As rates rise, home foreclosures surge

[UpInArms]

http://www.msnbc.msn.com/id/12975777/

ATLANTA - In the suburbs of Dallas, Bridget Edwards comes home to uncertainty every day. She and her husband, James, are four months behind on their mortgage.

“It's been just like a roller coaster,” Bridget says. “Our payments have been just up and down.”

Up and down, from $1,300 a month to more than $2,000.

<snip>

“We have an adjustable-rate mortgage,” she explains. “I really didn't know it would change like this.”

Today, foreclosure looms over their $129,000 home. That’s a problem facing a growing number of Americans, who are finding themselves one crisis away from financial ruin. RealtyTrac, an industry organization that maintains a nationwide database of foreclosures, says mortgage defaults between January and March of this year numbered 323,102 compared with 188,122 during the same period last year — an increase of 72 percent.

...more...

[madaboutharry]

1. Paul Krugman warned of this

some time ago. He wrote that people with adjustable rate mortgages were going to be in for very hard times if they didn't figure out how to lock in a rate. People got lured into wanting more than they could afford. It is part of our culture and the keep up with the Joneses mentality.

[joneschick]

3. this Jones locked a 30 year at 5.25 in June of '03

I was working in the secondary mortgage market at the time. I couldn't believe what people were grabbing in ARM refinances without thinking about what would happen down the road. And those that qualified for ARMs probably don't qualify for conversions or fixed rates. They are screwed.

[LostinVA]

74. This Lost locked in a30-year at 5.5 in April '05

I work in the library sector, but Mama didn't raise a fool... no ARM or no-interest loan for me...

[snooper2]

77. This found locked in 5.625 30 year June '05

People are just not intelligent financially any more. Like buying a new car while living in an apartment...

Der Der Der, as Carlos Mencia would say...

[AnOhioan]

4. That "Keep up with the Joneses" mentality

is due for a huge crash and burn. When did people forget that living WITHIN their means was considered common sense. Sorry but my sympathy for those who over-extend themselves (Mc-Mansions, huge SUV's, etc) is growing real thin. "Reap what you sow" is gonna bite a bunch of people in the ass.

[Nashyra]

6. $129,000

hardly sounds like McMansions and SUV's. The majority of the the hardest hit were the ones who briefly thought they could buy their first home. The McMansion/SUV crowd simply sell their speculation property at a loss and write it off. My sympathy goes out to those who tried, who were lured and basically manipulated into thinking there equity would continue to rise. Some of these folks looked at the gamble, thought it was worth taking because the rising costs would make it prohibitive in the future. McMansions no, American Dream come true so they thought. It has ended just like almost everything else does in this country for the less than wealthy, a step forward and two steps back. Bless those who were not greedy, just trying to bring there families into the American Dream, where night mares come true.

[AnOhioan]

9. You are right. $129,000.00 is not a McMansion

But the basic principle remains the same. Do not buy what you cannot afford. It is a simple concept that seems to escape so many. Did they screw up? Yes. Can they blame it on being "lured" or "manipulated"? Maybe they can. For myself, I believe in "Let the buyer beware". I go into life counting on the fact that someone is gonna try to screw me. '

I try to look ahead and avoid the traps. The keep up with the Joneses idea really sticks in my craw.
What is important in this life is good personal relationships, living honestly, and trying ones best to care for those who are in need. Not the house in the burbs with the white picket fence nonsense.

Money is no good if you cannot use it to help.

[NashVegas]

33. 129k Home In Dallas?

That's probably not much more than a mobile home. Even in markets #40-100, that's not going to be much above average, or even just plain decent.

Part of the trouble is that people are refusing to say 'no' and walk away, when they can buy on credit.

[conflictgirl]

58. Not necessarily true

I lived in the DFW area for 8 years from 1994-2002. $129K at that time could get you a pretty decent home in one of the suburbs - we're talking 3 bedrooms, 2 baths, 2-car garage. Newer, like most of the houses in the area - built within the last 20 years usually. $129K is not a McMansion anywhere, no, but it's not just a step above a trailer in DFW, either (unless things have changed dramatically in the past 4 years, which is possible). We bought a house in 1999 for $69K in that area. You could still get a McMansion there for less than $200K.

An example

[LostinVA]

75. $1,3000 is a really high mortgage for a 129k house

That's way higher than mine, and our house cost more, and we didn't put a huge down payment on it.

