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Thread: New Mortgage Foreclosures Set Record

  1. #1
    ♫♪ ♫♪ ♫♪ ♫♪ downhill's Avatar
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    New Mortgage Foreclosures Set Record

    WASHINGTON (AP) Homeowners, struggling to deal with sharp increases in their adjustable mortgage payments, got hit with a record number of foreclosure notices in the spring as the crisis in subprime lending intensified.

    The problem was the most severe in the industrial Midwest and former housing boom areas such as California and Florida, but economists warned the situation will get worse in coming months as an estimated 2 million adjustable rate mortgages taken out with low introductory interest rates reset to much higher rates.

    The rising defaults in subprime mortgages have roiled global financial markets in recent weeks, sending stock prices on a roller-coaster ride as investors wonder which big bank or hedge fund will be the next to report huge losses from subprime mortgages that were bundled into securities and resold to investors.

    Sen. Charles Schumer, the chairman of the Joint Economic Committee, said the new mortgage delinquency numbers should serve as a wake-up call to Congress and the administration that urgent help is needed. Schumer is seeking $300 million in federal support for nonprofit mortgage counseling groups which he said were "the best defense against the coming storm of foreclosures throughout the country."

    Private economists warned the worst slump in housing in 16 years and the turbulence in financial markets from a resulting serious credit squeeze could push the economy into a recession as more borrowers fall into default, dumping even more homes onto an already glutted market.

    "You have a lethal combination of higher mortgage payments, lower house prices, a weaker job market and more cautious lenders," said Mark Zandi, chief economist at Moody's Economy.com. "That is a very noxious mix and it is the reason for this surge in foreclosures."

    But now with the inventory of unsold homes at record levels, many speculators are defaulting on their mortgages. Those defaults are dumping more homes on an already glutted market.

    "With so much supply out there to compete against, borrowers who can't pay their mortgages are behind the eight-ball," said Mike Larson, a real estate analyst at Weiss Research. "They can't sell to get out from under their obligations. As a result, more end up tumbling into foreclosure."

    During the five-year housing boom, which ended last year, prices in the hottest areas surged as investors bid up the price of homes hoping to quickly resell them for a profit. Now with home sales falling, the inventory of unsold homes rising and prices stagnant, some speculators are choosing to default on their mortgages.

    Democrats on Wednesday blamed predatory lending practices for a large part of the current problems and said they planned to introduce bills aimed at halting such practices as aggressive marketing of subprime loans to unqualified borrowers.

    Federal and state banking regulators issued guidance this week encouraging lending institutions to work with borrowers to restructure loans at more favorable terms rather than foreclosing on the existing mortgages.

    http://ap.google.com/article/ALeqM5j...fHxWszAVbQf6Rw


    *discuss*


    Bouncer brought up the question of VBR's probably 2 and a half years ago. I've been asking quesitons from people I know in the industry and even from one loan officer on this forum for quite a while.

    Looks like the problem has finally come home to rest.

  2. #2
    R.I.P. 2013-11-22 blebs's Avatar
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    I'm not at all surprised. There has been an ongoing building boom around me where they're putting up $200K to $1 million dollar homes. The money has to come from somewhere, so I guess the banks are stuck with a lot of loan notes.
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    ♫♪ ♫♪ ♫♪ ♫♪ downhill's Avatar
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    Quote Originally Posted by blebs99 View Post
    so I guess the banks are stuck with a lot of loan notes.
    Think about this one for a second.

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    Dr Tweak mnosteele52's Avatar
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    I'm not surprised either and I have no sympathy for them. The real estate boom hit very hard where I live and everyone was buying houses they could never afford except with an interest only loan. Now a few years later it has caught up with them and they are all crying for help...... they did it to themselves so they should get themselves out of their own mess..... without the governments help.


  5. #5
    Quote Originally Posted by downhill View Post
    Think about this one for a second.
    Yeah, it's the consumer and the bank stuck with the debt(Consumer, really)...you can also thank the current administration for making it almost impossible to file bankruptcy on that debt now also.

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    TypicalWhitePerson JC's Avatar
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    Quote Originally Posted by mnosteele52 View Post
    I'm not surprised either and I have no sympathy for them. The real estate boom hit very hard where I live and everyone was buying houses they could never afford except with an interest only loan. Now a few years later it has caught up with them and they are all crying for help...... they did it to themselves so they should get themselves out of their own mess..... without the governments help.

    could not agree more
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  7. #7
    Quote Originally Posted by mnosteele52 View Post
    I'm not surprised either and I have no sympathy for them. The real estate boom hit very hard where I live and everyone was buying houses they could never afford except with an interest only loan. Now a few years later it has caught up with them and they are all crying for help...... they did it to themselves so they should get themselves out of their own mess..... without the governments help.

    How about the loan officers/brokers knowingly pushing through loans that were borderline ..they hold any guilt? I mean, they wouldn't have anything to gain being a commissioned employee .....would they? Believe me when I say thre is plenty of guilt/blame to spread around. Look at the mess Countrywide Home Loans is in....if that's not an indication of a problem I'm not sure what is.

  8. #8
    Dr Tweak mnosteele52's Avatar
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    I completely agree Izzo, the loan officers are just as guilty, approving loans they knew people could not truly afford. My main point it is it's not the governments fault and they should do nothing to help. It's between the mortgage companies being greedy and the consumer being stupid to buy a house way out of their budget.


