Americans Losing the roof over their Heads!

http://www.toledoblade.com/apps/pbcs.dll/article?AID=/20061102/NEWS33/61...

Foreclosures are up across the U.S.A. with Lucas County rated 9th out of
88 counties with record breaking filings of 3,000!

Decent hard working Americans are losing everything...with our region
dependency on Industry being hit hard with unemployment, bankruptcy and
HOME FORCLOSURE....

Where and What are those to call home? Will we see as in the "Great
Depression"....Shanty Towns spring up...will these towns have a
government of some sort...will we pay a squatters tax...or...are we in
Toledo nearly at that point now?

Or...is there a way to nip this in the bud NOW...before we get to that
point of homelessness, Shanty Towns, Tent Cities...

...do we simply blame the Bush Administration and put our all in our
next President to turn this all around with the belief every American
who is willing to work will have employment a home...

...for us in Lucas County is it our local government we blame for the
slow death of Toledo...as many of us did believe all it take was to
bring "Carty" back in office and Toledoans would shine with jobs, homes
and pride!

Looking forward to learning your thoughts...

No votes yet

We often see these stats and I wonder...

what is the average price of the home that is forclosed?

how many of these forclosures are the result of divorces (this is often underestimated...)?

do forclosures happen in certain areas more than in others?

While not denigrating the numbers, I'd think that answers to these and similar types of questions would tell us more than just the straight stats.

...Toledo is one of the more stable markets. Home values appreciate at a more realistic rate and at a slower pace than 'boom markets' and they do, overall, hold their value.

The foreclosure issue is one that is primarily fueled by employment issues. When someone has bought a house based on a $60,000 annual income and then becomes unemployed, it becomes difficult to maintain solvency. While it CAN be done, many are spoiled to a way of life that they are unwilling to adjust to compensate for the loss of income. It's called a lack of priorities.

While not ALL foreclosures are due to poor financial habits, those habits certainly are a contributor. People, by and large, do not save or plan for that proverbial 'rainy day' and then get caught short in an emergency.

This article from the FannieMae Newsletter (scroll to Page 6 and locate Ohio's portion) has some interesting information. http://fanniemaefoundation.org/programs/hff/pdf/HFF_v8i2.pdf

The issue of divorce as a contributing factor to foreclosures is certainly viable, but very difficult to track. Mortgage holders don't care WHY you are behind, just that you owe them the money. Therefore they don't ask, nor do they track causal factors. At least not for publication that I can find.

And this article has some interesting tidbits in regard to the foreclosure situation. http://www.foreclosurefreesearch.com/images/press/050202_inman_html.html

do we simply blame the Bush Administration

why blame him? is it his fault someone purchased a home they had no business buying? is it his fault the homebuyer financed the home using ARMs, fooling themselves on how much home they could afford?

It makes me sick when I hear of this because mainly it comes from inaction than anything else.

......do we simply blame the Bush Administration and put our all in our
next President to turn this all around with the belief every American
who is willing to work will have employment a home...

You can't blame the President for bad personal financial decisions. Hell you can't even blame Carty.

A home will sell in any market if priced right. A homeowner faced with foreclosure could save themselves a huge personal financial crisis and a lot of heartache if they sold their home with no profit and maybe even some loss. A $20,000 loss beats losing a $120,000 home.

I have a friend who is a realator in Toledo. He tells me about all the stories he gets of people who come into his office faced with foreclosure. He's willing to work with them but they never return after the initial contact. He will then see their name on the foreclosure listings a month or two later.

Most fall into the "How'd this happen to me" syndrome where they worry about how it happened and not how to correct the problem. Any financial person will recommend to you paying more than you minimum payment on your mortgage at least in your first year so that you can begin building equity at an increased rate on the date of sale. It helps to limit damage from a finacial disaster later on.

Even with the housing market downturn it's possible to make good money on your home. My sister-in-law sold her home for a huge ammount before the bubble burst. When she bought a new home the market was down. She took the money she made from her last home and paid off debt and put the remaining ammount onto her new home. If she sold today she'd make a considerable sum on her new home despite the buyers market.

MikeyA

MikeyA

I don't want to sound mean or anything but if you don't make your house payment well... your house gets forclosed. Same thing for a renter, you don't pay your rent, you get evicted.

This isn't about the economy, this is more about people financing homes they shouldn't buy. Relying on ARMs and interest-only loans seems like a great thing when interest rates are low and when the housing market is booming, but raise interest rates just a hair or slow the market down just a bit and you'll see foreclosures. Both have happened now. Buying an ARM when interest rates were at ALL TIME lows three years ago and expecting them to stay there shows a lack of brain-power.