[snooper2]

78. We have very high Property Taxes..

But no State taxes on food or income...that is where a big chunk of it goes...

[LostinVA]

79. Ah! Okay.... that could explain it

Thanks. It seemed like a really, really high mortgage -- way more than my house, which was more than theirs.

[MadMaddie]

18. So true...when you have a President after a major attack

on US soil says..."No go on with your lives...buy, buy, buy and continue to buy", instead of we need to all start sacrificing a little and be careful with our money....This is what happens....

Do you think this will be worse than the housing bust in the 80's?

[fakingit]

46. Agree

I definately agree that it will be worse than the housing bust in the 80's. Given the fact that we're in the most pointless war ever, and how prices have surged over 100% in the last 40 years. All we can do is pray that something good will come our way:)

[pokercat999]

47. 100% in the last 40 years? Better check your math.

When I was a kid, 40 years ago, a nice middle class home was around 10K today 200K that's about 2000% increase. A 4% rise in price over 25 years will result in a 100% increase. We've seen 100% increases in the last 4 years in a lot of markets.

[Matariki]

5. not so much about people wanting more than they can afford

but a credit rating system that has poorer people paying more interest or worse, variable interest.

[InkAddict]

26. Stable employment is also a key factor

After a year long spell of unemployment in 1986, we moved to a new city for work six months before we sold and rented for a year before purchasing a modest $74,900 home in 1988 that has only slowly appreciated to about $107,900...refied once for college expenses/bill clean out just before Y2K, but the IT profession, like so many other enterprises in America, has been sold out to the Indians and Chinese.

This family has been outsourced, merged, downsized, govment contracts put out to pasture, held up, out-and-out lost, corporate jobs relocated without taking employees; all bid-ness decisions you understand. Meanwhile, in our prime earning years, we've rescued that modest home three times from foreclosure while being sandwiched between children in college and elderly parents' chronic terminal illnesses. Not livin' within' our means, my butt. Maybe we should have just rented out a cave to live within my paltry full-time earnings that were cut after 9/11 and for which I was forced, after 10 years with the same physician-employer, to pay a hefty amount for health insurance just for myself, in case of another family experience with yet another RIF. One can't even contemplate saving for retirement..we've had to "save" for the next RIF.

Well, no more! Enough is just quite enought! Once again, we're seeking "opportunities", and for what??? I'm at the end of the rope! I'm glad to see all you employed DUers - I'll be looking to improve the quality of life in the camps once *Co does away with SS and what little comforts will be left in our lives. I expect my days of "surfing" at DU are just about over too unless I walk to the library, because there won't be funds for gasoline for anything but solid interviews.

I'm not really a complainer; we've worked hard and long at what we've done to raise our children and contribute to our communities, scrambling for a new gig every 6-10 months since the early '90s--now with ruined credit that's been the equivalent of a bankruptcy without the legal-beagles grubbing just a bit more out of us, and the poverty wages from the shit-jobs in between that barely sustained survival, I'm ready to throw in the towel and tell 'em all to just come get it if they want it so badly. It's all been stolen away by these THUGS and their policies, and we're left staring at golden years of desperation and dependence.

If they want that damn house so bad, then just maybe that damned mortgage co/bank should get stuck with it instead and all you DUers who think we've been living life in the fast lane can come visit me at the mad-as-hell patriot camp, the asylum, or on the lovely little hillside family plot, whichever comes first!

[annabanana]

29. Yours is the true story for the vast majority

that find themselves in straightened circumstances. There is no moral failing here, no lack of foresight, no greed.

I get annoyed with the 'holier than thou' free-market radicals that think you've called this down on your own heads.

(I am always reminded of the girl caught stealing who can't understand her culpability.. "Man, it's their fault; they didn't catch me or stop me or nothing")

[DiscussTheTruth]

38. Agree. Might be joining them shortly if it keeps up.

[annabanana]

57. Welcome to DU!

:hi:

[UpInArms]

30. "The Disposable American: Layoffs and Their Consequences"

http://www.nytimes.com/2006/04/02/books/review/02delong.html?ei=5088&en=3b9a4fa2479cb088&ex=1301634000&partner=rssnyt&emc=rss&pagewanted=all

Layoffs have disrupted the lives of millions of Americans over the last 25 years. The cure that these displaced workers are offered — retraining and more education — is heralded as a sure path to new and better-paying careers. But often that policy prescription does not work, as this book excerpt explains. It is adapted from "The Disposable American: Layoffs and Their Consequences" by Louis Uchitelle, an economics writer for The New York Times. Knopf will publish the book on Tuesday.

