New mortgage foreclosures set record

Source: Associated Press

WASHINGTON - 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 crisis is most severe in subprime mortgages, loans provided to borrowers with weak credit, but it is now spreading to other types of mortgages, according to a quarterly report released Thursday by the Mortgage Bankers Association.

That report showed the number of homeowners who got foreclosure notices in the April-June quarter hit an all-time high of 0.65 percent, up from 0.58 percent in the first three months of the year. It marked the third consecutive quarter that a new record has been set.

Read more: http://news.yahoo.com/s/ap/mortgage_delinquencies

according to a newspaper story I read today. Some outfit called ACORN was looking into the number of minorities (Black and Latino) which were in pre foreclosure or foreclosure.

Banks claimed, they did not seek minorities but the lower rung of sellers of mortgages did.


I wonder how many Illegal Immigrants got these ARMs? They can buy new cars and trucks with ease now.
Has anyone seen a connection here which i postulate

Study: Subprime burden uneven
Blacks, Latinos saddled with higher proportion of costly loans
Jerry W. Jackson and Richard Burnett | Sentinel Staff Writers
September 6, 2007
With the subprime-mortgage collapse still shaking credit markets, a study released Wednesday found that blacks and Latinos continued to wind up with proportionally more of the high-cost loans than non-Hispanic whites last year, even if their incomes were the same.

The analysis of 172 metropolitan areas by the minority and low-income advocacy group ACORN showed that Orlando actually improved its racial balance a bit in 2006 in terms of the distribution of its subprime home loans.

Upper-income blacks in Metro Orlando were 2.4 times more likely to receive a high-cost mortgage loan than high-income whites in 2006, the study of federal data found. A year earlier, the disparity rate for blacks had been three times that of white borrowers, according to ACORN's 2006 study of the four-county Orlando metro area...

full story here.
SOURCE: http://www.orlandosentinel.com/business/orl-acorn0607sep06,0,124147.story

than high income.

story also indicated that income as a variable was equal or higher among some Minorities.

The story triggered a bit of mental wondering on my part.

I have seen these quarter of a million dollar homes and higher, especially the large corporate housing developments around here. I haven't met any of the new owners as I am not in the Realty business.

But during my commute to work, I do notice their kids waiting for the school bus. Then I see the large number of minorities in those houses. Thus the story caught my eye because I could put a face to the situation.

I also saw that the FHA and VA had been the prime mortgage holder for a large percentage of minorites up until recently.
Then the sub-prime market cut into their market share severely. Also the FHA was limited to something like 417,000 dollars max.

Connecting all these variables together developed a clearer picture for me. Then I mentally project that this could have a racial crisis aspect if society overall is not aware. Just thinking.

It's so obvious if a buyer read the documents. It's as if people think the readjustment time will never arrive? The whole thing about taking that initial lower rate than a fixed would give and they can get a bigger house? Or maybe they have no down payments that a fixed requires? I've watched several programs on it and read many articles on it. The homeowners basically say I was stupid or I was just greedy. Something like that. It reminds me of people getting or using debit cards. Why? Why does anyone fall for that garbage of ATMs or debit cards? But millions do.

A DU'er here said that he was slipped an adjustable rate mortgage contract beneath a cover signature page after having negotiated a fixed rate contract. The mortgage broker said it was a mistake and replaced it with the correct contract. (The DU'er actually believed it was a mistake!!!).

My newspaper did a story about people who were in trouble with adjustable rate mortgages. TWO of six people profiled said they believed they were signing fixed rate mortgages and were shocked when they got the notice about the rate adjustment (neither of whom apparently contemplated suing their broker for fraud). One of three said she caught her mortgage broker giving her the wrong contract at signing, but thought, if she didn't sign it, she'd lose the house so she signed it.

I think a lot of people were defrauded...

How is the attorney general in your state? The AGs should be going after those bastards. Does it also make you wonder about the lawyers hired by the buyers? Why they weren't reviewing the documents and advising the buyers here's what you pay when this piece of crap mortgage readjusts?

Also the way these loans were bundled and packaged and the way the rating services uprated them to the financial markets was fraudulent.

will in some cases be double-digit. Double digit? Can you imagine paying something like that? Also, in some cases the monthly mortgage will be tripled. Who can sustain that? The 1st of the month comes around really often.

Also, this article states that "2 million ARM mortgages" will shoot up. I've read that it's 7 million. Now if it's 7 MILLION that are affected, it will effectively topple our economy. Let's assume 7 million houses go into foreclosure. That's about 28 million people out on the street. Or roughly 9% of our total population.

How many will Emperor Monkeynutz label as teraists?


Maybe they say this coming and that;s why they want to be able to declare martial law.

which means if they ever buy anything again on credit for at least 7-10 years, it will be in the 20%-plus interest rate range.

Bankers are grinning 'ear to ear' all the while scream for the Fed's to 'bail them out'...

credit scores.

no credit listing. if the payment rolls into the next calendar month, then it is reported.

October will be a VERY bad month for people with ATMs. Then April 08, but that won't be as bad as Oct 07.

People bought homes they could afford. Flor-mica was good enough, they didn't "need" granite. Linoleum floors were the norm, not "travertine". People were buying a place to live, not an investment.
Look at your average sub-division now. 5 or 6 basic home plans with minor upgrades available. Homes are more like a commodity than anything else. Easy credit at VERY low rates made this bubble. People bought on the assumption that they would make a profit. People who bought at the market top will lose the bet.
Back in the double digit rate days people lived in homes they were able to afford.

