My home town--banks walking away from foreclosures

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   pgrundyposted 15 years ago

   This is hitting South Bend now, where I grew up. I have a house there with a renter in it that I"m about to lose:
   
   http://www.nytimes.com/2009/03/30/us/30 … y.html?hpw
   
   It's so bizarre. The industrial midwest is getting really, really bad.

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   Jewelsposted 15 years ago

   There really doesn't seem to be a positive standpoint to these foreclosures. Nobody gains anything.  There used to be strategies implemented on compassionate grounds by banks in this country where  repayments were stopped for a limited period (usually maximum 3 months) until the customer was back in a position to make payments.  It was a precursor to try and prevent the customer going under and into bankruptcy.  That way at least the bank had a chance of recouping their loan without the cost of foreclosure and the losses that came with it, banks recouped only 1 cent in the dollar for forced sales after all costs were taken into account. That ratio was in good financial times, not like today.
   
   The current situation is in no way a similar circumstance.  But one common sense approach would be to put these loans on hold, even if they are being 'sold' so that existing owners could at least look after the property, and hopefully when job circumstances improve there just maybe a chance mortgage repayments could resume.  It's very likely a solution like this would be rejected as farcical but what's happening now is throwing the baby out with the bathwater.  Everything is going to the dogs in the current process.

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   pgrundyposted 15 years ago

   I know. My renter needs the house but her credit is trashed so she can't buy it, and my attorney advised me to give the house back to the bank and stop taking rent payments, so I did. So far the bank has not taken the house back. She's just living there rent free. Houses in that neighborhood are on the market for under 10K and not selling. I owe $38K on the house and it isn't worth as much as a used subcompact car right now--as if anyone would even buy it for that amount. It was on the market for all of 2007 and most of 2008 and I finally took it off the market in the fall of '08 because not one single person even looked at it and my real estate agent (the second one) was just whining at me all the time about how crappy the market is and how rich people won't even buy houses from her nevermind poor people.
   
   Here another weird detail---A bank-owned house a block over is up for $11K and is totally trashed. It's a way more jacked up than my house--they haven't even cleaned the trash out of it--and the city has the taxes (with the homestead exemption gone) at $3800! It's only about 700 square feet. I live in nice suburban area in MI and don't pay nearly that much.
   
   I think the world has gone mad. I do. I went looking for subsized housing for my renter--it basically doesn't exist anymore. So all these stripped empty homes, all these homeless people, it's nuts. I told her to stay put until I find out what will happen. If the bank is going to dump the house, she might as well live in it. Make the city put her out if they dare.

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   earnestshubposted 15 years ago

   I Imagine this must be an absolute nightmare! Hell $38,000 still sounds amazing from here in Suburban Melbourne Australia. In any outer suburb a three bedroom house is over $300k. Inner Melbourne is too expensive to think about buying, at 225k for a one bedroom . Mind you, we only have a few taxpayers left in Australia and we have started to leak money, real big money with the meltdown, so we will not be far behind. Private financiers from America or Australia should offer some help in the way of cheap finance for home owners who need it. Sooner or later property must get back some value. Those are amazingly cheap prices for any land even if it had a lousy house on it.
   Hell pgrundy I am so sorry it has got to this for America and your town, and for you. I have been reading your honest, decent writings for long enough to recognize a little about your values.You seem typical (if I may say so) of many smart Americans I have met in America, in Australia and other places.I love your people, but where the fuck do you all go while your bankers and Government rape and pillage? I hate what is happening to the poor in the world, but we are to become the poor if the companies and bankers of America are not cleansed of shit management, for the rest of us, we will be lucky to get three meals a day.I hope America finds a way to revolt at least financially, and with houses and land at 8k that is almost there!
   Another way to see it is that they have typically followed the fairy story to the letter and killed the goose! 8k? nothing left to scrape any AAA up against!
   Good luck and love from mine to yours, may brighter days come to us, and in the meantime I can rely on you to be real about stuff, and that is why I feel confident that you and others like you who are the America that I love have spirit enough. Here's to a better America under a new Presidency that you and I have ripped in to but we could still be wrong enough.....

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      pgrundyposted 15 years agoin reply to this

      Thanks Earnest.
      
      My biggest fear is that there WILL be revolt. Honestly, if this keeps up, there will be, and it seems to me that never goes well, revolution. It always gets uglier not better once that happens. I feel like I have acted in good faith with that house--I moved to take a job in April of 2007--at a bank that is now defunct. So now I own two homes, have no job, and my renter is working three crappy pretend jobs (like home parties, temp work, etc...) and there are entire neighborhoods in South Bend that look like Detroit--just all bombed out, nasty, no one living there. I don't really know what to do. I saw the NYT article today and just thought, damn. This is bad.
      
      I wish some Australian WOULD buy my house. That person would regret it though. I'd have to sell it to an Australian I don't know and don't care about, because that person would get there and  be like, "Yikes! What have I done!?!"

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   earnestshubposted 15 years ago

   Our Federal Government has spilled the 19 Billion surplus and fired money in to pensions and the poor, handing out payments of around $3k each. This has found it's way back in to the economy and debt reduction,(pay down the credit cards) and it has staved off the heavy stuff till now, but it will not be long before it crashes here too.It sounds very bad over there, but all I can think to say is good luck and hang in there. I wish someone decent would hire you.You would be an asset to any employer.

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      Jewelsposted 15 years agoin reply to this

      I totally agree that Pam is a major asset. But so skilled she is better off self employed and making herself wealthy instead of some other schmuck who doesn't appreciate her.  Go Pam, it will happen.

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   pgrundyposted 15 years ago

   Thanks Earnest and Jewels.
   
   It's great to hear such supportive words. I know eventually things will turn around in the U.S. but it may be awhile. In the meantime, I'm glad I'm living indoors and making some money on my own. Soon it will be time to plant the garden and this year I'll actually have time to do it!

