't getting put back together again. Savvy homeowners don't want to be rescued from foreclosure on their freefalling "investment in their future". If they're smart they're gonna "walk away now" and leave the banks holding the bag. Banks on the other hand would rather suffer the foreclosure wave than set a dangerous precedent by significantly altering the terms of legally binding agreements. Bottom line, there is no solution. There's gonna be a lot of posturing for posturing 's sake and plenty of bandaids applied on the way down but in the end nothing's gonna stop the bloodbath.

[MyLessThanPrimeBeef]

I personally think that if you are on a sinking Titantic, it is un-ethical for the captain to offer you 50% discount to stay in your steerage cabin or even upgrade you to one with ocean view rather than to confront the inconvenient truth and try to put as many people, leaving their valuables behind, as he or she can and let them float away, as far away from the disaster as they can.

[Raul]

That is what we are talking about, it does not matter what the Banks, the Federal Reserve, the Goverment (as long as we the Taxpayers do not pay for it), or any one else does..... the house prices are going down, and they are going to stay down for a long ....long time. If we are pacient, and we know we have some experience in waiting, the banks and sellers will eventually beg you to buy those houses at ridiculous low prices, in metro LA very soon.

[Tim]

It is very important to let the market work.

Say No to government bail-outs.

The banks are saying no to every shortsale I hear about.

Not worth your time, do not listen to any re agent that says it works!!

[Sam]

Amazing at how Bernanke is asking lenders to reduce the principal amounts on the loans and let people get a way with the unfairness of this situation. What about the people who are paying their mortgages and have followed the rules. What about them, can they request that the principal be reduced on their loans?

http://leadingrich.com/2008/03/04/
bernanke-tells-lenders-to-write-down-loans/

[Susan]

Let's not forget Bernanke is asking lenders to forgive some of the principle of troubled borrowers.

Just about every feature of these bailout plans have applied yet more of the same remedy of what got us in trouble in the first place.

Yet another slap in the face to those who have paid or are paying the full principle on their homes.

[ILuvLA]

"At the end of 2007, there were "more than 2 million" vacant, unsold homes in the United States."

And landlords think that the sub-prime/mortgage/whatever crisis means that they can raise rents? Smoked much crack lately?

[MyLessThanPrimeBeef]

Raul, you're right. Be patient. Cash is king. Cash will be king. Save, save, save and save some more. Instead of shopping, navel gaze. No even for planet saving hybrids, don't buy them - I suggest skipping sex instead, for it reduces heavy breathing, which is another major cuase of carbon dioxide emision. Navel gaze. Reduce your heartbeat. Don't get excited.

[the problemwithcaring]

I personally think that if you are on a sinking Titantic, it is un-ethical for the captain to offer you 50% discount to stay in your steerage cabin or even upgrade you to one with ocean view rather than to confront the inconvenient truth and try to put as many people, leaving their valuables behind, as he or she can and let them float away, as far away from the disaster as they can.

Posted by: MyLessThanPrimeBeef |

Comments like this are why I read this blog.

Also, the entire speech had an air of fantasy again - like the one he gave last summer claiming the housing correction was "contained" - as not once did he even admit the existence of a "nonprime" distressed borrowers.

In this latest rendition of American Fairy Tales, only subprime borrowers are finding themselves underwater, uable to refinance, and unable to sell or buy a house.

What kinda speeches will he be giving in 2009-11 to the 75% of people making the 1% negative amortization payment on their pick-a-pay?

[A Scanner Darkly]

We're getting precariously close to the #of PIP's (People In Prison) equalling VH's (Vacant Houses).

[Sean]

Here's an idea - PAY BACK WHAT YOU BORROW!

This whole mess is the result of irresponsible people who took out mortgages they could not afford to pay off. They gambled and figured their home would go up in price and they could refinance. They were wrong.

They deserve to learn their lesson the hard way. They should have to leave their home, rent a place and regroup.

[Geek Seek]

I still don't think we're getting at the root of the issues. Loans are still being bundled and sold (don't know in what quantities, though. Anyone?). This makes it our problem. If the banks are forced to assume the risks on these loans themselves, they will self-regulate and do the proper underwriting.

If they're allowed to pass them on to wall street, who then passes them on to "investors," there's too much opportunity for the built-in translucency to cause pain to the taxpayers. One bank decides to make bad loans? Bank then doesn't get paid back and bank then fixes itself or goes out of business. It is then *not* our problem. Right?

Again, this isn't just about home loans... this needs to be about cars, and credit cards, and anything else that can be securitized and derivatized. If we need to depend on Moody's to tell us what can be trusted and what can't, we're in a heap of trouble.

[LA in my rear view mirror]

Sean: Where to start?

Would love to pay it all back. Could then; can't now. But buyer and lender entered into a contract that said "if you can't pay back what you borrowed, we'll take the house back and call it even. What part of that don't you understand? We can't; they are. Simple enough.

We left it. We're renting and regrouping. So glad to hear you never guessed wrong. Happy now, Mr. Pompous?

[dave]

I don't really understand it all, but I'm told this so called bailout could eventually come at tax payer expense. I live in a small very modest home and have seen many large impressive homes going up for several years. We have often wondered how people aford it. Wish I'd got one too.