Housing Boom Creates Increase in Foreclosure

[Modem Butterfly]

For some American homeowners, the greatest housing boom in U.S. history has delivered riches. They repeatedly tap their homes for equity and use the cash to purchase granite countertops, a BMW, even a trip to the Super Bowl. But there's a dark side -- a sharp rise in foreclosures that is destroying the single greatest generator of personal wealth for most Americans. Foreclosure rates rose in 47 states in March, according to Foreclosure.com, an online foreclosure listing service. The rates in Florida, Texas and Colorado are more than twice the national average. Even in New York City and Boston, where real estate markets are white-hot, foreclosures are rising in working-class neighborhoods.

http://msnbc.msn.com/id/8029531/

The dream of home ownership is just that: a dream. Some people are in a position to achieve it, others aren't quite there yet, but are tempted by predatory lenders to put themselves in a near unsustainable economic situation. Creative mortgages, growing debt burdens, stagnant wages and now the disastrous bankruptcy bill have worked to create a perfect economic storm. This period will someday be remembered the same way as we now remember the Dot Com boom, i.e., "What were we thinking?"

[ScreamingMeemie]

1. I've posted these things (as a real estate appraiser) many times...

only to see them sink like a stone. Folks, there is no bubble. We're now reaching back to the limits of the 1 year guideline for values and I always, ALWAYS warn people that they are not going to get that price if they place their homes up for sale.

Along with this is the alarming rise of predatory (and illegal) lending practices. We now have Loan Shark type Brokers masquerading as legitimate and even respected lending institutes. Please, fellow DUers, heed these sinking housing posts...for once.

[Modem Butterfly]

2. We just sold our home for nearly double what we paid for it

We are in an area that's highly sought after by developers. We had bought an old home (circa 1913) on a large tract of land in suburban Atlanta (we can throw a rock at 285, for those who know the ATL). We bought an existing home in the same area that is about 30 years old. It needs some updating, but the kitchen, master bath, central air, furnace and water heater are new. We paid cash for the place and are banking the rest of our money. Our real estate agent tried desperately to get us to buy a McMansion-style house, arguing that we would have much lower mortgage payments because we wouldn't have to mortgage as much, but we have this funny thing about owing as little money and having as much savings as possible...

[Dora]

17. That's so good to hear

I always enjoy hearing about people making common sense decisions.

Congrats on the great sale and the wise purchase. May you have many happy years in your new home.

[Mizmoon]

3. Because a lot of this is hysterical tripe

Three or four years ago the same people were wandering around with the same warnings. Many potential homeowners listened to them and refused to use agressive mortgages to get into a home or into a better home. They got screwed for their efforts to "do the wise thing". If they had NOT listened to the experts they would be homeowners with cartloads of equity today. Instead they are renters who wasted their money for the last few years.

Folks, do what's right for you and ignore the supposed experts.

[Modem Butterfly]

5. With homeownership...

Better to have never owned then to have been foreclosed.

From the article:

Pennsylvania's foreclosure problem is not just an urban phenomenon. Montgomery County contains a genteel stretch of suburbs north of Philadelphia. But from 2000 to 2003, county officials recorded almost 5,000 foreclosure filings, a 14.6 percent increase. Arline, Woodland and Lindbergh avenues run through Abington, a pleasant lower-middle-class town with ranch houses and cherry trees, children's slides and neatly tended gardens. On each of these blocks, three or four houses have gone into foreclosure in the past four years.

Unlike those in northeast Philadelphia, the houses are easily resold — the foreclosed-upon homeowners tend to simply fade away. "We bought this in a foreclosure auction a year ago," Becky Morrison, a mother of three, said as she stood in the doorway of her house in Abington. "We rented it back to the previous owner. She was pretty sick — I think she had trouble with her bills. I'm not sure where she went."

Losing a home is particularly destructive of personal wealth. A foreclosure often costs upward of $10,000 in various legal, sheriff and bank fees. And people who have gone through foreclosure end up paying more for insurance and credit card interest and can get turned down for jobs that require good credit.

