Posted on 05/19/2010 10:56:35 AM PDT by SeekAndFind
One in every seven U.S. households with a mortgage ended the first quarter behind on payments or in foreclosure, although a peak in unemployment could mean repayment stress is easing, the Mortgage Bankers Association said on Wednesday.
While the rate of new foreclosure actions has slowed, the stockpile of loans that are seriously delinquent or in foreclosure means a long path to recovery for the U.S. housing market.
"It's like shutting off the oil leak, but you still have a lot of oil in the Gulf to deal with," Jay Brinkmann, the MBA's chief economist, said in an interview.
Loans that are 90 days or more past due or in foreclosure represent a historically high 68 percent of all problem mortgages. High unemployment is overwhelming efforts by lenders to alter loan terms to borrowers.
Looming foreclosures and short-sales "suggest we will have more house price declines where we'll see a bottoming of the price decline very late this year into early next year," said Mark Zandi, chief economist with Moody's Analytics in West Chester, Pennsylvania.
Prices have toppled about 30 percent peak to trough on average but have stabilized in recent months.
"But the good news is that early-stage delinquencies and foreclosures are falling, so we should see a definitive rise in home prices by the spring 2011 selling season," said Zandi.
The combination of loans in foreclosure and those that are at least one payment past due declined to 14.01 percent on a non-seasonally adjusted basis from a record 15.02 percent in the fourth quarter, according to the MBA's National Delinquency Survey.
New claims for unemployment insurance in the first quarter were higher than expected, the MBA said, which stymied improvement in the 30-day delinquency rate.
(Excerpt) Read more at reuters.com ...
Those of us who PAY ON TIME and BOUGHT WITHIN OUR MEANS are bailing out those who DO NOT PAY and OVERBOUGHT.
Change.
I know several people that bought within their budget and means but the economy just fell out their business and as you make know the banks loan-modifications are a joke and not happening.
The banks keep the money, has not helped the homeowners and people are simply not buying and business is folding everywhere.
What a bunch of suckers! [/s]
“Those of us who PAY ON TIME and BOUGHT WITHIN OUR MEANS are bailing out those who DO NOT PAY and OVERBOUGHT.”
If you lose your job will you still be paying on time or become a deadbeat as you are suggesting those that have lost their jobs must be?
You tough guys be patient. Our President is going to give all you middle class (white) oppressors a taste of his medicine. That medicine is economic hardship.
What people do not seem to grasp yet is that the scope of this is so, SO much bigger than just subprime. Those loans were simply the first link to break in a horrendously over-stretched chain of debt.
We went from $5 trillion in mortgage debt in 2000 to $11 trillion in 2007. That means that more than $5 trillion in mortgages were originated in a short 7 year period from 2000 - 2007 when the market was completely over-priced. Think about that.
To put a trillion into some kind of perspective, 1 trillion (just ONE) is $1 per second for 32,000 years.
During that same timeframe, we had a NEGATIVE national savings rate. Savers weren’t cool. Big spenders were very cool.
Of the 5 - 7 million mortgages that are 90 days or more delinquent right now, 75% of them were originally packaged as “traditional prime”. The typical “prime” loan in 2005 would have fit the definition of a subprime loan in 1995.
It is not accurate to say that SOME of the loans made during that time were bad... practically ALL of the loans made during that time were bad... no matter what label was put on them (prime, subprime, Alt-A or otherwise)... because the market was over-priced and millions of jobs existed only because of the artificial real estate boom.
If the real estate/mortgage market had been truly healthy in 2008, except for those darn subprime loans, the market would have absorbed those loans and contiued on its way without missing a beat.
But the market was not healthy, and it has not been healthy for a long time. The market became bloated with mal-investments because the Federal Gov’t got involved and decided that everyone should have a mortgage.
If everyone had a mortgage, they would feel richer and would vote for the politician who made it possible for them to buy a home (what irony that citizens voted for politicians who sold them into a slavery of debt in exchange for imaginary prosperity!)
In order to get people to buy a house, politicians rigged the tax code to favor real estate investment over other investments, the Federal Reserve kept rates artificially low for way too long and Fannie/Freddie relaxed their underwriting guidelines for ALL types of loans.
Real estate prices skyrocketed, which had the perverse effect of making more people want to buy even more of an already over-priced commodity.
A mania was created by the government and the free-market was NOT allowed to work. Now the government is supposed to fix it and the free market is being blamed. How backasswards!?!
A 2008 study of 4 million mortgages (51% of which were supposed to be prime loans), found that “low or no down payment” was the #1 common denominator in foreclosed mortgages.
Funny things is, the very people complaining the loudest right now about predatory lending were the loudest voices calling for 100% no-down payment loans back in the 2000’s. If someone would have suggested that people should be required to put more money down in order to qualify for a mortgage back in 2000, they would have been called a racist and an elitist... and those are just the names that are fit for print.
Some people are screaming that we should go “cold turkey” and require 20% down for any mortgage. They have absolutely no idea that catastrophic damage that would do to the real estate market. But it feels good and it sounds good and politicians are only too happy to pass any and all laws that populist anger is calling for now. Such as the Financial Reform bill that is going to cause untold horrific unintended consequences.
It’s true that requiring a significant down payment would have prevented prices from skyrocketing and would have greatly reduced the size of the bubble. But, we did not do that. We allowed the real estate bubble to grow to $11 trillion. And here we sit...
The problem is that the amount of existing mortgage debt is so huge and savings are so nonexistent, that raising the minimum down payment now will take badly needed buyers out of the market, which will only worsen the downward spiral.
