I find it interesting that an exploding portion of society is in the predicament of finding themselves not able to make their mortgage payments or owing more than their home is worth.
I find it even more interesting that the government is rolling out this huge bail out program for these people.
Being "in the market" I see a lot of these people day to day. And one of the things that I think most people would find interesting is that not all these people are the "irresponsible, over-buying" personality that they seem to be categorized as. In fact in our area (speaking specifically about Washington County), many of these home owners who are facing foreclosure are "regular people" with 30 year, fixed rate mortgages, in homes worth $250,000 or less, who bought when the market was at it's highest 3-5 years ago and now can't afford to sell because home values have gone down.
Even homeowners who bought $170,000 homes 3-5 years ago, putting 3-5% down can't afford to move because these homes have actually gone DOWN in value. Add to that the costs associated with selling (and yes, there are a lot of them EVEN if you don't use the services of a Real Estate Broker), and these sellers are having to bring money to the table to simply get rid of their house.
Now wouldn't it be better if these people who HAD to move, could move without having to give their house back to the bank as a foreclosure? Before you answer that question, I think one needs to understand how much foreclosures impact THEM personally. Foreclosures cost banks (and taxpayers) a TON of money, and they destroy property values for those of us who DO make our payments.
If your neighbor's house gets foreclosed on, chances are they're going to sell for quite a bit less than what it "should" be worth. That now affects you. When you go to sell your house, people will determine the value of YOUR home based on what your neighbor's house sold for not what your home is actually worth. You've just lost money on YOUR home because your neighbor couldn't make HIS payment and the bank had to foreclose on him.
Sure, there are people out there who were irresponsible with their money, who got themselves into mortgages they couldn't afford and are now looking for an easy way out. . . . .but to say every homeowner who is facing foreclosure or short sale is "irresponsible" is simply not true.
Bad things happen to good people. People lose their jobs, get divorced, death, illness, declining housing values. . . .all of these factors ALSO contribute to the foreclosure rate. It's not ALL irresponsibility.
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4 comments:
who gave out the dam mortages for those who could not afford it in the first place. Who invented the fricken ARM rates should be responsible!
It might not be fair to call it all irresponsibility.. but the excessive borrowing for more lifestyle had to stop some time.
what % of US don't use/need credit cards? What's it used for? Groceries or ipods? How many refi'd their car into 30 years?
In hindsight, should the 170k 3-5% down folks bought a cheaper house?
It's all outta whack. and putting it back is gonna hurt.
-jwm
Arms have been around for a long time. They make perfect sense if you are not planning to stay in a house for the long haul.
People that bought a house only a few years ago have very little equity and can literally walk away. They really don't own a house. The bank does.
jwm makes a good point. Many people borrowed against the value of their house to fund everything from vacations etc and when the value dropped...
There are many problems out there with liar loans and people who were over leveraged and you can't tell if a person has bad credit by looking at them.
MTB Girl is quite right about people losing homes for a variety of reasons that have nothing to do with irresponsibility.
But the big problem is the sub prime (bad credit) loans which were increasing at a rate of 25% per year already way back in 1994. I believe prior only a few years later that half the holdings of Mac and Mae were sub prime.
The government had a noble idea to help people with bad credit and or lower incomes buy homes but due to the law of unintended circumstances it didn't end up helping anyone.
Don't forget about all the 0% down loans. . . .those are the people in real trouble. No equity, loss in property value. . . .no way out.
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