rssOnly Forceful Action Can Change Foreclosure Crisis Tide
Monday, July 13, 2009 at 6:00 am
- 41 Comments
Illustration by: Matt Mahurin
The time may be ripe for a shift in strategy as the foreclosure machine grinds on, and new foreclosure notices reach the troubling milestone of 10,000 per day.
A weak economy has added job losses and falling home values to the mix of toxic loans that prompted the crisis two years ago, making an already difficult situation even more severe. Government measures from foreclosure freezes to loan modifications have only served, so far, to stall the inevitable – and to create an ominous backlog of millions of pending foreclosures. Plus, more than one in five homeowners now owe more on their mortgages than their homes are worth, according to the real estate website Zillow.com. No one can predict with assurance whether those underwater homeowners will keep paying on their loans, or take a walk.
Illustration by: Matt Mahurin
And as bad as things may seem now, there’s still a long period of pain to come: A steady drumbeat of foreclosures, and a stagnant housing market, for the next several years ahead, at a minimum. Some experts see an even more dire picture: Five to 10 years, in California alone, of record high foreclosures. No significant home prices increases nationwide on the horizon in the next year. Or the year after. Or for as long as the next five years. Some 9 million foreclosures are expected by 2012.
While economists search for signs of green shoots, “no one’s really saying anything about this,” noted Guy Cecala, publisher of Inside Mortgage Finance, a Bethesda, Md. publication that covers the lending industry. “There’s really no good news out there, other than we can’t possibly get in much worse shape than we already are.”
Given this bleak scenario, some say it’s finally time for more forceful action. Congress and the Obama administration need to move boldly to stop foreclosures, requiring lenders to go beyond what Calculated Risk dubs “extend and pretend” repayment plans, and actually write down loan balances. And the Obama administration should move quickly to bring more players to the table to pick up the pace of those loan modifications – including the Internal Revenue Service. Servicers might be more aggressive about writing down loans if they’re sure it won’t create tax liabilities for trusts they represent, an impediment that currently stands in the way of getting more mortgages modified, said Kathleen Engel, a Cleveland State University law professor who studies mortgage securitizations.
There’s more to be done, Engel said: Expand the benefits of the homebuyer tax credit up the income ladder, offering it to move up buyers with existing homes as well as first time purchasers. Even direct government loans to borrowers, to keep them in their homes, shouldn’t be dismissed.
“Now is the time to do something,” Engel said. “There are a lot of things to be very concerned about right now. There are people underwater who aren’t making good on their home equity loans. With job losses increasing, more people aren’t able to make their mortgage payments at all. And REOs (Real Estate Owned properties) are driving down home prices. We really need to be trying some new things.”
Engel’s view was echoed by the Obama administration, which recently chastised lenders for their lack in progress in modifying loans. “We believe there is a general need for servicers to devote substantially more resources to this program for it to fully succeed and achieve the objectives we all share,” Treasury Secretary Timothy Geithner and Housing and Urban Development Secretary Shaun Donovan said in the letter, which was sent to to 25 mortgage-servicing firms.
Only about 270,000 borrowers have been offered loan modifications under Obama’s Making Home Affordable program, the Treasury Department says — a far cry from its much more ambitious goal of helping 4 to 5 million homeowners rework their loans.
Geither and Donovan weren’t the only ones speaking out. As TWI reported, a small band of House Democrats last week urged for more action beyond voluntary loan foreclosures. Senate Finance Committee Chairman Chris Dodd (D-Conn.) and 19 other Senators also petitioned Geithner to adopt a more aggressive strategy for loan modifications specifically for homeowners with option adjustable rate mortgages scheduled to reset to higher payments over the next four years. In addition, the Washington Post reported the Treasury Department also is putting together a “Plan C” – a new strategy – to head off defaults in commercial real estate and to tackle delinquencies tied to job losses.
It seems like a full frontal assault. But it may not be enough.
