March New Loan Default Summary
- Total CA Foreclosures — At 1.5 Year Lows
- Total CA new Defaults – Surging
- Subprime -- Declining
- Alt-A — Constantly Rising
- Pay Option ARM – Surging, Despite Wachovia being on Moratorium
- Jumbo Prime – Relentless
- Super Jumbo – Surging
- Fannie – Freddie – Surging
CA House Prices are Bottoming – But for the Wrong Reasons
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With proprietary default and foreclosure data only available to a select number of firms in the nation and decades of mortgage and real estate experience, we are able to provide high-level and granular broad-market and company-specific insights never before available – sometimes months ahead of public news and events. Looking ahead of the mortgage and housing market and into bank’s residential mortgage portfolio and balance sheet is now much easier. Best, Mark Hanson
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The mortgage default and foreclosure news flow has been heavy over the past couple of weeks. But aggregated news is tough to make sense of or trade. At Field Check Group we can break down the default and foreclosure data hundreds of different ways including by originating and foreclosing lender, loan type, loan amount, present property value, MSA/City/State/Zip and more making it easy to understand.
Below are various looks at the default universe by loan type. When breaking it down this way, what has happened to date and going to happen in the future becomes much clearer. It also gives a clear picture of the task at hand the Administration has with respect to its new foreclosure prevention plans, as the loan default wave is a mile high and they are swimming into it with a canoe.
-Total CA Foreclosures — At 1.5 Year Lows
In March, new foreclosures were at 1.5 year lows. Actually in Q1 2009, foreclosures were much lower than in Q1 2008 due to broad market legislation and bank-specific moratoriums. This has kept distressed inventories at a low and allowed the low-end housing market — the only segment getting any action — time to consolidate a bit. But remember, supply is everywhere. Although foreclosure-related sales are 50%+ of the market in the bubble states it is only about 35-40% of total supply at this point in CA. The rest of the supply comes from Ma and Pa Organic homeowner who is being squeezed out or can’t sell due to epidemic negative equity. Of the 60-65% of supply that is organic, 50% are typically listed as a short-sale.
-Total CA new Defaults — Surging
New loan defaults – of which a large percentage will turn into foreclosures 5-7 months following the notice month — are surging. In the past that would be indicative of a major foreclosure wave coming. Now with aggressive moratoria and mortgage mod initiatives in place, the eminent wave may not break all at once. It will break, but could be stretched across more months than typical. One thing is for sure, there is a pig the size of Godzilla in the python right now that has worked its way to the lower intestine.
Subprime Defaults — Declining
New Monthly Subprime notice-of-defaults have eased off considerably. This is because the mortgage crisis started with Subprime, and mortgage mod initiatives and moratoriums are most targeted to Subprime loans.
Alt-A Defaults — Constantly Rising
New Monthly ALT-A notice-of-defaults have surged along with total defaults but not with such an aggressive rate of change. This is because mortgage mod initiatives and moratoriums are most targeted to Alt-A and Subprime loans.
Pay Option ARM Defaults — Surging
Pay Option ARM defaults are continuing to surge despite one of the nation’s largest Pay Option holders — Wachovia — remaining on near full moratorium.
Jumbo Prime Defaults — Relentless
The Jumbo Prime default chart is absolutely unique but increasing steadily along with total defaults. Within this category supply this high can’t be absorbed into the housing market because sales over $417k are so slow.
Over $750k Loan Amount Defaults — Surging
Defaults on original loan amounts over $750k are surging with total counts higher than total sales in this segment. Supply from foreclosure is about to hit hard in the mid-to-upper end housing market. And remember, foreclosure supply is only one form and account for only about 35% of total supply.
When we look back at 2009 on December 31st with Champagne bottles in hand, we will reflect upon 2009 as being the ‘year of the mid to upper end house price collapse’.
Fannie-Freddie Monthly Loan Defaults — Surging
This goes hand in hand with the FHFA report put out yesterday showing new GSE loan delinquencies and defaults are surging. This is what the low-to-mid end of the market can’t handle right now — it has finally reached a point of decent supply-demand with help from mortgage mod initiatives and foreclosure moratoriums kicking the can down the road.
A surge in GSE defaults and foreclosures will bring around round 2 of the low-to-mid end house price fall. Many are hopeful that Obama’s new mortgage mod plan focused upon GSE loans will prevent this. But given that the GSE’s at present have 1.229 million delinquent and defaulted loans and were only able to pump out 9k mortgage mods in January, I believe that is wishful thinking.
House Prices Are Bottoming — But for the Wrong Reasons
Present values of properties at the notice-of-default stage are clearly rising due to the shift in the mix of loans/properties going into default from lower to higher. This ‘mix-shift’ effect may push up median house prices in 2009 creating the appearance that the market is improving when in reality it is because more higher-value properties are defaulting, being foreclosed upon and reselling through the Realtor network.