This is just speculation, but I bet if you looked at the actual breakdown of people in foreclosure you'll see a lot of middle income American families ($30,000-80,000/year) that haven't lost their jobs or seen a pay decrease.

do we simply blame the Bush Administration

In most cases you can't blame anyone but the homeowner. President Bush isn't telling people to buy homes they can't afford or take out car loans that will cost them more than their mortgage. They decide to do that themselves and stretch their pocketbooks just as far as they can go. And then when you see interest rates tick up just a hair their budget is thrown all out of whack and they're deciding whether to eat or pay the mortgage (and eating wins out).

Most of the financial troubles of this country would be solved if people forgot about the Joneses, lived within their means, and prioritized their financial obligations. Make healthcare a priority. Make retirement a priority. Make your childrens' education a priority. After those are paid for then you can see if your budget allows luxuries like cable television and internet, a bigger home, a new car, and week-long summer vacations. Of course the new car is a lot more fun than health insurance or a retirement account, but sometimes the fun thing is not always the right thing.

i honestly think this type of discussion highlights a greater issue. heyhey, you hit on this. it's isn't so much a matter of outside forces; it's often a matter of personal responsibilities. people look to blame others instead of looking inward. additionally, it also shows the ever-increasing reliance on govt. just look at the initial comments/ thread.

I know that this is what is causing a great deal of these home foreclosures. And I can't believe the banks want these houses back - but I was offered an ARM when I bought this house.

It was a loan that was 5/8's of a percent less than a 30 year fixed mortgage. It would mean the difference of about 200.00 a month the first two years - about 50.00 the third and then I was going to be paying a percentage over prime - where ever it went. This made no sense to me. The guy who was explaining why it was a great deal just shook his head like I was an idiot when it didn't make sense to me.

I went to Sky Bank then and got a good rate on a 30 year fixed mortgage. If I hadn't, I would be losing my house too. Refinancing is expensive and most places want most if not all of the costs up front. And a down payment. People who can't make their mortgage payments cannot come up with these costs.

It's a lose - lose all the way around. Here's a story that ran last summer about a 53% spike in home foreclosures:

http://money.cnn.com/2006/09/13/real_estate/foreclosures_spiking/

Some additional information:

http://www.consumerfed.org/results.cfm

If you're here to tell me it's my fault - you're right. I meant to do it. It was alot of fun. That's why I have this happy smile on my face.

In most people's lives - their home is the biggest investment they ever make.

And it's an obligation, to you family, to make a good investment with a families wealth.

I question that I have done right by my kids. I really and truly do.

If you're here to tell me it's my fault - you're right. I meant to do it. It was alot of fun. That's why I have this happy smile on my face.

Americans have confused privileges with rights. A home is not a right.

In seeking this false right, it's been repeatedly reported that about 20% of all the subprime mortgage loans made recently (2002 and later) are going into foreclosure. Guaranteed. The banks were more than happy to push the matter since, obviously, they made money on each loser deal. Due to the vast expansion of things like collateralized bond obligations (CBOs), banks have managed to avoid taking asset responsibility for all the foreclosures they are causing. They just packaged up their future-foreclosure mortgages and sold them off to the rest of YOU. It was a win-win-lose situation, where the banks won up front, they'll win in back, and the home "buyer" and so-called investors are the big fat losers.

Kate mentioned that some MLO or loan-officer dweeb was shaking his head as if she was stupid or something. In a way, he was right, since I'm sure his office was filled with people looking to flip homes. To him, it's fiscally stupid to not take on absurd loans (like IO or "option" ARMs) just to flip a home at profit levels past the break-even margin (since no matter how lax the loan, there are closing costs). A person like Kate looking to actually buy a home to live in for decades just strikes him as insane. As far as such bank officers are concerned, Americans should just jump from home to home each 5 years or so, to maintain the Great American Housing Bubble.

The GAHB is in Toledo, too. Many people blather about how Toledo hasn't subscribed to it, but the terrible truth is, if a home is over 2.5 times your yearly income, then you're in a bubble home. We see people commonly accepting x4 multipliers around here. That is a bubble. The increases in foreclosures are helping to illuminate that, although I don't know how the "failed economy" factor (where Toledo's continuing economic collapse is undermining the payer side of the housing equation) applies to it.

The GAHB is national, hence Toledo is not immune. Sure, places like San Diego, Boston and Miami were outrageous, high peaks in the 'Bubble, with x10 multipliers being common. A recent news article in San Diego called a $850K home a "starter home" there. But the existence of such extraordinarily high peaks only casts shadows over the rest of the nation, which hides the myriad of local peaks. The banking industry is deeply responsible in creating the GAHB, and such an industry is national in every sense of the term. The banks stuck their absurd loans into every town and city in America. The GAHB is everywhere. In Toledo, it just so happens that homes are about 50% overpriced on average ... and we can count on Carty to increase the bulldozing in an attempt to support such overpricing.