I knew people who had them. And yes, people didn't need granite counters, subzero fridges, etc. The average size of the American home has been steadily increasing the last 50 years. Wants become needs.

It was 1200sqft for a family of five. They added on a 500sqft addition (paid for in cash) recently. They felt no need to live above their means.

with one bath until she and her husband bought a house for cash. The kids were basically grown by that time. It wasn't all that unusual to buy a house that way.

A small house on 15 acres of land. I only paid 52,000 for the whole place and my mortgage was only 20,000. I lived in a crappy rental trailer for 10 years in order to save the money. I was dead set on buying some land with the house. It isn't a showplace but it will be paid off by the end of the year.

all the way to 13%. The sad thing is that my sister was the mortgage broker who set her up with that deal.

A huge number of loans readjust in October.

"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 sub-prime loans to unqualified borrowers."

Ok, SOME Democrats blame predatory lending practices for a large part..yada yada yada. I blame both the lender and the borrower for the current situation. Tougher underwriting rules are needed and people who don't qualify at the highest possible payment should be denied a loan. The borrower signs the loan statement. He/She is affirming that everything on the loan application is true. The lender has to provide a truth in lending statement which is signed by the borrower.
I am 100% against bailing out anyone. No lender gets bought out of their problem. No home-buyer is bailed out. Many people bought their homes on the assumption that real estate always gains 10-20% a year. People who bought more home than they could afford deserve no more sympathy than someone who ran up their credit cards. No more sympathy than for a car buyer who is upside down. No more than for the stock investor whose account drops by half.
Use tax dollars to keep someone in a home they can't afford while there are homeless on the street? How is this fair for those who are struggling to make their payments but managing somehow?

I recently heard a call to a financial talk show. The guy had some problems paying his house note which had a balance of 1,000,000 dollars. One freakin million dollars!!!!! His families total yearly income? 120,000 a year. His yearly mortgage payment was at least 70,000. Should we bail him out?

That blows me away. Things were almost completly unregulated. It was a house of cards. Not all that long ago you had to qualify for a mortgage and you had to have a down payment and all the info on your application was checked. The loan officers made sure that you were able to put a new roof on when then time came. If everything didn't check out on your credit, job, income, etc., including the value of the property, you didn't get a loan. If you couldn't afford it and pay the bills, you just didn't get a loan.

lawyers, and has marketing practices developed by well-funded professionals many of whom have psychology degrees, and has the laws to which they are subject crafted by well-paid lobbyists?

And when in the history of the US have banks thought it was a good strategy to get people on the hook with debt they couldn't pay? The only precedent I can think of is the way the IMF and Wall Street treats developing FOREIGN governments, whom they want to screw over.

Isn't it reasonable for home buyers to assume that banks regulated by a government to whom they elect their representatives would ensure a playing field on which the bank would only be offering you a loan they believed you could repay? Don't you think borrowers were at least reasonably assuming that their government was not allowing banks to treat them the way, say, our government allows banks to treat people in the Dominican Republic or Indonesia or Guatemala?

Many Americans engaged in speculative activity in their housing purchases. Those outside the housing market should not be penalized for their folly.

I remember people buying the lot, digging a hole in it, and putting a temporary roof over the room which would later become their basement. They then added to the house as they could afford it--framing and roofing, then interior finishing room by room over a period of 3-6 years. They lived in the basement while that was going on, and did a lot of the work themselves.

wouldn't just freezing the current rates prior to reset, help? Then renegotiate with the home owners for a better rate?

maybe I'm just naive but that makes sense to me.

I guess congress and the rest of our governmental mouth breathers would just prefer to let the system bleed out and crash.

Doing that would only prolong the crisis. The problem is that home prices are severely inflated by easy credit. Credit does need to be tightened. The government can try to help homeowners renegotiate, however, in order to get a new fixed rate loan. But many homeowners still would not be able to afford this. In those cases, orderly exit from the housing market is called for.

a summer resort island..and most homes here are second homes..beach homes..and i have never ever seen so many for sale signs up..in fact in the last 6 years..everything sold almost the day the house went on the market..and most here were knock downs..so many old beach homes have been knocked down and new houses built..i am seeing not the remaining old houses on the market ..but the NEW beach McMansions...

My lifelong best friend is looking to buy an older home here..and the Realtor friend ( neighbor)of ours told her hubby to wait until mid to late October..that many will be going into foreclosure..
many have been 2-3 million$$ homes..i am talking about...the realtor said there could be possibly 700 foreclosures on an island only 18 miles long..

many people it seems bought into these big beach homes and now can't afford them..

and i am sorry but i do not have much sympathy for the bankers or the people who bought like they did..

the people i feel sorry for are those with one home and they bought into the American dream..and they have been screwed by the system and then were sold out by our congress..with the bankrupts laws..and how this was allowed to go on.....it was a fake economy to make little lord pissy pants look like his economy was good..it was all bullshit..and now those who can least afford it will be screwed while our tax dollars are used to bail out the crooks!

but it is not just the lower middle class that is going to take a hit..it was people who were greedy who bought what they could not really afford...or they could afford it until the ARM's went up..and ballooned.

But don't worry about the hedge fund boys..they got theirs out...one just bought a home on my street for $3 1/2 million and just put in a $100,000.00 pool..they are not taking the hit..maybe their companies are ..but they are not..and this guy is only about 34 yrs old!

fly

for the autumn numbers when those ARMS get pumped.