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America's Hardest-Hit Foreclosure Spots
Forbes ^ | 28 January 2008 | Matt Woolsey

Posted on 01/30/2008 3:45:42 PM PST by Lorianne

Edited on 01/30/2008 3:49:56 PM PST by Admin Moderator. [history]

What could be worse than getting behind on mortgage payments? Owing your lender more than your home is worth.

That's what's happening to homeowners across the country, many of whom just a couple of years ago opted for interest-only or adjustable-rate mortgages. For them, just as their loans reset and interest rates rose, home values began to plummet, leaving them with negative equity; this is where their mortgage is greater than the value of their home.

Of course, some homeowners started off walking a shakier tightrope than others. Many subprime borrowers acquired piggyback mortgages, where a second mortgage covered the downpayment, leaving them with negative equity from the beginning. Indeed, 79% more U.S. homes entered foreclosure last year than in 2006, according to data from RealtyTrac, an Irvine, Calif.-based real estate research firm. Congress's Joint Economic Committee estimates that 2 million Americans will lose their home over the next two years, a figure in line with most research firms and rating agencies.

Excerpt


TOPICS: Business/Economy; Government; US: Arizona; US: California
KEYWORDS: bailout; foreclosures; irvine; keatingfive
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If you've borrowed the money for the home AND the downpayment, how is it YOUR home?

I'm thinking you're renting.

1 posted on 01/30/2008 3:45:43 PM PST by Lorianne
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To: Lorianne
I have a coworker who did an interest only adjustable mortgage and is crying because now he can't afford to make payments on the house he insists he was "buying" and he got his panties all in a knot when I pointed out that with an interest only loan he's renting as he is not actually buying anything. Sorry, but I have no sympathies for any of the parties involved in these foreclosures. Stupid people lent stupid money to stupid people and I'm supposed to care....why?
2 posted on 01/30/2008 3:49:01 PM PST by PeterFinn (A muslim in the White House would be an Obamination.)
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To: Lorianne
I'm thinking you're renting.
There's a very simple test to determine ownership...
Can you sell it?
3 posted on 01/30/2008 3:50:38 PM PST by lewislynn (What does the global warming movement and the Fairtax movemractent have in common? Disinformation)
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To: Lorianne

So houses have become like cars. They depreciate the moment you “drive” them off the lot.


4 posted on 01/30/2008 3:52:42 PM PST by saganite (Lust type what you what in the “tagline” space)
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To: PeterFinn
when I pointed out that with an interest only loan he's renting as he is not actually buying anything

You are correct.

But, I also point out that none of us, no one owns their home. We lease our homes and the lease amount is property taxes.

Don't pay your tax, you have broken the lease and they can take your home.

Pitiful.

5 posted on 01/30/2008 3:52:48 PM PST by technomage (Radical Islam gives me the urge to go to the bathroom and drop a big stinking mohammed!)
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To: Lorianne

Kings County, New York is also known as Brooklyn.


6 posted on 01/30/2008 3:55:45 PM PST by decimon
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To: technomage
I paid off my home last July 3rd. I thought it was an independence day, but ... taxes, too high property taxes.
7 posted on 01/30/2008 3:55:51 PM PST by GOP_Lady (I'm a MITTen!)
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To: technomage

Sad but true.


8 posted on 01/30/2008 3:59:06 PM PST by Lorianne
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To: PeterFinn
I talked to a security guard who was making $40k a year and his wife was makeing $25k a year and they were was boo-hooing about being foreclosed on a $550K house in southern LA. My advise was: “Hey that makes zero financial sense. Move to a part of the country where you can afford a house”.” I like them and they are nice people but that does not repeal the laws of economics.
9 posted on 01/30/2008 3:59:50 PM PST by AmericaUnited
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To: technomage

The fact that one does not “own” real estate in that the State may take if for non payment of an arbitrarily determined tax makes us the equivalent of medieval serfs living on the Lord of the Manor’s property. There also was a similar systems under the Caliph in Islamic kingdoms. We may stay on it and live in his house as long as he permits it.

At one time in England, there were Freemen whose property belonged to them.

Alas, no more.


10 posted on 01/30/2008 4:01:04 PM PST by Citizen Tom Paine (Swift as the wind; Calmly majestic as a forest; Steady as the mountains.)
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To: PeterFinn

If the bank forecloses, what has he really lost? Sure, he has to move, but if you don’t pay your rent you get evicted.