<snip>

Saying that the country should solve the skills shortage through education and training became part of nearly every politician's stump speech, an innocuous way to address the politics of unemployment without strengthening either the bargaining leverage of workers or the federal government's role in bolstering labor markets.

But training for what? The reality, as the aircraft mechanics discovered, is painfully different from the reigning wisdom. Rather than having a shortage of skills, millions of American workers have more skills than their jobs require. That is particularly true of college-educated people, who make up 30 percent of the population today, up from 10 percent in the 1960's. They often find themselves working in sales or as office administrators, or taking jobs in hotels and restaurants, or becoming carpenters, flight attendants and word processors.

<snip>

The Labor Department's Bureau of Labor Statistics offers a rough estimate of the imbalance in the demand for jobs as opposed to the supply. Each month since December 2000, it has surveyed the number of job vacancies across the country and compared it with the number of unemployed job seekers. On average, there were 2.6 job seekers for every job opening over the first 41 months of the survey. That ratio would have been even higher, according to the bureau, if the calculation had included the millions of people who stopped looking for work because they did not believe that they could get decent jobs.

...more...

I am so sorry. I have come to hate the media for only reporting the symtoms and never reporting the illness.

[earth mom]

43. I feel for you and hope it gets better!

My husband and I were on a roller coaster ride for 8 years, but have had a bit more of a smooth ride the past 2 only because hubby lucked into a better paying job. But I'm still just as angry with the greedy rethug bastards responsible for our hellish ride, because it had absolutely NOTHING to do with a) living high on the hog or b) not working hard enough. Rather, it had everything to do with the rethugs love for downsizing, wage bashing, and union busting etc.

You are not alone. :hug:

[Maine-ah]

48. If I could nominate a single post in a thread, yours would be it.

this is the story of american workers, all of us that are continually getting fucked no matter how hard we work, no matter how much time we put in. It's all of us that aren't living beyond our means, just trying to live, just trying to make ends meet.

[JNelson6563]

70. Sorry to hear of all this

and I hope your post serves as a reminder to all DUers that qualifiers could be helpful. Hopefully and end to sweeping statements about everyone having to face foreclosure.

I hope things get better for you soon InkAddict. Many of us are but one crisis away from disaster.

Julie

[barb162]

39. Krugman tells it like it is

[WhiteTara]

2. when they got their mortgages they

it probably wasn't emphasized that the payment would go up several percentage points. With ARMS, you should really pay the highest amount to begin with (whatever the max is) so that you are surprised. But they were seduced by low low payments and thought the party would always last. Too bad, the make up of home owners and not is about to change radically all over the country. I'm saving my pennies and waiting for the prices to come down.

[onager]

7. Gack! $1,300 to $2,000 A MONTH?

I live in one of the most expensive real estate markets in the country, Los Angeles County. (Well, my house does. I live in Egypt right now, temporarily.)

My payments are about $1000 a month, on my stodgy old 30-yr. 5-something fixed. That's for a 3br/2.5ba townhome in a definitely non-ritzy neighborhood of the San Fernando Valley. But I like the place. It's roomy, has a 2-car garage for my hobby stuff, and is only 5 miles from my job (when I'm there).

I've also refied a couple of times, always at a lower interest rate. I work with a great mortgage broker who lets me know when the rates are down low enough to help me out. And he absolutely despises ARMs. He advises people against them.

Of course, there are advantages to living in that real estate market. I bought the place for $160,000 and two units in my building recently sold for over $400,000 each...

[jerry611]

10. Many people have bad or zero credit

Or sometimes they havn't been with a job long enough to have income verification. So the banks have an excuse to rack up huge interest rates.

Yes, the rising real estate prices combined with no increase in salary is a big part of the problem. But banks are also are part to blame as well.

You also have to consider how homeowners insurance is increasing everywhere because of the hurricanes, forest fires, and landslides. Even though the hurricane hit New Orleans, if your insurance company does business in that area of the country (most do), then your rate will increase even if you live in Minnesota.

[tsuki]

69. I looked up 10% for twenty years. The most it could be with

an escrow that is out of sight is $1300. How are they at $2000?