This is the last look at prop values before they become REO and are listed for resale. Present values of props at the actual foreclosure stage have stabilized but are not yet increasing as they are at the NOD phase shown previously. Given 60% of all resales are from this foreclosure stock, this does not indicate prop values in CA will rise in the near-term.
For any of you that play MSA based house price futures, this chart series nails the Case-Shiller.
**For more information in our default/foreclosure related research including real-time mortgage default, foreclosure and loss tracking across large-named publicly traded companies please email me at the address below. Looking ahead of the housing and mortgage market and into bank’s residential mortgage portfolios and balance sheets is now much clearer.
Best Regards,
Mark Hanson
Mark@TheFieldCheckGroup.com
Analysis by Mark Hanson, Field Check Group Real Estate & Finance
Data provided by ForeclosureRadar.com
April 24th, 2009 at 3:07 pm
Shanon,
Buying at 400K, and within 2 years home is 200K – now that’s a joke!
Spending $3400 on mortgage, @ 7.75% interest for 40 years – now that’s a joke!
Help for Homeowners – now that’s a joke!
So the fact:
- my wife lost her job – joke?
- my 80K of savings gone – joke?
- the money invested in the house (landscaping) – joke?
- the fact I’ve paid off credid cards .. joke?
- the fact I’ve been saving after forclosure.. for next home when ever it may be..joke?
- losing home (emotional), telling everyone (embaresement).. joke?
And you think I shouldn’t have a right to buy again?? I make 100K, credit recover 150 points since forclosure..and no credit card debt..
Why do you think FHA lowered from 3 years to 2 years?? I say REDUCE TO 1 YEAR! for those with repaired credit.. and forclosure in 2007,2008,2009
Why do you think Bush signed at end of 2007.. forgiveness of tax upon forclosure in 2007,2008,2009???
THIS MARKET WAS NOT NORMAL!… and with out ex-owners NOT coming back.. this market will be down 80% !!!!!!!!!!!!!!
April 24th, 2009 at 3:14 pm
I SAY TO ALL UNDERWATER OWNERS! WALK!.. AND FHA WAIT WILL BE DROPED TO 1 YEAR!
April 24th, 2009 at 3:15 pm
ESPECIALLY IF YOU LOST AN INCOME, OR CREDIT CARDS WERE MAXED OUT.. situation I can relate to!
April 24th, 2009 at 3:27 pm
Did homes really need to go up 300-1000% in 10 years? Bankers knew that.. gave out loans… builders knew that.. but built some more.. government knew that.. but it’s the buyers fault for buying..right?..and now for walking… people like Shanon.. say..it’s a joke for us to come back in?
you’re a joke!..and don’t worry.. we won’t yet/we can’t yet.. so you got plenty of time to buy yourself a FORCLOSURE! THANKS TO PP LIKE ME.. have fun
April 24th, 2009 at 3:32 pm
GREED is still ALIVE!
April 24th, 2009 at 3:42 pm
Nobody made you buy a house. I’ll buy a house when I have 20% down and can easily afford my mortgage PITI on one income. Stop making excuses for your bad decisions.
April 24th, 2009 at 3:53 pm
You’re right.. I made a bad decision..in an irational housing market.. too bad it was at the time after getting maried, having children.. thought was the right thing to do..
it’s all my fault!
I strongly feel like housing is overated.. I may just never buy again.. even though I’m in my 30s.. RENTING MAY JUST BE FINE WITH ME!
…just quick q.. Sharon… why is FHA alowing 3.5% down payment?? That’s less than my down payment I’ve made! What are you going to say when those loans BLOW UP??… hey government..stop making excuses for you bad decision..!! stop giving FHA loans??
BTW.. I feel good now with extra money.. I’ve spend over 8K over the last few months.. I’m happy it shows in the economy.. I THINK I’LL STOP AGAIN.. AND SAVE EVEN MORE!!
April 24th, 2009 at 4:02 pm
You (Sharon) must not have learn the economics 101.. SUPLY AND DEMAND.. ex-owners don’t get in? (demand)… house prices keep going down (suply)
With more owners soon to be ex-owners (underwater/unemployed), shadow inventory,home building still high, and lots of pp want to retire soon~~sell their homes…. you can CLEARLY SEE THE SUPPLY just going higher..
WHERE IS THE DEMAND?? ABVISOULY NOT PEOPLE LIKE YOU!.. I repeat: LET EX-OWNERS GET IN SOONER.. but hey.. I can wait 7 years.. to get a loan..or I’ll be just fine with renting! WE’RE LOOKING AT JAPAN STYLE DEFLATION…
April 24th, 2009 at 4:19 pm
GrumpyGuss, I agree with you 100%. Too many people bought they KNEW they could not afford and now looking for ways to stick it to the bank or stick it to us all. I’m tired of it, it’s all BS.