[trumad]

6. Bidding wars for homes here in the Orlando area.

A house will go on the market for 250,000, be bid up to 280, but the appraisal will come in at 230. Hence, no loan.

No bubble around here, at least not yet.

[sendero]

8. While it is often pretty certain..

... where a particular buying/pricing/speculation dynamic will end up, the timing is next to impossible to determine.

Those folks could just as easily be in foreclosure right now.

The simple truth is - buy the house you need and stop treating it as a speculative investment. Speculators make money sometimes, and lose their ass others. Not that many people can afford to play with their nest egg that way.

[ScreamingMeemie]

12. Excuse me? Where did I say buying a home was a bad idea? Refinancing

for what you home is "worth" is a bad idea. Get an interest only...you're gonna get screwed. Listen to a broker...you're gonna get screwed. There is no bubble. Even a non expert, as I never called myself a "supposed expert" should be able to see that.

You have a terrific, and happy, day, Okay? :hi:

[elehhhhna]

31. Mrs, you are correct!

Seems the bubble is in easy credit, not housing. Does that make sense? Homes still have underlying value and people will always need shelter. It's overreaching/overborrowing that leads to trouble.

Aren't many forclosures due to spiralling unemployment & underemployment? I don't hear the MSM mention that as a factor.

[AndrewJacksonFaction]

4. Advice?

Just wondering what your advice would be to a first time home buyer. I feel that NONE of the houses in my area (Tampa Bay) are just plain not worth what they are asking. I feel that if I purchase a house, there will be a slide backwards in price. What is your advice, should I buy or wait?

[trumad]

7. It's tough in Central Florida.

The homes are skyrocketing in price and are just now catching up with the rest of the Country.

I'd look for a fix me up and try to buy it at the appraised value. MHOP

[ScreamingMeemie]

13. My advice to a first time home buyer would be to do your homework.

You can go to the city and pull up (it's public info) a list of the recent sales in that area. Most offerings end up being in a list to sell ratio of about 10%. Just because homes are being listed for one price, doesn't mean they're selling for that. Make sure you get an inspection because most people find most of their problems after closing day...and then a lot of times it's too late. Go FHA with your first home. That's what it's there for, and you get great protection from it. Don't go with a broker who promises low rates and no closing fees.

Good luck. Even if there is a slide backwards, as long as you don't refinance to the max, you're going to do okay. :hi:

[Buddyblazon]

43. I can't get FHA....

I can't get any more deferments on my student loans. They were requiring at least 10 months of deferment. Cause unfortunately it puts my debt to income out of wack.

I want to refinance the student loan (it was a good interest rate when I got...now it's ridiculously high) but can't take the hit on my credit in the middle of buying the home. So...I have to go stated. Not terribly happy about it. But the home I've got under contract is just so far below market value (111,500 in a neighborhood where the comps are 160-180). The monthly payments are still below my budget that we set. The house has structural issues in the attic...but the contractor has given us a set price at 3000. They disclosed that to me and the house is "as-is".

The rest is cosmetic. 35 year old carpet over 90 year old pine floors. Paint. Needs a kitchen overhaul at some point. All "sweat equity" things. The easy stuff. I've done all the inspections. Even scoped the lines (and glad I did). Found a small hole in the sewage line that the seller gave me a 2000 credit for (the plumber gave us a 1200$ estimate). I haven't found a deal like this in our market in a year of searching. Period. I was looking at stuff of 140-150 on the low end.

But I'm going for a 30 year fixed....because I'm are pretty nervous about where the economy is going. I'm avoiding the ARMS and Interest only stuff. But don't think the mortgage broker hasn't tried to pitch the other stuff. He even called the 30 year fixed a "Grandpa loan". I told him that the thought that if the shit hit the fan (economically speaking) and I could remain in it until I was a Grandpa...then I wasn't turned off by the "Grandpa loan" at all.


