14% of homeowners in danger of foreclosure

posted at 12:15 pm on November 20, 2009 by Ed Morrissey

Yesterday, the Washington Post reported an “unexpected” decline in new-housing starts, a drop of 10% from September to October, when analysts — and the White House — expected the number to rise.  Today, the Post again reports on bad news in housing, which will likely depress new housing starts even further.   The number of homeowners in trouble on their mortgage rose to 14% in the third quarter, the highest level since Mortgage Bankers Association began conducting the survey in 1972 — and they expect it to get worse:

More than 14 percent of borrowers were in trouble on their mortgage during the third quarter, a new record, according to an industry survey released Thursday, which also suggests that the foreclosure rate is likely not to peak until next year as unemployment rates continue to rise.

Unemployment remains a big driver of the problem, according to the Mortgage Bankers Association, which conducts the survey. Those with delinquent loans now include a growing portion of people traditionally considered creditworthy and people whose mortgages are insured by the Federal Housing Administration. …

About 9.6 percent of borrowers were delinquent on their mortgage during the third quarter, according to the survey, and another 4.5 percent more were somewhere in the foreclosure process. Overall, about 14 percent of mortgage loans or 7.4 million households were delinquent or in the foreclosure process during the quarter, according to the group.

And unemployment has not yet peaked.  Joe Biden’s chief economic adviser told CBS earlier this month that he doesn’t expect to see positive job creation numbers until the third quarter of 2010, which means unemployment will rise until at least mid-summer.  As more people get thrown out of work, more mortgages will go into risk of default.

Furthermore, the programs that the White House has in place don’t address this situation.  The Obama administration has a program that renegotiates loans to lower the payments, but that assumes that the homeowner can make those payments at all.  The unemployed will not qualify for refinancing, as it won’t help them with their basic problem of insufficient income.  The program was designed for people who got in a little over their heads, not for those who can’t make any reasonable payments at all.

As foreclosures rise — and they will, based on this data — it will suppress new-home sales.  Foreclosures lower home values and keep people from moving into new homes when they cannot get their investment back on their current homes.  Also, the inventory in the foreclosure market will make new homes less attractive, and therefore will keep new starts lower.

Even a drop in the unemployment rate won’t stop foreclosures from hitting peaks now.  The unemployment rate has gone too high and the number of mortgages in danger too many to keep them from snowballing.  The main failure won’t be the mortgage-renegotiation program but Porkulus, which was supposed to prevent this outcome by keeping unemployment from hitting 8%.  How many mortgages could have been rescued for the $787 billion Obama spent on his failed stimulus package?  Assuming an average principal of $300,000, it comes to 2.623 million mortgages paid in full, or ten times that number to pay 10% of the principal in exchange for keeping homes out of foreclosure for a significant period of time.  That still would have been bad policy for a number of reasons, but it would have had more positive impact on the American economy than Porkulus did.


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Next year is looking really good for home buyers! Prices in North County San Diego are well off their highs and headed lower!

Theworldisnotenough on November 20, 2009 at 12:20 PM

The really scary thing is that refinancing rates can’t really go any lower. Until unemployment recovers the percentage of home owners behind schedule is only going to rise.

And the new home buyer tax credit encouraging people who maybe shouldn’t be buying houses to jump in isn’t helping, either.

BadgerHawk on November 20, 2009 at 12:21 PM

Why are the banks making loans? Why?

WashJeff on November 20, 2009 at 12:21 PM

This is really good news in disguise.

/troll

mankai on November 20, 2009 at 12:22 PM

Nah. Real estate agents say housing will be up 18% next year. I trust a house salesman to tell me the truth. Better buy now before you’re priced out forever, they’re not making any more land you know. And better get that $8K tax credit too. After all, overpaying $200K for a house that will be 1/2 price in 2-3 years is worth getting $8000 Obama bucks.

angryed on November 20, 2009 at 12:22 PM

Why are the banks NOT making loans? Why?

WashJeff on November 20, 2009 at 12:21 PM

Too much coffee got spilled this morning.

WashJeff on November 20, 2009 at 12:22 PM

It is an order of magnitude worse than this report indicates according to a real estate agent we have dealings with. He has been in the business for 40+ years and he is worried about even having a job come next spring.

Johnnyreb on November 20, 2009 at 12:23 PM

The recovery is here! /s

AUINSC on November 20, 2009 at 12:23 PM

We need that “stimulus vs. no stimulus” unemployment chart, Ed.

Red Cloud on November 20, 2009 at 12:23 PM

Dude, this is awesome news for this would-be-first-time-home-owner.

Trent1289 on November 20, 2009 at 12:23 PM

There’s a coming crisis in commercial real estate as well.

This will not end well.

MarkTheGreat on November 20, 2009 at 12:24 PM

The good news is that local governments do not take foreclosure sales into account when assessing my house. Awesome!!!!! But, if I tried to sell my house, I would have to compete with foreclosures to make the sale. Thank you government!

