Just saw this on morning news...If this is true than we have seen nothing yet...
There's certainly the potential for things to get a lot worse before they get better. I like to be optimistic though, and think that between homeowners being a bit more responsible and banks being a bit more helpful, maybe we can get through all this without any one else losing their homes.
That is horrible! That is to many far to many
You know, a foreclosure is not the end of the world. It's definately a setback but sometimes we need setbacks to put us back on the right path.
Unless your finacial situation has changed for the better, postponing a foreclosure is not going to help. Getting out from under a mortgage that is doing more damage to your mental health is a good thing.
Many of the banks that took Federal bailout money are repaying the Govt. They will not be getting more money. They have every opportunity and benefit to work things out with the homeowners either through loan modifications or through short sales. They need to be left to their own fate. If the homeowner fails, he is not being bailed out so why should the banks?
Unfortunately, the banks while having “every opportunity” also now have every advantage. The “Foreclosures” and bad lending policies that the banks were forced into by the Government (via The Community Reinvestment Act) are over and the Taxpayer paid the bill.
The majority Foreclosures enacted now and in the upcoming foreclosure storm of 2010, are the very same taxpayers, that now, by no fault of their own (via unemployment caused by the very same CRA impacts), are facing an impossible situation.
How you one refinance or modify a mortgage if you have lost your job because of the economic fears of higher taxation and increased governmental control and have no income and regaining an income source to replace what you lost is all but impossible.
The majority of these people never had mortgage issues before, were not considered “low income” nor were considered a “mortgage risk,” but they now stand to lose everything they ever worked for with no support and very little legal defense.
The Banks, and the Government I might add, will earn billions in confiscated equity while millions will be made homeless. And the best the government has suggested so far is to rent homes, those very same homes, to the disadvantaged.
Doesn’t that sound like redistribution of wealth? Wasn’t that a political goal of the left?
What wealth is being redistibuted if the homeowner had a mortgage? Having a mortgage just gives you the illusion that you are a "property owner." The bank that gives you the mortgage owns your property and always will.
The banks advantage for helping people rework the terms of their loans far out weigh the disadvantage of reselling the property at the lower new market value of the homes. By extending the length of the loan in a modification they increase their overall reward.
Keeping up with the 20+ million foreclosures in process is a workload they just can't handle and most are going to slip through the cracks into full foreclosure and eventually eviction.
And Mark, Bank of America, Wells Fargo, and Citicorp have all sold off equity to the tune of $90 billion+ to repay the Tarp money. Foolish on their part because there are more bad times coming but they do it so the Govt. can't force them into making fincancial decisions.
Who did they sell this "equity" to?
This is not a US-only issue. We are all in deep doodoo (technical term). Look where the assets and equity are going. Another bank. In Switzerland perhaps - or Dubai?
They have not sold anything or "repaid| anything. Money was handed to institution X, in the form of bond purchases - either by the Fed or some other central bank. Institution X then bought Institution Z's assets at 12 cents on the dollar.
What happened to Bear Sterns? Who picked it up at 5% of 2004 value and made a fortune?
We are all being taken for a ride. The Spanish banks are also the biggest property owners in Spain. they needed 60 billion Euros which the ECB pumped into them by buying Spanish covered bonds.
I see where you are going and I don't mean to trivialize it but you and I both can invest in the very same private equity firms that are purchasing that equity.
Most of the equity sell-offs are going to private equity firms and other stronger financial institutions.
Really? You think any body lost any money when Bear Sterns went belly up or when Citibank tanked or GM went under?
Yet - here they all are still - in new hands.
Like Pam said, it's a shell game and you take chances when you make investments. You have said you sit on a 6 figure income, do you not make investments? I do and I still invest in real estate, only now I get if for pennies on the dollar. I also invest in some equity funds which do real well considering the economy. I'm no expert but you might want to check out DSPBR Top 100 Eqt Reg-G and DSPBR Equity-G the return on these funds far exceed the risk.