[LostinVA]

76. Did they have a bankruptcy, and so have really high interest?

Something doesn't seem right...

[Porcupine]

8. You can buy a house for $129K in Atlanta?

In California $129k wouldn't buy you a wrecked airstream trailer in the back boonies. Seriously, 2 bedroom condos on the tracks sell for $175K in my town.

[union_maid]

12. On Long Island, too

Actually, for 175K you can get a one bedroom co-op - not a condo - in a neighborhood that's in the process of being gentrified - meaning the schools are still bad. The co-ops here are converted garden apartments for the most part and don't have all the room and features that condos do.

I'm curious to see how things are going to play out in my neighborhood. It was pretty full when this bubble started, but McMansions have been built on whatever plots were left. More of them have been built over some of the very modest older houses. People probably figured it was such a great investment that it was worth taking a chance and they could always sell if they couldn't make the payments on the refinancing they used to remodel. Prices are still high, but going down a bit and inventory is growing. I'm wondering if there'll be foreclosures all over the neighborhood soon.

[maveric]

23. 2 bdrm condos in San Diego are $400,000.00.

Older,rundown crackerboxes in Barrio-Logan are going for the same.
$129,000.00 might get you a double wide in East County.

[tanyev]

27. The $129K house is in a Dallas suburb, which sounds about right.

I feel bad for people getting screwed like this. It shows how financially illiterate our country is when people don't understand what can happen on an adjustable rate mortgage.

[sendero]

11. The economic illiteracy of the average American..

.. is being well exploited by the mortgage companies. It's hard to feel sorry for either of them. ARMs are really not that hard to "get". All you have to do is ask a couple of hypothetical questions, and you'd know that they are a terrible idea when rates are already low, and a bad idea most of the time.

[Boomer]

15. How much can you protect people from themselves?

Many, many years ago I could only qualify for a variable rate mortgage because I was free-lancer and did not have a "stable" income. The rates at the time were 12% and rising. My income was sporadic, but high, and I was disciplined in my spending, so I knew I could afford the worst case scenario AND still continue to maintain the house expenses of insurance, utilities and repairs.

I took the mortgage, but not before I knew EXACTLY what the terms were: how often the rate could rise (every 6 mos) and whether there was a cap (14%). I also chose a 15-year period so I could pay it off that much faster and save money over the life of the mortgage.

I assumed the worst would happen, and was pleasantly surprised when interest rates actually fell and I ended up paying less rather than more.

>> "I am sad. I'm angry. I'm confused," says Bridget Edwards. <<

I've made some bad financial decisions in my life by rushing into something without doing my homework. I got burned, and I learned. I knew exactly who was to blame: myself.

[barb162]

41. rates have been so historically low these last few years

I can't figure why people haven't switched to fixed rate. Rates are still really low

[Boomer]

56. And it also begs the obvious

Rates are historically low, so they have nowhere to go but UP.

Anyone who barely qualifies for a mortgage in today's low interest market probably can't afford a house. You need a cushion for rising utilities, maintenance, rising insurance. Anyone who is oblivious to those extra expenses is dangerously unprepared for life in modern times.

[UpInArms]

31. Greenspan advocated for ARMs in 2004

http://www.federalreserve.gov/boardDocs/speeches/2004/20040223/default.htm

American homeowners clearly like the certainty of fixed mortgage payments. This preference is in striking contrast to the situation in some other countries, where adjustable-rate mortgages are far more common and where efforts to introduce American-type fixed-rate mortgages generally have not been successful. Fixed-rate mortgages seem unduly expensive to households in other countries. One possible reason is that these mortgages effectively charge homeowners high fees for protection against rising interest rates and for the right to refinance.

American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage. To the degree that households are driven by fears of payment shocks but are willing to manage their own interest rate risks, the traditional fixed-rate mortgage may be an expensive method of financing a home.

[sendero]

32. Why am I not..

... surprised.

But I found it funny, back in 2002-2003 the local mortgage companies were pushing ARMS hard in radio commercials. Now they are offering to help you get out "of those risky ARMs".

Buying a house is a big deal. Anyone who is going to do it needs to invest a few hours in understanding this stuff. It's really not hard, an average 10 year old could understand why buying an ARM when rates are at historic lows is a bad idea.

