Did you know that most people that lose their homes to foreclosure is a result of mismanagement? The second is Marital problems that result in seperation and divorce.
I tend to disagree with you on the first one and after reading your profile I wonder if your hands were in the mess too!!! It is going to be a long road back for so many who are mortgage brokers etc. as what has happened to our economy and our home prices has left a bad taste in many of our mouths.
It might have been because they employed a really poor mortgage mitigator
I am a real estate investor who buys distressed homes, many of them foreclosures, repair them to doll house condition, and retail them. My last house I sold only stayed on the market for 18 days. I have a brand new hub that answers all questions related to buying, fixing and flipping for profits. My business is still doing well. People are still buying nice homes that are priced below market value, mainly because this is the best time in over 30 years to buy a home. Values are down considerable and mortgage rates are at almost all time lows.sixty percent of all the current foreclosures are in four states. I promise the sky is not falling.
If you say "most" I'm not in a position to argue that point; but I do know that a lot of people who lose their jobs can end up losing their homes too. Also, someone facing a lot of medical bills not covered by insurance can end up in the same boat too.
I think people have to be careful about assuming things, even if a lot of people lose homes because of mismanagement. It may feel safer to assume "it won't happen to me because I make sure money is managed well; but it's not always that simple.
For a while though (at least of what I knew, being in the West Coast Florida market) There was so much inflation on property pricing. Underwriters let a lot of loans through for people, when it was clear that they could not satisfy it.
They did. I think, though, part of the "mismanagement" was that some people felt pressured to buy homes before the prices went up any higher. They did take the gamble with an adjustable rate mortgage, with the idea that they'd refinance later. In the meantime, the adjustable rates went beyond what they could handle.
In fairness to those people, though, some knew that both rents and mortgages were going up. Everyone always hears, "don't throw your money away on rent; put it into equity" - so a lot of them thought the wisest thing was to take the gamble on the ARM (after all, it had worked out for other people). (By the way, I wasn't one of those people - so that's not why I'm defending them. )
You're exactly right. By far the biggest problem was the sub-prime mortgage companies making so many NINA ( no income no asset) loans. They would make loans without requiring the applicant to provide proof of income. A lot of these loans were also 100 per cent financing, so the borrower had no skin in the game. The poor, or non-existent oversight of Fannie Mae and Freddie Mac was also a large contributor. No doubt some people have lost their homes due to job loss, but the incompetance of some of the lenders is by far the most dominant culprit.
Most people lose their homes because
1) bad things happen to good people
2) folks fail to contact their lenders not knowing that they have options.
3) they ignore the problem, in foreclosure the further you fell behind. the harder it will be to reinstate your loan and the more likely that you will lose your home.
4) they do not prioritize their spending,
After health care, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses-cable TV, memberships, entertainment-that you can eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.
5) State of denial most folks facing foreclosure tends to be in a state of Denial, that is something those homeowner can't afford in this Real estate Market.
The reason people are losing homes is that the loans written were doomed to failure. They were loans that were not based upon sound underwriting but rather loans based upon the greed of wall street. They took the loans, labeled them aaa, and lied and sent them all over the world to unsuspecting investors who now will not buy those bonds.
Foreclosures are going to hit big starting now and going through 2011.
If there is a functioning and robust banking system after that I will be surprised.
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