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      earnestshubposted 15 years agoin reply to this

      On second thought, Jewel is right. You are where you should be. Working from home.
      How do you want your backlinks served? How about we all try to chuck you as many authoritative backlinks as we can? They seem to be harder to get than money.
      How about someone build a hub on it?
      Gotta be someway to offer a hand from a community this big. Sorry pgrundy, not trying to run your life, but I'm feeling a bit helpless and care what happens to our star writer.

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         Jewelsposted 15 years agoin reply to this

         Funny you saying that earnest, I've been wondering how we could help here. Practically help that is.

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            pgrundyposted 15 years agoin reply to this

            Funny you both should say that, because I was thinking the same thing--not about myself so much, but just in general. After I wrote this I got to thinking, Jeez Pam, get over yourself--all these homeless and poor people, and here South Bend has all these homes nobody wants, not even the bank... Does this turn a lightbulb on in any heads here??
            
            Seriously, I'm going to write to the city attorney and ask him if some of these properties can't be used productively. If I think of anyone else to write to, I'll do it. Meanwhile I'm going to research this and DO something, even if its only another hub. It's freakin' nuts that people are living in tents while empty houses rot. That's crazy.

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               Jewelsposted 15 years agoin reply to this

               Go Pam. But it's nice to look after family too - Hubfamily that is.

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   AEvansposted 15 years ago

   I swear is this mess ever going to end???? If it isn't one thing it is another, what an endless mess all due to corruption, greed. It is destruction of the middle class, which I believe is now dissolved we are either rich or poor , nothing in between.

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      pgrundyposted 15 years agoin reply to this

      I agree. We're pretty much there. You're rich or you're poor, the end.
      
      I don't understand why South Bend is letting this happen. They interviewed the city attorney and (I know this guy too and he's not stupid)--and he's all like, Oh it's so awful gosh gee whiz what will we do ain't it bad golly its bad. So I'm thinking, then why are you taxing houses that BANKS don't even want at such a high rate it practical guarantees EVERYONE will walk away? What's that all about? If I could see someone benefiting I'd think, oh, corruption. But no one is benefiting, not even the city.
      
      I wish I still had my code enforcement shake down photos. When I first moved into the house, I got a shake down letter from code enforcement for leaning a 24" by 36" piece of cardboard (just one) against the trash bin. I took a 'before' and 'after' photo (before I folded it and put it IN the barrel and after) but I lost it when my computer crashed.
      
      Anyhoo, code enforcement sent me a letter saying I'd be assessed a $250 fine and $500 in clean up costs. So I sent the 'before' and 'after' photos, along with a photo of the five months worth of dead furniture and trash in the front yard down the block, and they dropped it, but it's fairly typical.
      
      And insane.
      
      But it still makes me sad.

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         Mishaposted 15 years agoin reply to this

         They should feed their kids Pam, right? Their salary is your taxes. You wanted more government, you have it. Enjoy

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            pgrundyposted 15 years agoin reply to this

            I though Aya would get here first to say that, but thanks Misha.
            
            You have a nice day too.

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            LondonGirlposted 15 years agoin reply to this

            Is it just me, or is this a trifle insensitive?

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               Aya Katzposted 15 years agoin reply to this

               LondonGirl, I'm glad I'm not the one who said it this time, so that Misha gets the scolding. But... honestly, my social skills must be really bad, because I don't understand why it's insensitive.
               
               Many of us in the US are suffering from similar situations. Our property taxes are going up, but our property values are going down. Even a bee-keeper, who owes no moral duty to his bees, understands that during a bad season, you can't harvest any honey, because the bees need it to live on. He knows if they die, he loses his investment. Why can't our governmental keepers understand this basic principle? Do they owe us less of a duty than the bee-keeper owes the bees?
               
               Okay, now to the "insensitive" part. Some of us always vote against taxes that are not limited by the value of the thing being taxed. Others vote for unlimited taxation. Why is it "insensitive" to point out the result? It could save us all, if they could only understand the point.

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                  Leta Sposted 15 years agoin reply to this

                  Yeah, that might be so, Aya, with your property taxes (though I hardly believe it in MO--if you cannot do well there, you just can't do well, IMHO, just like Omaha) but it isn't the same all over the country.
                  
                  I just wonder--do you guys just come up with the philosophy first and then try to fit it en masse onto a situation because it suits some personal agenda?  Like I say, I'm not an extreme expert on real estate, but my research of markets around the country did yield some information.  You libertarian/conservative types are all about locality, private enterprise and de-centralization--well, it looks to me like you really don't understand the dynamics at works in the rust belt or in general......  of course, I could be wrong, I dunno...
                  
                  
                  If you all want to save these houses, lol, consider inviting artist types from NYC or other large cities to take them over and start gentrifying--similar to what's going on in Philadelphia, or the old mining town of Jerome here in AZ (and what often happens).  The innovative find creative and inexpensive ways to improve everything, make the place cool again & then everything comes back and people want to live there.  But it takes vision.

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            Leta Sposted 15 years agoin reply to this

            Anyway, Misha.  It isn't about that.  (I just was reading this whole post more in depth.)  The industrial Midwest is unlike the middle or plains Midwest as far as weird taxes and fees.  I was actually looking at houses in MI in university towns at one point (University + cheap home prices usually = good profit in renters or appreciation down the line).  Actually, I've looked at a lot of areas.  The rust belt is suffering all around because of the failing industries there.  Places like Detroit are extremely draconian as far as fees and taxes and inspections comparatively speaking.  I freaked when I heard what they required.  It seems very localized.  And also very sad, because there are some lovely old houses to be had. 
            
            We have nothing like this in Omaha, my hometown (steady as she goes)--and look at Fargo, SD, as well--it is doing well.  My taxes in TX, also, for land are something, lol, like $100 per year.
            
            The entire infrastructure is crumbling--both private and gov't following after--in the rust belt.  Here in AZ, it's akin to CA with the outrageous huge mortgages, because we have been Califoricated, basically.
            