Suppose I really wanted that penthouse in New York (I really don’t but just s’pose)for rent of $10,000 per month...if I don’t pay my rent do you think ANYONE really cares that I got thrown out?

Live within your means. Pay attention to what you are signing. Fifteen minutes with a pencil, a paper, a calculator, and an open mind can save much distress later.


11 posted on 01/30/2008 4:01:52 PM PST by starlifter
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To: saganite

Just before the dotcom bubble burst, there was a Japanese academic economist who came out with a paper then a laymen’s book about how homes had switched from being an asset to a liability in most developed nations. The guy did the English speaking talking head tv circuit and had a piece in the WSJ, but I simply can’t remember what his name was.

That guy was way ahead of the curve.


12 posted on 01/30/2008 4:02:50 PM PST by JerseyHighlander
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To: Lorianne

This happens with cars all the time. What is the big deal?


13 posted on 01/30/2008 4:04:42 PM PST by RightWhale (oil--the world currency)
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To: RightWhale

True, but cars depreciate a lot faster than homes. So you can drive it into the ground by the time you have to give it back it’s worth a lot less.

Still, you’re right, it’s the same deal.


14 posted on 01/30/2008 4:13:20 PM PST by Lorianne
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To: Lorianne
I feel truly sorry for all of the Michigan counties listed.
15 posted on 01/30/2008 4:15:08 PM PST by GOP_Lady (I'm a MITTen!)
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To: Lorianne

Uhm, unless you own it outright, how is it your home? Actually, try not paying taxes and see if it is really your home.


16 posted on 01/30/2008 4:16:27 PM PST by ItisaReligionofPeace
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To: PeterFinn

“Stupid people lent stupid money to stupid people and I’m supposed to care....why?”

Sometimes I think our detractors are right about some of us. We are so full of hate and spite so often, and for no reason.

Who really cares what you think?


17 posted on 01/30/2008 4:16:42 PM PST by billhilly (I was republican when republican wasn't cool. (With an apology to Barbara Mandrell.))
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To: Lorianne

A car buying success around here is that the car is still running when the final payment is made. Many don’t get that far. :)


18 posted on 01/30/2008 4:16:45 PM PST by RightWhale (oil--the world currency)
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To: Lorianne

How the heck do you get negative equity? Isn’t equity based on how much you borrow minus how much you paid?


19 posted on 01/30/2008 4:18:00 PM PST by ODDITHER
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To: ODDITHER

I think that’s a trendy way of saying you’re up the creek without a paddle.


20 posted on 01/30/2008 4:20:21 PM PST by Lorianne
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To: GOP_Lady
I feel truly sorry for all of the Michigan counties listed.

I don't feel sorry for Michiganistan one bit. I was raised there...

For years they elected 'rat bastard Democrats who were stooges of the union thugs. They nearly put their own employers out of business and built lousy cars.

The auto companies and others helped them by giving money to the 'rat bastard politicians and lavishing every pervert leftist cause they could find.

Circular firing squad... glad I left...

21 posted on 01/30/2008 4:24:11 PM PST by Sir Francis Dashwood (LET'S ROLL!)
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To: Sir Francis Dashwood

Indeed the rats. I’m glad you got out of there. I feel sorry for the non-rats who are still there. I’m next door in Ohio.


22 posted on 01/30/2008 4:25:24 PM PST by GOP_Lady (I'm a MITTen!)
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To: Lorianne
One of the prime reasons for the hyper-inflation in some housing markets was because demand increased because people who used to be ineligible for a mortgage now had a bunch of cash and this drove the home prices in some areas through the roof. Now with foreclosures in these area there will be a greater supply of houses and the price will become reasonable.

Supply and demand. It works. You can't fight it.

23 posted on 01/30/2008 4:28:43 PM PST by Eagles6
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To: ODDITHER
How the heck do you get negative equity? Isn’t equity based on how much you borrow minus how much you paid?

Equity is the value of the property minus what you owe. If the value of the property declines faster than you pay off the loan principal, you end up with negative equity.

24 posted on 01/30/2008 4:40:27 PM PST by ReignOfError (`)
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To: AmericaUnited
I talked to a security guard who was making $40k a year and his wife was makeing $25k a year and they were was boo-hooing about being foreclosed on a $550K house in southern LA.