SLOWING DOWN THE INEVITABLE
In reality, there’s little political will to force lenders to write down loan balances. Congress defeated mortgage “cramdown” legislation, which would have allowed bankruptcy judges to cramdown, or reduce, the terms of a mortgage to keep a borrower in his home. The Obama administration stood by as the measure failed. Only that small group of House Democrats still wants to revive it. Bailing out homeowners still runs smack into the wall of moral hazard, in the public’s mind, and even the worsening crisis hasn’t changed that. “I don’t know why this is still true, but people are willing to roll over and give billions of dollars to banks, and they get pissed off about the idea of their next door neighbor getting a break,” said Sean O’Toole, president and founder of ForeclosureRadar.com,which compiles foreclosure data for the California market.
Instead of pressing for more loan modifications, it may be time to conclude that all the programs thrown at the mortgage problem haven’t done much to fix it. The most infamous, Hope for Homeowners, intended to help 400,000 borrowers, resulted in just 25 loan closings. Various state and voluntary foreclosure freezes only gave a pause to foreclosures. And most foreclosure prevention programs were created two years ago, when subprime loans were the major cause of foreclosures, not unemployment and a faltering economy.
These days, if you can’t afford your mortgage payment because you just lost your job, it really doesn’t matter whether you have a toxic Option ARM or a standard 30-year fixed loan. You’re still in default.
“The bad economy is what’s driving foreclosures right now,” Cecala said. “Even if there were no Pay Option ARMs out there, many homeowners would still be in deep trouble.”
Foreclosure prevention efforts, at this point, are “just slowing down the inevitable,” he added. “You can take a look at any one of these programs and you won’t find a lot of value in it.”
The Obama Administration, for example, recently expanded the refinancing options available under Making Home Affordable, to include borrowers who are more deeply underwater on their loans. It sounds good - but it’s unlikely to pan out, Cecala said. Borrowers may not qualify for refinancings, under new underwriting guidelines from Fannie Mae or Freddie Mac that are far stricter than when they originally applied for their loans. Or borrowers may have to pay such high fees or rates that it won’t make the refinancing worthwhile. In places like California and Florida, some homeowners are so far underwater they still won’t qualify.
THE NUCLEAR OPTION
The big question, as Cecala notes, is whether foreclosures can be stopped at all. Which brings up the nuclear option: Unleash the pent up foreclosures and get the pain over with. Consider the backlog in California alone. More than 3 million households are expected to end up underwater eventually, according to O’Toole. As of now, some 851,000 households are delinquent on their mortgages. Of those, 264,977 already have received a foreclosure notice – but their properties have yet to be sold at auction. Only 22,245 foreclosures were completed in June, Foreclosure.com said.
Given that possibility that half of the the 3 million underwater homeowners or more also will eventually lose their homes, that means that working through the entire backlog could involve between five to 10 years of record high foreclosure levels, O’Toole said.
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Nationwide, the picture isn’t much better. After hitting a high point of about 900,000 in November 2008, REO inventory, or bank-owned foreclosures, slowly decreased over the last six months, down to about 770,000 in May, according to RealtyTrac, an online foreclosure database.
But don’t get your hopes up just yet.
“We believe the reason for that decline is largely due to the various foreclosure moratoria and state laws extending the foreclosure process that have been in effect in recent months,” said Daren Blomquist, a RealtyTrac spokesman. “As some of those moratoria were lifted in March and April we saw a substantial spike in initial foreclosure notices and we believe that will translate into a spike in REOs as well over the next several months.”
The bad news continues: “In addition, we believe there is still a pent-up supply of delinquent loans that have not even hit the foreclosure process yet because banks are taking longer to start the foreclosure process after a loan goes delinquent – probably partly because they are overwhelmed with the volume of delinquent loans and partly because they are more aggressively trying to modify or refinance loans rather than foreclose.”
Blomquist added that the “twin threats” of risky loans and high unemployment will ensure a steady drumbeat of high foreclosure activity, for at least the remainder of this year.
The radical approach would be to stop staving all this off, take the pain, push the foreclosures through the system without delay, and get to the bottom. In California, at least, that could clear out the foreclosure backlog in about two years, O’Toole estimated.
“I’m not necessarily advocating that we should simply dump all the foreclosures at once – I actually think that could be disastrous,” he said. “But I think dragging them out over the next 5 to 10 years is an equally bad choice.”