            Anyway, it is definitely NOT about more government in a broad national sense or whatever as you stated.  That's just conservative drone-speak cliches.
            
            Anyway, Pam--I dug up links.  Don't know if they would be helpful to you.  This Blazevik guy I have already talked to previously.  They are still making investor loans and have seller financing. He really seemed OK--youngish and willing to help out investors.... This is possibly my naivete about your situation--but I just cannot see if you have a renter in the house that can make payments why a $38,000 house wouldn't be having a positive cash flow.  ?  This house is also close-ish to a couple universities, so?  Unless the taxes and fees are killing you?
            
            www.BlazeVicFunding.com
            
            Have you thought about some kind of rent-to-own agreement with your current renter?  She doesn't need credit then (this is what I was seeing on Craigslist in CA)  Also, advertising yourself that you will carry--then they pay you.  That is--if there is still time to avoid losing it...
            
            OK--so that may or may not help,

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               pgrundyposted 15 years agoin reply to this

               Thanks Lita.
               
               The rent to own option is not allowed by my mortgage contract. In fact, I shouldn't have a renter, but after carrying the place vacant for a year while I tried to sell it my son in law offered to move his mom in there so she wouldn't move in with them. I was grateful and still am. I told her to stay put, and depending on how brave she personally is, I'm thinking she should stay put even if foreclosure is initiated, because now lenders are just dumping the properties anyway. So you know, they kick people out, then can't sell at sheriff's sale, then the house is stripped and ruined by scrappers and isn't habitable anymore. The renter or borrower could have stayed in it all along.
               
               Weirdly, the last house my tenant rented was foreclosed on, and she lived in that one rent free for six months before the city made her get out. That house sold at sheriff's auction for $3,000 and the investor who bought it is just letting it rot--it's not rented, not improved. It now sits vacant on a whole block of vacant foreclosed properties.
               
               I find it ironic that Libertarians, who claim to champion individual freedom and individual responsibility above all else, usually have this dream of living out in a field somewhere where they hope they will have no responsibility. Plus, Libertarians, the champions of individual freedom, are some of the least tolerant people I know. What they mean is, THEIR freedom matters to them. Screw mine.    Especially if I disagree with them on anything.
               
               I just don't think it's a very mature political philosophy. And the habit of intellectually mugging every person at every opportunity to repeat the same two or three bad ideas is really irritating.

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         AEvansposted 15 years agoin reply to this

         It is very sad and to fine you as well is ridiculous, I am glad they dropped the fines. I wonder what everyone is thinking? Maybe they are just exhausted from the whole housing mess and do not have any idea what they should do. The can't collect from the bank so what do they do? If legally it is the banks , but still is the parties as documents have not been turned over, then it leaves the owner which is unfortunate. Where I am located they are selling $200-300,000 homes that were foreclosed for $70,000 here is the downside as in the news today, there is a clause in the ppw, which balloons the payment after 6 months and then again after a year and so forth, so end in the end again, there will be foreclosures as the banks are still trying to find a way to re-coup their money from the first time home buyers and investors. Personally all of this money should have been given to the consumers and not the banks, I am certain that they economy would have been stimulated then. Downside the government can't monitor the money like they do with the banks, so of course we know they wouldn't do that either. I wish you all of the best on your issue and I hope that it ends up being something positive in the end.

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            pgrundyposted 15 years agoin reply to this

            Thanks! I'm sure it will all end badly though. This is how Detroit and Flint turned into ghost towns. Government is only as good as the people who elect it, so if you live in a city full of backwater rednecks who throw food at people who disagree with them, you get that kind of government-- the crooks and jackasses take over.
            
            Where I live now the city reduced everyone's property taxes without being asked, to bring the amount into line with the falling values of the homes. Here I voted for a school bond issue because I think schools are important, even though I have no children to send to the new school. Bill voted for it too. The city is pretty decent here. It depends very much on where you live how bad it gets.

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   pgrundyposted 15 years ago

   I should mention that we do have a government here in Kalamazoo too, and they don't happen to be completely insane. Nothing like taking advantage of other people's miseries to score points for your personal political opinions. Now I know that about you Misha.

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      Mishaposted 15 years agoin reply to this

      I would say give them some time, and they likely will get there, too
      As for scoring points - may be, but I don't really think so, at least not mostly. I am using whatever I can to try to open your eyes to what is happening and why it is happening, because I care. Sorry if I went overboard.

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         pgrundyposted 15 years agoin reply to this

         That's OK. I love you Misha. 

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   Mighty Momposted 15 years ago

   During the Great Depression people sought relief from their daily woes by going to the movies. Buzzby Berkeley and big productions showing glamorous movie stars in beautiful clothes. For a couple of hours, at least, life seemed better.
   All I can say is I'm glad we have Hub Pages. And it's open 24/7. And it's free.

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      pgrundyposted 15 years agoin reply to this

      Amen MM, amen!
      
      You know, those screwball comedies of the 1930s are really fun to watch right now. They are so amazingly timely! Seriously, check them out on TCM if you have cable, they're a lot of fun.

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    earnestshubposted 15 years ago

    Mighty Mom you are right as usual, we have an amazing community here.

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    Mishaposted 15 years ago

    It was. I should have shown my compassion, which I do have.
    
    Does not make the message invalid, though....
    
    How to give you a glimpse of what I feel about that? Ah!
    
    OK, you are probably telling your boy to stay away from sharp objects and not to try to slide a knife blade on his skin, and explaining that he will hurt himself if he would. May be you even hide all knives from him, idk, everybody have their own approach. Yet almost inevitably one day he gets a hold of a knife and cuts his finger. What would be your feeling? On one hand no doubt compassion, cause you love him and you know it hurts, but on the other hand - told ya so many times!
    
    Pretty much the same thing here.
    
    See how much I love you Pam?