But truthfully...I'm nervous as hell. I'm really hoping I'm making the right decision. Am I nuts in worrying about this? Or am I making a sound decision?

[ScreamingMeemie]

46. I think you are making a sound decision. I only work from the appraisal

side of the issue and if the cost to cure is only $3000 in an area where homes are selling for 170 ( I averaged), you're still ahead of the game by 50 thousand. Go for it. But, if you haven't already, get an inspector (with references) to go through and make sure that's the only problem. I shudder over "as is" sales. There could be something else they're not mentioning. Good luck. I like Grandpa loans. We have a 15 year one. :hi:

[Buddyblazon]

47. I have had it gone over with a fine tooth comb.

The contractor is a friend. He does everything in Real Estate. Fix and flips. Rentals. Rehabs. Scrap offs. New houses. Small developments.

He walked through the entire home. He basically said, "Other than that structural, which is minor, the rest is cosmetic. The plumbing and electrical have been updated. The lot is big. Fix the structural only...and you've got a house worth at least 160."

And my Sister and Brother in law do the same things he does. They basically told me this was the deal I've been looking for.

But as it is my first home, and sometimes the people close to us can be yes-men...I wanted an outside opinion.

I really appreciate your feedback. Thank you so much. :)

[Dora]

21. I agree with Mrs. Grumpy

My husband and I bought our first home in 2002, doing everything that she's recommended. We now own a home in a desirable, centrally located neighborhood, and while property taxes gave us quite a shock the first year, we now consider ourselves both wise and fortunate for buying the house that we did. We also used a real estate agent to help us with the buying process - she was a magnificent advocate for us, and I can't imagine ever again buying a home and dealing with the seller's agent without her.

Be very wary of who you're dealing with on your mortgage. See if you can get referrals from friends or coworkers who have bought and sold properties and can recommend someone trustworthy. Two different people recommended the same person to us. We called her and I believe she gave us the best possible financing experience anyone could dream of, and my husband has a bankruptcy and I have student loans that I almost defaulted on a few years ago. As it turned out, she was VP of a locally-owned mortgage bank and approved us on an FHA loan - there was no brokerage middleman to negotiate with. She even came to our closing on a Friday afternoon in order to ensure that the loan was funded and that we received the keys to our new home. Our mortgage has since been sold to Wells Fargo, but we expected that to happen.

Good luck!

[flvegan]

50. Depends on the area (Tampa Bay)

I live in Tampa, too. Housing prices seem to fluctuate wildly depending on the neighborhood. Location, location, location seems to be taking into consideration more these days. It's not how close you are to the water, it's what kind of "beautification" is going on a few streets away.

I'm looking as well. I just can't see $150k on a fixer-upper in a questionable area, either.

[Auntie Bush]

16. My two sons are both planning on building spec houses.

Do you think this is too risky during this housing bubble?

I'm getting worried about them possibly losing their shirts.

They plan on building average priced homes in a desirable area.

My two brothers lost theirs when the housing bubble burst in the 80's.

[SW FL Dem]

51. It depends on your local market

Our has been going gangbusters for the past five years, our house has doubled in value in less than four years (from $340K to over $650K) It's crazy, the house is a basic cookie cutter tract home, 2200 sq ft, 3BR, 2BA with a pool on a quarter acre lot. I wouldn't pay even 500K for the place but luckily, I don't have to. We live about a mile from the gulf beaches in a newer, higher income part of town. We are in the highest rated school district and there are very few homes on the market. Most homes sell in less than two weeks, some with full-price offers or even bidding wars.

There is a bubble here, even the local experts are beginning to recognize it. For the past few years, people have been lining up to by homes in pre-construction phases, putting 10% down and then selling the house before it is finished for 30-40K more than they paid. There are lotteries to buy the spec homes because so many people want them (not to live in - but to make easy money). The problem is that the average value of a single family home in the county just topped 400K. The median income is 60- 70K, I don't know how these people expect to pay a 400K mortgage on 65K income. To get into these homes, people are taking risky mortgages.