I’m not talking about people who has lost their jobs … but people who KNEW without a shadow of a doubt that they couldn’t afford the mortgage, but bought thinking that RE will go up forever and they will refinance later with hundreds of thousands in their pocket. They bet, they lost and now they want to blame others.
Note: I’m speaking in general, not necessarily Partyboy’s case.
April 24th, 2009 at 4:24 pm
“Did homes really need to go up 300-1000% in 10 years?”
Good lord, it went up MAINLY because freakin buyers were willing to fight for it. Yeah, families making $40,000 a year and thought they deserved a $600,000 house. So easy, right?? No down, no income verification, just sign a few documents and here’s the key. Sure sure, banks, realtors, loan officers bear some responsibility but BUYERS need to look at themselves in the mirrow. It’s pathetic and I don’t shed one tear for these people.
April 24th, 2009 at 4:32 pm
I must say how saddened I am by the casual attitude to breaking agreements I read here. It reminds me of the verse that says, “Every man did that which was right in his own eyes.” Have you never considered there are many more valuable issues at play here than money? I urge you and anyone else thinking the bottom line is money to rethink what could be worth more than money. I will not give you the answers, your conscience will tell you. If it has become so deadened you cannot hear it, try reading a few verses from the Bible.
April 24th, 2009 at 4:38 pm
I could have bought 600K or more.. I didn’t do it. I thought 400K was ok..considering I’ve had savings, a small down payment, and my wife started working. I’ve also changed jobs to make more $$.
(I’m not sure you would say 100K is completely crazy to get a 400K home.. in my situation)
I do however agree that 40K salary to buy 600K home is insane… but where was the government in all of this? no control at all! There so many parties to blame.. but picking on just the buyer.. is insane too!
April 24th, 2009 at 4:45 pm
VA.. yes money is not everything.. that’s why I think renting is fine.. I did’t buy to make $, I thought was a home to raise a family..but when you’re on a NEGATIVE BUDGET, a LOSS OF INCOME, SAVINGS GONE, and you need to pay all bills, food, send kids to school, and yes gas at 4.50$… my concience said:
- food is more important
- harmoney in family is better, than arguing/blaiming who/why bought this house
- geting rid of debt
- kids stay in school
- I’ve made a mistake, wished I would have realized it sooner (before buying at PEAK!.. in an insane market filled of FRAUD, and GREED!)
I could go on for ever… but you also have to think at the good of the economy, SPENDING..our capitalist way…what’s best in our present situation.. that’s why in order to balance our housing model.. I still say let the DEMAND GROW!! Lex ex-owners get back in…
April 24th, 2009 at 4:59 pm
VaAppraiser, Shannon, Grumpy Guss, Wonton
There is NO BREAKING OF AGREEMENTS going on, why is that so hard to understand. Read your mortgage docs. Pay and stay, or don’t and the bank gets the collateral. Don’t you think the ‘experts’ (banks, appraisers (lol), re-litters, mortgage brokers) should have been better judges of ‘value’. They literally handed over loans, filled mail boxes with offers. This is the world we live in, choose to be a debt slave or not. If not the sooner one can repair their own personal balance sheet they get back to contributing to our consumer economy. The walkers are rebalancing the disrquilibrium; this would last longer and hurt more if they stayed. The sooner they can clean up the mess they are in the better for all. As is it’s still a ways to the end.
Here’s a verse for you; be careful to tell your neighbor about the splinter in his eye wihtout removing the plank form your own.
April 24th, 2009 at 5:24 pm
Sam Stern/Partyboy:
There absolutely IS a morality to this. Why should others support your folly?
If you and YOU alone get hurt and lose your money without burdening others, I couldn’t care less if you walk away or not.
But when others like myself who made the right choices, were responsible, and took care to not get into such a situation now have to cover your asses, that’s where it stops.
I can’t believe the level of irresponsibility you are promoting and justifying under the guise of “take care of yourself first.”
I suppose you guys don’t mind paying high taxes then right??? Because after all, why shouldn’t you pay for someone else’s free lunch.
April 24th, 2009 at 5:29 pm
ex_owner_now_renter:
Greed is indeed still alive…you are proof of it.
Did someone put a gun to your head and tell you to buy that property? If not, tough that you screwed up. What’s next? You’re going to ask a casino for your money back because you were “forced” to gamble?
This nation has turned into a bunch of sissy-Mary’s who don’t have an inkling of the concept “personal responsibility.”
I can only hope the people who walk get seriously damaged. Serves them right for being so damned greedy. And this applies to Wall Street too.
April 24th, 2009 at 5:32 pm
By the way…when I say YOU…I should be more clear….people like you…not necessarily you.