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    pgrundyposted 15 years ago

    I do understand why you feel the way you do. But I I have had good experiences with government as well as bad ones. So I just have a different 'take' on it. Most people don't change their attitudes by the time they reach our age, and I doubt I will change mine. But I do understand how, when someone goes through something terrible, that changes their view of a thing forever after. I totally get that.
    
    I'm like that about some things too, just not government.

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    pgrundyposted 15 years ago

    I should also mention that South Bend has been rotten since I was a kid. When I was in high school a community organizer from NW side where a lot of this crap goes down was making some headway against it... and was murdered. The murder was never solved. And that was the end of the noise.
    
    But then up here, in MI, it's not like that at all. It's a mixture--some good, some bad. I'm glad I live up here now. If it gets rotten up here I guess I'll have to complain and then I'll get shot or whatever. Well, something gets all of us sooner or later...

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    Aya Katzposted 15 years ago

    PGrundy, it ought to be possible for someone to complain without getting shot. I certainly don't want to have anything bad happen to you. I would also like for all of us who are under similar circumstances to be able to do more than just complain...

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    pgrundyposted 15 years ago

    That ought to be possible, but human beings being what they are, I doubt it will ever be totally possible. We all make choices every day about which battles to fight and which ones not to fight, and I'm not living in South Bend now--I made a clear choice to let that battle go a long time ago. It bothers me, sure, but I've been beat up by South Bend enough--and I'm not even talking about the house thing or the taxes or whatnot, I just mean the place is a sh*thole and I thank God everyday I don't live there anymore and no one is crawling in my windows, no one is beating me up on the street, no one is throwing crap at my car and my house or harassing my kids or stealing my stuff or shaking me down. If you wish to pursue a Libertarian agenda in South Bend, Indiana be my guest, I wish you all the best.
    
    Me, no thanks.
    
    But more to the point (your point, I think), I believe in representative government, and I believe that the price of consenting to representative government is that I will not always get what I personally want. Sometimes I will, sometimes I won't. And more than that, sometimes I will have to to tolerate what I find offensive or just leave. Sometimes I will pay for the mistakes of others. I am willing to do all this. It's my choice. If you choose not to consent to that, fine. Don't. But take responsibility for the consequences of living by your own code. Either convert enough people to change the tide or civilly disobey and take what comes from that.
    
    So that's what I believe, but I know you already know this about me. It would be nice if you would show any respect at all for my right to believe what I believe and to pursue my own view of what is good and decent--even when it departs from yours. I'm not expecting that from you, understand--it would just be nice.
    
    It would also be more consistent with what YOU profess to believe.

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    Aya Katzposted 15 years ago

    PGrundy, I believe in fairness. I, for instance, do not think we should change the constitution because someone we didn't vote for won. If you follow everything I've said, you'll see that I believe in a level playing field.
    
    No, I'm not going to South Bend to clean things up, any more than you are. I am stuck in a cage in the Ozarks, and here I will stay, as long as I'm allowed to mind my own business.
    
    I meant that if we both feel a certain practice is corrupt, we could support each other in saying so. And in lobbying for the practice to be discontinued. I always get confused when, right after complaining about something that you have every right to complain about, you get mad when someone remarks something about the source of the problem.
    
    I understand that sometimes we need to blow off steam when we feel legitimately oppressed. However, oppressors just love it, if that's all we ever do.
    
    One of my problems throughout my life history is that when somebody complains, I take them seriously. I tend to blow the whistle on corruption, and then it turns out the person who told me about it doesn't cover my back. They were just blowing off steam. They never meant for me to help make it all better.

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       pgrundyposted 15 years agoin reply to this

       You NEVER make practical suggestions. You just beat me (and others)  over the head with your Libertarianism philosophy at every opportunity even though you KNOW I don't agree with you and won't, ever. You're like a stalker at this point. Everything is a cue to get out your philosophy club and beat someone with it. It's not helpful, and you're not right.
       
       If the answer to corruption is no government then the answer to food poisoning is no more food and the answer to a chapped ass is no more clothing.
       
       How about developing some maturity and respect for other points of view?

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          Aya Katzposted 15 years agoin reply to this

          My suggestion, concerning the property tax problem that you brought up, is to limit taxation to a small, fixed percentage of the current market value of the property. This would mean that in areas where the property value is negative, then theoretically, the local government has no right to any tax whatever, and might even be required to pay back taxes taken from you in earlier years.
          
          This is not "no government". This is "limited government", and I don't think it's a bad idea. If applied in our respective states, it would help you, it would help me, and it would help lots of other people who are in a similar situation.

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    Leta Sposted 15 years ago

    OK.  Oh, boy.  Yeah, all that....  Now a discussion of opposing politics here just >may< be in bad taste, I dunno, just sayin'....  I could be wrong.
    
    Do you want to hang on to the house, Pam?
    
    I do not claim to be an expert, but I do a little research on real estate and financing, and have come across some resources in my own pursuit.  You know CA, given all the foreclosures, has developed a lot of alternative financing sources (leave it to them, of course)...  There is also a developer/financier I know of in Phoenix who is buying up houses as investments in MI and IN who gives hard money loans and is flexible--will work with people--and is legitimate.  TMG also strikes me as legitimately knowledgeable in this area (if you can get past the cynicism, lol).  He hasn't been around much, however.
    
    Want some links?  You can see if you think it might help/or not.  ?

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    pgrundyposted 15 years ago

    Hi Lita!
    
    Thanks, sure send them if you get a chance. I am working with an attorney though. I don't want to keep the house, and I can't sell it, so I'm going to give it back the the lender and the hell with my credit. When I read the article about lenders walking away in South Bend, I realized it could get a lot messier than that though. My lender is Wells Fargo and I know they do actually hold the mortgage note, so I'm thinking they won't dump it, but who knows?
    
    Mostly I posted this hub because it is sad to me to see how far South Bend has fallen. It has always been a rough place in a lot of ways, but in better days it was a major industrial center and I did grow up there, so that makes it sadder.
    