Most of my neighbors paid 250-350K for their homes that are now worth 600-750K. That's great, as long as they aren't constantly refinancing and drawing down their equity. The bad thing is that they are taking out huge equity lines for home improvements, new cars, or even worse, to invest in spec homes. The last article, I read predicted a market correction of up to 20% in homes valued from 200- 800K. If that happens, many of my neighbors and even more of the new purchasers in my neighborhood can end up under water, with a mortgage that is greater than the value of their home.

Risky loans and aggressive lenders are only part of the problem. You have to have people who are willing to risk their home on the assumption that housing prices will continue to go up. We learned our lesson in the housing crash of 89-93. Our mortgage is a 30 yr fixed at 5.125, our LTV is under 40%. Yes, it would be nice to tap into our home equity to replace my 97 Volvo, but it isn't going to happen.

[DavidFL]

23. I'll say thank you MrsGrumpy...

Although I don't always get a chance to come to, or spend a lot of time at, DU, I will keep an eye out from now on when I am here to help keep those articles kicked.

Predatory mortgage lenders and servicers are an area I became involved with about 3 years ago after a family member began experiencing problems with their servicer playing hide-and-go-seek with payments, forcing very expensive homeowner's insurance that covered very little, among a host of other issues/problems that I would end up writing a book on if I went into detail. When I began researching this problem, at first I felt overwhelmed because there's was so much infomation to learn in order to have a full understanding of the problem, as I do not have a real estate background, and many of these scams are incredibly sophisticated. When I tried sharing what I learned with others, I realized that it's not something which can be broken down into simple sound bytes in order to impart a full understanding of the problem and this is one of many reasons I think the problem hasn't resonated with the public yet. Once I spoke to a CBS Evening News producer who was working on a story about a particular predatory lender/servicer and her first comment was she never would have done the story if she knew how complicated it was going to become.

It gets worse with regulatory agencies, and governments that I've spoken to because the reaction I've received goes from lip service to indifference about the magnitude and implications of the problem.

Anyway, just wanted to thank you for getting the word about this out there.

[ScreamingMeemie]

28. Unfortunately you are right. Here it is giving appraisers a bad name

as many appraisers forgo ethics and work hand in hand with these types of lenders to keep food on their table. In order to get the work they must promise the value, which is in itself illegal and against appraisal standards. But they are doing it anyway. So many of the foreclosures that I see are because of these types of practices. It has to be stopped. As long as there are appraisers willing to work with these scam artists it'll continue. And it will give me a bad name.

[Misunderestimator]

9. I just started looking for a home here where the prices are ridiculous...

and when I was talking to lenders and real estate agents here, I heard that interest-only loans are now the most popular ones. :wtf: Never, never, never. AND, many people are teaming up with other families to purchase homes together. I can only imagine the headaches they will face when they sell the thing, or if one of them loses their income and can't afford the payments.

I think I'll rent for a while and ride this one out. The house I'm renting would sell for well over $500,000 in today's market (though it would probably sell for less than $200,000 in Florida or upstate NY, where I have owned homes)... and the mortgage payments if I were to buy it (if it were for sale) would be 50% more than what I pay in rent. I hate not owning a home right now, but this market is impossible.

[Modem Butterfly]

10. It's a bitter pill to swallow, but necessary anyway

It's good you're restraining yourself.

[Gormy Cuss]

32. If you feel better in a rental, stay.

The fact that your rent is so low relative to the house's value is a big warning sign. I made the same choice in an earlier scary housing market. I saved money for a bigger down payment while friends scrambled to get in overpriced housing thinking it would last forever. It didn't and I knew more than a few people who owed more than the market value. They had to take a loss or sit tight until the market approved. When prices stabilized I was able to buy a house in a nice town without creative financing or PMI. In fact, the previous owner of my house had purchased it at the peak of the earlier run-up and had to wait five years for prices to recover. The crazy appreciation of the last few years is nice, but the important valuation for me is that the housing market could crash and I'd still be ahead.

