America's Hardest-Hit Foreclosure Spots

Forbes ^ | 28 January 2008 | Matt Woolsey

[Lorianne]

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

[Sir Francis Dashwood]

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...

[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’m next door in Ohio.

[Eagles6]

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.

[ReignOfError]

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.

[org.whodat]

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.

[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 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!

[ReignOfError]

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.

[Tijeras_Slim]

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

[purpleraine]

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.

[GOP_Lady]

Hey, I’ve got a great dentist. She’s really, really cool, even though she went to Michigan and gave me a root canal. :-)

[purpleraine]

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.

[ko_kyi]

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

[purpleraine]

The guy simply bought at the wrong time.

[ko_kyi]

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

Ding Ding Ding, we have a winner!

[purpleraine]

Also known as being upside down.

[PinkChampagneonIce]

“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.

[mamelukesabre]

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.

[Abigail Adams]

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

[purpleraine]

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?

[Abigail Adams]

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.