It is a shell game and a lot of people got burned this time. I make more money trading currency than I could in an investment fund like that one. Waiting on the dollar to get a tad stronger (Euro weaker). Should happen when the truth about European investment in Dubai comes about.
Agreed I haven't a clue on where to begin with forex so I invest in what I know, funds and RE. I tried the practice forex schemes but still I have no confidence to use real money. Maybe soon!
There is no illusion in the amount of principle that has been paid by a borrower to the lender or the equity that will be lost. Think about it. Simplistically, lets say a home is worth 100K the “homeowner” has paid 45K in principle so far. The home goes into foreclosure lets say because of unemployment. The bank then sells that home for a reduced rate of say 80K. Not counting interest income or foreclosure costs, how much money did the bank pocket?
-$100,000.00 Original Mortgage
+ $45,000.00 Principle Paid (equity)
- $55,000.00 Remaining Balance
+ $80,000.00 Short Sale price
+ $25,000.00 Bank Profit
Certainly the numbers can be skewed and in cases of the bank gaining negative transaction numbers many are insured for which the rights to property, (and expenses) are turned over to the insurer (the Fed) or are paid the difference, so the bank loses where?
You will also so find Banks with these federally insured mortgages are less likely to work with the “homeowner” since they retain that security net.
Even if the short sale numbers are less, though I have rarely heard or read of any under 20%, usually in such a sale agreement the equity level on that property is higher.
And no matter how you play the numbers the amount of “equity” the homeowner has invested is lost to them, and the Bank “inherits” the equity for which it has already been paid quite handsomely in interest, no matter the home value.
You see you are confusing equity share with ownership. When you have a mortgage and and fail on your obligations you forfeit your equity. And in your numbers did you account for the 30% to 80% drop in the new market value of the home?
I'm not quite sure what you are arguing. Do you think that after losing your job and having no income to pay your mortgage (hypothetically) that your equity share in the home should be enough to keep the banks from foreclosing?
You can get creative and find some one, an investor and sell your house to him and then buy it back from him through rent to own or something like that
You guys need to do a little home work.
The US banks are now the largest property owners in the US.
They currently own and are sitting on more than 22 million foreclosed residential properties. They will probably foreclose on another 7 million over the next 18-24 months.
They have no intention of "working with anyone" to alleviate their debts and will continue to be supported by the Federal reserve and government Inc to make sure they own everything.
No one is paying back anything and the banks will always be bailed out at the expense of the majority population.
Our system of consumption based on a perpetual debt model (Fractional Reserve Banking - i.e. The Federal Reserve) is designed to shift assets from the working class to the Rich.
The model is not sustainable. The model is by designed meant to shift ownership of assets to the Private Bankers who control the Money Supply.
Americans are very stupid to continue to allow PRIVATE BANKERS to control the money supply.
The entire Consumption for profit model is a complete failure. The Planet is not capable of unrestrained growth. At some point your reach saturation. We have reached that point.
What has to happen is a total collapse, and an entirely new way of thinking. The distribution of wealth and assets will be changed whether the bankers want it or not. Their very system is flawed by design.
We as Americans over consume and do NOT demand quality in our product. It's all about price, inflation and deflation. We do not need another car, a bigger house, etc. Those are just unrealistic and unsustainable wants.
What we do NEED is clean air, clean water, and a planet that is in balance so we can have clean pure food to eat.
Unfortunately all this profit based consumption has led us away from Happy lives as we are all slaves to some job we probably do not enjoy so we can earn enough income to eat, sleep, and exist.
Wow. Amen, amen, and um, amen.
The government, the banks, even many ordinary people still don't 'get it'. We're at an end game moment. I read the news and it's all about "has the recovery started yet?" or "are those green shoots we see?" as if we can just go right back to sustaining a huge economy by buying cheap crap from China on credit cards. It's not coming back that way. It can't.