But if there’s little political will to bail out homeowners, there’s even less stomach for announcing a strategy to bail on them entirely. It’s not the sort of thing that can be said in pubic. Even if there’s some logic to it.
AN ENTIRELY NEW DIRECTION
And that opens the door for a third way.
Alan Mallach, a senior fellow at the National Housing Institute and the Brookings Institution, took a close look at the housing market in Phoenix, where prices have declined by as much as 60 percent in the past few years. Houses that sold for a quarter-million dollars now go for $90,000 or so in the booming REO market. Buyers – both investors and individuals – are realizing that at those prices, they have options, if they are willing to be patient. They can hold on to those homes for six or eight years, rent them out until they earn their money back, and wait until they can possibly sell them at a profit.
Most importantly, the new owners often are more than willing to rent back the homes to their former owners, a situation that benefits both sides. Borrowers can stay in their homes, with rent payments they can afford. The homes don’t sit vacant, abandoned, or vulnerable to vandalism, which can drive down surrounding property values. “You don’t kick the person out,” Mallach said. “And many of the investors say it’s an advantage not to have to look for a new tenant.” The situation, he said, provides evidence of “the beginning of some sort of leveling off that’s going on” in neighborhoods hit with foreclosures, at least in Phoenix.
Based in that experience, Mallach these days reminds local governments and neighborhood development groups not all investors are enemies, despite their reputations. Communities can both encourage investors as partners in buying and fixing up bank-owned houses – and warn them they’ll come down hard if they sink too far into speculation. And there are more encouraging signs at the local level. As Philadelphia, and some other cities have found, mandatory face-to-face foreclosure mediation between borrowers and servicers has proven to help avoid foreclosures, without dragging out the process.
A combination of these kinds of ideas – smaller scale, targeted to the needs of particular markets – may a quicker and more effective blueprint for tackling the crisis, especially in the absence of an aggressive government approach.
“Maybe we’re coming to the realization that we can’t loan mod our way out of this,” Mallach said. “There’s no magic solution. There’s no government riding in on a white horse to buy up all the bad assets.”
THE WILD CARD
Congress and the administration, in fact, haven’t exactly come up with anything “radical and bold” yet to tackle the crisis – and it’s unlikely they will turn around and do so now. Instead, Mallach noted, Realtors, the real estate industry, and some economists are spending unnecessary time and energy trying to declare a bottom to the crisis and look for any evidence of good news. It’s a great time to buy a house, they insist.
But there are still 9 million foreclosures expected by 2012, according to the Center for Responsible Lending. Goldman Sachs estimates 13 million foreclosures on all types of loans by 2014. And a continuing decline in home prices for the majority of housing markets is predicted for at least the next two years, says a report by mortgage insurer PMI.
As Malllach noted, policies to encourage renting are one option to counter all this. Even with all their limitations, loan modifications could be another. It’s “a really crucial time” to jumpstart them right now, said Cleveland State’s Kathleen Engel. Servicers finally have gotten fully staffed and up to speed, after a slow start. Clearing away potential tax liabilities for trusts due to aggressive loan modifications could help, she said. So could ratcheting up the pressure on lenders and servicers alike to complete more of them.
But challenges remain. REOs are driving away other sales, keeping downward pressure on home prices, Mallach noted. Stronger markets that have been immune so far to plunging home prices, such as New York City, New Jersey, and the Philadelphia suburbs, still remain at high risk for a downward spiral. Frustration keeps growing over a lack of progress in anything being done to stem foreclosures, creating anger in neighborhoods, and even a movement to put squatters in vacant homes.
Beyond that, underwater homeowners remain a huge wild card, with the chance that a significant number of them will stop paying their mortgages in the near future clouding any hope for a quick recovery.
When it comes to the foreclosure machine, things are probably even worse than they seem. That’s a starting point for any strategy to challenge a housing crisis isn’t ending anytime soon.