If so - how exactly could that work? Eventually you'd have to pay down the principal - so you just pay extra interest up front?

If you're here to tell me it's my fault - you're right. I meant to do it. It was alot of fun. That's why I have this happy smile on my face.

Who knew? I thought traditional and ARM were it.

My folks taught a class for a while "Debt Free Living" and I believe in those principals - however I am still struggling to attain my goals :-)

One of the goals is never to borrow money. Most of us did, for our homes, and are still paying them. I'll be 70 years old before this house is paid for. But that's something, all the ways people are thinking up to get people to borrow money that, in my opinion, are in a position that makes being able to pay questionable.

Good bankers didn't used to do that. Seems predatory to me a bit...

If you're here to tell me it's my fault - you're right. I meant to do it. It was alot of fun. That's why I have this happy smile on my face.

Let me explain a little about predatory loans and lending. Trust me, BobTheDad, you are not going to like this one little bit. Maybe you better just skip this post and save a little wear and tear on the old cardio system.

A few years back, I had occasional to rub elbows with someone in the house flipping business. Here

Mad Jack
Mad Jack's Shack

"HJ folds like a cardboard box in a rainstorm"

Priceless....just priceless.

So I am NOT the one with the forked up sense of personal economics here?

If you're here to tell me it's my fault - you're right. I meant to do it. It was alot of fun. That's why I have this happy smile on my face.

Its a good thing I had a couple metoprolol left after the French lesson from GZ. Still ticking.

appreciate all comments! With that, yes, some homes were likely FORCLOSED due to Divorce, living above means...

Yet, how many of those homes were FORCLOSED due to loss of employment...or...cut in wages earned due to OUTSOURCING, ie, Industry, Manufacturing, Mexico, China...

Even...President Bush, himself, admits the Middle-Class has taken a HARD HIT due to Manufactury, Industry relocating...

Thus, my opinion...hardworking Americans are losing..."the ROOF over their HEADS"!

What once was $20.00 per hour wages...are a thing of the past for many Americans who are now employed earning wages of $10.00 minus per hour...

I per say for example...whose earning exceed $60,000 per year...IF I should lose my employment, thus, "lose the roof over my Head"...would in essence have been living above my means...

Is it suggested that we all live within a $30,000 per annual income no matter if our actual income exceeds...just in case...

Is that the answer...yet, still

...how do we STOP the slow death of the Middle Class...especially in Regions as ours where Industry, Manufacturing is all we know...

Just to add to your statement I'd like to say that owning a home brings more tax breaks than probably any other venture. A home is most people's best way to move out of their "class".

So essentially it's a business. So when you get a tax refund off of your home you should probably do what every financial advisor tells someone who owns a business what to do with the profit... reinvest it into your business.

By just using a portion of your tax refund toward your mortgage you do two things 1. eliminate a portion of your total debt and 2. Create more equity in your home.

It makes your home more profitable twofold. Now that it's tax time maybe that's what the homeowners on here should look at instead of buying that new big screen.

MikeyA

MikeyA

Basically, you only pay the interest portion of your normal mortgage payment obligation. The IO period is generally active for a few years. This was done for the flippers, so they could artificially (and in my opinion, criminally) afford to purchase a home while waiting for the Great American Housing Bubble to inflate its value and allow them to then ... well, flip it. Of course, the official stories differ from this truth, stating that people could get more home than they could otherwise afford in a rising market, and that professionals could obtain their "normal wage" home early, once their wages rose upon attaining more senior statuses in their industries. Blah blah blah -- it was actually all done just to flip homes.

After the IO period, your mortgage payment MUST rise to reflect the actual principal+interest. In effect, it puts off the principal some years into the future, back-loading your mortgage with payments. Whee! Live for today, and screw tomorrow!

I've heard of IO payments rising from 30% to 100% once they adjust to the true P+I. Typically, people are now moaning (since about $300 billion in mortgages adjusted in various forms in 2006, and another $1000 billion will do so in 2007, with maybe $1500 billion in 2008) that their mortgage payments have swelled so enormously and they are finding it difficult to handle such payments. I say: Tough shit. The people who took on these "toxic loans" are buffoons who were either stupid or greedy.

Apparently Sen. Dodd and Rep. Waters are already talking about holding hearings and are ALREADY using "bailout" language. Even the subprime borrowers were overextended and they are ultimately responsible for being so. If you can't afford to buy a home (having failed sensible wealth+risk tests) then you should rent. Like I said before, there is no right to have a house. The banking industry has nearly criminally overextended itself with lending to millions of people who could not even exercise the fiscal decency to come up with a 20% (or 10%, or 5%, or ANY) down payment. The wealth+risk test (i.e. economic law) alone says millions should not be homeowners; hence, no bailout can be moral.