April 24th, 2009 at 6:29 pm
” but where was the government in all of this? no control at all! There so many parties to blame.. ”
Could you please knock it off? This is why many people out there like myself are angry. You knew exactly what you were doing, but when things don’t go your way, you look elsewhere to blame. Had the government tried to stop you from getting the loan, you would have screamed bloody murder that the government was stopping you from owning your dream home. Look, it’s like a gambler going to a casino every week, blowing his money. After months and years of this, his wife left him and he files for BK. Then he blames the casino for not stopping him.
Like Nor above, when I say “you”, I don’t necessarily mean you but in general.
April 24th, 2009 at 8:17 pm
yeah.. I sure I knew what I was doing..
so does the banks, the builders, the government…we’re all in it!
I don’t mind criticism, as I deserve some… but do the math, and find out how much the bank really lost on my particular deal:
- 60K..as it was sold to someone (that I think over paid!)
- but banks got interest for 2 years.. almost 80K + my down payment
- my landscape investment..(someone else benefits)
BTW, I didn’t divorced, I didn’t do bankruptcy..and I left within 30 days of not paying the mortgage..maybe I have some morals?
Noz, Wonton.. go spend some money in the economy..don’t be cheap.. go buy a forclosed home.. you’ll make a killing in the future.. go stimulate.. and stop complaining.. !! it’s a colateralized DEBT!.. you’ve been told before..
Noz..please elaborate .. on how you find me greedy..
April 24th, 2009 at 8:19 pm
Noz,
It would seem that it is people like you who want to change the rules retroactively not people like me who choose to walk. I AM honoring the term of my contract. The contract clearly states that if I do not pay the mortgage, then I lose the house. I am abiding to the letter of the law. It is people who look to modify their loans who are looking to the government for help (i.e. homeowners who participate in government sponsored loan programs or the banks themselves who take bailout money that are changing the rules) that are changing the rules. Where in the contract did it say that homeowners are entitled to government assistance for help paying their mortgage? or where does it say that banks who face huge losses deserve tax payers money?
I am not asking for any quarters nor should any be given to me. The issue that is irking people like you is that according to the contract, the banks and society have no-recourse with respect to me should I abide by the original contract and walk. I am paying the penalty as stipulated in the mortgage contract and am willing to lose my house. It appears that you want us to have an additional penalty for walking or prevent us from walking in the first place. Now that would be changing the rules in the middle of the game. I along with each and every owner who walk are indeed abiding by the rules.
April 24th, 2009 at 8:26 pm
WAS I greedy for buying a 400K for my family, instead of 600K?
or you find me greedy…
for saying let ex owners (that lost in 2007,2008,2009) come back in sooner/if repair credit?
You think 2007,2008,2009 is NORMAL?… greenspan even said this once a 80 year event.. cause we’re people!
Personally I don’t care about real estate, and hope it drops 80%.. I was saying for the good of the country… you fool! It would stop the decline that’s coming from this second wave… start contributing to a solution that works!
April 24th, 2009 at 8:49 pm
all these people bashing the walkers…please give it a break…none of you have so for said a word about the banks and the government.
Individual buyers don’t have all the market info..they act under peer pressure and they made mistakes.
But what was the excuse of the banks?
Do you know each of of these mega banks employs hundreds of Ph.D.s who model and simulate all these scenarios? what were they doing? and where was the government who can spot on your 1040 form whether you had an extra deduction or not, but let billions and trillions get loaned to people who don’t qualify?
I am not a walker. I bought in mid 90’s and am almost paid on my mortgage but I have seen this madness go around. I was under peer pressure to buy a second house few years ago but I resisted as prices did not make sense but not everyone can do that calculation. most middle to lower class people got sucked into it because they thought if they did not buy now they will never have a roof of their own on their kids heads…tremendous peer pressure of the american dream.
Legally, walkers are all within their right. There is no morality when banks loans at teaser rates and jacks up to 9% later or gives Credit cards at 30% interest artes…30% damn thirty percent. yes it is the same banks. but gof forbade you say something about it or the president who slept over it for 8 long years while sniffing people’s phones.
April 24th, 2009 at 9:18 pm
anyone here blaming the HOMEOWNER is a fool and hasnt been paying attention to how this whole crisis happened
April 24th, 2009 at 9:24 pm
sam, I personally do not blame you at all. If you stopped paying your mortgage, then you walk and the bank takes over. It’s the risk that they took, I don’t have a problem with that.
April 24th, 2009 at 9:30 pm
“most middle to lower class people got sucked into it because they thought if they did not buy now they will never have a roof of their own on their kids heads…tremendous peer pressure of the american dream.”
Oh give me a break, are you kidding me? You’re implying that those who didn’t spend beyond their means somehow were not pressured to buy. We all have our American dreams and if you want to write a check for your dream, fine, go for it. If your dream becomes a nightmare, don’t blame others. No one forced you to buy.
April 24th, 2009 at 9:31 pm
all the whining about you tax money helping home owners….WRONG…it is helping the mega banks survive. that is main reason of the bailouts..save the banks or country will go down mantra.