WashJeff on November 20, 2009 at 12:24 PM

It’s simple. House prices have traditionally been 3X income. In 2005/2006 prices got to 5, 6, even 10X income in some places like SoCal, Las Vegas, Miami.

Right now prices are still above 3X in most of the country. And until we get back to the 3X historical average, all the tax credits in the world won’t stop the slide. You might as well ask that water stop flowing downhill.

angryed on November 20, 2009 at 12:24 PM

The economy has recovered

- Bleeds Blue

rbj on November 20, 2009 at 12:24 PM

Has this been verified by Joe Biden? I don’t believe it until Smokin’ Joe has given this his blessing.

Cybergeezer on November 20, 2009 at 12:25 PM

Before we get all the knee jerk reactions from people saying others should not have bought these houses think of this…
If you have a house built, and you hire an architect to design and build that house, and you hire a contractor to build that house…and that house, after moving in, collapses because of poor design and work. Do you blame the home owner for relying on their experts? Who is at fault?
We “hired” experts to keep our economy strong, we “hired” experts to not build bad policy, we “hired” experts to make sure that financial institutions were not only following laws, but those complex laws were reasonable.
That did not happen…our economic architects and our political contractors failed miserably, placing ordinary, responsible, law abiding, honest, citizens in a financial predicament that was out of there control…but fully in the control (and promises) of our leaders.
Sorry, but the people voted these goof balls into office, and these experts blew it…so they have to bail out the honest citizens that were conned.

right2bright on November 20, 2009 at 12:25 PM

Why are the banks NOT making loans? Why?

WashJeff on November 20, 2009 at 12:21 PM

Banks will lend to credit worthy borrowers. But banks are in much worse shape then they or the government will let on and they have not realized the full losses from real estate. Since they need to hold on to cash credit is much tighter and lending standards much higher.

Theworldisnotenough on November 20, 2009 at 12:25 PM

In CA, the Banks are still making short sells impossible. My Realtor friends says next year, the properties will hit the market.

If you have money, that’s when to buy. They’ll be a dime a dozen.

AnninCA on November 20, 2009 at 12:26 PM

right2bright on November 20, 2009 at 12:25 PM

I could sue the builder. I cannot sue my government. I can only buy vaseline at Costco.

WashJeff on November 20, 2009 at 12:27 PM

right2bright on November 20, 2009 at 12:25 PM

Oh puuhhlzeee. People wanted to get in on the housing gravy train and behaved recklessly. When you make $50K and buy a $500K house that is your stupidity, not the govt’s.

angryed on November 20, 2009 at 12:27 PM

4 1/2% loans on 30 yr. fixed…4 1/4% on 15 years fixed, and $8,000 credit…it is getting to the point of being almost too good to be true.

right2bright on November 20, 2009 at 12:28 PM

Why are the banks making loans? Why?

WashJeff on November 20, 2009 at 12:21 PM

Because there are indigent people that need a house and they will vote Democrat even when they’re evicted.

Cybergeezer on November 20, 2009 at 12:28 PM

The good news is that local governments do not take foreclosure sales into account when assessing my house. Awesome!!!!! But, if I tried to sell my house, I would have to compete with foreclosures to make the sale. Thank you government!

WashJeff on November 20, 2009 at 12:24 PM

Check your area for forclosure sales. When they happen have your home’s value reassesed.

Theworldisnotenough on November 20, 2009 at 12:28 PM

Theworldisnotenough on November 20, 2009 at 12:25 PM

I was being sarcastic. If I was a banker, I would be tighter than union leader protecting their pensions.

WashJeff on November 20, 2009 at 12:28 PM

In CA, the Banks are still making short sells impossible. My Realtor friends says next year, the properties will hit the market.

If you have money, that’s when to buy. They’ll be a dime a dozen.

AnninCA on November 20, 2009 at 12:26 PM

AWESOME! The shadow inventory has been propping up the market for awhile…

Theworldisnotenough on November 20, 2009 at 12:29 PM

In CA, the Banks are still making short sells impossible. My Realtor friends says next year, the properties will hit the market.

If you have money, that’s when to buy. They’ll be a dime a dozen.

AnninCA on November 20, 2009 at 12:26 PM

And let me guess then it will be the best time ever to buy right? Just like it was in 2006 and 2007 and 2008 and 2004 and 2005. Anyone who listens to a realtor for advice on housing is a fool. They will always tell you today, this very second is the best time to buy a house (or sell a house if you own one). They get paid to make transactions happen, they could care less what the outcome of the transaction is.

angryed on November 20, 2009 at 12:29 PM

right2bright on November 20, 2009 at 12:25 PM

What gives you the right to be correct?