Fact is, probably most of these folks DID know how ARMs work, and the downside potential, but did the uniquely American thing and decided to buy-now-pay-later with a vengeance :).

[survivor999]

59. I remember that...

Being risk adverse and not planning to move anytime soon, I ignored that BS advice...

[barb162]

40. I can't believe this sentence...like what does the word

"adjustable" mean ?
“We have an adjustable-rate mortgage,” she explains. “I really didn't know it would change like this

Yes adjustables are a bad idea most of the time

[soup]

13. ouch.

Those low rate ARMs being offered are/(were?) so attractive, I can understand people falling into it.

Our oldest son and his wife just bought their first house two months ago. (Tried to get them to wait a few months since the market seems to be changing so quickly, but they were determined to do it now.)

They probably looked at 20-30 houses with the realtor doing the "We can get you into this house for $---- a month..." and me in the background repeatedly asking 'but is that a fixed rate?' and my son saying, 'No. But mom, we can always refinance later.' 'But, son, if the rates go up, and you have to refinance at a higher rate, you'd be paying more no matter how you look at it. Lock into financing you know you can afford - period - or walk away.'

They found a house they wanted and financed it with a 6% fixed interest mortgage and a payment they can afford. It isn't as 'fancy' as some they were looking at, but it's not going to kill them to try to keep it. They love the house, even though they came in on the very tail end of this 'boom', and paid absolutely top dollar for the neighborhood. I think they'll be ok mortgage-wise, but there's so much more to consider.

Another major factor, besides interest rates, is the insurance costs have made a such huge leap in FL, that people (especially those on fixed incomes) are being priced out of homes they've lived in for years. I've read some really sad stories.

add rising property taxes and utility costs and gas prices and groceries and health insurance and and and - yikes.

[cliss]

14. $2,000.00 per month,

sometimes even more than that? For a $129,000 house?

They're better off unloading this property. A monthly mortgage of $2K is way too high for a house of that little value. It would have been more reasonable for a $200,000 house.

These folks need to sell this house, and they need to do it quick. I believe at 6 months of non-payment, they start foreclosure proceedings.

And when that happens, you get nothing out of it. The bank takes it all.

[sadiesworld]

17. "The bank takes it all."

Actually, that's not true. A homeowner is entitled to any remaining equity once the bank has been made whole (note paid off, costs, fees, etc.) and any other liens have been satisfied. This is true whether it is a private sale or a lender-instigated auction.

Of course, there is rarely enough money to satisfy the lender in these cases, much less anything left for the homeowner. That would be seem to be particulary true in this case--judging from the information given.

[cliss]

19. Well, I had heard that the bank

will charge fees for all kinds of things, like "legal fees", "fax fees", "copying fees" "fees to chage fees", and so on.

I've never been through a foreclosure, but I've heard that you get so little of your equity out of it, that you're much better off selling before the gavel falls.

Thankx for the update.

[sadiesworld]

21. I really questioned whether to post that response b/c

I wasn't sure how literal you were being. However, I've had experience with homeowners who took it quite literally and I didn't want DUers to be left with a misimppression (was that how Gore termed it?).

You're absolutely correct that it is almost always better to sell rather than wait for foreclosure.

Have a great Saturday! :hi:

[Trajan]

16. Its time for them to SELL ...

pay off the arrears and sock away the rest, while they rent a modest home nearby ...

That is how you play this game ..... you play it to save your family's assets, if you can ....

Sell FAST, at lower than market value, but higher than the note .....

[dysfunctional press]

20. what kind of rate do they have on that $129,000?

when we bought our house 10 years ago, we borrowed $130,000 at 7.1%, and the payments were $898.00/month...perhaps they have their taxes and insurance included w/mortgage payments?

[Joe Bacon]

22. James Kunstler has been warning about this for ages!

http://jameshowardkunstler.typepad.com/

He asks the question that the Main$tream Media won't ask...

What are we going to do when we pass peak oil and it goes over $1000+ a barrel?

It's a shame, if ONLY we had listened to Jimmy Carter back in the 70s, we would have bought a hell of a lot more time for alternatives :-(

[barb162]

42. MSM is now doing these stories

and some people still pay no attention. I don't get it. There was a thing in Newsweek a week ago about SUVs still selling despite their low mileage. People want them despite the gas prices increasing...that macho thing or whatever it is

[stepnw1f]

24. And Yet Some Heartless Folks Will Say: "Oh Well..."

"they shoulda' known better...heh heh."