April 24th, 2009 at 9:32 pm
javagold, explain to me how the homeowner shouldn’t be blame for the current crisis.
April 24th, 2009 at 9:33 pm
wonton, when 100 school kids are peer pressured for drugs 5-10% fall for it. it is human. not inherently evil just ignorance and human. BUT Banks lending this money were practicing calculated evil.
April 24th, 2009 at 9:33 pm
I hope partyboy is required to put down 50% for his next home. You say you could afford the home, and the rents/payments were negligible in any difference. It sounds as if you knew exactly what you were doing, and I find that the most depressing. If our society has completely lost all sense of responsibility, credit in our country is going to change forever. Gone are the days that our word and agreements mean something.
April 24th, 2009 at 9:35 pm
wonton, do you see any role of banks and the financial system or not? (besides the homeowners – who I think were only partially to believe).
see when adult leads a kid to danger, we always blame the adult. adult in this case was Banks and Government.
April 24th, 2009 at 9:36 pm
*partially to blame.
April 24th, 2009 at 9:42 pm
Javagold – The homeowners who bought what they could not afford were fools. Furthermore, I could afford to buy, however prices relative put in any historical context were crazy. Were banks at fault, yes. What spending decisions do you take responsibility for, if not the largest one you will ever make?(for most people)
April 24th, 2009 at 10:02 pm
housingrealist: I agree some of the buyers were fools, some were greedy, some were midlead but very few were evil. that is my only point.
on the other hand banks and our government are a whole diff story.
April 24th, 2009 at 10:06 pm
Adults in this case were the banks? Are you serious? You are implying that these people who bought houses they could not afford had no free will.
April 24th, 2009 at 10:15 pm
As far as credit cards, many people abuse them. That being said, banks should be required to have a set, unchangeable rate that the consumer agrees to before anything is charged. Also, lower available balances (prevent abuse) and a much lower penalty with a longer grace period for when trouble hits a family.
April 24th, 2009 at 10:31 pm
Jag, yes I absolutely think banks are PARTIALLY to blame, but one cannot deny that ultimately, it’s the buyer who made to decision to buy. No one forced him to do it and unlike you, I do not think of buyers as “kids” but adults capable of making their own decision.
April 24th, 2009 at 10:35 pm
“I agree some of the buyers were fools, some were greedy, some were midlead but very few were evil”
Jag, to make it clear, I do not think any buyer is evil. I just think it’s annoying when they start blaming others for their bad decisions.
April 24th, 2009 at 10:37 pm
wonton “explain to me how the homeowner shouldn’t be blame for the current crisis.”
First off they are not homeowners. A lot could not afford a fully amortized payment but got in on a low up front rate. Since the income was not there to support the later payment when it adjusted, the bank was actually selling an option on a home. When the home option market collapsed, everything went with it.
If banks were actually making loans that people could afford, them, prices would not have been forced up by the option players demand for housing.
Anyone getting pissed at the walkers for having to subsidise the banks losses needs to contact their congressman and tell them to stop the bank bailouts! Oh wait, we already told them no and they ignored us!
Walking facilitates affordable housing and America needs affordable housing. Besides, why send money to a banker when you can support your local economy. Who needs the money more right now, the bank or the local economy?
April 24th, 2009 at 11:24 pm
ex-owner:
Noz, Wonton.. go spend some money in the economy..don’t be cheap.. go buy a forclosed home.. you’ll make a killing in the future.. go stimulate.. and stop complaining.. !! it’s a colateralized DEBT!.. you’ve been told before..
Noz..please elaborate .. on how you find me greedy..
If I wanted that sort of headache, I would have bought a place a long time ago. I’m not willing to spend a dime on someone else’s waste and trash.
As for you being greedy, as I said…YOU didn’t necessarily mean you. It seems you’ve learned your lesson without doing great damage to others like some others here who tout that walking away is meeting their obligation.
April 24th, 2009 at 11:38 pm
JAG:
all these people bashing the walkers…please give it a break…none of you have so for said a word about the banks and the government. Individual buyers don’t have all the market info..they act under peer pressure and they made mistakes.
But what was the excuse of the banks?
No one is making excuses for the banks…but bitter owners seem to be targeting them only. Individual buyers do have all the info they need.
Due diligence is not that hard to achieve. I know people who spend more time at a car dealership or at Frys buying a plasma TV than they do when buying a home. What’s their excuse for getting screwed in the biggest investment of their lives? There is no excuse…it’s pure greed and the fantasy of flipping a house to make a few hundred thousand dollars that throws any prudence out the window. How can anyone in their right mind make an excuse for such actions? What nonsense.
Do you know each of of these mega banks employs hundreds of Ph.D.s who model and simulate all these scenarios? what were they doing? and where was the government who can spot on your 1040 form whether you had an extra deduction or not, but let billions and trillions get loaned to people who don’t qualify?