Cybergeezer on November 20, 2009 at 12:30 PM

Oh puuhhlzeee. People wanted to get in on the housing gravy train and behaved recklessly. When you make $50K and buy a $500K house that is your stupidity, not the govt’s.

angryed on November 20, 2009 at 12:27 PM

Sorry, but when you lose your job because of an economy built on a house of cards…when do you actually blame the political leaders for screwing up our economy.
Are you one of the ones saying that the policies of continuous spending, forcing banks to make loans was a good one?
Your example is a small percentage…many, most, are not like that.

right2bright on November 20, 2009 at 12:31 PM

4 1/2% loans on 30 yr. fixed…4 1/4% on 15 years fixed, and $8,000 credit…it is getting to the point of being almost too good to be true.

right2bright on November 20, 2009 at 12:28 PM

Do the math and see if the house you buy even falls 10% in value over the next 5 years. Take all closing costs (buy and sell), property tax, insurance, HOA fees, repaisr and maintenance into account. You’ll quickly see it is too good to be true.

angryed on November 20, 2009 at 12:31 PM

Check your area for forclosure sales. When they happen have your home’s value reassesed.

Theworldisnotenough on November 20, 2009 at 12:28 PM

I did this year to try to lower my assesment. Short sales are also disallowed. Though, I admit, I am not fully versed in what a short sale is with a house.

Some $700K-ish home in my area sold for $440K in foreclosure. Not that my house is a $700Kish house, I would love to compare my house to that one for a proportional adjustment.

WashJeff on November 20, 2009 at 12:31 PM

If you have money, that’s when to buy. They’ll be a dime a dozen.

AnninCA on November 20, 2009 at 12:26 PM

Trickle! Trickle! Trickle!

WashJeff on November 20, 2009 at 12:32 PM

I have a question for the more suave.

Should I move my mortgage to a credit union, or keep it with the bank. I am trying to avoid my mortgage being sold.

upinak on November 20, 2009 at 12:33 PM

The fact that home prices are tanking and folks can’t sell their homes for what they bought them for is not only a national tragedy, but a very scary trend. This might look good for first time home owners, but the many millions of regular folks losing their only assets with the housing costs dropping will have a kick back effect on the economy for decades.

Thank Bawny Fwank and the Dems and the morons that elected them since it rests squarely on their watch.

Hening on November 20, 2009 at 12:33 PM

Sorry, but when you lose your job because of an economy built on a house of cards…when do you actually blame the political leaders for screwing up our economy.
Are you one of the ones saying that the policies of continuous spending, forcing banks to make loans was a good one?
Your example is a small percentage…many, most, are not like that.

right2bright on November 20, 2009 at 12:31 PM

Really? So the fact that in LA county, the median income is $55K but the median house price was $650K was the result of a small percentage?

You think all the people living in 4500 sq ft McMansions make the income that is needed to afford that kind of lifestyle?

angryed on November 20, 2009 at 12:33 PM

Denninger: WHERE ARE THE [redacted] INDICTMENTS?:

Then how did these BANKSTERS get away with peddling this TRASH, not to mention selling these “loans” to people in the first place when they knew full well there was not a snowball’s chance in hell the alleged “borrower” was going to be able to make the payments?

EVERYONE INVOLVED IN THIS CRAP SHOULD BE ROTTING IN FEDERAL PRISON.

In related news, Martin Armstrong – A Forecast for Real Estate: 26 years of contraction.

Rae on November 20, 2009 at 12:34 PM

I could sue the builder. I cannot sue my government. I can only buy vaseline at Costco.

WashJeff on November 20, 2009 at 12:27 PM

And that is where more then a few people are…these are people who have never missed a payment in their life, many who have had excellent credit ratings, and have been prudent…the builder blew it, unfortunately the builder is developing the “bail out” and it isn’t much better.

right2bright on November 20, 2009 at 12:34 PM

Some $700K-ish home in my area sold for $440K in foreclosure. Not that my house is a $700Kish house, I would love to compare my house to that one for a proportional adjustment.

WashJeff on November 20, 2009 at 12:31 PM

If it sold for $440K then it’s a $440K house, not a $700K-ish house.

angryed on November 20, 2009 at 12:35 PM

angryed on November 20, 2009 at 12:31 PM

It is the property tax that will start killing everyone eventually.

They said they were going to raise them again here. Why? To deal with a 10 million dollar windfall in the budget. Why is this my fault or anyone else who lives in this city since we aren’t over spending the money? Because the idiots who elect the other idiots in, is why.

BTW when they do raise the prop tax, it will be about a 3-5% hike.

upinak on November 20, 2009 at 12:35 PM

I think the title needs correcting. It should be 14% of mortgageholders, not 14% of homeowners.

Peri Winkle on November 20, 2009 at 12:36 PM

Should I move my mortgage to a credit union, or keep it with the bank. I am trying to avoid my mortgage being sold.

upinak on November 20, 2009 at 12:33 PM

I am not Rico Suave, but why would you worry about your mortgage being sold? If it is fixed interest rate, they cannot change things on you.

WashJeff on November 20, 2009 at 12:36 PM

upinak on November 20, 2009 at 12:33 PM

Not possible; There’s a whole market place for mortgages and your friend, Bawney Fwank, has been in on the legislation to govern this mess.

Cybergeezer on November 20, 2009 at 12:37 PM

The fact that home prices are tanking and folks can’t sell their homes for what they bought them for is not only a national tragedy, but a very scary trend.