I think a lot us understand it but you'd never know that from what we see in the media.
Check this out:
http://www.nytimes.com/2009/12/17/busin … s.html?hpw
To make a long story short, the banks have the property, we (the US taxpayers) are backing the bad debt.
Good deal huh?
It so much worse than most people really understand. Seriously we are doomed.
I thought the economy was trying to improve but its like its reversing. They do have the first-time buyer stimulus, maybe that will help some.
The whole problem in America isn't going to get better, anytime soon, but will get better in about 3-5 years. Providing the Government and Treasury get back to some sort of rationalized monetary policy. Right now, the U.S. dollar(today is up) has been badly beaten down.
The printing press in the Federal Reserve Bank MUST BE Stopped sooner rather than later. It's getting too ridiculous to back the losers in Congress any longer. The time is coming for the Citizenry to take back it's true power in America.
Presently, Business(the Economy) has Congress by their shorts and can pressure many into bad decision making. This needs to change.
Actually Cagsil, I think it's the other way around, Government has business by the shorts. The best way to solve the problem is for government regulation to get out of the way. And forget legislation that will increase taxation, the main reason for all the cost (job) cutting and economic pull backs (investment).
My Indiana house is FINALLY in foreclosure, thank God, and I say thank God, because in the past three years its value has tanked by 80%--and that's just what the bank will admit to. In reality, it's worth nothing, because it can't be sold at any price. A few such homes are still selling at Sheriff's sale, but the buyers just let them sit and rot, hoping the market will come back and they'll make a few bucks, which it won't, and they won't.
The house cost me $39,900. I was making $34,000 a year when I bought it and intended to live in it until I died, so I hardly bought beyond my means. It is in a mixed neighborhood that was in NO WAY a slum when I purchased the house. I put a new roof on it, a new high-efficiency furnace, repainted everything, put a new cedar facade on the front. It's a very cute little house, across the street from a new grade school.
I moved to take what I thought was a better job. The market crashed months later. The house sat on the market for TWO YEARS without even one single person looking at it. I tried to rent it for 6 months and couldn't, finally stuck a relative in it just to keep it from being vandalized. By the third year I stopped paying on it because I my 'better' job went down the tubes when the bank that hired me went belly up.
You should see the town now. It looks like hell. It's in the rustbelt, just east of Chicago, and no one wants to live there. People are moving away in droves.
Banks have been dumping such houses on the city--initiating foreclosure and then never finishing it when the house doesn't sell at Sheriff's auction. It's not unusual either. I'm not in a weird position. I know half a dozen other people personally who are in the exact same mess.
The house I do live in now lost 30% of its value last year. And it's in an upscale suburb.
Financial deregulation caused this bubble. It was created by people who don't even attach anything real to their trading practices. The houses almost don't matter. It's not about the houses, although the mortgage crisis is destroying cities, homes, and lives, it's really about the repeal of Glass-Steagall and a ton of other financial deregulation measures that took place in the 80s and 90s and cleared the way for banks to make more money in the stock market and in weird, insane securities than by lending. That's why they're not lending now. Why should they? They can make so much more money on gambling. And if they fail, we jump in and give them money.
The US will not come back in 3, 5, or 10 years. The US is bankrupt now. We're just waiting for the rest of the crap to come down on us. After that, we're out of the running as a superpower for generations.
Property values in my neck of the woods here in Fla have dropped to 67.3% of their former value. And thats after a 8% pushback. The majority of mortgaged homes purchased or refinanced after 2003 here are underwater. More than 1 in 15 homes in our area are in some phase of foreclosure. That ratio is expected to rise to over 1 in 9 next year, as is unemployment which is expected to top 21% from 17.4%.
<<And Mark, Bank of America, Wells Fargo, and Citicorp have all sold off equity to the tune of $90 billion+ to repay the Tarp money. Foolish on their part because there are more bad times coming but they do it so the Govt. can't force them into making fincancial decisions.>>
They are doing this because they don't want to be bound by any of the (very few) conditions attached to taking TARP money, especially the executive pay restrictions.