41 Comments
Pingback posted July 13, 2009 @ 7:15 am
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Pingback posted July 13, 2009 @ 7:41 am
[...] Random Feed wrote an interesting post today onHere’s a quick excerptIllustration by: Matt Mahurin The time may be ripe for a shift in strategy as the foreclosure machine grinds on, and new foreclosure notices reach the troubling milestone of 10,000 per day. A weak economy has added job losses and falling home values to the mix of toxic loans that prompted the crisis two years ago, making an already difficult situation even more severe. Government measures from foreclosure freezes to loan modifications have only served, so far, to stall the inevitable – an [...]
Pingback posted July 13, 2009 @ 11:19 am
[...] Post By Google News Click Here For The Entire Article Buy and Sell Real Estate Without Paying a Broker! Share and Enjoy: These icons link to social [...]
Pingback posted July 13, 2009 @ 1:09 pm
[...] Government, Obama administration at 10:09 am by LeisureGuy Mary Kane of the Washington Independent sounds the alarm: The time may be ripe for a shift in strategy as the foreclosure machine grinds on, and new [...]
Comment posted July 13, 2009 @ 12:50 pm
“Congress and the Obama Administration need to move boldly to stop foreclosures, requiring lenders to go beyond what Calculated Risk dubs “extend and pretend” repayment plans, and actually write down loan balances.”
The economy is autonomous and it does not take its marching orders from Washington. The optimal solution is to let professionals in the private sector cope with the problems at hand. Unfortunately today our elected officials are woefully out of touch with anything outside the Beltway, power-hungry, out of control, and responsible to no one.
The president and Congress will discover as many of us did months ago that the economic collapse isn't over, and that it cannot be prevented.
Comment posted July 13, 2009 @ 1:40 pm
I'm so sick of hearing about” what to do,” “what to do”, We all know what to do. The important thing at stake here is the American family. And turning us all from home owners to renters is bull-shit. Enforce the frigging lending laws and prosecute fraudulant, misrepresented loans, protect the consumers. Stop letting people (banks) dance all over like they own the joint when they don't own squat. Let the banks lose. Let them pay for for their shoddy, reckless lending practices that left most of our homes in the loan pool, and either jump in that pool and come back up with some proper legal paperwork on these homes they 'claim' they own or forfeit their interest in them.
Pingback posted July 13, 2009 @ 3:54 pm
[...] The time may be ripe for a shift in strategy as the foreclosure machine grinds on, and new foreclosure notices reach the troubling milestone of 10,000 per day. A weak economy has added job losses and falling home values to the mix of toxic loans that More Foreclosure News [...]
Comment posted July 13, 2009 @ 3:52 pm
It is really time for everyone to stop making their home mortgage payments–even if they can.
We the people must come together and save ourselves from the dastardly, corrupt, and heartless elite that run our country.
They can't hear us.
Stop making your payments.
It is the only truly patriotic and American thing you can do right now.
Show your support for your country, your state, your community and your neighborhood by flying the American Flag on your home to demonstrate your support for an end to the tyranny of Big Government, and Big Business and to proclaim that you are a true American Patriot and have stopped making your payments in support of freedom, justice and the people and families of our once great country.
Comment posted July 13, 2009 @ 10:36 pm
Why is it that the PMI on a house mortgage which covers the house in case of foreclsoure is not being looked at from the view of just how much is flowing to the banks as long as the house sitsa in foreclosure or if the PMI was to cover the entire mortgage then if the PMI is paid after foreclosure then why are collectors still chasing people for the default?
Comment posted July 13, 2009 @ 10:45 pm
That's what got is into this mess in the first place, “professionals” in the private sector. Give me government amateurs any day.
Comment posted July 13, 2009 @ 10:47 pm
On the other hand if we are going to start writing down the principal, let's do it for everyone, not just those in foreclosure. Once you go down that road it's going to be hard to hit the brakes…
Comment posted July 13, 2009 @ 11:02 pm
The majority and I mean the vast majority of the housing crisis is due directly to unregulated, illegal, misrepresented, preditory, low down lending. Going unprosecuted because obviously once your in a financial bind you can't afford adequate legal representation, even if major lending laws were broke. The banks know this and have deep pockets with teams of lawyers to step on you like a bug if you dare tried to enforce the law. We've helped them grow stronger with dollars so this can continue. We've helped them screw us! Illegal lending should be prosecuted to the fullest extent of the law, and the homeowners need representation, not a modification of something that was illegal to begin with. And your right, everybody should stop paying the banks one red cent. And stand your ground, out right revolt.