Hening on November 20, 2009 at 12:33 PM

When has went from $2 to $4 people were screaming that it cost twice as much to drive. Instead of $100 a month in gas someone pays $200. That is bad, bad, bad.

When a house goes from $250K to $500K it costs twice as much to live in the house. A $1500 mortgage now turns into a $3000 mortgage. Yet for some reason we celebrate having to spend an extra $1500 a month in housing but we go insane that we have to spend an extra $100 a month in gas.

The country will be better off long term with lower house prices. Much better.

angryed on November 20, 2009 at 12:38 PM

I am not Rico Suave, but why would you worry about your mortgage being sold? If it is fixed interest rate, they cannot change things on you.

WashJeff on November 20, 2009 at 12:36 PM

Because I don’t want to deal with the mess of a bank closing and wonder where I need to send the payment. As a credit union is safer.

And who wouldn’t get a fixed percentage is an idiot. I am sorry if I ticked someone off… but why buy a house if you can’t fix the percentage?

upinak on November 20, 2009 at 12:38 PM

right2bright on November 20, 2009 at 12:28 PM

Dang. We bought a home that was in danger. The price dropped 17% so we bought. It’ll probably continue to drop in value. Oh well. we’re in it for the long haul.

The unspoken consequence of the deflation in real estate is the corresponding drop in property tax revenue for states and locales.

As an aside… I’m STILL waiting on the 8 grand. The IRS has been botching our paperwork since the start. If a bank was this incompetent regarding its financial promises, the news people would be on them 24/7… but here’s the lesson learned… what can I do? It’s the US government… not like I can make a complaint or switch tax services.

(See also: Coming Health Care Problem)

mankai on November 20, 2009 at 12:39 PM

If it sold for $440K then it’s a $440K house, not a $700K-ish house.

angryed on November 20, 2009 at 12:35 PM

I agree that’s what it should be, but here in IL foreclosures do not count. Arggh!!!!!

I copied this from an IL assesors web site:

Also, the state law does not allow us to consider non-arms-length sale transactions, such as foreclosures, when determining assessed values.

WashJeff on November 20, 2009 at 12:40 PM

I would like to know:

1) How many of these homeowners are having problems with their homestead versus with additional properties (vacation homes, rental/investment properties), and

2) How many of these homeowners are legitimately suffering (bought a reasonable home that fit their budget at the time) versus “house poor” (bought more than they could afford).

cannonball on November 20, 2009 at 12:41 PM

And who wouldn’t get a fixed percentage is an idiot. I am sorry if I ticked someone off… but why buy a house if you can’t fix the percentage?

upinak on November 20, 2009 at 12:38 PM

If you know you’ll likely move before the arm adjusts it’s not a bad move. I did that, had a 5 year arm, knew I would not hold the property longer than 5 years and got a much lower rate.

angryed on November 20, 2009 at 12:42 PM

right2bright on November 20, 2009 at 12:34 PM

I have also have aquaintences that have had bad builders but cannot sue since the builder is bankrupt. What to do in those scenarios?

I have to put on my “cold hearted” conservative heart and say, “life handed you a pile of sh*t. That sucks.” There is no recourse anymore…unless you can prove that the local government inspectors did not do their job in inspecting your house.

WashJeff on November 20, 2009 at 12:44 PM

Really? So the fact that in LA county, the median income is $55K but the median house price was $650K was the result of a small percentage?

You think all the people living in 4500 sq ft McMansions make the income that is needed to afford that kind of lifestyle?

angryed on November 20, 2009 at 12:33 PM

$500,000 hardly buys you a mansion in LA…
Really, you think that LA is the only city in the U.S.?

Estimated median household income in 2007: $53,573

2008 cost of living index in Los Angeles County: 162.0 (very high, U.S. average is 100)

Median monthly housing costs for homes and condos with a mortgage: $2,350, those costs include insurance and taxes.

Can’t use the value because the values in the past several years (until last year) appreciated so much faster then income.

right2bright on November 20, 2009 at 12:46 PM

Because I don’t want to deal with the mess of a bank closing and wonder where I need to send the payment. As a credit union is safer.

And who wouldn’t get a fixed percentage is an idiot. I am sorry if I ticked someone off… but why buy a house if you can’t fix the percentage?

upinak on November 20, 2009 at 12:38 PM

I have had mortgages sold at least twice, maybe three times on me. No big deal. Just a little hastle in reestablishing the EFT.

No worries about mocking people in ARMS.

WashJeff on November 20, 2009 at 12:46 PM

The really scary thing is that refinancing rates can’t really go any lower. Until unemployment recovers the percentage of home owners behind schedule is only going to rise.

And the new home buyer tax credit encouraging people who maybe shouldn’t be buying houses to jump in isn’t helping, either.