    If it goes up at sheriff's auction, my son-in-law is going to bid low on it--see if he can pick it up for a few thousand dollars and keep his mother in it. That's what I'm hoping can happen.
    
    I'm going to SB Friday. Thought I'd take some photos and do a hub or something.

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    LondonGirlposted 15 years ago

    if it sells very cheaply, do you not owe the difference between the sale price and the mortgage? Or do you live in one of those states where that's it?

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    nhkatzposted 15 years ago

    I have to side with PGrundy on this.
    
    Your suggestion that she limit taxes is not really a practical one because she does not control the tax rate.

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    Aya Katzposted 15 years ago

    Nets, PGrundy alone does not control the tax rate. But PGrundy represents many people, all of whom agree with her about what the tax rates should be like and how they should be used. I am not asking her to change the tax rates on her own. I am asking her to agree with me that they ought to be changed. If she agrees, then all her fans will agree, too. Then there might be a chance at a popular movement.
    
    I can't leave PGrundy alone, because she is not simply an individual minding her own business. She is a thinker who publishes articles that influence many other people. Her mind is a valuable resource, because of this.
    
    In a free society, this is how change is achieved, by sharing ideas and changing each others' minds. If what PGrundy believes had no effect on what happens to me and my family, it would indeed be none of my business. But she believes is immensely important, as she has the votes to take away my freedom. She matters very much.

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       nhkatzposted 15 years agoin reply to this

       Aya,
       
       That all may be.
       
       But PGrundy is right to think that you are not making practical suggestions to help her
       solve the problems which concern PGrundy, and that in fact there is something unfriendly
       in your interest in her.
       
       Nets

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    Mishaposted 15 years ago

    Come on Aya, what you resist - persists. Law of Nature
    
    You don't have to push it, it is counter-productive and only causes resistance. More subtle ways give much better results in the long run

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    Aya Katzposted 15 years ago

    Nets,
    I disagree that my interest in PGrundy's worldview, life and specific problems is unfriendly. Often, she talks about problems that are very similar to problems that I, too, am grappling with.
    
    When she experienced job dissatisfaction, that really resonated with me, because I had had similar experiences, and I believed that walking away from a bad situation was the best thing we could do for ourselves. Eventually, she did exactly that, and she felt much better. But when I suggested it, and when I offered a rationale that explained how this might affect everyone for the better, she took it badly. I didn't mean it in an unfriendly way.
    
    Impersonal, perhaps, but not unfriendly. That is, I like to look at the big picture, and how our small acts of courage in our personal lives can affect everyone's future. This may be too abstract for some, but it is certainly not in any way in violation of the tenets of representative government or the free exchange of ideas. Wanting to convince someone isn't a hostile act. It means you really do care what they think and you value their mind.
    
    PGrundy and I and millions of other people have to deal with high taxes, the corporate 
    mentality, the effects of crime and overcrowding. If it weren't for the internet, we wouldn't know about each other's situations. We couldn't compare notes. We couldn't as easily see how our own personal problems fit into the big picture. Now we can.
    
    It's isn't wrong to try to draw conclusions from the data, and it is not wrong -- or unfriendly -- to offer solutions that might work for all of us together. Each of us alone is powerless to change the situation. Together, we have a chance.

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    nhkatzposted 15 years ago

    Let's try to put this another way.
    
    Perhaps it does not do so much good to value a person's mind if your theory of that person's mind is too flawed.
    
    Nets

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    Aya Katzposted 15 years ago

    Nets,
    
    Okay. I guess you got me there!  But I'm doing the best I can...

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    nhkatzposted 15 years ago

    In fact I'm a Libertarian :-)  but I don't want to talk about that right now, because I think this forum actually is about the economic situation in the rust belt.
    
    I live in Bloomington, which is a college town, and so am a little sheltered from the rather bad economic situation which currently prevails elsewhere in the state. I see a lot of houses priced at under $10K in Indianapolis and it is sad but interesting that the same is true in South Bend.
    
    I, probably quite wrongly, think of South Bend as a college town because of Notre Dame. But I take it from this discussion that South Bend is, or was traditionally, dependent on the steel and auto industries? If those are gone or going, it would explain why real estate prices are so depressed. Whatever one thinks of cities, they do need industries of some sort to support them.
    
    I basically agree with Lita, when I hear about ridiculously low house prices, my first inclination is to think that the situation could be helped by having someone with vision buy them. For instance, could somebody buy a neighborhood at $5k per house, set it up as a living arrangement for cool off-campus Notre Dame students, whereby they could be offered some equity in exchange for fixing up houses they were living in, and thereby make a profit. If yes, then some investors should be trying something like that. If it is made impossible by city policies, somebody needs to explain to the city that it is destroying its own tax base. If there is no possible economic justification for owning the houses, the price should be as it is, and sad as it is to say, the city, or large neighborhoods of it, should simply be abandoned. (As PGrundy has abandoned it for Kalamazoo, I understand. I've only been in Kalamazoo once, on a kind of camping trip from Chicago, but left with a really positive impression of the
    place.)
    
    Just because a city has been built in a certain place for some reason does not mean that it has to stay there forever when the reason disappears. Maybe the Lorax and all of his friends can come back.

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    Aya Katzposted 15 years ago

    Maybe the Lorax and all of his friends will come back. But how long can they stay, with the property tax structure that way?
    
    Suppose bison and elk and all sorts of wildlife were to populate that area after humans abandon it? Suppose that after that, a few humans decide to also move back and hunt the bison and elk, and live the lifestyle of the native Americans? How long will they be able to do it, before someone realizes that the land is valuable again and decides to take it back?
    
    It might be nice for property rights to remain secure, so that when a usage that is "less efficient" is put into effect it is not wiped out as soon as it establishes itself.

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    nhkatzposted 15 years ago

    With the property tax structure that way, they are the only ones who can stay.
    
    The elk and bison can't be induced to pay their taxes.

