Record US foreclosures - Economy is the best it's ever been

Lenders started foreclosure actions against more than one in every 200 U.S. mortgage borrowers in the last quarter of 2006.

Yahoo story

It's a good thing the economy is the best it's ever been.

Wanna see just how wonderful the economy is. Check out realty trac and look take a look around your city with the mapping program.

www.realtytrac.com...

[edit on 29-3-2007 by In nothing we trust]
mod edit: shortened the link

[edit on 3/29/2007 by Gools]

Not to disagree but could it be people are just being stupid with there money and over extending them selfs?

Where I live they can't build high end shopping centers fast enough. Or multi million dollar home's for that matter.

However with that said I was shocked to see over seventeen thousand foreclosures in my county alone.

The rich get richer and the poor get poorer.

I'm not a realtor or a mortgage broker, but I don't believe the high foreclosure rate has much to do with the economy in this particular situation. The reason there are so many foreclosures is because people were offered loans with a low interest rate that only lasted for a few years. Now that the interest rates are up, peoples payments are up. In some cases a thousand or more dollars a month. Hence all the foreclosures. I know that if my rent went up a thousand bucks, I'd be homeless.

The problems is that in order for many Americans to own a home they don't have any choice but to go for the variable rate loans, in hope that they will be able to secured a better fix rate later on.

But because our economy is nothing but a dream and we have been lied so much about how good it is, more often than not this people with less than perfect credit get stuck with the variable rates.

In my neighborhood I decided to find out how many foreclosures we have, I just came to the realization that both my closes neighbors had gone into foreclosure and in my street is about 3 houses like that.

What this does to my home? it brings the value down, meaning that if I want to sell I will be losing money.

The housing business has been allow to go on and on with not restrictions like corporate America.

They win, while we the regular joes lose the American dream.

When people find themselves without home they become homeless so in the next year we are going to have an increase of homeless people in our nation in the millions.

Now corporate America wants to fire people so they can re hired for less pay . . . all this problems on top of each other is going to have a domino effect.

But is OK, our government tells us the economy is doing fine, you may be homeless and with lower pay, but you still can charge on credit and keep spending.

[edit on 29-3-2007 by marg6043]

the sub-prime fiasco will hit certain areas very hard but others, like NYC, will not be hit quite so hard. The sub prime lenders gave out money, sold the loans to banks with the caveat that they will take back the paper if the borrower defaults. Now the banks are turning back to the lenders and telling them to take their paper back and the lenders are saying they cannot afford to take them back so the sub prime lenders file for bankruptcy, the banks take the hit, the borrowers walk away with little change other than the loss of their home. The bulk of these people put no money down, borrowed 103% of the value to purchase the house and when they walk they will be right back where they were before these sub prime lenders enticed them to overextend themselves.

The pricing in those neighborhoods will drop and the residual impact in higher priced areas might not be quite that bad. Remember, in places like NYC you cannot buy an apartment in a "good" co-op if you don't put down at least 20% and in most cases that number is even higher so there's more to lose for the purchaser and little chance of any over extension issues. If you check that site linked above, you'll see no foreclosures in the NYC area.

Is that correct? Don't know but I do know that the figures for Manhattan are far below the nation average at the moment.

I can tell you this much, small town America is the one to be hit the most.

Our home loan was sold once from the local bank that the loan was originated to Countrywide.

And is a fixed loan under Veterans Administration, but the foreclosures in my area are starting to hit very close in my street and that is no good for the value of homes.

Originally posted by Crakeur
... NYC, will not be hit quite so hard. ... you'll see no foreclosures in the NYC area.

Really?

You better look again, Crakeur.

I just looked at manhatten, between the Holland tunnel, the Williamsburg bridge and the Brooklyn Battery tunnel, (That's in NYC isn't it?) and I see 110 properties in Pre-forclosure, At Auction or already Bank owned.