BadgerHawk on November 20, 2009 at 12:21 PM

Rates are artificially low due to Fed intervention. True rates should be 1-1.5% higher. FTHB tax credit is detrimental to any recovery and is meant to give an appearance of price stability.

singer on November 20, 2009 at 12:47 PM

right2bright on November 20, 2009 at 12:46 PM

$2350 monthly housing costs for $53K a year gross income is way too high. That is 53% of income. It’s insanity.

angryed on November 20, 2009 at 12:47 PM

If you know you’ll likely move before the arm adjusts it’s not a bad move. I did that, had a 5 year arm, knew I would not hold the property longer than 5 years and got a much lower rate.

angryed on November 20, 2009 at 12:42 PM

Ok I can see that. But I don’t plan to move like I was hoping too. I decided to stay put for a while.

upinak on November 20, 2009 at 12:48 PM

WashJeff on November 20, 2009 at 12:44 PM

I am saying that policies put in place my Washington, and the payola, caused this mess.
I think home values were over appreciated, but it was the lack of oversight with the banking and SEC that caused this collapse, and it continues because of bad policy.
Now some may blame the citizens…I happen to believe the major part of the blame is with our corrupt liberal policies…others think it isn’t.
But when someone is responsible for a mess…they should clean it up.

right2bright on November 20, 2009 at 12:50 PM

Why are all you Rethuglicans rooting for America to fail?

/grow fins

BPD on November 20, 2009 at 12:51 PM

It’s simple. House prices have traditionally been 3X income. In 2005/2006 prices got to 5, 6, even 10X income in some places like SoCal, Las Vegas, Miami.

Right now prices are still above 3X in most of the country. And until we get back to the 3X historical average, all the tax credits in the world won’t stop the slide. You might as well ask that water stop flowing downhill.

angryed on November 20, 2009 at 12:24 PM

That’s interesting, when I was employed and looking I had set the max price and it was just under 3x what I was making.

Unfortunately now, to paraphrase the Hero Of Canton, nuttin x 3, carry the zero – still nuttin.

aikidoka on November 20, 2009 at 12:52 PM

Wait until the economic crap hits the fan from the $5 billion default of David Axelrod’s boyhood home. Since it’s going to happen right in front of the New York City media, confidence in the finances of the overall real estate market can’t help but take a hit going into early 2010.

jon1979 on November 20, 2009 at 12:52 PM

Ed, if the median home price is somewhere south of $200k, and the mortgage is a part (a major part, but just a part) of that, and the more likely foreclosures are in the lower market segment, your use of $300,000 principle might be a bit conservative. If we use $200k which is still conservative, your number would be about 4 million paid in full or 40 million if helped with a 10% reduction.

Christian Conservative on November 20, 2009 at 12:52 PM

Should I move my mortgage to a credit union, or keep it with the bank. I am trying to avoid my mortgage being sold.

upinak on November 20, 2009 at 12:33 PM

Upinak, the only control you have over who has your mortgage is when you first select a company to finance your home purchase or if you should choose to refinance. Most mortgage “brokers” sell their mortgages, and quite a few of the large holders like Citi and Principal offload chunks of them from time to time as well.

You have no real control over it, but you shouldn’t worry, the terms of your mortgage cannot be changed, they remain as they were when you signed your papers.

Puddleglum on November 20, 2009 at 12:52 PM

$2350 monthly housing costs for $53K a year gross income is way too high. That is 53% of income. It’s insanity.

angryed on November 20, 2009 at 12:47 PM

In California it was insane…but regulations forced them to accept those loans…that was Fannie Mae and Freddie Mac.
Some banks could refuse, but many were forced…and quite frankly some that didn’t couldn’t compete and they would have been driven out of business by the gov. backed ones.
I get it, I moved out about 4 years ago, I just missed by six months the downward trend…but much of that was caused by poor gov. policy. And of course horrible leadership in Sacramento, and Washington.

right2bright on November 20, 2009 at 12:53 PM

But when someone is responsible for a mess…they should clean it up.

right2bright on November 20, 2009 at 12:50 PM

I do NOT want the people that caused this mess to “fix it.” I think we would be better off if they said, “my bad,” and just leave the stage.

WashJeff on November 20, 2009 at 12:53 PM

right2bright on November 20, 2009 at 12:50 PM

Whooops! Forgot to do a MOP joke!

WashJeff on November 20, 2009 at 12:55 PM

According to the BLS.gov website one of the three largest segments of new layoffs came from construction.

The other two were retail and manufacturing. There is no sign of these trends abating. Also reported on the AP yesterday was the news that a million more people will exhaust their unemployment benefits by the end of December.

There are already reports that the number of new homeless people are swamping the various agencies that help them. The last report I saw on that reported that NYC was overloaded. I sent the link to the tips address here at HA.

Retail sales have also “unexpectedly” dropped by “record amounts” over the last three months.

Bozo announced that his job summit on December 3rd is not actually about jobs. In double speak he said its just about giving him a photo op that allows him to look concerned.

Bozo has two words for us and they aren’t “Merry Christmas”.

dogsoldier on November 20, 2009 at 12:56 PM

Puddleglum on November 20, 2009 at 12:52 PM

Okay here is a scenerio, as a person at work and another friend of mine had their mortgages sold in the last few months.

