Banks are New Homeowners in Miami

Eye on Miami reports:

In the Miami Herald editorial titled “Mortgage Crisis Stirs Regulators: Chance to mend, not break subprime market” the Herald said: "The subprime market is a good deal for many worthy borrowers." I say: wrong.

They also said: “At present, only a fifth of all subprime mortgages are at risk of default." I say: wrong again Miami Herald.

Here is why they are wrong on the first one: There was a plethora of illegal activity in Miami’s subprime that even I (a citizen) could uncover by looking at public records (see the Mortgage section in our index). People with bad credit who had no business buying a house were given 100% financing. There is too much fraud and corruption with subprimes and they actually hurt the very people the Herald thinks the subprimes help. Some people SHOULD NOT own homes. And, finally, we should not expect the government to bail out fraudulent deals and greedy people who bought multiple properties they could not afford.

On number two: As Karen Carpenter sang in the 70’s: “We’ve only just begun.” Most of the mortgages are at their low teaser rates and haven’t sky-rocketed yet. Many of the subprime people have 8% or 9% mortgages that can go up to 15%. What do you think will happen when the interest rates go up (almost double) for thousands of people (that have outrageous prepayment penalty clauses and little money invested) Miami Herald? They are going to let the property foreclose.

I would suppose the Herald is right when it says the foreclosure rates jumped 36% in August. But here is the good news...Ha, ha, ha...there is a new breed of buyers taking possession of homes: Lenders! Yes, Wells Fargo Bank, owns an 800 square foot condominium in The Palms and Deutche Bank, owns a 984 square foot condominium in Blue Lagoon (paying almost $7,000 a year in taxes). How did this happen? Why did a German Bank take possession of a one bedroom mediocre condo?

Best of luck.