Looks like 17,000 to 37,000 +- or more city wide (I don't know your city so you tell me). That includes MLS for sale listings by realtors though.

www.realtytrac.com...|a884212&criteriatype=city&criteriavalue=new%20york~NY&ms=r&cobrandPK= 15821

You know things aren't right when there are more preforeclosures, auctions and bank owned than for sale by realtor. Lot's of competition there.


[edit on 29-3-2007 by In nothing we trust]

I'm sorry, I should have said Manhattan and not NYC. NYC encompasses Brooklyn, Queens, The Bronx and Harlem.

The link you gave shows all properties in the 5 boroughs. you need to go to the last few pages for Manhattan properties and it looks like they are mostly small 1 bedrooms and studio apartments. A 450 square foot box for $365,000? they dseserve to lose it all paying more than $150 for a studio.


The reason you won't see a big number of foreclosures in Manhattan is as I said earlier, a result of the co-op boards having ridiculous rules for purchasers. I have seen some boards that won't allow more than 50% financing. The average is more than 20% in the area. While this doesn't mean people won't lose their homes, it does mean that they have more to lose if they put 20% down. In the case of the sub prime lending, many of the borrowers not only had crappy credit scores (sub prime) but they borrowed 100% or more of the value of the home, putting no money down. If things go bad they walk and they are right back where they started. For a home where you put down 20%, you stand to lose that money and that can be a hell of a motivating factor to sell, refinance etc.

The sub prime folks can't refinance because the rates are higher, they don't have the income or the assets to support the documents and they cannot afford the payments at today's rates.

I have to go with the notion that this is just a case of stupid people buying homes they cant afford with interest only loans. I was looking for a home this past year and a bank actually offered me a 250K mortgage. I know I cant afford that. I told them I cant afford that and they said "oh sure you can." I guess if only paying interest and never touching the principle means affordability.

People are greedy and incredibly stupid. If they want to buy snake oil then sell them snake oil. Im just going to sit back and wait about 8 months for the prices to start collapsing from their artificial high and then Ill be able to afford a house. I mean REALLY afford a house. Not buy into some cheap suit lenders lies.

250K, give me a break.

I should also mention that my city/town has been quick to catch on. Theyve gone around reassessing home values now at this peak so they can milk property taxes for the next 5 years or so while the values drop.

Gotta love government! They never miss a chance to make a quick buck at the citizens expense.

Originally posted by thisguyrighthere
I have to go with the notion that this is just a case of stupid people buying homes they cant afford with interest only loans.

sort of. Sadly, many of these people were misinformed. Mortgage brokers need to make their commissions so they sell people on things that the banks are offering that might not work well for the borrower. The borrower should have an attorney who is sharp enough to see the lack of a ceiling on the bump after the fixed period ends. They often don't see this or they do, point it out and the borrower (and I've heard this a ton of times) will say "if the rates go up in three years, I'll sell for a profit and move or refinance because rates won't go up that much."

Misinformed.

Then there's the simple carelessness. My dad took out a loan three years ago. He went with an adjustable rate mortgage (ARM) with three fixed years and then it bumped. He did this because the rate was 4 1/8%. My dad didn't need this. He has plenty of money and he knew that he could always pay the loan off if he wanted to. So he took the money and invested it in a fund that had been earning him 18% or better for the past few years. His investment did fine and then turned south so he pulled the money, found other investments etc. He forgot about the 3 year period etc.

then he got the notice from the bank. There was no ceiling and his loan was jumping a little more than 2 points to 6.25%. He paid it off. His lawyer missed the cap issue. He did too. Everyone overlooked it.

What many of these people should be doing is converting these things prior to the adjustment. Many banks, knowing the issue of foreclosure is a serious risk, will lock in a rate that is based on the day's rates. There are almost no costs to this and it saves the borrower the chance of having a mortgage at next year's rates should they go up. Sure, there's a risk that rates will drop but peace of mind is a wonderful thing.