Mrs.Grumpy, thanks for sharing an appraiser's point of view.

[Misunderestimator]

35. Thanks.... That's exactly what I'm doing.

The equity of the house I had before is only enough to cover about a 15% downpayment in this market. In about 1 year, I should be able to save enough to cover 20%. The PMI for a mortgage I would need with what I have to put down right now would be about $500 a month. Definitely not worth it. I'll wait it out, unless I come across a real bargain.

[yankeedem]

55. That's what I'm doing

In my area of Northern NJ a decent house goes about 350k, which assuming I drop 50k down, means mortage/tax/insurance of about $2,400 or so.

Now income tax deduction on the interest would be about $500/month at most, which leaves me paying $1,900, to earn $300-400 equity/mo for the first few years. So in other words, I'm "throwing away" $1,500/month on interest.

My rental is $1,250/mo for 3-bedrooms, with water/hot water paid. So I'm "throwing away" only $1,250, and keeping the other $250/month and investing it. Not to mention decreased risk from repairs, repairs are not a renters responsibility.

Now of course if I assume that housing prices increase 10% a year, I would come out ahead by buying. But when buying costs twice as much as renting, can we really assume that housing prices will increase at that rate any longer?

I have watched housing prices double in the past 10 years, while rents have stayed the same. It is my opinion that renting is the bargain right now.

[thethinker]

11. Housing bubble is not the problem

The problem is that the poor and the middle class do not have a safety net. Illness or unemployment can destroy their world. It does not make a difference if they own a home or not.

The fact that the rich are bidding up the prices of luxury homes does not cause foreclosures in the lower priced neighborhoods.

Once a person owns a house, their monthly price for housing is frozen. It does not matter that the guy next door is selling his house for twice what they paid for theirs. The problem is Americans are living close to the edge. When gas and food go up in price, and their incomes do not go up, they can't handle illness or emergencies.

They are better off owning a house. They could sell it and pull out money for emergencies.

What we are seeing is the rich get richer and the poor get poorer. The money is being moved (by government policies) from the middle class to the super rich. This happened in the 1920s also.

[Modem Butterfly]

14. Only if it's a house they can afford

The problem is, most people buy more house than they can afford and end up living even closer to the edge than before and end up less able to handle illnesses and emergencies. This is worse than not owning any house and having some liquid assets (after all, it takes a good bit of time to sell a house).

[elehhhhna]

33. Yep! That's why you see Behemoth homes w/ no furniture in them.

[ScreamingMeemie]

18. Here the poor are bidding up the prices of the luxury homes they cannot

afford and will lose once their 7-10 years on that interest only loan is up.

Case in point:

My brother in law-26 (max) dollar an hour shop rat who makes most of his money in (now hard to get) overtime. Sister in law: stay at home mom. They bought a 3200 s.f. wanna be manse on his income and an interest only loan. Their payment right now? About $500 a month...7 years? $4,000. 26 bucks an hour and no overtime ain't gonna keep that house for them. It's not the rich buying the houses...it's the rich making money off speculation of what us "idiots" in the (almost defunct) middle class are gonna do next.

[SmokingJacket]

22. Is that what's called a "balloon mortgage"?

That sounds crazy and terrifying -- bizarre that someone could pay just $500/mo for a house that big.

We bought seven years ago at a time when mortgage payments on an average house were considerably less than apartment rents -- a screwy situation brought about because of a local college. Rich students drove up the rental market. Housing prices have since exploded -- we got so lucky.

[elehhhhna]

37. So, in 6 years he has to sell or refi. If he's gained no equity, however,

he can (many will) walk away.