[sendero]

81. Same as the heartless..

... folks who won't let their kids play in the freeway?

ARMs were used *mostly* to get folks into a house that was basically out of their price range. They gambled that the rate would stay low enough, long enough. Now that they rolled the dice and lost, I'm not going to have that much sympathy, no. Their gambling, along with the speculators, are what is bringing ruin to the whole housing market where it will affect not only themselves but every person who bought RE in that market and now needs to sell.

No, I don't feel sorry for them, they are assholes.

[mwooldri]

82. Some folks have lived through similar crap before like this.

My family (talking about me as a child now) lost our home in the 1990's thanks to adjustable rate mortgages, and 'low start' mortgages - where you only pay interest at say, 1% for the first year and so on and so on. The problem is that if interest rates go up the way they have you go upside down on your mortgage, and you can't refinance that easy.

When we go for our first home, we're going for a fixed mortgage with the lowest rate we can get away with and with the shortest payoff time we can afford. Until then, we'll carry on renting at our relatively low price in our too-small a house... until we can afford it.

Mark.

[VegasWolf]

25. Asking how much will I pay when my rate goes up does not seem

to be an overly complicated question to ask. It is difficult to feel sorry for the combination greed and stupidity in some people.

[redacted]

28. Agreed, this is a greedy mess. Some may qualify for ARM IO pay option

before their rate adjusts. But why they didn't look into it before the (expeitive deleted) hit the fan -- I'll never understand. (Neg AM, but it keeps you in the house).

Many of them must have been stretched to the hilt already.

Or why not just put the house on the market and cut your losses.

[struggle4progress]

34. The (Temporary) Ownership Society.

[Spike from MN]

35. Looks like the same is happening in MN.

I just happened to stumble across this today so I figured I'd post it.

Twin Cities foreclosures climb at record pace
Rising interest rates, growing popularity of riskier mortgages likely to blame
BY JENNIFER BJORHUS
Pioneer Press

A record number of Twin Cities-area homeowners lost their homes to foreclosure last year. If trends so far this year continue, hundreds more will see their homes slip away.

In 2005, sheriff's departments in the seven-county metro area sold 3,743 homes at foreclosure sales, up from 2,850 in 2004 — a 31 percent increase. And data compiled by the Pioneer Press reveals that the tide of foreclosures shows no signs of abating: By mid-May, there had been 2,169 sheriff's sales in those counties, well ahead of 1,300 or so that had taken place by the same time last year.

The reasons for this disturbing trend aren't entirely clear, in part because comprehensive data on foreclosures is hard to come by, but rising interest rates, coupled with the growing popularity of some riskier types of mortgages, probably play a part.

In Minnesota, 3.91 percent of subprime loans were in foreclosure in the fourth quarter of 2005, up from 3.62 percent a year earlier, according to the latest available Mortgage Bankers Association national delinquency survey. (Subprime loans are higher-interest rate loans made to people with dented credit histories.)

http://www.twincities.com/mld/pioneerpress/business/14681795.htm

For what it's worth, it appears the slowdown here has started. My neighbors have had their townhouse up for sale for about 3 weeks or so now. This is in a neighborhood where we have had to beat back buyers even just a month or two ago. Even a FSBO would sell within 3 days. Five tops. With almost no advertising. For the past year or two, I have been getting absolutely bombarded by requests from real estate agents begging me to sell. They have buyers lined up and they want to buy in OUR complex and ONLY our complex. Townhomes are also VERY popular with retired couples that are looking to sell their house and move to something where they don't have to do so much maintenance. In short, the townhouses in the complex where I live have been in HUGE demand the past few years and it's astonishing to me that my neighbor's place has been on the market for even more than a week, much less 3 or 4. For the record, my neighbor is selling because his wife has health problems and she can no longer negotiate any stairs. They had to find a one-level place and even the single step up at the entry-way might be a problem for her down the road. They bought a place a month or so ago and need to sell their place before June 1 or they'll wind up with having to pay for two places. Normally their place would have been sold long ago. It appears their timing was extremely bad as the slowdown hit just as my neighbor's health problems worsened. At any rate, I'd have sold long ago but there's no way I could buy anything back in the Cities with the way real estate prices are. The only way I would sell was if I was going to move out of state. Or out of the country. That last one is still an option. Canada is looking better and better every day.