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    TypicalWhitePerson JC's Avatar
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    Quote Originally Posted by Izzo View Post
    How about the loan officers/brokers knowingly pushing through loans that were borderline ..they hold any guilt? I mean, they wouldn't have anything to gain being a commissioned employee .....would they? Believe me when I say thre is plenty of guilt/blame to spread around. Look at the mess Countrywide Home Loans is in....if that's not an indication of a problem I'm not sure what is.
    Is that not their job? To get the paper bought and funded.
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    TypicalWhitePerson JC's Avatar
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    Doesn't the underwriter make the final decision?
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    ♫♪ ♫♪ ♫♪ ♫♪ downhill's Avatar
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    Quote Originally Posted by mnosteele52 View Post
    I'm not surprised either and I have no sympathy for them. The real estate boom hit very hard where I live and everyone was buying houses they could never afford except with an interest only loan. Now a few years later it has caught up with them and they are all crying for help...... they did it to themselves so they should get themselves out of their own mess..... without the governments help.

    Even though it'll effect you and millions of others if the country goes deep into a ressesion?

    My personal feelings are that hundreds of politicans knew this would probably happen and yet, sat on their hands and let it.

    The solution? It was really pretty simple. Crack down on the lenders who pushed for larger loans and qualified people for a LOT more home than they would ever be able to afford on their regular income.


    Your not looking at the whole picture on those who were flat out taken.

    Were people just being nieve? Mabye as I'm sure there were lots of them who figured they'd take a chance......


    This "boom" affected lots of people. The market was hot around here and was pretty much fueled by people buying properties online and sight unseen, sitting on them for 6 months and reselling them, thus driving up the market even more. The solution for low income people looking to buy their first starter home?

    Subrate interest loans obtained from lenders who could care less what happend down the road as long as they got their initial cut.

  12. #12
    Quote Originally Posted by JC View Post
    Is that not their job? To get the paper bought and funded.
    They have to meet underwriting standards ...and if they don't it's time to get 'creative' I see evidence of this on a daily/hourly basis....ask Spammy if it happens. I'll bet the farm they do. Christ, there's mortgage fruad running rampant.

  13. #13
    Quote Originally Posted by mnosteele52 View Post
    I completely agree Izzo, the loan officers are just as guilty, approving loans they knew people could not truly afford. My main point it is it's not the governments fault and they should do nothing to help. It's between the mortgage companies being greedy and the consumer being stupid to buy a house way out of their budget.

    Yeah...it's not the gubments job to bail people out ....although they should go after the corporations that enable it.

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    SG Enthusiast cybotron r_9's Avatar
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    Quote Originally Posted by mnosteele52 View Post
    I'm not surprised either and I have no sympathy for them. The real estate boom hit very hard where I live and everyone was buying houses they could never afford except with an interest only loan. Now a few years later it has caught up with them and they are all crying for help...... they did it to themselves so they should get themselves out of their own mess..... without the governments help.



    Do I feel sympathy for investors who got caught out trying to make 50K in a month? Nope.

    Do I feel sympathy for folks who were buying homes with no money down and variable rates? Nope

  15. #15
    ♫♪ ♫♪ ♫♪ ♫♪ downhill's Avatar
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    Quote Originally Posted by Izzo View Post
    They have to meet underwriting standards ...and if they don't it's time to get 'creative' I see evidence of this on a daily/hourly basis....ask Spammy if it happens. I'll bet the farm they do. Christ, there's mortgage fruad running rampant.
    I've asked Spammy. He says it's rampant.

  16. #16
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    Quote Originally Posted by cybotron r_9 View Post


    Do I feel sympathy for investors who got caught out trying to make 50K in a month? Nope.

    Do I feel sympathy for folks who were buying homes with no money down and variable rates? Nope
    Those who live in glass houses.........

  17. #17
    TypicalWhitePerson JC's Avatar
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    I disagree, lenders don't want to foreclose on homes. last thing they want is a bunch of houses to unload. They didn't make loans knowing people were not going to make the payments. Obviously they already know a certain % of people will go into default.
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  18. #18
    Quote Originally Posted by downhill View Post
    I've asked Spammy. He says it's rampant.
    It's ridiculous....you should hear things on my end. I got a story about a couple in Western Wisconsin that fits this scenario to the 'T' and these clowns are real estate agents ...yet I'm going to repo 4 of their cars because of their mismanagement. Yeah...4 cars.

  19. #19
    Quote Originally Posted by JC View Post
    I disagree, lenders don't want to foreclose on homes. last thing they want is a bunch of houses to unload. They didn't make loans knowing people were not going to make the payments. Obviously they already know a certain % of people will go into default.
    They don't but they also have shareholders to respond to....what do you think they're saying on these losses?......they also don't want to see those loans funded by their competitors either... it's called risk analysis and if it fits within their scoring system and the lender gives a nod....it's done.

  20. #20
    Moderator YeOldeStonecat's Avatar
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    If the government/politicians step in..and crack down on lenders and instituted more strangling rules on those seeking loans...I don't think I'd like that, it's a case of government telling me (who supposedly lives in a free country)...of what I can and can't afford.

    I don't want that, nor do I think the gov't should be trying to control that aspect of my life.

    This is just a case of people going into water waaay to deep for them...those trying to live in the 1/2 million dollar "McMansions" that are popping up like weeds.

    Nothing wrong with little money down and variable rates, IMO, you can still make out great with those, I have many times. As long as you get a good one, with a good bank, none of those flakey "fly by night" mortgage companies...as yes there are plenty of those out there also.
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