Comment posted July 13, 2009 @ 11:52 pm
What the HEL? is a matter with you??? Let them fail and lose their homes and let responsible borrowers pick them up who will pay. STOP kicking the can down the road you fool!!
My God what has the media and people like yourself done with your collective minds and more importantly souls?
SHAME ON YOU ALL!!!
Comment posted July 14, 2009 @ 12:04 am
Do you read what you write? Do you understand that most of these homeowners who are in line to lose their homes were delt illegal loans? Do you understand these were misrepresented, liar loans? Should the homeowners have been more informed and not just trusted the lender to follow federal lending laws? Yes. Should they pay for their ignorance by losing their homes? No! Its not the homeowners who were acting irresponsible.
Pingback posted July 14, 2009 @ 3:02 am
[...] The end might be in sight for this foreclosure, but not for the housing market: [...]
Comment posted July 14, 2009 @ 4:05 am
No one wants to hear it but the nuclear option; allowing the foreclosures to just happen is really the only option. The taxpayers will revolt if they have to pay for it, the banks have to clear out the inventory or they'll go under. Politicians can scream and gnash their teeth all they want but the nuclear option is going to happen. Politicians can only delay it not prevent it. Politicians delaying it only make it worse
Comment posted July 14, 2009 @ 4:14 am
While you're at it, how about giving me a free house? I worked tons of hours and (at times) multiple jobs and held off buying until I could put down a substantial down payment on a decent home without taking on debt I couldn't reasonably pay off. So now I'm supposed to pay off other people's mortgages while I continue to rent and the government props up house prices? AS IF!!
Comment posted July 14, 2009 @ 4:53 am
Answer my question. Why can't illegal lending be prosecuted.? Why is everybody acting like its alright? Fine, if the loan was legal we can do it your way. and I didn't say 'fair' because theres a difference between illegal and unfair. But for the loans that were truly misrepresented and in violation of federal lending laws enforce the stiffest penalties. The rest will have to see it through. Thats what would work without turning America into tent city.
Comment posted July 14, 2009 @ 4:58 am
The only real solution is foreclosure. You can't write down principal balances. What kind of solution is that? And what do those of us that didn't buy homes we could not afford get? Am I going to get a principal write down even though I can afford my home? Or do I have to stop making payments so “I get my piece of the bailout pie”?? I'm certainly willing to stop making payments if I can knock $100k off my loan. Everyone I work with says the same thing, If the banks start writing down principal balances they will stop making payments so they get a reduction too.
Let the foreclosures happen. When prices return to levels average families can afford the homes will sell. And those families will have enough money left after paying the mortgage to spend on consumer goods. That is how our economy will recover. Not by having the government hand out freeking $500 stimulus checks. Our consumer driven economy would be going like gangbusters if housing was affordable.
Comment posted July 14, 2009 @ 5:20 am
Let the house of cards fall already, most modifications are just band-aid's for the time being.
Comment posted July 14, 2009 @ 5:26 am
If the government stopped messing with the housing market and let prices fall, I can buy a house for 100% cash tomorrow morning. I am waiting for the inevitable drop, and watching the government's efforts with great amusement.
Comment posted July 14, 2009 @ 10:11 am
Why must we spend a disproportionate amount of money to support a tiny minority of the population. Less than 10% of the population is in trouble with a mortgage. More than 30% of the population rents their home. Those people are having their tax dollars used against them to prop up the 10%.
The forrest fire that we're experiencing now is healthy and necessary. Even with the massive declines that we've seen over the last two years, homes are still way over priced with respect to historic norms, personal income and costs of renting. When home prices get back to their 100 year trend line which parallels inflation, then we will have hit a natural and normal bottom. Until then, nobody in their right mind should be buying a house, especially first time buyers.