[GetTheRightVote]

36. Could it be due in small part to wages being kept low by illegal aliens

which give cheaper wages paid out to employees by the upper class and their wealthy members, corporations ??

In part it is but so many individuals wish to turn from the obvious results of keeping the wages low for all legal citizens with crys of racism, it is all really very sad to those of us whom depend on capitalism working as it is suppose to when it is not control by corporations.

:kick:

[NorthernSpy]

44. for working class people, that's certainly part of it...

And don't forget the H-1Bs and L-1s eating away at jobs and salaries for white collar professionals. Downsizing, outsourcing, offshoring, replacing American workers with illegals -- so many of us are getting screwed!

[sandnsea]

45. Minimum wage workers don't qualify for home loans

So, no, it is not the illegal immigrants. Low paying jobs are always going to be too low paying to buy a house. Those are the people who have had to resort to living in motel rooms because they can't even afford the rent on an apartment.

[Name removed]

37. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Moderator]

49. Kick

[salin]

50. Mortgage defaults on rise (Chicago Tribune)

Mortgage defaults on rise:
Increasing debt, interest rates and job losses blamed for spike in foreclosures

By Becky Yerak
Tribune staff reporter
Published May 28, 2006


Foreclosures on home mortgages are on the way up.

In Illinois during the first three months of 2006 nearly 13,700 properties entered foreclosure, up 32 percent from the fourth quarter of 2005, according to an analysis by property tracker RealtyTrac Inc.

The numbers are grimmer elsewhere in the Midwest. Michigan and Ohio, battered by automotive-related job losses, together recorded 45,000 mortgages entering some stage of foreclosure in the first quarter. Those are increases of 91 percent and 39 percent, respectively, compared with last year's fourth quarter.

Nationally, foreclosures are up 38 percent, higher than in any quarter of last year, RealtyTrac said

http://www.chicagotribune.com/news/nationworld/chi-0605280258may28,1,3882686.story?track=rss (requires registration)

[no_hypocrisy]

51. Foreclosures also up due to rising interest rates for adjustable mortgages

and tax auctions due to rising property taxes. Some homeowners have seen their monthly bills increase over $1,000 between the combination.

[Mabel Dodge]

52. kick

[Robb]

53. If the housing market "cools," what happens to rates?

I don't really understand this -- if fewer people are applying for mortgages, will rates adjust to make them more attractive? :shrug:

[phantom power]

54. The prime rate is driven by other things....

For instance, our enormous federal debt is forcing the prime rate up, because foreign investors are starting to realize that America is a bad credit risk. The way to keep investing in American debt attractive is to raise the prime rate, which gives countries like China a better return on the loans they give us.

So, no, a cooling housing market will probably not lower the rates. We're a 3rd-world country now.

[Robb]

55. So it's not just to "keep inflation in check"?

:D

Man, color me disillusioned! Not. ;)

[OKNancy]

60. Kick

[TexasLawyer]

61. Mortgage defaults on rise

Mortgage defaults on rise
Increasing debt, interest rates and job losses blamed for spike in foreclosures

By Becky Yerak
Tribune staff reporter
Published May 28, 2006

Foreclosures on home mortgages are on the way up. In Illinois during the first three months of 2006 nearly 13,700 properties entered foreclosure, up 32 percent from the fourth quarter of 2005, according to an analysis by property tracker RealtyTrac Inc.

The numbers are grimmer elsewhere in the Midwest. Michigan and Ohio, battered by automotive-related job losses, together recorded 45,000 mortgages entering some stage of foreclosure in the first quarter. Those are increases of 91 percent and 39 percent, respectively, compared with last year's fourth quarter. Nationally, foreclosures are up 38 percent, higher than in any quarter of last year, RealtyTrac said.

There are many reasons for the growing number of defaults, and there are suggestions that the foreclosure trend may soon worsen. Layoffs due to corporate downsizings, health-care issues, increasing debt levels and rising interest rates all are factors. In addition, a growing number of homeowners are relying on adjustable-rate mortgages, catching some people by surprise when their monthly payment rises.

Significantly, some of those ARMs were offered with an initial three-year to five-year period in which the rate was fixed. At the end of that period the mortgages will be reset at prevailing rates, potentially upending borrowers as interest rates have been rising. For many such people that moment is approaching.