I have no doubt that they do and I have no doubt that they manipulate the economy. No one is arguing that and anyone who thinks the banks don’t do such things is a fool. But that’s not the only point here. We’re talking about personal responsibility. We’re talking about taking the time to make a good decision…regardless of what the market is doing. Seems like you are a living proof of it so why can’t others do the same? And why should the rest of us be held responsible to clean up the mess others make?
I am not a walker. I bought in mid 90’s and am almost paid on my mortgage but I have seen this madness go around. I was under peer pressure to buy a second house few years ago but I resisted as prices did not make sense but not everyone can do that calculation. most middle to lower class people got sucked into it because they thought if they did not buy now they will never have a roof of their own on their kids heads…tremendous peer pressure of the american dream.
That’s completely false. Most people bought “now” because they wanted to make money in a very short period of time. One stroll around an average neighborhood in Los Angeles and you quickly realize there is absolutely no pride of ownership in most areas. Why do you think that is? It’s because people didn’t buy to stay…they bought to flip and walk away. I say screw these people. They deserve nothing.
Legally, walkers are all within their right. There is no morality when banks loans at teaser rates and jacks up to 9% later or gives Credit cards at 30% interest artes…30% damn thirty percent. yes it is the same banks. but gof forbade you say something about it or the president who slept over it for 8 long years while sniffing people’s phones.
Then don’t take a teaser rate. Don’t buy the house if you can’t afford it on a regular rate…it’s that simple. There is no excuse. Unless blatant illegal activity was going on against the buyer, anyone signing an contract is OBLIGATED to read it, understand it, verify it, and acknowledge it. Buying a home takes some effort….if one is not prepared to put that effort into reading the contracts, then one cannot blame anyone but him or herself for getting screwed in the end…regardless of what Wall Street is doing.
Believe me, I know first hand how many would-be buyers and homeowners were salivating at the chance to get homes for no money down, on pick a payment plans, so they could cash out on their equity and buy toys. Screw these people….not only do they deserve to lose their homes, they don’t deserve to ever get another one. Ever.
April 24th, 2009 at 11:42 pm
JAG:
wonton, do you see any role of banks and the financial system or not? (besides the homeowners – who I think were only partially to believe).
see when adult leads a kid to danger, we always blame the adult. adult in this case was Banks and Government.
Frankly if you have an opinion of yourself as a child, then you have no business buying a home. If you’re an adult, act like one, take responsibility , be cautious, and act accordingly. Don’t come back whining about how you got screwed by the casino because they lured you in and you didn’t have the will power to stop yourself from putting coins in the machine.
This is ridiculous.
I’ve yet to come across a bigger bunch of whiners who have no sense of personal responsibility than I have here in this thread.
April 25th, 2009 at 7:10 am
Noz, the only reason you care is because your children and your children’s children will be paying because the government is bailing out irresponsible banks.
Our whole little problem surrounds one issue. That issue is: “YOU QUALIFY!”
Nothing has really changed in the world, greed and bubbles have existed for centuries. Nobody waved a wand over the US and suddenly there were a slew of immoral people. For that matter most of the rest of the world had a housing bubble as well.
If we take the position that people are just as greedy now as those buying tulips in Denmark centuries ago, then we have to look for something else as being the problem. If people’s basic human nature did not change, then what did? It is my contention that it was bank financing that changed, not human character.
If a company goes bankrupt, do you blame the person cleaning the toilet or sweeping the floor for the bankruptcy? That just would not be logical now would it? In the chain of responsibility in the housing market, the home buyer is the equivalent of the janitor.
It is kind of fun to watch people shaking fingers at the janitors, as it shows how incorrectly the blame is being placed. Secondly, it is not going to solve anything and chances are, people are going to walk anyway.
Walkers are exercising their rights under the contract. If the banks wrote a bad contract or the industry dumped millions of bad contracts into the market, it is not the walkers fault that happended either now is it? It was bankers manipulating the market.
If the home buyer unknowingly walked into a manipulated market,does the home buyer have a claim? I say yes he does! Can the home buyer file a market manipulation claim against the banks and win. I believe so. Does the home buyer have the financial resources to sue the bank and be remunerated for his losses? Most likely not.
Walking then, is the most logical solution for sticking the bank with the problem they created in the first place and they should consider themselves fortunate that the home owners do not band together in a class action suit and sue the pants off of them.
Oh wait, they have no pants. Walking is a healthy choice, a great stress relief and doctor recommended.
