In his book, Thompson's search for the American dream ends at the burned-out husk of a former nightclub, a fitting metaphor for a city that went from the fastest-growing to the most-foreclosed city in America in the space of a year. As our article and its accompanying video document, today more than 80% of Vegas mortgages are underwater, and empty or abandoned home pepper the city.
Sunshine and Stricken Suburbs
Vegas is hardly the only region whose housing sector fed on dreams. In Florida, the third-most foreclosed state, dreams have fed the area's growth ever since Ponce de Leon ventured there in search of the fountain of youth. Our piece from Florida explores a different kind of dream: an uncompleted "Italian resort themed" suburban neighborhood that's now filled with cows. In order to save on taxes in the now-unprofitable real estate venture, the area's developer had the area reclassified as farmland and moved in livestock. As for the people who live there, the swanky neighborhood they signed on for is now a barbed-wire bonanza.
And dreams continue to be deferred across the country. In Modesto, Calif., Todd Lappin documents empty streets, hastily boarded-up windows and stagnant swimming pools in the fourth most foreclosed state. With his images of rusting barbecues, overgrown yards and abandoned homes, Lappin sketches a near-apocalyptic landscape, the scattered leavings of a once-posh suburban development.
Meanwhile, a promising development in Vickery, Ga., has started transforming into a money pit. To the dismay of the area's residents, the bankruptcy of Vickery's developer and rising foreclosures have sent neighborhood fees through the roof, even as property values have tumbled. As the author notes, it's unclear if the bucolic neighborhood will ever recoup its lost property values.
Small-Town Destitution
One doesn't have to travel to a sun-kissed wonderland to find a dream that came crashing down. As David Schepp documents in "The Housing Mess Hits One New York Town Hard," Mount Vernon, a scruffy suburb of New York City has also watched its property values plummet. With a majority African-American and Hispanic populace, the working-class city was heavy targeted by subprime lenders, a factor that helps explain why prices have fallen by 37% across the city and by as much as 72% in some neighborhoods.
...statistics show that despite Countrywide's representations, a much higher percentage of borrowers did not occupy the mortgaged properties:
...Overall, 18.3% of the loans sampled had recalculated LTV ratios of more than 10% higher than was claimed in the offering materials, and 6% of the loans sampled had recalculated LTV ratios of more than 25% higher than what was claimed in the offering circular. This overvaluation affected numerous statistics in the Offering Materials...For instance, the Offerings each made representations about the percent
of loans that had LTVs higher than 90% provide the lender little value
cushion to protect against borrower default and loss upon foreclosure.
However, the AVM indicates that a much higher percentage of the loans
had LTVs higher than 90%.
The Offerings uniformly represented that none of the Mortgage Loans that collateralized the Certificates had LTV ratios greater than 100 percent, meaning that the size of the loan is greater than the value of the property. (aka: being "underwater") Loans with over 100% LTV afford the lender no equity cushion and leave the lender with inadequate collateral from the outset of a loan. Allstate's analysis has found that, despite Countrywide's representations, a substantial number of Mortgage Loans had LTVs greater than 100%, as follows:
Allstate has also analyzed the weighted average LTV of the Mortgage Loans in each pool and has found that the weighted average LTV was also overstated, because of the overstatement of individual Mortgage Loans within the pools.
All these lies, and much, much more, can be found detailed in the filing below. At the risk of cheeiness, this is just a sampling of the sampling. And it demonstrates as all those who purchased loans from CFC/BofA that were repped to be in order, will find, following sampling or loan by loan analysis, that Brian Moynihan's bank committed acts of fraud after fraud, putting not only itself, but its underwriter counsel at risk time again. In fact, if there was anything remotely close to a working legal system in the US, what happened to Lehman's Repo 105 auditor, E&Y, should promptly befall every single underwriter's counsel which is jointly liable in representing that the data set forth by the underwriter is correct. But just as importantly, it means that of the hundreds of hundreds billions in loans sold by BofA to hapless dimwits, arguably the bulk of it is now subject to putbacks, and is of far worse quality than previously expected. It also means that the GSEs: those infinite receptacles of mortgage biohazard, are lying consistently when representing the state of their own books, which are likely orders of magnitude worse than the monthly status reports will indicate.
This is just starting to get interesting.
The full Allstate filing which is a must read for everyone is presented below.
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