Both these people had Citi, the mortgage was sold. Citi didn’t tell them who they were sold too. 2 months later, both of my friends finally got a bill. Both of my friend paid their mortgage still to Citi as they had no clue who they were suppose to send the payment too.

Now Citi is saying they never recieved the payments and the new company who took them over says they need to pay the two back months.

See why I am kind of scratching my head?

upinak on November 20, 2009 at 12:56 PM

Dude, this is awesome awful news for this would-be-first-time-home-owner.

Trent1289 on November 20, 2009 at 12:23 PM

FIFY

singer on November 20, 2009 at 12:58 PM

Merry Christmas!!

Foreclosures, unemployment, citizens under attack from the fiends in Congress with prospects of tax hikes and a VAT, staring at fines and jail sentences for not participating in socialized health care should it pass.

We’ll have to find some joy watching the Obies entertain lavishly at the WH, go on a New Year’s “date night,” and lecture us on ‘the necessity of sacrifice.’

Can’t wait to see what MO wears over the holidays. Maybe we’ll get another glimpse of those manly muscles she sports.

Life is good, isn’t it?

Cody1991 on November 20, 2009 at 12:58 PM

Sparkling news. Now my area can enjoy even more vacant homes as magnets for thieves and squatters.

Bishop on November 20, 2009 at 1:00 PM

See why I am kind of scratching my head?

upinak on November 20, 2009 at 12:56 PM

Yeah…that’s bad. My switchovers were smooth. Clear letter stating what was happening from both parties. I would just chaulk it up sometimes poop happens.

WashJeff on November 20, 2009 at 1:01 PM

Sparkling news. Now my area can enjoy even more vacant homes as magnets for thieves and squatters.

Bishop on November 20, 2009 at 1:00 PM

That’s what we’re experiencing in my area. Oh…. and property taxes are going up.

Cody1991 on November 20, 2009 at 1:02 PM

1. buying a house is not a totallly economic decision. if you just had twins and live in a 1 BR apt, you are going to need a home with more bedrooms.

2. greed is fueling a lot of these foreclosures. i have a client right now who is letting her home go and her husband is buying another home in the same neighborhood, same floorplan!…just becuase they can lower their payment by 33% and lower their mortgage debt by $50,000.

DrW on November 20, 2009 at 1:04 PM

upinak on November 20, 2009 at 12:56 PM

Well, that is strange as they are required to give you advance written notice that your loan is being sold and to whom, and where you are to send your future payments. I find it odd that even if Citi dropped the ball in notifying them of the sale, that they also did not receive a welcome letter from the new loan servicer. These people are usually not remiss in instructing you where to send them money ;-)

I also believe the law states that late fees for missed payments cannot be levied within 60 days of your loan being sold. I would have them talk to someone in the mortgage department at Citi.

Puddleglum on November 20, 2009 at 1:04 PM

Those that fail to learn from history are doomed to relive it.

When FDR went all communist on the USA the media went all optimistic on the economy. Problem it got much, much worse after the government intervention.

Parallels to today are spooky.

Seeds, canned goods, and ammo.

jukin on November 20, 2009 at 1:05 PM

right2bright on November 20, 2009 at 12:53 PM

It’s insane from the point of view of the borrower. Nobody forced anyone to buy a house and spend 50%+ of their income on the mortgage. If your income is $4416 a month ($53K you used) then shouln’t a little voice in the back of your head say “DANGER, DANGER, DANGER” when you get a house with a $2350 mortgage? I made twice that amount when I bought my house and the mortgage was just under $2K. And even then I was thinking, man I hope I can swing this.

And it’s not just $2350. Because there is also HOA fees and the water heater breaks or the roof springs a leak or you need a new fridge. All these things add up and fast. And if you’re at 53% of gross income to just make the mortgage paymnet there is nothing left.

Is it really worth living on the edge of financial ruin just so you can say you “own” a home? And

angryed on November 20, 2009 at 1:06 PM

If you have a house built, and you hire an architect to design and build that house, and you hire a contractor to build that house…and that house, after moving in, collapses because of poor design and work. Do you blame the home owner for relying on their experts? Who is at fault?

right2bright on November 20, 2009 at 12:25 PM

I did have a house built. It did fall apart. I was mad as hell at the builder.
But I was even more upset with myself for not making a better choice when I selected that builder. Since it was my house, I took care of fixing the problems. I let the builder know I was unhappy with him, and also mistrustful of anything he could do to help fix things…since he did such a bad job in the first place. Shortly thereafter, the bad builder went out of business. After some sacrifice, I now have a solid home. It wasn’t a pleasant experience…but accepting personal responsibility ceratinly helps me be at peace. I recommend that you try to avoid playing the Blame Game….and keep it real.

redwhiteblue on November 20, 2009 at 1:09 PM

Never fear,

Barney Frank, Chris Dodd, and Maxine Waters are here to save the day.

Oh, wait………..

franksalterego on November 20, 2009 at 1:10 PM

The bulk of all ARMS were written between ’05-’07, at the top of the market. This recent downturn was only the tip of the real estate iceberg.