April 25th, 2009 at 8:06 am
There is a reason home ownership went from the low 60% range to almnost 70% in the last decade – as BertDilbert said ‘YOU QUALIFY’. Of course many people bought a home who had no business buying a home, but I see folks here railing against the burger flipper who leveraged themselves 15:1 (40K income for a 600K house) when there is no mention of the banks that allowed that loan to be written. What about Wall St.’s insatiable appetite for Mortgages to securitize and create finacial derviatives leveraging themselves more than 40-50:1. That’s crazy! People wouldn’t have purchased homes they coudln’t afford if affordability wasn’t made possible by the banksters, and propogated by the gov. BTW – the ani-deficiency statutes that allow people to walk from their mortgage without being liable for the deficiency (difference between home value and mortgage balance) were enacted AFTER the Depression so that people would not be so burdened by debt that they would not be able to contibute to the economy. Our economy is built on leverage, and once that leverage gets to high it crashes. Thank your banksters and fractional reserve lending for that. There is culpability all around, and homebuyers played their part, but the gov has made it clear who they are in bed with, leaving homeowners to fend for themselves. With no other option walking is the rational choice, and in the end is the better choice for the economy as a whole. Not to mention the lesson it has taught the homeowners/walkers that will now pass it along to their future generations. To bad the banksters don’t get a lesson out of this, they just get bailed out. What’s to stop this from happening again? They took all the risk and bear no consequences. Lastly, it kills me that all the holier than thou folks that were ‘responsible’ and don’t find themselves in a house worth half of what their mortgage is wag a finger at those that are. Great for you, why are you so upset? You have no idea what it feels like to know you can never move, never accept a job transfer, fear for your health, etc. There were lots of folks who bought more than they could afford (only b/c it was possible by way of loose credit), but there were also lots of folks who bought what they could afford, becasue they thought they had to, and are feeling hopeless. Instead if railing against them, what can you do to make this better for all involved, yourself included? What’s your personal repsonsibility to your fellow man?
April 25th, 2009 at 10:45 am
BERTDILBERT:
Noz, the only reason you care is because your children and your children’s children will be paying because the government is bailing out irresponsible banks.
No I care because it’s affecting ME and my wife. If walkers want to destroy themselves..great…but don’t do it on the backs of others.
Our whole little problem surrounds one issue. That issue is: “YOU QUALIFY!”
No the issue is YOU TOOK THE BAIT because of greed. Nothing more…nothing less. A perfect example is how fat people are now blaming fast food joints for their overweight problems….but wait a minute…was Ronald McDonald strapping these fat asses to the chair with their mouths wide open and force feeding them Big Macs? Give me a break…..PERSONAL RESPONSIBILITY.
Nothing has really changed in the world, greed and bubbles have existed for centuries. Nobody waved a wand over the US and suddenly there were a slew of immoral people. For that matter most of the rest of the world had a housing bubble as well.
That’s true….I agree…but learn from them…that’s your responsibility if you don’t want to get burned.
If we take the position that people are just as greedy now as those buying tulips in Denmark centuries ago, then we have to look for something else as being the problem. If people’s basic human nature did not change, then what did? It is my contention that it was bank financing that changed, not human character.
Who do you think makes up the banks? Robots? Cyborgs? It’s PEOPLE. Corporations don’t run by themselves. They have people running them. This time around, it seems both sides were as crooked as each other…both the clients and the banks.
If a company goes bankrupt, do you blame the person cleaning the toilet or sweeping the floor for the bankruptcy? That just would not be logical now would it? In the chain of responsibility in the housing market, the home buyer is the equivalent of the janitor.
Sure it would…look at the unions and how they affect large corporations when the mobilize. It’s not simply ONE person in the housing market who is affecting the situation…it’s millions of people. What does that say about the current people in housing…all these flippers/specuvativers/etc? I think it says A) they are extremely stupid for going into a contract with their eyes closed OR B) they knew what they were doing from the start and wanted to take advantage of the system and screw people over. Or both.
It is kind of fun to watch people shaking fingers at the janitors, as it shows how incorrectly the blame is being placed. Secondly, it is not going to solve anything and chances are, people are going to walk anyway.
You should be allowed to walk away from a mistake YOU DID. If YOU signed that contract, it means the following:
A) YOU READ IT
B) YOU UNDERSTOOD IT
C) YOU ACCEPTED THE TERMS IN THE CONTRACT
D) YOU ARE BINDED BY THAT CONTRACT TO PERFORM THE FUNCTION THAT CONTRACT IS ASKING OF YOU…PAY, DANCE,DRIVE WHATEVER.
If you didn’t accept any of things, you have no business signing that contract.
Walkers are exercising their rights under the contract. If the banks wrote a bad contract or the industry dumped millions of bad contracts into the market, it is not the walkers fault that happended either now is it? It was bankers manipulating the market.
Walkers are NOT exercising their rights:
A) They are breaking the contract because they cannot meet the contract’s obligations.
B) They signed that contract knowing full well what they were doing, what chances they were taking, what risks they were involved in…all in the hopes to make money fast.
C) If they didn’t understand or read the contract and SIGNED IT ANYWAY, TOO BAD…they shouldn’t have signed the contract.