I don't think the banks are worried about bad times coming, because they have the government by the short hairs.
It's a shell game. Investing has come unmoored from reality. I'm by no means the only person saying this.
People are talking about houses and mortgages and homebuyers as if we matter at all. We don't.
Yesterday I heard that the IRS made large concessions to the banks just so the banks could repay the bail outs. Paying back the bail outs also allows the banks to pay the executives bonuses. And I wondered...Why is the government giving the irresponsible banks bail out money, tax breaks and loop holes while the people who have lost (or are losing) their savings/retirements, homes and jobs are actually footing the bill?
Is this a fair assessment? Am I off base on this? Holly
I have to come back and read all the post on this topic, such an intelligent and important conversation
Pam - did you watch that film I suggested you watch?
Fractional reserve banking - oh yes.
Part of it...god, it goes on and on, you know? I can't say I'm persuaded so far. It still seems like another Reptilians-are-sucking-my-brain conspiracy theory to me. Are there a few vey rich men dicking us right now. Totally. Is it a conspiracy dating back to FDR and some Masons or whatever? No, I don't think so.
I actually know quite a bit about these things but being not a guy a not being a millionaire no one cares. I am totally used to "Oh who cares Pam." In fact, if I get that much uptake on anything in the financial realm I'm being deluged with attention and it goes to my head.
I wrote a white paper on fractional reserve lending for a client and I've done a TON of research on the history of banking--which is not that easy to do believe it or not. It's surprising (or not--depending on how you look at it) how hard it is to find that kind of information, even in paper books. (Online, forget it. All you hear is the sound of axes grinding.)
I'd be more persuaded by the movie if the whole history of banking as an institution wasn't not-so-coincidentally the history of slavery and theft. I mean, it's not like this is new--it's just the newest biggest version of what banks DO. All this business about the Fed is red herring when you take a broader view.
It's what banks do. They're debt-making slavery machines. Check it out, you'll see.
Yes, but privately owned central banks are the ultimate in debt making slavery machines. I really do recommend watching it all - it filled in a lot of blanks for me.
Indeed, our economy is getting tougher nowadays. Banks will always be a bank, which means that no matter what happens they will always go for profit. People should not expect too much from them. They will lend you money but the interests will still be high. You will open a bank deposit but the interest will still be low. Perhaps, that's the way it is in the banking industry. Let's just be on guard with our financial standing and try to manage it well.
Happy holidays to all!
Team Obama can only ask the Banks to do the right thing. But the Banks are only going to do what is in their own interests. PROFIT.
They make a lot more money foreclosing than they do carrying the loan.
There is no incentive for them to help because they get enormous loans on the back end, do not have to take risks on the loans as they are being guarnteed by the Government, Deposits are Federally Insured as well.
So what is the incentive for the Banks?
CitiGroup has taken 100,000 applications under the Team Obama Loan Modification plan and modified less than 400 loans.
And the news you are speaking of is just residential foreclosures, Commercial Foreclosures are just kicking into gear.
This is a plan by design... shift America's assets to the Corporate Interests who hold the Stock.
This is why a debt based Fractional Reserve Banking system is such a disaster... people never really own anything. Always making payments. As soon as you can not make your payment, you lose our equity to the Bank. Many have negative equity because the bought into the belief that paper value is real value.
I beg to differ with some of the posters. Yes, banks do own a lot of property right now, but not by choice. They'd rather stick with the finance business and not the property management business.
I know banks are selling foreclosed homes at up to 60% of their value because they're just trying to get rid of them. If they can work something out with the home owners, they will.
Banks will do what they need to make money. They are not interested in helping the public good. They are interest in their own profit margin. But it hurts their profits if they are selling for nothing or if they have these properties they have to spend tons of money to manage and maintain.
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