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Gerry Clinchy
02-20-2010, 01:28 PM
http://news.yahoo.com/s/ap/us_housing_plan_one_year_later
This is an AP writer. The piece appears on Yahoo News.



Ambition, though, got far ahead of reality.
The numbers show a program that failed to deliver. About 116,000 homeowners have had their loans modified to reduce their monthly payments, the Treasury Department said Wednesday. Only about $15 million in incentive money has been paid to more than 100 participating mortgage companies. That's 0.02 percent of the $75 billion available.




Interviews with officials in the Obama and Bush administrations, bank executives and housing experts show the government launched the effort without thinking through many of the details of such a complex program. Banks were ill-prepared, as well. To implement the program, it took months to hire and train thousands of new workers — many of whom had no previous experience in the mortgage industry.


Personally, I don't buy that last sentence. As a Realtor, I might say they could have made a lot of headway a lot faster by using their existing mortgage loan officers/brokers. Since houses weren't selling at the rates of the boom time, these guys had time on their hands. The banks would have had to pay them to do it, as these fellows work on commission. A more reasonable investment for the banks than the mortgages they had written to cause the problem! The banks could have even used a flat rate fee schedule for these loans which were essentially a form of re-fi.

They could have even recruited Realtors® who certainly had time on their hands :(. Experienced agents know quite a lot about the loan process ... would NOT it into the category of "no previous experience with the mortgage industry." Again, a flat fee payment for guiding a borrower through the process would have been an easy fix for the manpower issue that is cited.


That's because lenders have struggled to get homeowners to complete all the required documentation. Many don't comply, despite repeated phone calls, mailings and even in-person visits by notaries.
It's a problem that has perplexed and frustrated industry executives. "Borrowers didn't understand that if they didn't send the documents in, they would fail to qualify," said Sanjiv Das, Citigroup's top mortgage executive.

Cut me a break! How hard is it to make a list of the paperwork needed? We do it every day of the week to get first-time buyers into the mortgage process. And these people with mortgages already have some familiarity with the process. You just have to give them a list of what you need. Then don't lose it when it arrives.

Occurs to me if these banks are this incompetent, it would have been better to let them go down the toilet. These excuses are just plain lame.




Faced with poor results last summer, the Obama administration pressured mortgage companies. Treasury officials summoned key executives from lenders, including Bank of America, Wells Fargo and JP Morgan Chase, to Washington. The industry was given strict orders: Sign up at least 500,000 borrowers by Nov. 1.

And suppose there weren't 500,000 borrowers who could qualify to reasonably expect to make reasonable payments?

To meet that goal, most companies allowed homeowners to enroll in the program without proof of income. That was the same low standard that lenders used when they made some of the riskiest loans that fueled the housing frenzy.

Geez! You'd think they have learned the first time around!
Getting the documents in advance would have been a better idea, Heid said.

Geez, Louise! I guess so! One presumes that Mr. Heid should know something about the mortgage industry since he's co-President of Wells Fargo home mortgage division!


That's because lenders have struggled to get homeowners to complete all the required documentation. Many don't comply, despite repeated phone calls, mailings and even in-person visits by notaries.

I find that last sentence extremely difficult to believe. Who were they calling? Reports from one of my own clients this past summer was the problem of finding anyone at their lender who had any information for them.

Gerry Clinchy
02-23-2010, 10:27 AM
From RIS Media, a real estate agent publication
http://rismedia.com/2010-02-22/obama-targeting-homeowners-with-1-5-billion-in-assistance/


Obama recently announced a $1.5 billion fund to help unemployed homeowners and other struggling borrowers in a handful of states.

He announced this while campaigning for Reid in NV ... NV is one of those states. The others are Arizona, California, Florida, Michigan

The Pres said:

He argued that too many lenders were too focused on “making a quick buck than acting responsible,” that “too many borrowers acted irresponsibly by taking on mortgages they couldn’t afford” and government regulators turned a blind eye to the problem.”

Ah ... the truth!


State and local housing-finance agencies in states seeking assistance must submit program proposals to the Treasury Department, which will evaluate and decide if they qualify. The funds are allocated from capital set aside for housing from the $700 billion Troubled Asset Relief Program.

That $ has just been laying around with no other plan for spending it?

According to some this effort may not really do much:


Henry Sommer, director at the National Association of Consumer Bankruptcy Attorneys in Philadelphia said he supported the idea of targeted taxpayer assistance to states that need it most. However, he was skeptical whether the vast majority of the $1.5 billion would ever be used. Sommer pointed out that the largest part of the $75 billion HAMP program so far hasn’t been allocated—in large part because only a small number of households have received permanent modifications, which is when the majority of incentive payments go out. “They are supposed to spend $75 billion, but aren’t using it,” he said. “I am concerned that even though they announced this program, that the funds in it won’t be used.”


This is what happened with the original mortgage relief program. They announced it, but had no protocol in place to implement the program. Sound bytes were pretty good though.