Jorge Bonilla on November 20, 2009 at 1:10 PM

If you think that is bad, have a look at commercial real estate. James Stewart believes that half of all those loans will have debt service ratios below 1.0 by mid 2010. That means that they will owe more on the note than they take in on rent.

Vashta.Nerada on November 20, 2009 at 1:10 PM

1. buying a house is not a totallly economic decision. if you just had twins and live in a 1 BR apt, you are going to need a home with more bedrooms.

DrW on November 20, 2009 at 1:04 PM

Or you get a 3 bedroom apartment. Or you rent a house you can afford. Or if you’re hell bent on buying, you move to a lower cost area. Why is the default option to buy more house than you can afford?

angryed on November 20, 2009 at 1:11 PM

1. buying a house is not a totallly economic decision. if you just had twins and live in a 1 BR apt, you are going to need a home with more bedrooms.
DrW on November 20, 2009 at 1:04 PM

Wrong Doc! The word buying means it is an economic decision. In the case of the twins, I suggest you will have to tough it out and make your living room into a bedroom, eat cheaply, stay out of the malls, and work your freakin way up in the world like the generations before you have!

redwhiteblue on November 20, 2009 at 1:19 PM

It’s time to get rich.

bbordwell on November 20, 2009 at 1:24 PM

angry red and redwhiteblue

there is still a tax advantage for buying vs. renting becasue owning a home has been judged by our government for decades to be a stabilizing societal force that is to be encouraged. to state that a young family should only rent is ridiculous.

also, who the hell are you two to deny a young family the pride of ownership? get a clue..owning your own home is rewarding in many ways not revealed by a spread sheet.

DrW on November 20, 2009 at 1:25 PM

Let’s go over this again. You seem to think that the Obama administration was concerned about unemployment AT THE TIME they rammed through the Porkulous legislation. Nothing could be further from the truth. For the Obama-lytes, the market economy is a black box. Impenetrable and unknowable. So they assumed that the magic elixir – whatever it is – would work again and the economy would experience a V shaped recovery, just in time for the 2010 election. In the meantime, the Progressive Marxist-Keynesian mind sees no connection between national (household, corporate and fiscal) debt and economic performance. And, since the Progressives now possessed the keys to the USG Fed-Treasury candy store, they decided to raid it for sweets and pass out the goodies to their constituencies. Consequences? What consequences? None of the so-called recovery initiatives – C4C, Wall Street bailouts, or tax credits for home purchases were aimed at solving household budget/debt problems. They were all aimed at supporting efforts by favored corporations-unions to kick the can down the road or extend and pretend until the “recovery” is solidified. Now they see the light at the end of the tunnel and even they are starting to realize that it’s probably not daylight they see but more likely the headlights of a runaway train of continued deep recession extending beyond November 2010. The resulting electoral crackup may well be giving the Axelrod-Emanuel crew some restless sleep, hopefully.

boqueronman on November 20, 2009 at 1:27 PM

A lot of executives and managers who were laid off a year ago and given a year of severance pay have now gone through that and are still without jobs. I know a few of them. They are going to have to dump their houses now for whatever they can get. A lot of families have cut everything they can cut to keep paying for the house, but they can’t cut any more now.

rockmom on November 20, 2009 at 1:32 PM

angry red and redwhiteblue

there is still a tax advantage for buying vs. renting becasue owning a home has been judged by our government for decades to be a stabilizing societal force that is to be encouraged. to state that a young family should only rent is ridiculous.

also, who the hell are you two to deny a young family the pride of ownership? get a clue..owning your own home is rewarding in many ways not revealed by a spread sheet.

DrW on November 20, 2009 at 1:25 PM

You have to be kidding, right? Or are you 12 years old? If so, I apologize for my angry tone.
Integrity, personal responsibility, sacrifice, financial stewardship, diligence, perseverance, and stability – please look these words up.
Perhaps you will begin to understand the actual process involved in matters of home ownership. Best wishes.

redwhiteblue on November 20, 2009 at 1:48 PM

The rampant incompetence taking place with the current administration is going to come back and bite US on the ass. And these same incompetents are going to be off in their Italian villas spending our money in their retirement.
Haven’t you figured that out yet?

Cybergeezer on November 20, 2009 at 2:02 PM

And oh yea; You may have free health care, but you’ll never be able to buy a house.

Cybergeezer on November 20, 2009 at 2:05 PM

And the gubmint is still making bad loans. Why? To create a permanent underclass dependent on the largesse of politicians. IOW, Venezuela.

Foreclosure Rescue

PattyJ on November 20, 2009 at 2:30 PM

More Change as expected.

Tremmy on November 20, 2009 at 2:38 PM

Slightly OT,

There was an article on The Market Ticker that stated that the Pontiac Silverdome’s price was recently reduced from $20 million to $583,000.

There are still no interested buyers.

