The Voice of San Diego reports on the effect of exotic financing on homeowners in San Diego. Excellent discussion with a borrower about her experience as well as quotes from mortgage industry members.
I do think that Julie Haas, the option rate mortgagee, miscalculated her worst case scenario. I think anyone buying real estate in the last three years should have factored in a 25% market decline into their numbers to see if they would still be happy over the medium to long term.
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Bennett's story is important and the message is that it's a trap! Potential victim Haas is an intelligent scientist, but she may just be paying a mortgage on her San Diego condo for decades. The system expects somebody to actually pay off the principle on all those loans. So as house prices fall over the next few years, mobility will drastically reduce. This isn't going to be pretty.
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