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    Aya Katzposted 15 years ago

    Right. But I feel bad for the hunter-gatherer, too. After all, limited predators do help to keep the herd healthy.;->

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    nhkatzposted 15 years ago

    This can be easily solved by the reintroduction of wolves.

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    Aya Katzposted 15 years ago

    Yes. Reintroduction of wolves is good. But who will keep the wolf population in check? There's a slot for man in the eco-system, too.

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    Leta Sposted 15 years ago

    I'm terribly sorry, but that conversation was just so cute.  Some do live in the real world.  There are some real life issues and and some real people involved here. Maybe it is true what they say about academia, ...  I dunno..I could be very wrong....  Already made my choice.
    
    http://www.jeromechamber.com/
    
    Jerome, AZ.  Abandoned in the 1940's after mining failed.  Resurrected in the 1970's, primarily starting with artists--buildings available cheaper than cheap.  Property values CURRENTLY now so high, nobody here could ever afford them, guaranteed.
    
    Maybe this thread should be abandoned for more scholarly interests.

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       ledefensetechposted 15 years agoin reply to this

       Lita, did it occur to you that the reason that town was resurrected in the 1970's by artists was because they were fleeing the rising cost of living elsewhere?  The fact that they had to go to an abandoned town and attempt to rebuild it is troubling.  The reason prices are so high right now is because artificially low interest rates caused speculation to run rampant.
       
       As for things like the rust belt, well that holds several lessons as well.  One of the main reasons the rust belt began rusting was due to the loss of manufacturing jobs to less expensive labor elsewhere.  As jobs were lost, people were no longer able to afford living there and moved.  As local governments began to lose tax revenue, they increased taxes and tried different ways to raise money for government services. 
       
       This is key.  As taxes went up, the flight from those cities accelerated.  In addition, since it costs so much in taxes to do anything in cities like Detroit, those cities cannot attract new businesses that will create new jobs.  Thus they're stuck in this giant whirlpool that is destroying their city. 
       
       That lesson is important today because many cities that have been hit by this housing mess are raising their tax rates, millage, and other fees which will further depress economic activity.  If it goes on long enough, those cities will become eerily similar to Detroit.  I'm not sure about the tax rates in Iowa, but they seem pretty reasonable.  I'd expect refugees from high tax areas over the next decade or so.  If that is the case, it might be a good idea to invest in some real estate and hold it for now. 
       
       What will complicate this issue is inflation.  When it does hit, rural places will do pretty well, I think.  Cities will become less and less affordable places to live and I think you'll see the flight from them accelerate as well.v
       
       Anyway, most of this is just off the cuff analysis of the way things are going now, the trend is pretty clear, but specifics are, as always, notoriously hard to pin down. 
       
       As for anyone currently underwater with their loans, there really isn't much to be done about it. You can attempt to negotiate with the bank, but that all depends on how desperate the bank is.  The problem is that too many people got involved in the real estate market with unrealistic expectations.  You used to hear how "Housing prices never go down".  As soon as I heard that, I'd have sold all of my real estate except for my primary home.  Other than walking away, you could try bankruptcy.  If that is a second home, you'll lose it, but at least you'll start with a relatively clean slate and start to rebuild without massive debt you'll probably never be able to pay back.

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          Leta Sposted 15 years agoin reply to this

          Wow, LDT...you've resurrected an old post!
          
          Actually, artists always have moved to places nobody wants to go...  Where they improve these places with ingenuity and creativity, making them cool again, and people move back.  Soho is one example, ie...  Williamsburg, Brooklyn WAS such a neighborhood a few years ago...and I hear Bushwick is the up and coming neighborhood now.
          
          The town I'm talking about was abandoned when the mining operation there failed in the 1940's or earlier.  It was a ghost town until artists started moving in...and now it is one of the more sought after places to live in this area.  lol  The coolness factor, plus great culture and history.
          
          I think Pam figured out what she's doing with her house...and the best decision for her...this was a while back.  As for me, I think real estate is fairly easy to understand.   Recently sold my first investment property for 4 times what I paid for it.  lol brag brag brag...
          
          TK is gonna come along and berate me...I'm just waiting. 

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             ledefensetechposted 15 years agoin reply to this

             It's sad that he has nothing better to do.  Great job on your successful foray into real estate.  Many real estate investors talk about a sort of migration from former boom states, to places that were not affected by the housing insanity.  I'm concerned that what might be happening in the Midwest is the same thing that happened on the coasts.  But since banks aren't producing NINJA loans, or any loans for that matter, investors should be OK.  Still I'd be careful, housing prices are set to tumble more, I think.
             
             
             
             http://www.investorsdailyedge.com/

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                Leta Sposted 15 years agoin reply to this

                Yah, I pay cash for under-valued properties (thus far).  ARM loans are the stupidest instruments (for borrowers) ever invented.
                
                And MO, according to my research, has about the best value for what you are getting across the board--land or improvements--that I have seen.  IA, NE, good (but besides being 'normal' about actual stated value, the people are savvy), MO, UNBELIEVABLE good bargains to be had.  (OOOOOOOOooo, shut up, I'm telling people!)

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                   ledefensetechposted 15 years agoin reply to this

                   Interesting, there are a few rental properties around here for sale.  It's a college town so you'll always have renters.  Too bad I don't have any capital.  How does the tax structure compare between MO and other areas you've looked at?  That, I think, is going to make the greatest difference in the future.  The governor of Wyoming, for example, cut government spending rather than raising taxes.  As the tax burden increases in other states, that will fuel migration to less burdensome states.

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                      Leta Sposted 15 years agoin reply to this

                      It's TINY (the tax structure).  As is IA, NE, and all of the middle Midwest.  Nothing...absolutely nothing, compared to MI and all of the upper Midwest/North.  You have no idea how good you probably have it there.  (Ie, I looked at investment homes in MI and PA...the taxes are bizarrely huge!  If you look over this thread, you'll get an inkling as to why...its just outrageously crazy.)
                      
