Looking Back At Frenetic Foreclosure Activity In Los Angeles

July 27th, 2008 | Tags: Foreclosure

Los Angles has and is seeing frenetic foreclosure activity. The willy-nilly embracing of mortgages by the middle class is threatening recession. This question is making the rounds. In November 2007 Rev. Jesse Jackson visited the city exclusively to gauge the situation.

The senior activist looked somber in black in the porch of a house in Los Angles. He compared the foreclosure frenzy to the drowning of the Titanic and another tsunami. In November there were 2.2 facing foreclosure and 10 million more weighed down by sub-prime mortgages.

The foreclosures are harming tax collection by millions of dollars. Los Angeles is one of the worst hit areas. Jackson said that it might require a massive measure by the government to stabilize the situation – something like the Marshall Plan that bailed out Europe. He suggested initiation of something like 2% loans that will stretch to 50 years. Jackson outright blamed the predatory lenders for the duping borrowers. He claimed this to be the “biggest economic fraud our nation’s ever known.”

The truth is a cocktail of preying lenders, greedy borrowers and the market finding its own level. Whatever goes down has to fall back – that is the basic truth. Politicians, officials and experts disagree on nearly everything but they all agree that the boatloads of people are sinking. The eddy is at its worst in Los Angeles.

Foreclosures in Los Angeles, as reported in November last, show that approximately there are 150 per week. One house is slipping into foreclosure each hour according to Los Angeles Neighborhood Housing Services, a non-profit body. Los Angeles ranks second only to Cook County in the number game. Riverside and San Bernardino are the front rankers among the top ten. To make matters worse sale of house had dropped in September 2007 to an all time low since the last two decades.

The Governor of California Arnold Schwarzenegger called for a dramatic budget cut of 10%. The foreclosure rate of Los Angeles was double that of the nation. It held a fifth of all the sub-prime mortgages. The saddest part is that this ugly mess is getting worse by the da. Jon Haveman a former economist of the President’s Council of Economic Advisors had commented that the bottom had not been reached till then. . The numbers of delinquent borrowers are increasing. This will translate into more foreclosures. Huge numbers are resetting to higher niches spelling doom for days ahead.