Interest only loans are not always a bad idea. They are available at completely fixed rates and can be interest only for as long as 10 or 15 years in some cases. Statistically very few people keep their mortgages that long, and even if they do there is no law that says they are limited to making only the minimum payment. If they remain in that loan, they will eventually have to begin making principal payments. The question is, how much? For the right person, it can be a good plan.

Many of the sub prime borrowers take a 2-5 year adjustable because the start rates can be much lower, then plan on improving their credit rating over time until they can refinance at a lower fixed rate. As long as things go according to the plan, it works out OK.
I have never been a fan of putting anyone in a mortgage that stretches them to the limit right from the start. Its even worse when an adjustable rate can increase by as much 5 or 6 percentage points after just 3 or 4 years. Most people just don't have that much room in the budget to handle that. There is a time and place for the "creative" programs, but for many plain old vanilla can make sleeping at night a little easier.

I hate it when people throw that word around.
When I bought my first home, the only options were to save until you have 20% down, or go FHA with 3% down which can even be a gift from a relative so it can basically be a zero down loan. The market has now made products available that allow more people to buy homes. Some might call that progress. The most recent available national figures had foreclosure rates for sub prime loans in general at just under 4%. Do you want to tell the 96% that you can't finance a home for them because it didn't go so well for some? Car dealers have higher risk/rate financing programs to help sell cars too. Its about giving people choices, but people need to take reasonable care before making these decisions - like you did. I can explain the available options, benefits and the potential risks, but ultimately you are the one that decides if it is right for your situation.

You were wise to run away from the guy that tried to push you into a program you didn't want, but there are also occasions when the riskier types of loans are the only option available for some to hang on to their existing homes.

Metoprolol is used thusly:

"[...] to treat angina (chest pain) and hypertension (high blood pressure). It is also used to treat or prevent heart attack."

It looks like Metoprolol is going to be the drug of choice for FBs ("fucked buyers") who bought much more home than they needed AND that they could afford. My sympathy? ZERO.

Metoprolol? I use whiskey. Seems to work Ok for me...

::Erk!::
::Thud::

Mad Jack
Mad Jack's Shack

No.

At least, not that I can see.

Mad Jack
Mad Jack's Shack

This is just my point: for a significant minority of those people, there WAS NO PLAN. For a large fraction of the remaining, there was no SENSIBLE PLAN. These types of loans are called "toxic loans" for a REASON. The reason is that as exotic instruments, they only had rare applicability to the population. What happened instead is that they were embraced by large numbers of people in many population sectors, producing unhealthy fiscal outcomes across the nation and society.

We're having a crash since a bubble NEVER works out "OK". When too many people take on too much debt, it's never OK. Millions of people now live in homes they cannot afford since by rational finances they were never able to afford such properties in the first place.

The only way such home expansion would have made sense and would have been sustainable is if home prices had PLUMMETED from their mid-1990s prices. It's sustainable when people acquire assets which are falling in price. If people could have fit 2 homes (1 living, and the other either for vacations or tenants) into their current incomes, then that would have made sense. But the banks and the Federal Reserve wanted otherwise. They wanted people to speculate on assets which are provably non-investable. Over time, homes are strongly tied to wages and inflation; this makes them NOT speculative assets. Also, homes require maintenance and as well are subject to unlimited property taxes, which means they cost money over time to have. Again, this makes them NOT speculative assets. So, when people started to treat them as speculative assets, the entire national economy started to become profoundly unstable. We're going to find out exactly how unstable that that will be in 2007 and 2008, as well as the aftereffects in subsequent years.

You said: "The market has now made products available that allow more people to buy homes."

Since the common terms of such purchases mean that even larger fractions will be foreclosed on, and the remainder will be struggling under increased (even monstrous) debt service, then it becomes absurd that what happened actually allowed people to "buy". Too many (for example, from reports, a good 25% of the subprimes) will not complete the purchase.

In fact, too many of these people who bought from 1999 to today are not really homeowners. Other than being subject to greatly increased property taxes and association fees, the remainder are largely subject to debt service of such size that they are really renters. Their rental terms are merely different than the normal ones. Overpaying on an asset is no different than money lost from paying rent.

Dropping the interest rates to extreme lows, combined with almost criminally-lax loan terms, is not the way to expand the franchise of home ownership. It ONLY increased the franchise of those who are slaves to the banking industry, and considering who made the arrangements about these rates and terms, that makes sense. The banking industry has basically attacked America in this fashion, yet somehow the real enemy are domestic dissenters and foreign towelheads. One man enslaves you, the other bombs you. Is there really a difference?

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