Their income 75,000.00 gross, the bank deserves that one back, tell them to draw up a deed and have an attorney deliver it. Two hundred thousand would be high for a home on their income.

25 posted on 01/30/2008 4:41:58 PM PST by org.whodat (What's the difference between a Democrat and a republican????)
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To: GOP_Lady
Indeed the rats. I’m glad you got out of there. I feel sorry for the non-rats who are still there.

I know a few non-rats still there. They are not happy campers.


I’m next door in Ohio.

Well, for you it is a possible plus. When the U of M football team starts getting bad recruits because nobody wants to live there, at least the Ohio State Buckeyes might win more often because the better players will got to school there instead!

26 posted on 01/30/2008 4:45:25 PM PST by Sir Francis Dashwood (LET'S ROLL!)
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To: Citizen Tom Paine
The fact that one does not “own” real estate in that the State may take if for non payment of an arbitrarily determined tax makes us the equivalent of medieval serfs living on the Lord of the Manor’s property.

Serfs didn't elect the Lord of the Manor. I don't enjoy paying taxes any more than anyone else, but I sure do like all of these roads, schools, parks, cops and firefighters.

27 posted on 01/30/2008 4:45:30 PM PST by ReignOfError (`)
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To: Lorianne

Albuquerque’s forclosure rate was down 26% last year.


28 posted on 01/30/2008 4:48:10 PM PST by Tijeras_Slim
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To: technomage

Actually you’re incorrect. The property tax and the loan are liens. If you’re on the title, you own the house. Here’s a little test. Make your payments and see if the county or the bank can sell your home. Can’t do it.


29 posted on 01/30/2008 4:50:02 PM PST by purpleraine
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To: Sir Francis Dashwood
Hey, I’ve got a great dentist. She’s really, really cool, even though she went to Michigan and gave me a root canal. :-)
30 posted on 01/30/2008 4:50:54 PM PST by GOP_Lady (I'm a MITTen!)
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To: Lorianne
There are many people paying only the interest.

The key to your question is the adjustable loan, the index it is tied to and the term of the loan.

The people who are in trouble are people who ignored the adjustable rate part or who were mislead by a corrupt loan officer.

There are some sound investment strategies based upon interest only payments.

31 posted on 01/30/2008 4:53:10 PM PST by purpleraine
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To: Lorianne

Wow, that list of counties shows the central valley of CA is getting crushed. Also FL.


32 posted on 01/30/2008 4:54:29 PM PST by ko_kyi
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To: JerseyHighlander

The guy simply bought at the wrong time.


33 posted on 01/30/2008 4:54:44 PM PST by purpleraine
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To: purpleraine

“There are some sound investment strategies based upon interest only payments.”

Ding Ding Ding, we have a winner!


34 posted on 01/30/2008 4:55:23 PM PST by ko_kyi
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To: ODDITHER

Also known as being upside down.


35 posted on 01/30/2008 4:57:18 PM PST by purpleraine
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To: Citizen Tom Paine

“At one time in England, there were Freemen whose property belonged to them.”

Not if you are referring to any time after 1066, when William the Conqueror took England from Harold. William, who consequently owned all the land, parcelled it out to his friends ON THE CONDITION that they provide him with personal loyalty and manpower and supplies to fight wars. These friends subsequently gave land to their subordinates, requiring similar duties in exchange. Later, that obligation of personal service was transformed into a system of taxation and obligations in kind. If a landowner did not meet his obligations to his lord, he not only lost his land but, frequently, his life too as forfeit for his disloyalty.


36 posted on 01/30/2008 4:59:32 PM PST by PinkChampagneonIce
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To: ReignOfError

So far, I’ve never needed a cop or a firefighter. So I’m not getting my money’s worth there. I’ve no use for schools and parks. That leaves roads. I’d say I’m paying too much.


37 posted on 01/30/2008 5:00:01 PM PST by mamelukesabre
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To: Lorianne

I know a couple that took out a home equity loan to pay the downpayment on a house. I scratched my head when they told me that. I guess they’re idiots. :-0


38 posted on 01/30/2008 5:07:48 PM PST by Abigail Adams
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To: Abigail Adams
This is a common investmentr strategy and I can tell you it fits the financial goals of many people.

Have I wondered into some kind of financial twilight zone on this thread?