<snip>

http://www.chicagotribune.com/business/chi-0605280258may28,1,2225630.story?coll=chi-news-hed

[physioex]

62. Too freakin bad....

I have lost any sympathy for those that got into houses they can't afford on ARM.

[TexasLawyer]

64. I feel sorry for the people who lost their jobs

And I even feel for many of the people who took out ARMs. Many of the people were lured out of apartments and into houses and condos and got misled about the risks involved in taking out a no equity loan.

Re job loss, this was in the article:


Losing jobs can and has triggered mortgage defaults.

Consider Archie Tolar, who said he once earned about $3,000 a month as a salesman at a suburban Chevrolet dealership. Since losing his job in 2002 Tolar has struggled to make ends meet, relying mostly on $400 a month in disability payments.

"To go from $3,000 a month to $400 doesn't even cover the mortgage," the Harvey resident said. ABN Amro Mortgage Group Inc. filed a mortgage foreclosure against him last month.

"They're supposed to call me in two to three weeks to give me whatever options I have," said Tolar, who is single and said his mortgage was $435 a month.

Tolar's was among the 6,451 foreclosure notices filed in the state in April, according to RealtyTrac. That number was strikingly higher than in any month since the beginning of last year.

[Viva_La_Revolution]

65. We've been raised on consumerism...

TV, Malls, Cheap shit from China.

Thank God I grew up dirt poor, I'm semi-prepared for this.

I wonder if I can make a decent wage teaching people how to live poor? :think:

[physioex]

68. Exactly...

Cheap useless crap from China and shopping malls full of things that people don't need. There is no sense of modesty and living within ones means.

[InkAddict]

73. Yup, children's shoes and school supplies

and music lessons when the public school programs "arts" programs got cut. Oh, did I mention healthy fruit and vegtables, and Scot's Plus 2 so YOU don't get dandelions in YOUR yard from me. Cheap junk, those used college books and supplies, and those DEPENDS for gramps. You know what? Mean people who make assumptions about others' consumer choices sometimes need a swift kick.

[physioex]

67. I agree....

That is a bad situation to be in like that person who is mentioned, and some people did not realize that they were getting into a no equity situation. However I still think that most of them did know that were getting into a no equity situation and were aware of the pitfalls of the fluctuations in mortgage rates. And probably the lending companies were quick to sell people on the ARM.

Like the person that says below, you should know that you have to live within your means and not overextend yourself. I could have easily ended up like one of those people if I had signed that dotted line, but I didn't cause I knew I might get in big trouble, right??

[Trajan]

63. In all fairness ....

I dont share the 'hatred' of those who may have overextended themselves in the last runup ...

Many are families who are just trying to do their best in a crazy world .... I greatly doubt that a whole lot of greedy speculators are the one's losing their asses in this environment ....

Not everyone can know everything, and so I feel sorry for those who didnt see this coming, and who have hungry little mouths to feed ....

Life is a fucking BITCH ..... ease up and be nice to your neighbor, as you would want your neighbor to be nice to you .....

One word : CIVILITY ....

[Theduckno2]

66. Civility indeed!

One other thing for DU members to consider: A large portion of state and local revenues are based on property valuations.

Think about that when you are waiting for your road to be plowed this next winter and there is no money for overtime.

Then again global warming is upon us and maybe I won't have to worry here in Michigan. :sarcasm:

[union_maid]

71. People here could hardly help it

I have zero sympathy for those who helped blow the bubble with home flipping and speculation, getting fat off the fact that housing was becoming out of reach for the average person. People who got stuck in the bubble are a different story and I hope they come out all right. People here who couldn't leave - and there are any number of reasons why you might not be able to - were stuck with bad choices. If you don't already own a home, you can rent for more than you ever thought you'd pay for a mortgage or you could take your chances with a $3,000 a month mortgage payment. 18 to 35 year olds are fleeing the area, but sometimes you just can't. Custody arrangements, ailing parents - there are a lot of things that can tie you to a place.

[pooja]

72. Totally agree

But where do the young people flee. Its all relative really. You move to a place where the housing looks cheaper, but your avg. pay decreases.

[Dyedinthewoolliberal]

80. I always like to think of myself

as ahead of the curve. I lost my home to foreclosure two years ago.
It was a combination of many things but prolonged unemployment and living off my savings sure didn't help.
So now I rent and am seeing how the other half lives.........