Its the constant meddling that the author of this article suggests, that got us into this mess in the first place.
Comment posted July 14, 2009 @ 7:34 pm
Foreclosures have been a major issue of the economic recession that has hit all countries across the world. The Bush administration overlooked the foreclosure issues of the average homeowners which the Obama administration is struggling to tackle with various initiatives.
The housing delinquencies and foreclosures have seen an alarming rise in the first quarter of this financial year. Among the 34 million loans that are tracked by The Office of the Comptroller, the foreclosure rates rose by 22% and surprisingly, this is a 73% increase as compared to the same period last year. This puts forth a question whether the banks and policymakers are intelligently tackling the problem.
Recently read an onteresting article on a similar premise
http://www.housingnewslive.com/is-the-housing-market-recovering.php
Comment posted July 14, 2009 @ 11:05 pm
You can get a free Homeowner's Guide on President Obama's “Making Home Affordable” plan at http://MortgageCreditTrauma.com?03.
This plan outlines the rules and eligibility guidelines for 1st & 2nd loan modifications as well as giving a Loan Comparison Chart for Countrywide/BofA, CitiGroup/CitiMortgage, IndyMac Fed Bank and JP Morgan who is also accepting Washington Mutual and EMC Mortgage Corp customers.
Hope this helps!
Comment posted July 14, 2009 @ 11:10 pm
1lowelisamarie1 get a clue….they didn't call them liar loans because the bank was lying. they called them liar loans because the people taking out the loans were lying about their income, job, assets, etc. aka NINJA (No Income, No Job, or Assets) loans. it's the duty of the borrower to read the paperwork and understand the loan before they sign the papers. the borrowers were too caught up in their greed and their fear that they weren't going to get theirs to actually read the paperwork, and figure out if they would be able to afford the loan when it adjusts or life happens. it's called responsibility. just because you were told that you could refinance later, or that they are no longer making anymore land, or that prices only go up….that doesn't mean you had to jump in. SO PAY UP!!!!!
Comment posted July 15, 2009 @ 2:09 am
Hey John, there are three types of liar loans, and yes you have described one. Then theres the broker who doctored the docs to push them through so he could make that commission, then theres the broker who tells the borrower with poor credit and no understanding of preditory lending ,that this loan is to their benifit because it will improve their credit score and they will be financed at a better rate within 12 months and not to worry about the stated rate increase as it will never make it that far, and then before the first payment is due the homeowners loan is in a security pool because nobody ever had any intention of dealing with that home owner again. Once again I'll ask “should a person lose his home for trusting the lender to be honest and not misrepresent the truth?” You must be a bankster.
Comment posted July 16, 2009 @ 6:31 am
I read this article this evening and then I was anxious to read the comments below, since I have been in the lending industry for 22 yrs. First let me say that I feel LisaMarie1 is completely wrong in blaming the lenders for this complete fall out. Just my opinion, I know, but I feel we ALL have a responsiblity in what happened (or those in trouble now due to loan changes) and is continueing to happen. Flat out GREED is what caused this situation and the end results were forseen ahead of time. But instant cash and gratification and live for today and worry about tomorrow or let the next guy worry about tomorrow won out. It had to be for it is simple math and common sense. Investors offered to the public a way to purchase a home off of a credit score without verifying their income and/or assets And with little money/investment in the transaction, towards the end.
They knew if they offered it to the public they would go for it. They knew most of these loans were “lies” per say, otherwise why would someone who truly qualified for a loan take a higher interest rate and do one the of the many no doc loans? That is common sense.
These loans were initially meant for self employed borrowers whos bottom line taxable income was $30,000, though their income before write offs was $160,000. (just an example folks and a realistic one). You could see where the income was coming from, you could see that though the taxable income was only $30,000, they carried a mortgage or rent of $1500 fine along with two car payments in the family and a few credits cards just fine and on time. They took advantage of the “paper” write offs the IRS allows. These loans made sense to me. Not to mention, the money/investment involved was 20%.