D) They have no concept of personal responsibility. They are cop-outs who think walking away from obligations is the norm. It’s the sign of the times…no one wants to take any personal responsibility anymore.
If the home buyer unknowingly walked into a manipulated market,does the home buyer have a claim? I say yes he does! Can the home buyer file a market manipulation claim against the banks and win. I believe so. Does the home buyer have the financial resources to sue the bank and be remunerated for his losses? Most likely not.
Tell me…short of fraud…which I am sure happens…how can someone be that dumb and stupid to walk into a manipulated market and purchase the most expensive item in their lives in a matter of days without any checking, reviewing, care, caution, etc? Is that why current home owners are only too eager now to not pay payments and try and qualify for a bailout? That’s a noble one isn’t it.
Walking then, is the most logical solution for sticking the bank with the problem they created in the first place and they should consider themselves fortunate that the home owners do not band together in a class action suit and sue the pants off of them.
The banks offered the products…people took them. No one forced people to do so…they were ultimately responsible for taking the cocaine..pure and simple..you can spin it however you like….but people need to take personal responsibility.
I’ll disclose something here. I used to work in the RE business part time. I never really did much in terms of sales but I learned A LOT and when I did, I removed myself from the business.
I had the luxury of working in a sub-prime lender’s office for about 6 months. I never wrote a single loan because I was the office’s RE agent. But I did see what went down.
Every day, we’d get multiple faxes from many banks that offered products. 5/1 ARMS, pick a payment plans, etc. There’s no doubt the products the banks were pushing were bad and toxic. But ALL the regular products were there too…15 year, 30 year fixed. Long term stuff…stuff responsible people took.
We’d get about 15 walk-ins a day and about 100 calls a day asking for loans on new and refi’s.
PEOPLE….PEOPLE…not banks….were climbing over each other to get loans and equity lines of credit. They couldn’t ask for them fast enough.
I would sit in many of the loan doc meetings and client/broker signings just to learn. I would say….and this is anecdotal on my part but still accurate to MY experience…that about 70-80% of buyers wanted money no matter what. They simply wanted the money…and this is how:
A) They didn’t care how we got it
B) They didn’t ask what happens tomorrow
C) They didn’t want to show any income
D) They didn’t want to read the contract…all of it.
What the wanted was:
A) MONEY FAST
B) CHEAP MONEY TO SELL A PLACE QUICKLY IN A FEW MONTHS OR A YEAR TOPS
C) CASH OUTS TO BUY CRAP
E) MONEY TO BUY A SECOND HOME FOR MORE PROFIT AND RENTING
People DIDN’T CARE. They didn’t care about consequences…they didn’t care about the future.
These same crooked SOBs are now crying their eyes out for a bailout…because they’ve been riding the wave and want to keep riding it.
YES…the banks offered the products…yes the banks and Wall Street is in up to their eyeballs in charlatan stuff. Yes these bastards MUST also face consequences. No doubt about that.
But please…stop insulting people’s intelligence by saying it’s only the banks faults. It takes TWO to tango when it comes to money and making a profit. ALWAYS.
April 25th, 2009 at 10:48 am
By the way, what I mean to say was:
You should NOT be allowed to walk away from a mistake YOU DID. If YOU signed that contract, it means …..
April 25th, 2009 at 1:09 pm
Noz: signed the contract that states “you can give the house back.”
what don’t you get?
And BTW- these banks were in charge of the financial stability of a country- Hello!!! Who cares if the people were idiots or not-really is that important- they allowed anyone to get a loan.
They shouldn’t get anyone’s tax dollars- they should have to eat thier mistakes- and be held accountable to the same contract that was signed- read or not read. Take the house back thats whats in the contract.
April 25th, 2009 at 1:22 pm
Noz.. unless you’re super rich (and even then posibly).. you’re going to be affected by many things thta other people do in this country.. if you don’t want to..go buy yourself a island somewhere!
April 25th, 2009 at 1:34 pm
Noz.. you mentioned:
“No the issue is YOU TOOK THE BAIT because of greed”
Are people buying today..greedy? Are the FHA loans today.. the new SUPRIME?
Is the government creating the BAIT?
When is a home buyer not greedy? buying low? how do you know when it’s low? 2 years of price decline? 5 years?..10 years? ..20 years?
are all homeoners greedy?
April 25th, 2009 at 1:44 pm
does suply and demand model really work?
April 25th, 2009 at 2:28 pm
Oh and Noz:
“No I care because it’s affecting ME and my wife. If walkers want to destroy themselves..great…but don’t do it on the backs of others.”
You should be directing this at the banks, not the homebuyer- banks created the contract, they knew that if people couldn’t pay they could just walk away. The banks got greedy and now they are the only ones getting the tax dollars- (You are not single handedly paying for this.)
The contract is between the lender and the buyer- I quite franky have know Idea why you are involved, oh yeah the government stepped in.