                      And isn't it strange how most of the schools and other things work on that tax base in the Midwest, too?   And you don't wanna go (in general) to Wyoming.  Same thing as AZ...
                      
                      Nice you are taking me seriously...lol...all that talk among the REAL academics, , just before our postings was actually a meta conversation about how the wolves were gonna eat me and thin the herd (which is just necessary - survival of the brainiest, er whatever) a bit.  You can bet I laughed, too, a month or so later. 

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                         ledefensetechposted 15 years agoin reply to this

                         Oh don't get me wrong, I'm just as susceptible to going off on an intellectual tangent as the next person, don't get me started on nanotech for example, but I like to think that I have a good grounding in reality.
                         
                         Strange, what is it about WY that makes it so unattractive?  No income tax, lower sales tax than even here in MO and the property taxes seem to be much less than elsewhere.  Unless those refugees from places like CA have been screwing things up.  I know the refugees from the People's Republic of Massachusetts are moving north and screwing things up in New Hampshire.

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    nhkatzposted 15 years ago

    I disagree. Wolves will be limited by the quantity of their prey. It is all very Malthusian.
    
    
    Notice how, on this forum, your presence has the same effect as a tax. At first people attempt
    to continue their postings, carrying the weight of having to deal with your annoying comments.
    Over time, it becomes too much and they see the benefit of carrying on in more convivial venues. After I get tired of this, which is very,very soon, the forum will be left to the Elk, Buffalo, and Wolves and will cease to be active.
    
    If, like the city elders of South Bend, you wish to maintain the level of discussion in the forum
    while continuing to influence it in your own way, you have to make somewhat accurate judgments about the utility of the other participants.
    
    Of course, unlike the city elders of South Bend, this forum isn't any kind of milk cow for you and it costs you nothing to permit it to expire. Indeed PGrundy probably thinks this is your goal: to pollute and destroy her forum. She thinks this because she assumes that you are rational and cannot see any other purpose you might be serving. In all, this makes a forum a less appealing place to carry on this discussion than a hub which she moderates.

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    Aya Katzposted 15 years ago

    Nets, I find it easier to post on moderated sites than on Forums, perhaps for the very reasons that you cited.
    
    I'll work on my theory of mind and try to improve. I suggest that you do the same.

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    Lisa HWposted 15 years ago

    Pam, I was so shocked to see the home prices you mentioned it "inspired" me to double-check on a real estate site to see if I understood your thread correctly!  (I haven't paid attention to home prices anywhere but in my area, Massachusetts.)  The prices you mentioned and the prices on the real estate site are - like - 1960 prices for my area.  A modest, little, 3-bedroom cape or ranch where I am runs over $300,000 (unless it's run-down or only has two bedrooms, in which case, maybe $270-290,000).  Even in the city that's closest to where I am (and it's no upscale city, by any means - to the contrary), the prices are similar.  The downtown in the RE market here has more stopped basic levels from going up past $450,000 and made them more like $400,000.  Larger homes selling for $600,000 and up aren't uncommon.  (And this is in working-class suburbs).  Rents for one-bedroom apartments in the bad neighborhood of that city I mentioned start at, I think, $900 a month; and two-bedroom apartments just about anywhere seem to average at least, I think, like $1,700 and up.  The problem here is that so many people have trouble earning enough to save up downpayments or pay what it takes to cover high rents or mortgages.  My son's a college-grad out of school for a couple of years, and he still needs roommates.  Companies aren't starting people at the pays they used to, and nobody's money buys as much as it used to.
    
    I guess my point (besides being amazed at the different nature of the economy problem where you are) is that across the country we all seem to live in a little pockets where the problem is experienced completely differently.  Of course, living in the state known as "Tax-achusetts", people can probably understand why working people are getting fed up with talk of yet more taxes.

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    Leta Sposted 15 years ago

    Yeah, Bingo.  Same thing as Arizona's Californication.  Unless you know what you are doing, as far as improvements, you will own some beautiful wild land with no electric, etc., miles from the nearest town.  The very wealthy can afford the resort areas...others, not so much. 
    
    But I would have to look into it further...there are always bargains in places if you look hard enough.

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       ledefensetechposted 15 years agoin reply to this

       All the more reason for libertarians to move there and take it back.  Hell they screwed up their states, they should have to live with the consequences.  Who knows, if the Lakota are successful in creating their nation, that entire area might look more and more attractive as the US slides more and more into socialism.

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          Leta Sposted 15 years agoin reply to this

          Depends on what your interests are I guess.  I wouldn't mind being a land baron, .  And Montana, Colorado, and Wyoming are beautiful.
          
          I talked to one successful investor who bought lots of land in CO, mainly because he loved the land.  Funny, but it is working for him.

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             ledefensetechposted 15 years agoin reply to this

             It's more and more apparent to me that you can make just about anything work.  What you need is a realistic assessment of the situation, know what you want and what you're willing to sacrifice in order to get what you want and a plan to get it.  If more people thought that way during the Bubble Epoque, as Bill Bonner likes to call it, we'd not be in as deep a mess as we are in today.  I'd have to at the minimum have a working farmstead that at least paid for itself.

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    bgamallposted 15 years ago

    Today, Diana Olick of CNBC reported that housing inventory could DOUBLE. They got the inventory down to about 4 million but there are 4 million that are in severe distress.
    
    And FASB is on the warpath. It will be interesting to see how the banks will smooth this over. NOT

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       ledefensetechposted 15 years agoin reply to this

       Heh, like I said wait until the Alt-A ARM's reset.  That particular market is just a little smaller than the subprime.  The defaults should be worse.  At least when the subprime market went belly up, we weren't faced with 10-20% unemployment.

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    LondonGirlposted 15 years ago

    Could someone give me an idiot's guide to tax in America? Do you not pay similar amounts where ever you live in the country?
    