Then they offered these loans to salaried borrowers. Why? Then they reduced the down payment all the way to 5% and even offered the 80/20 programs. These were not all coming from non-conforming lenders. FNMA and FHLMC jumped in early in the game. Then the grand finaly was you don't have to show us where the money is coming from. Basically, we don't want to know.
Where do the lenders get these programs? WallStreet. FHA and VA did not participate in such things. As much as I hate to see the government now controlling our housing, I have to look at what the government could have and should have done to stop this disaster. I was not happy to hear that they took over 80% of those agencies who have 50% of our mortgages. When you look at those, existing FHA and VA loans, how much is left to the private sector? It is pretty dam scary to me. However, I have to look at the fact that this would not have happend to this magnitude if the government had stepped in years ago and said no, you can't do this. There are limits. But instead, much of the government was pushing to make homes more affordable to those that they felt “deserved” home ownership and were just less fortunate individuals. They pushed and pushed. They did not help these people, they helped them bury themselves!
If I have heard “every american deserves home ownership” once, I have heard it a million times and it makes me sick. We “deserve” nothing. America gives us the “opportunity” to EARN home ownership and many other things. It is a wonderful place and we are all blessed because of that opportunity…..not freeby.
So Lisamarie1, you are probably wondering by now, how do I feel differently than you? Because of the statement above. Because we as stupid consumers bought into this thought. We bought into the BS. And, we are responsible for ourselves, and no one else. I am not directing my comments directly at you, for I read all of the ones on here tonight. You just wrote the most is all. I disagree with many of them, as I am sure many will disagree with me.
These things that we are seeing now did not start with the no-doc program. It goes all the way to the credit scoring system, that took years to pass. I felt it was a screwed up system from the beginning, and this just shows even more that it is a screwed up system. They said, hey if your credit score is 680 or better, you deserve to buy any home of your choice. Have faith in yourself because we have faith in you. Any one who has credit such as this, will find a way to make the payment.
There are many reasons the credit score system is a bad system and I can go into my reasons should anyone be interested in hearing it!
Let me clarify once again before I go into this more. I am NOT a fan of the government controlling our housing market!!! Or what I should say is, Owning the homes we live in. That is a much better way of putting it I guess. I have to look at the FHA manual (4155) that allows for compensating factors a borrower may have to give “room” for the buyer to qualify outside of the box you might say. It specifically states that a lender can Not use good credit as a compensating factor. Good credit is expected, for borrowers are expected pay their bills on time. Where did this principal go? Out the window it appears. Having good credit (which should not necessarily mean perfect credit) is a part of a person EARNING home ownership, but should not be the only factor. Income, assets and debt ratios play a role in the qualifying part of a loan. They have to regardless of who you are and what a “score” says.
Can you blame a WAMU or AHM or Bank of America, Mortgage Brokers and/or their loan officers? Not really. When the industry goes one way in such a mass as it did, and the individual loan officer says I can do this loan for you, but I won't, they loose their job and they have a family to feed. When a broker or lender says we are not going to participate in this madness, people go and get it some where else and that company suffers greatly or goes under. The flood gates were wide open on these programs and pushed every where. In the past these loans might have represented 5% at best of the pipeline. The last couple of years, they were 50% or more of the pipelines.
I am simply asking you to not put all the blame in one basket. We are all responsible for ourselves. The comment of the LO telling the borrower that this rate is just for one year for you can refinance in one year. Since when does the LO have a crystal ball on the future? How do they know the value of your home will continue to rise? How do they know what the rate will be in a year? Okay, not the average consumers profession. But that is blind faith. Who is at fault for having blind faith concerning things that we all should know, no individual has control over.
There is so much that I could go into, and this is far to long as it is. But seriously, too much time is put into “who is to blame” rather than a solution and compromising on fixing this mess. Blame is a waste of time when trying to discuss how do we turn this around. We have to look forward and seek out real solutions; and yes, I agree totally, not just a Bandaid to the problem.
Comment posted July 18, 2009 @ 11:57 am
According to a retired HUD official, over 5 million home loans went to illegal aliens! You don't have to be too smart to know that many of them would default on those loans…then you have the “house flippers”, some just walked away when they couldn't sell the house.