[Horse with no Name]

42. If many will remember Texas in the late 70's and early 80's

I was selling manufactured housing and making a fortune. There were months I made over $10,000 in commission. At that time, the economy was fabulous here. I was paying more for a one bedroom condo in 1981 than I pay for a 4 bedroom home now--25 years later. I thought nothing of spending $1000 a weekend on entertaining myself. Money was endless. Many areas of Texas at that time were packed with out of staters working the oil fields. For instance in Midland-Odessa, there wasn't any housing whatsoever. None.
People lived in their cars. They were working the oil fields.
It was like this in many areas of Texas.
Anyone remember John Bushman? I used to work for him.
He started A1 mobile Homes. No financing? No problem. He owned his own Savings and Loans and financed them himself.
Anyone could buy a mobile home for almost no equity and no credit. And they did.
You CANNOT imagine the money that was made from sales of mobile homes in those days. We all thought it was endless.
Then we had the oil bust. People walked away in droves from all of these mobile homes that they had no equity in. The industry was left almost crumpled and it was their own fault. It was predatory. In fact, the industry is now regulated by the Secretary of State.
Sooo, all of these mobile homes that were abandoned--I'm talking many thousands--that were financed through Savings and Loans in essence caused the Savings and Loans to crumble shortly thereafter.

On edit: John Bushman was from Odessa and was a "Close personal friend of the Bush's". I believe, although I can't verify, Neil Bush was one of John's partners in his ventures.

[ScreamingMeemie]

49. I'd like to see him try. Those refi rates will be gone in 5-6 years with

these crazy interest only scams nowhere to be found. He'll sink with it, just as his father did in the 80's. :hi:

[djack23]

19. Not really

"Once a person owns a house, their monthly price for housing is frozen"

Nope. For one, ARM and interest only loans will cause price adjsutments. Plus maintenance costs are variable.

[Kathy in Cambridge]

15. The prices here are ridiculous too

there was an article in the Boston Globe a few weeks back that stated that Massachusetts is experiencing the largest gap between income and housing prices ever. In other words, many people can't afford to buy, and those that do have huge mortgages. It's scary!

[Cash]

20. Cyclical and Regional

Of course, a lot of this has to do with where you live. In the area I'm in home prices have risen rather quickly in some areas and remained slightly above stagnant in others. The extension of an existing Interstate has opened up a whole new area of growth and opportunity in Western NC, and the land and home prices near this new Interstate have adjusted to accommodate this. Of course, as home prices increase, so do property taxes.

Some friends of mine who moved to Southern California recently tell me that housing is in such demand between LA and San Diego that the homes are sold via a type of lottery. And just like California, people living in the NE corridor and even parts of the Mid-West are paying inflated prices for most everything, but especially homes where they could buy double the size house in Atlanta or Charlotte for half the price.

[melissinha]

26. I shudder to think

of the people who get interest only loans.... Some dude was trying to sell my parents his second house on a wrap-around (basically they woudl pay him) turns out the loan he had was interest only and they would be paying mortgage payments to a man whose payments woudl never reduce the principal, cause he would probably pocket the extra money) NEedless to say, they almost did it cuase it was an awesome home, but couldn't gamble their savings...

You better want to dump or refinance when that 3-5 year term is over.... its so deangerous... that how peopel get caught.. they get more than they can afford.......

When I get a mortgage, its gonna be a fixed rate mortgage, no ARMs or balloons for me!

[Cash]

27. Depends on where you live.

IMO, interest only loans should only be acquired for a construction-to-perm loan or if you know that you're going to be running into a lump-sum of money in the near future and can pay it off. Same with balloons.

On the other hand, it's my understanding that ARM's are the majority of loans for homebuyers in California where home costs are so high.

[edhopper]

24. By most economic indicators

We are in one of the biggest housing bubbles in this nations history.

[ProfessorGAC]

25. And Those Economic Indicators Are?

I challenge the very idea of a "bubble" on tangible goods. There has never been any proof of their existence. So, if you could provide me with the proof nobody else can, i'd appreciate it.
The Professor

[elehhhhna]

36. Ding Ding you win.

You said, it Prof! Thank you.