    For example, I can move anywhere from Land's End in Cornwall to the wilds of Cumbria, and my tax bill would be pretty similar. I'd pay income tax (which is graduated, so you pay 0% on the first chunk of income, then 20% on a further chunk, etc), and National Insurance.
    
    I also pay VAT (value-added tax) at 15% on goods and services, with all sorts of exceptions such as food and books.
    
    I pay car tax (£140-ish a year), tax on alcohol and fags (if I drink and smoke), petrol duty (included in the price at the pump), and TV licence (about £120 a year). These are all the same.
    
    The only difference is council tax, which is what you pay to your local authority. It's based on the value of your house in 1991 or so (oddly enough), and while there is some local variation, it's not a big one.

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       ledefensetechposted 15 years agoin reply to this

       Ug, it's not like that's a tall order or anything.  Let's see.  We have an income tax, graduated depending on how much you make.  I think the brackets run from 10% to 36%. 
       
       Next in importance is the FICA tax or Social Security and Medicare tax.  Sorry but I don't know the exact figures for that Ponzi scheme, all I know is that I'll never see that money again. 
       
       Next we have state income tax, but not all states have those.  Wyoming, New Hampshire, Nevada, Florida and one other I can't remember don't have state income tax. 
       
       Then you have sales tax, which can run from 4% to 9%, at least I think CA is 9% it could be less, but it's awfully high. 
       
       Then we have property tax, which again varies by state.  This tax is used to fund public schools, among other things. 
       
       Then you have a federal gas tax that pays for the Interstate system which is currently 18.4 cents per gallon.
       
       Oh, lets not forget the capital gains tax which means if you make money in an investment, you guessed it, Uncle Sam takes his cut.  Short term gains for securities held under a year are taxed just like income.  Long term gains held for more than a year are taxed at 15% or 5% depending on how much you make.  That rate is set to reset in 2010 unless extended by Congress.  Then you will have to pay 20%.  I suppose you'll see a sell off in securities if Congress allows that break to lapse, then after the crash, people will swoop back in and buy at bargain basement prices.  Unintended consequences, don't you know?
       
       Oh yes, the death tax.  50% of your estate.  Unless it's an insurance policy, those don't get taxed.  There are other loopholes, but you'd have to talk to an attorney who specializes in such things.
       
       Then you have luxury tax, local income tax (in some places), personal property tax (cars, boats, etc.) and all sorts of others that I'm probably forgetting or that I've never had to pay.  So you can understand why some of us don't feel the need to spend more money in taxes for universal health care.

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          Lisa HWposted 15 years agoin reply to this

          Another one is "excise tax" (at least in Massachusetts).  That one is based on the value of each car anyone has and said to go toward the roads (or something like that).  That one comes around every year.  The good news is it is reduced as the value of the car goes down.  The bad thing is there's a minimum even on the old clunkers high-school kids and low-income people drive.  If those poor people and young kids can't afford to pay their excise taxes the good old Commonwealth takes away drivers' licenses (which essentially means that the kids and the poor people often have no way to get themselves to work to pay off their old excise taxes and all the penalties that get added once they're late).
          
          Property tax (where I am) is based on the value of the property, which means if a person adds something like a finished room or garage to his home he's likely to increase his own taxes on that property.  Property tax rates depend on where people live.

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             ledefensetechposted 15 years agoin reply to this

             Ah yes, the good old People's Republic of Massachusetts.  I'm glad my dad was in the military and we lived on Otis ANGB.  Otherwise we wouldn't have been able to afford to live there.  Liked the people, hated the government.

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    LondonGirlposted 15 years ago

    We have capital gains tax, too. Not entirely sure how that works.
    
    Council tax is what we pay locally - in our case, a 3 bedroom flat in central London, it's about £1,500 a year.
    
    And inheritance tax - the first chunk is tax-free, about £350,000 or £400,000 a year. Then 40% of the rest. It doesn't apply between married couples, though. No tax there.

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    ledefensetechposted 15 years ago

    One of our problems, other than our tax happy legislators, is the fact that we have a federal system and they have been piling on taxes for almost a century now.  Originally Congress was limited to raising funds through tariffs.  That sparked controversy because the South, being export oriented, was hurt and the North being mercantile was helped.  I'm sure their differences would have faded into background noise if they knew what sorts of taxes we are faced with today.  Personally I'm in the 15% tax bracket, but I only see about 60% of my pay after all the Federal, state and welfare provisions.  In addition we have things like unemployment tax, workman's comp tax, etc.  We don't see those on our stub, we don't see those taxes at all.  Except that without those taxes we'd probably make more money.  In addition Social Security and Medicare are also assessed as taxes for the employer, further decreasing what we might have been paid.
    
    Frederic Bastiat once said that the duty of an economist is to see not only what is seen, but that which is unseen.  http://mises.org/resources/2735
    
    We're being eaten alive by our unseen taxes.

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    Lisa HWposted 15 years ago

    Massachusetts is, as far as I can tell, the nation's leader in knowing how to make sure people who work to have middle-class incomes are taxed down to low-income standard of living and income; and that people who work to have upper-middle incomes are taxed down to middle.  The state is also quite skilled at arranging that low-income people remain that way.  In return for our taxes we do get pot-hole- and construction-riddled roads, bridges that are falling apart, and schools that are generally mediocre (although a small minority are better than that, another minority are far worse).  The state is also good at driving away business, or having regulations that make staying in business too expensive for small businesses.  The Founding Fathers would proud (??).

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       ledefensetechposted 15 years agoin reply to this

       The high school I went to there was in danger of losing their accreditation at the time.  They just finished building this massive new addition to the high school but forgot to appropriate money for operations.  They tried to pass a bond, but it failed.  Guess the sheeple were tired of taxes.  Thank God we moved to Missouri that summer.  I graduated from a different school that still had its accreditation.

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    bigbankfrankposted 14 years ago

    That's exactly why I don't have any problem with people who just can't handle their payments and then they decide to just walk away from their home. Just not worth the stress in my opinion.

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