Mike Honcho on November 20, 2009 at 3:09 PM

there is still a tax advantage for buying vs. renting becasue owning a home has been judged by our government for decades to be a stabilizing societal force that is to be encouraged. to state that a young family should only rent is ridiculous.

also, who the hell are you two to deny a young family the pride of ownership? get a clue..owning your own home is rewarding in many ways not revealed by a spread sheet.

DrW on November 20, 2009 at 1:25 PM

Wow, if I were to make a caricature of a clueless realtor, I couldn’t do a better job than what you just wrote.

angryed on November 20, 2009 at 3:18 PM

There are still no interested buyers.

Mike Honcho on November 20, 2009 at 3:09 PM

You sure? In bold it says there was a buyer… but you all have no clue.

“The citizens of Pontiac deserve better,” Seay said. “This is pennies on the dollar (of what it cost). It goes to show how bad times are … Worse, we don’t even know who bought it.

upinak on November 20, 2009 at 3:30 PM

Let’s go over this again. You seem to think that the Obama administration was concerned about unemployment AT THE TIME they rammed through the Porkulous legislation. Nothing could be further from the truth. boqueronman on November 20, 2009 at 1:27 PM

Bozo said it would keep unemployment below 8%. His clown posse had charts and all kinda spew about jobs. \”Shovel Ready\”What we didn\’t know it was a plastic shovel for a beach bucket.

dogsoldier on November 20, 2009 at 4:25 PM

All the recent forecast have been phony. The TARP money has done nothing to help the distressed real estate market. It is getting worse with more foreclosures to come. Money will get tighter. The feds will keep lending the money to banks at 0% to 1%. They will continue to hold their deadbeat paper as surety to borrow this cheap money so as to put in their credit card business that pays 20-25%. Its the obama economy stupid. The pay-off will be back in the campaign coffers for the dems and the crooks. Thats the obama way thats the tim the tax mans way. No reform. No promising future, higher taxes on the way, high inflation on the way, higher unemployment on the way. Stupidity and corruptness rule the day. You can thank your president, your congress and the media. No hope and pocket change. Charles W Clark and the Chinese not going to be able to help.

bluegrass on November 20, 2009 at 7:54 PM

Simply put, people were treating their homes like ATM machines. That’s not what a home is for, and they should have known better.

Simply put, there are lenders and brokers out there that should have known that Stated Income Stated Asset loans were ridiculously risky,

Simply put, the government should never have put the screws to lenders to lend to people who, by all evidence, should not have been borrowing the money in the first place.

Simply put, there’s a lot of blame to go around. I’ve seen it from several of these vantage points.

john1schn on November 20, 2009 at 10:33 PM

there is still a tax advantage for buying vs. renting becasue owning a home has been judged by our government for decades to be a stabilizing societal force that is to be encouraged. to state that a young family should only rent is ridiculous.

also, who the hell are you two to deny a young family the pride of ownership? get a clue..owning your own home is rewarding in many ways not revealed by a spread sheet.

DrW on November 20, 2009 at 1:25 PM

Our family of 4 lived in a 2 bedroom apt for a couple of years, then we were 5 and moved into a larger 2 bedroom apt. Once we saved enough, our target home was 30% of income. We settled on a nice one with a bit more sq ft and a huge yard at nearly 40% of our then income–bonus being that it’s semi-rural, yet mins from anything in town. 3 years later, the mortgage is down to 30%, but I can tell you it’s rough making ends meet. Way rough. As someone noted above, the little stuff adds up. Replacing the climate unit, other home repair/improvement stuff brought net current cost of ownership up to 40%, and that before factoring in inflation in cost of living.

Imagine if I’d lived in a home-owner covenant area where you have other mandatory fees that don’t factor into home prices. I specifically avoid such homes. We have an acquaintance that lives in such a community and when the dam broke on their pretty lake, the homeowners were hit with the repair bills of approx $2500 each – payable ASAP. In my brother’s community, they have a community-owned water supply system and when that crapped out, everyone had to cough up to restore water.

Word to the wise, yes it’s nice to “own” a home, but if you don’t watch it, the home will own you. There’s no shame in renting an apt and waiting. In fact, the market is all but sure to keep dropping, so why don’t/can’t you wait till you think it’s hit bottom. Then you’ll have the home you always wanted and extra money to play with compared to your Joneses.

AH_C on November 21, 2009 at 12:24 AM

I’m still wondering when they will sentence Barney and Chris
So what ever the hell you want it should start here.

bluegrass on November 21, 2009 at 9:38 AM

I’m still wondering when they will sentence Barney and Chris
So what ever the hell you want it should start here.

bluegrass on November 21, 2009 at 9:38 AM

Amen.

Cybergeezer on November 21, 2009 at 10:00 AM

More than 14 percent of borrowers were in trouble on their mortgage during the third quarter

While I agree that unemployment contributes to mortgage defaults, some of the banks are still pushing the “get 3 months behind on your mortgage and then we’ll help” program and there are people falling for it that could have re-financed–the rates are still relatively low. I wonder how many of those are factored in.

njpat on November 21, 2009 at 10:34 AM