[ProfessorGAC]

38. Glad To Be Of Service

Absent, yet conspicuous is the answer requested from the other poster. Declaring as absolute fact there is a housing bubble, but no facts to back it up. One of those things that make me go, hmmmmmm?
The Professor

[bananas]

54. What are your expectations?

How do you think the housing market will go over the next few years?

[edhopper]

44. Tulips!

[ProfessorGAC]

45. Exactly What I Thought!

Not making fun of you. Fact is, i think you heard from the econoharlots in the press and in gov't that there was a housing bubble. Most of them are clueless, and you shouldn't pay much attention to them. You need to get to the economists in academia to get the real picture. (No, i don't mean me.)

The Professor

[BlueStateBlue]

53. What about rent to value ratios?

There seem to be some unsustainable gaps between the "value" of property and the assumed income from potential rent for the property, which is used like a P/E ratio for a stock equity.
What about the report that approximately a quarter of the recent sales of homes were purchased by investors, who never intend to inhabit the property? Surely this has to distort the supply/demand picture. I agree with you if your point is that it is unlikely that housing will ever go to zero value. Maybe we should call this a "housing balloon", because while it may not pop, it is sure to deflate.

[dogday]

29. Mortgage Companies Have It Made

They get interest on the money they loan and if the people can't pay then they just foreclose and get the home and all the money the people have already paid into it. Then they can turn around and resell the house to someone else and hopefully get the same results. Got to admit it, they get all the money and the property. I remember in Monopoly if you had the money and the property, you won the game........

[Lannes]

30. My part of fla has had the biggest increase in the nation

City workers cant afford to live in town any more.Its too expensive.I also believe that property tax increases have something to do with the foreclosures.

[Brewman_Jax]

34. My brother tried the real estate "mogul" thing

years ago. To spare the gory details, he was very unprepared, but ready to make the plunge. He guessed wrong (bad tenants) and the job he was hoping for didn't come thru', so--he has another year (or later this year) 'til the foreclosure and bankrupcy clears his credit record. There's so much that he couldn't do 'cause of bad credit. :(

If anyone wants to do the homeownership thing, study and be VERY well prepared.


BTW,

[ProfessorGAC]

39. One Thing To Keep In Mind About Real Estate Buy/Sell Plans

The people who sell these programs make WAY more money selling the program than they did DOING the program. If these things worked anywhere near as well as the informercials suggest, it would make the original developers WAY more money than they could make selling the idea to others.

Caveat emptor.
The Professor

[elehhhhna]

40. Yep! Check out how much Carlton Sheets get-rich book costs on Ebay.

[Brewman_Jax]

41. So true

and along with the foul lending practices and the 0% down ponzi scheme, I can see where people have the dollar signs in their eyes.

Even if one doesn't want to be a "mogul", being unprepared can be just as harsh. Too much and not enough

[Tierra_y_Libertad]

48. Looks like the tip of a very large iceberg.

Methinks a lot of these folks are riding on the Titanic. When the "bubble" bursts (as bubbles inevitably do), they're going to be stuck with white elephants that they'll be paying for forever. Not to mention all those 2nd mortgages supporting their BMWs, media centers, and Nordstrom fashion statements.

[flvegan]

52. It's called being realistic about your means and knowing interest.

Maybe this is too broad a brush to paint with, but a great many of these foreclosures are based on folks that bought too much damn house. Happens at the car dealership, too. "For a few dollars a month more, you can have this additional/nicer (fill in the blank)." The borrower thinks that although they KNOW they can afford $X/mo, they think that they could easily cut something out and afford $X+50/mo. Next thing you know, they forget to cut, the rates go up, etc.

It's a vicious circle, too. Here in Florida, the banks take a MAJOR bath on 90% of their foreclosures, especially if they're using FNMA, etc money. They, in turn, pass those losses onto other customers.

Granted, the economy, our shitty administration and our jobless numbers are making this a million times worse.