Corrupt loaning practices, corrupt realtors, people buying that didn't care to pay their mortgages, corrupt Barney Frank & Chris Dodd, corrupt ACORN, all have hurt the people who try to pay, and those that are losing their homes because their jobs have gone south!
A web of deceit from the top, down!
Comment posted July 18, 2009 @ 11:16 pm
wall street lackeys now include the white house
When Geittner and Obama had the chance to push for loan modifications through the courts (bankruptcy judges)they chose wall street over main street. housing would have already started to recover if the legislation would have passed. Obama and Geittner chose to join a group of wall street lackeys – senators kyl, bayh, martinez,spectre and others rather than give homeowners a negotiating tool that would have been far more effective than anything thats been tried.Obama and Geittner are trying to save face by threatening the loan servicers (much the same way that they did with the banks that the taxpayers have bailed out)and no one is intimidated by this.The banking / mortgage interests are running this country and you can look at your elected officials campaign contributions to verify it. as long as wall street continues to pay for our elected officials votes- we don't stand a chance.perhaps next elections we (voters) should VOTE OUT all the incumbents and start over
Comment posted July 19, 2009 @ 5:07 pm
I totally agree, this should have passed. And who has it again…..WallStreet, where this mess started!
Comment posted July 21, 2009 @ 6:30 pm
Forceful action may be a solution of one problem but it may become a starting point of other problem. In my opinion, these too can work, i.e, modifications in existing loan plan such as reduced interest rates, extended maturity date , changing from adjustable to fixed interest rates, and the reduced principle.
An interesting link to visit is http://www.housingnewslive.com/blog.php
Comment posted July 22, 2009 @ 3:04 am
anybody who thinks foreclosure is even a choice, when it can be stopped is a cold hearted snake. Where do you think these families are going to go? To the street. Small children in America in tents on the street until the states can house them, you want to talk about problems. There are countless problems arising from foreclosures, families torn apart, education is a joke-its hard to concentrate when you dont know where your parents will put you to bed, how will you have clean school clothes, what about meals? It goes on, Health care is the least of their worries. Who gives a crap about the banks that DID cause this entire mess. The consumers did NOT come up with this game, who's bright idea was it for subprime? Some greedy bastards wanting to turn your home into profit.
Comment posted July 29, 2009 @ 3:34 am
http://foreclosurenv.wordpress.com/
NEVADA FORECLOSURE MEDIATION BLOG
Comment posted August 1, 2009 @ 3:17 pm
Well, with my limited understanding, can't we modify the loans+”interest” to take 100 years to pay off, instead of 30? Legislate offspring into the mix? Quit bs'ing about real property values “always appreciate, never depreciate” – yeah right, everything rots. So a new house today must necessarily be worth less as time goes on. People fake that property values increase because they're trying to recoup their interest payments, which should not be included in a property value. Might have been truer in the pioneer development days, but rundown lived-in homes subject to natural elements DECREASE in value I am sure. So why do we even agree to these bs loans in the first place? Interest-free, maybe… For sure I support converting default owners to renter tenants, and the rest to HUD until private programs evolve. Dunno.
Comment posted August 1, 2009 @ 5:06 pm
Just checking in. Your right about one thing whoever, It does seem like an old delapitated home would for sure lose value not appreciate. I would much rather have a nice new home with all the modern updates.
Comment posted June 4, 2010 @ 7:29 am
The court systems are taking baby steps in the right direction by halting the foreclosure mills. The mills and their lawyers can no longer produce shoddy documentation supporting their right to foreclosure. Sanctions on illegal foreclosure are on the rise as they should be. Nobody is trying to get a free hous., The homeowners want to be treated fair by the lender that OWNS their mortgage. States like Florida are starting to follow the law and force lenders to prove ownership of these loans before proceeding in court. Now the banks need a timeline to produce the documentation or forfeit the property. That would get them in gear to clear out the court house clog!
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Comment posted July 30, 2010 @ 2:58 pm
Just checking in. Your right about one thing whoever, It does seem like an old delapitated home would for sure lose value not appreciate. I would much rather have a nice new home with all the modern updates.
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