When home foreclosures almost double in a year, one has to question the local economy;
“Obviously there’s a lot more people having trouble paying their mortgages and house payments,” Johnson said. “It was an alarming number to see how much numbers increased, just from one year to the next.”
Well, let’s look at the facts, high unemployment and even higher underemployment equals not having enough money to pay your bills, couple that with the new Federal guidelines making it tougher to re-finance (I personally experienced this) and what you have is a crisis. Is it bad? Yup. Is it surprising? Nope.
This is not an indicator of today. Since you went through this, you should know that first you have to be delinquent. Ten after you don’t live up to your end of the bargain which you promised to, you are forclosed on. You also get 180 days of redemption in which you can make good on your promise or you can sell your house and buy one you can afford. The whole process can take over a year. So some of these reported forclosures weere from events that are about two years old. No spinning now!
I don’t think I am spinning? Obviously, as you pointed out, people have to be in pretty dire straits if they can’t get their shit together in a year. Secondly, since a bunch of bandits took the money and ran, the Federal guidelines for refinancing and mortgages has become strict, very strict. As the article points out, and you point out (12 month fruition period). This mess has just begun. It’s unfortunate too, because people like me who have great credit and have never missed a mortgage payment in 8 years are treated like chopped liver because of ‘new guidelines’. It’s the typical ‘knee jerk bullshit from the feds, when they failed to fix the levees in New Orleans, allowed the city to be flattened, then turned around and wanted everyone including SF to have a levee system.
I guess to protect us from our own turds 🙂
Ten (sic) after you don’t live up to your end of the bargain which you promised to, you are forclosed on.
Things have changed today. There was a time when getting a home loan meant some degree of vetting by the lending institution and realtor. Not so much anymore. In fact, it would be my guess they encourage young couples to get into mortgages that are way over their heads. WAAAAY to many kids are in homes that leave them financially imprisoned there because after they make their home payments there is little money left over for life outside that home. Sad. And the lending institution that wrote up that loan could care less. They made theirs knowing the odds are stacked against these young homeowners.
Back in my early years of home ownership there were certain rules bankers and realtors were held to. Things like a mortgage payment should not be more than 15% of monthly gross income. Some realtors would try to justify a 28% mortgage payment when including long term debt. We personally never bought into that line of thinking.
BUYER BEWARE. BUT…..a person should be able to trust a lending institution when they suggest you can make it under their lending guidelines.
I got out of the service in the early seventies. We rented for a couple of years before we decided to look for a home of our own. I recall from the time I got out being approached a few times by an aspiring young realtor who also at the time worked as a recruiter. Navy, as I recall. That aspiring young realtor had the inside track on all returning service members and leveraged that info into a very good realty business. One of the major players today in fact even though is is unofficially retired. But I digress. When my wife and I looked for our first home we had one child already and one on the way. That aspiring realtor showed us homes that were in my opinion out of our league. When we sat down at our kitchen table to discuss what we could afford, I brought up daycare expenses. He said that expense is not calculated as long term debt, or anywhere else when figuring how big a mortgage we could handle. I politely showed him the door. We found another realtor. One who showed us homes we could afford. In all fairness to that first realtor I showed the door, I later did move up a couple of times with his his wife as our realtor. Super nice person.
The whole process can take over a year. So some of these reported forclosures weere from events that are about two years old.
What we are seeing right now is just the tip of the foreclosure iceberg. As l3wis has already pointed out, underemployment is running rampant in this town. People cannot make mortgage obligations for long on continued underemployment. This is a story the Argus SHOULD be headlining, not a McArena.
Well thank goodness banks were forced to give loans to those who wouldn’t normally qualify, all in the name of equality! People bought houses out of their price range, work slowed down, consequences are currently attempting to correct the error.
Oh I should add I’m not trying to be a heartless bastard, just state what is going on.
@Jim – the banks were not “forced” to make any loans. And, their practice of making loans to people that are/were beyond their means to pay back are nothing new either. Back in the earliest 80’s I got a loan for a property for which, without some “manipulating of income figures” by a BANKER and a REALTOR I would not have qualified.
They decided (I emphasize THEY DECIDED) that if I changed some of my accounting methods, and included business purchases (Self-Employed) as part of my personal income rather than business expenses – that I qualifiedfor their loan. They of course each collected their commission fees for “arranging” that transaction and were on their merry way to the next “deal”.
Meanwhile, I’m the guy with the payments coming out of what should have been investments in growing my business. But what bthe heck do they care about that. I can make the payments – they make $$$. I can’t? They keep as much as I have been able to pay AND get the property to resell and “arrange” another “deal” on – collecting those fees AGAIN.
Don’t kid yourself. Bankers and realtors aren’t out to do anyone any favors (anything against their own personal interests) and haven’t been “forced” to. They have they have always done – help themselves.
Christ I get sick of this back and forth finger pointing bullshit.
Did some banks give loans to people that they knew couldn’t afford them? Sure – because there were a lot of mortgage brokers paid on commission so they did whatever they could to originate more loans.
However they also thought the housing market would continue to increase… they were gambling, and when the market tumbled and people couldn’t make the payments… well we all know how that ended.
It wasn’t just the banks or bankers though.
Did a lot of homeowners falsify loan documentation to qualify for a loan? Yes. Did a lot of homeowners sign up for idiotic things like ARM loans or zero money down loans or interest only loans? Yes, and when the economy faltered and they found their ARM resetting or they lost a job and could no longer afford the house they were screwed.
Did all banks try to screw people over? No. Did all buyers attempt to buy too much house? No.
But to this day there has never been one single documented case where a bank held a gun to the head of a buyer and told them they had to sign the mortgage… so let’s all just admit there is more than enough blame to go around.
Personally I don’t believe there should be such a thing as a no-money down mortgage. I also think people should have at least 20% down on a home so they have some skin in the game too. Banks should legally be required to verify income and there should be a formula to ensure housing costs don’t exceed a specific percentage of take home pay. And while we are at it, there is no need for a 30 year mortgage because other nations don’t have it and they haven’t had the issues we do. 20 or 25 years should be long enough for anyone. If you can’t afford a payment based upon a 25 year loan with 20% down… you are trying to buy too much of a house – this isn’t a difficult concept to understand.
By the way – we should also eliminate the mortgage tax deduction, but that is a separate albeit related issue.
I agree with you a little Costner. I was approved for around $110,000 eight years ago when I bought my house. I did the math and knew I could never afford the mortgage if I would have bought a $110 K house. So I started looking at houses $40,000 and up (which my realtor and loan originator did not like, I ended up paying $68,000 for my house, and glad I didn’t go over that amount. Some months were tight, but I have never struggled to make a payment. And that what pisses me off about the Fed guidelines. I have never missed or been late on a payment in over 8 years and my credit rating is really high, but I have been refused re-financing because I am self-employed and work on tips in my other job. It should be based on your tax returns and credit history, not your job.
I actually don’t think the new regs are such a bad thing. I know it sucks for you personally – but I would much rather they error on the side of caution. If that means turning a few good people away then so be it, but it is better than the alternative.
They do suck because loans should be given on a case by case basis, something the f’ing banks and loan originators failed to do from the beginning, but instead of punishing the lenders, the punish potential borrowers, and that is assanine.