39 posted on 01/30/2008 5:10:48 PM PST by purpleraine
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To: purpleraine

What is the strategy? To use the money they would have put into the downpayment for buying stocks or something? I’m not well-versed on this. I thought it was just a way for people to buy a house that’s bigger than they can afford.


40 posted on 01/30/2008 5:15:43 PM PST by Abigail Adams
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To: Abigail Adams
The second house can be a rental or they can move-in and rent out the first house.

If you put 50,000 in the market and it goes up 10% you make 5,000. If you put 50,000 into a 500,000 home and it goes up 10% you make 50,000.

RE is a good longterm investment for many people. With the rent and tax deductions creating a positive cash flow it's a double pay off.

We are financial planner. You have to proceed with caution. One paragraph from some guy or gal on the net does not constitute good advice. There are many variables and it should fit your situation.

Talk to someone you trust who can show you their success or that of their clients.

41 posted on 01/30/2008 5:20:18 PM PST by purpleraine
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To: Lorianne

I guess this is where being older is an advantage. This happened during the early 80’s. They also had interest rates for mortgages at about 15% believe it or not. With negative equity, people couldn’t remortgage even when rates came down. I knew a lot of crying people.

My mortgage was only 13% and I was happy, believe me.


42 posted on 01/30/2008 5:20:45 PM PST by I still care ("Remember... for it is the doom of men that they forget" - Merlin, from Excalibur)
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To: Abigail Adams

PS. In refinancing your home you may increase your tax deduction and possibly get a lower rate.


43 posted on 01/30/2008 5:21:37 PM PST by purpleraine
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To: saganite
So houses have become like cars. They depreciate the moment you “drive” them off the lot.

Cars depreciate because they decline in value as they wear. Some have better resale value than others.

Properties typically retain a much higher residual value because of the real estate they are on, not the structure on the real estate.

The real reason housing prices are declining is not depreciation but market economics. There are more houses for sale to fewer buyers.

44 posted on 01/30/2008 5:25:57 PM PST by pfflier
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To: Lorianne
"...that 2 million Americans will lose their home"

Get ready here comes the sob story of the new homeless just in time for an election. In fact they are not losing their homes, they are relinquishing property with their name on the title and moving to a rental unit somewhere else.

45 posted on 01/30/2008 5:39:36 PM PST by pfflier
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To: mamelukesabre
So far, I’ve never needed a cop or a firefighter. So I’m not getting my money’s worth there.

The presence of cops deters crime, and the firefighters are putting out fires before they reach your house. So even if you don't have direct contact with them, you benefit from their efforts.

I’ve no use for schools and parks.

Your community has use for workers who can read, and children who aren't playing in the street. You benefit from a livable community, whether you directly make use of the facility or not. I have never been hospitalized and don't attend church, but I'm glad my neighborhood has churches and hospitals.

That leaves roads.

Which also benefit folks who don't drive. Even if you always walk to the store, the roads allow the stuff to be there for you to buy.

I’d say I’m paying too much.

That's something to take up with your local authorities. They do answer to you. But not to you alone -- and if your argument is that taxes should be cut by eliminating schools, parks, cops and firefighters, don't be surprised when folks don't rally around your message.

46 posted on 01/30/2008 5:41:24 PM PST by ReignOfError (`)
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To: Tijeras_Slim

Tijeras, may I ask where you found that information about Albuquerque’s foreclosure rate?


47 posted on 01/30/2008 5:45:15 PM PST by Muleteam1 (Spongebob Squarepants for President!)
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To: purpleraine
If you put 50,000 in the market and it goes up 10% you make 5,000. If you put 50,000 into a 500,000 home and it goes up 10% you make 50,000.

You would gross $5K on the $50K infusion, and would gross $55K total.

48 posted on 01/30/2008 5:58:34 PM PST by EVO X
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To: saganite

They throw in the closing costs into the mortgage. So they owe more than the sales price of the house. Also if you sell, there are taxes to pay and if you use an agent theres another 3 to 6% of the cost.


49 posted on 01/30/2008 6:18:12 PM PST by sharkhawk (Here come the Hawks)
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To: saganite

I bought mine in 1981 for $90,000. I can sell it for ~$375,000 right now. In fact, if I drove a bulldozer though the front door I could probably get the same amount of money. I’m in the southwest Chicago suburbs near the intersection of two expressways and about a 5-iron from a forest preserve.


50 posted on 01/30/2008 6:26:13 PM PST by RonF
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