We shouldn’t have gone down this “owning a house is an entitlement and a down payment is an obstacle to home ownership” road in the first place. Now it is going to be almost impossible to put the genie back in the bottle.
There is no easy answer to this problem.
A certain amount of pain has to happen.
Jobs would help. Jobs are key. But they need to be real jobs where we make something and sell it to other countries. Or jobs that allow us to keep money here and not spend it buying things from other countries (Homegrown oil, coal and nuclear come to mind). We desperately need those types of wealth-creating jobs, NOT more government jobs that only add to our debt.
Unfortunately, during the heyday, we created a tax code that punishes success, a regulatory environment that suffocates business and a legal system that allows millions of frivolous lawsuits against businesses.
None of those things create jobs... those things are anti-business... they kill jobs.
So what are we doing now? Raising taxes, increasing regulation and making it more difficult to do business in America.
The insanity continues.
I think it’s on the verge of becoming ‘trendy’ to default. No specifics to link to, just from general reading.
The banks are a different animal, no better no worse IMO, just different.
The insanity continues.....
It will take a long time (years) for the debt to be settled out in the system. Plus add to that all the inventory of empty houses in this country with no prospect of selling them. Detriot is about to bulldoze 10k houses. Then back up to the basic materials industry that supplies the housing industry, concrete, forest products, appliances, furniture and on and on. The dim congressmen that blackmailed banks to make bad loans created this mess and are going to retire as free men and live out their lives on our dime. What the hell is this?
I won’t come around asking someone else to pay my mortgage, Code.
Playin’ the sympathy game won’t work with me: I’ve paid my dues time after time.
No it ain’t easy, as my kid doesn’t attend public schools, my spouse has had pay cut by 1/3 after Hussein was elected, etc. I’m not rich, but I’m not about to be government dependent.
I’ll do what I have to do: even if I have to use the “extended family” option. But leach off of my fellow citizens via the federal government? Nope.
By the way, I DO feel for anyone who is truly in need...so I do give to charities. Not everyone who works hard deserves the crap that comes their way. Certainly I won’t deserve it if it comes MY way.
Don’t know if I’ll pay on time if my job gets lost. But I won’t be asking YOU to pay my bill. And I won’t spend as much time on the internet chatting on boards, that is for sure. ;-)
My point is that to call someone a deadbeat when they lose their job is just plain stupid. People seem to think other people that do not pay their mortgage are all right rich guys with McMansions and just don’t want to pay. We have 15+ million people out of work. I hardly think of those they all own McMansions.
You’re right—I should’ve been a bit more clear. Not everyone who loses their job is a deadbeat. Not at all did I mean to imply that.
There ARE millions of people who bought more than they could afford, though.
No one “forced” them into it, they screwed up. Now Hussein and his ilk are taking money from ME to pay for their mortgage paydown.
Anyone buyin’ ME a dinner? Nope. Meanwhile, the value of MY property has gone down. My TAXES have gone UP. Meanwhile, John Doe who makes $50,000 a year is being foreclosed on in his $400,000 house and the gubmint is takin’ my hardearned bucks to help John get out of his predicament. Or something like that.
I keep pluggin’ away, doin’ the working class Joe Schtick, because I do NOT want to be a deadbeat. I keep my spending relatively on the low side, too. I sure don’t see anyone feeling sorry for ME because I’m having to work harder to pay for the bailouts of others who are gettin’ welfare.
That being said, I DO know there are true cases of pain out there—people who are TRUE victims of the system. Thing is, most of those people aren’t walking around with their hands out. Those people are the ones trying to make it work.
I am truly sorry if you’re one of those people who’ve been a victim of the Hussein “housing fix” and “stimulus fix” and “auto industry fix”, CodeToad. I hope things get better, and everyone who WANTS a job will get one. A real one, not some census, bureaucrat, government bloat crap.
Not everyone who loses their job is deadbeat—I agree. I know there are people out there trying to meet their obligations JUST like me. :)
But some folks are gonna have to pony up to the bar and start drinkin’ beer instead of the chilled chardonnay or fine whiskey for a while. ;-)
“There ARE millions of people who bought more than they could afford, though. No one “forced” them into it, they screwed up. “
I totally agree, and there are many who voluntarily don’t pay because they are under water and believe this is a good business decision. The entire system has broken down.
I feel screwed because I have done as best I can and we are doing well, but where has that gotten me? In 2001 I had a company I was a VP at go under after being told, lied to, that the company’s financials were sound. Surprise. We were bankrupt. The company President and CEO both took the money and ran. When I confronted them they said to file bankruptcy, keep the money, because that is what they were doing. The CEO walked with over $100 million. Today, I am seeing people walk away from million dollar homes, poor people walk away from their homes. It is the same thing as in 2001 just different money. This nation, this world, has hit bottom.
If I had been more of a crook I could have made even more money than I have. It seems that is expected.
Mugabe-ism?
How...all so ..UNEXPECTED!!!
THAT is something I do not agree with. When one makes a commitment, one needs to keep it. I've heard clowns on the RADIO promoting such immoral behavior. Of course, I guess as the society continues to deteriorate...keeping promises has gone the way of the dogs in our marriages, etc., the next step is to do break them in other arenas.
Not just the breaking of the promise, but the complete reversal of its effects--turning the evil action into something "smart". Ugh.
Absolutely SPOT ON! Thinking about copying your post and pasting it to my facebook page!
Sorry for the delayed reply... be my guest!
Enough is enough.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.