The new targeted assistance comes after the Special Inspector General for the Troubled Asset Relief Program on Jan. 21 released a report warning that the Obama administration’s and the Federal Reserve’s policies to support the mortgage market could in fact be creating another dangerous housing bubble in some markets, while at the same time failing to do a good enough job to stabilize other markets.

Gerry Clinchy
02-27-2010, 11:16 AM
http://moneynews.com/Headline/Obama-Home-Foreclosures-Housing/2010/02/26/id/351059

The White House is considering placing a "hold" on foreclosures.


President Barack Obama reportedly is considering stopping all home foreclosures unless they have been rejected by the administration’s struggling $75 billion mortgage assistance program

The "bold" emphasis is mine. This would mean, it seems, that if the borrower had already been determined to be so bad as to hold no hope of ever repaying the loan, those foreclosures would proceed.


[/QThe move comes as Republicans take aim at Obama’s mortgage assistance program. Republicans argue the effort is making the economic crisis worse and say many homeowners would be better off as renters.

The president has been trying to convince investors and the general public that the country is slowly emerging from the recession, but the threat of foreclosures and a faltering housing recovery has been looming over the economy.

Meg Reilly, a Treasury Department spokeswoman, told Bloomberg that the proposed foreclosure ban was “one of the many ideas under consideration” in Obama’s attempt to stabilize the housing market.

“This proposal has not been approved and there are no immediate planned announcements on the issue,” she wrote in an e-mail. She confirmed the authenticity of the plan, which hasn’t been made public, Bloomberg reported.



Under current rules, foreclosure litigation can proceed while borrowers are under review for the program or even in a trial modification.

The proposed changes would prohibit lenders from initiating new foreclosure actions before loan screening by HAMP and would require lenders to halt existing proceedings for borrowers once they are in a trial repayment plan, Bloomberg reported.

Meanwhile, Reps. Darrell Issa, R-Calif. and Jim Jordan, R-Ohio., on Thursday called the program a misuse of taxpayer money, The Associated Press reported. Though $75 billion has been set aside for the program, so far only $15 million has been spent.



And they defend their track record, even though only 116,000 homeowners have completed the process out of the 1 million enrolled since the program's launch last March.


Meanwhile, the Obama administration reportedly also is considering forcing lenders to make principal reductions to help struggling homeowners.

This last part gives me pause. Suppose a principal is reduced from $150K to $100K. Three or five years from now, housing picks up and these borrowers sell the home for $175K. Do the taxpayers get back at least some part of the $50K they sucked up for these borrowers who bit off more than they could chew?

http://rismedia.com/2010-02-25/new-home-sales-fall-to-record-low-level/

Meanwhile, new homes sales for January 2010 are down 6.1% v. January 2009. It will take 9.1 months to sell the new homes now for sale at the January pace.


With mortgage rates still very low and prices down, most analysts had concluded that the recent decline in sales was due to the impending expiration of the first-time home buyers’ credit in November.

For new homes, they might get their agreement done before 4/30/10, but at least in certain parts of the country, due to weather conditions, they might not be able to meet the deadline of closing by 6/30/10.


If a home isn’t sold before it’s finished, it’s taking a record 14.2 months to sell it after completion—a reflection of the mismatch between more expensively priced homes in the inventory and lower-priced homes that have been selling.

That might get worse after the expiration of the incentives. Might mean more contractors going belly-up & their unsold inventory becoming foreclosures as well.


The median sales price of a new home sold in January was $203,500, down 2.4% compared with a year earlier. Cheaper homes were selling better than expensive ones: 47% of sales were for less than $200,000, up from 43% in December. Meanwhile, 38% of sales were for $200,000 to $400,000, down from 41% in December.

In my area of PA this average price would only purchase a townehome; not a detached home.

I can't find the URL right now, but indications are that sales of existing homes is also down in January. Buyers who are in a position to buy are looking for "bargains". In my market, short sales and foreclosures continue to constitute a large portion of the market.

Our office also gets a lot more calls for rentals. They are not coming from people who have lost their homes. I wonder if the people who have lost their homes are making the rental market more competitive, and the former homeowners are in better financial shape than the long-time renters ... so the better credit report gets the nod over the less good.

Roger Perry
02-27-2010, 11:50 AM
With the number of Mortgage companies and sub-prime banks that went out of business there should be no shortage of experienced Mortgage Loan Officers available.

Gerry Clinchy
03-09-2010, 09:21 AM
The newest proposal to avoid outright foreclosures ... is to incentivize "short sales".

Pay the homeowner $1500 to relocate out of the home; provide $1000 to the servicing company; provide $1000 to the second-mortgage-holder; and compel the first-lien-holder to accept the appraised price for the home.

That still doesn't quite solve the manpower problem for the mortgage companies to actually implement the program proposed. The figure for borrowers at least 2 mos behind on their mortgage payment was estimated at 500,000.

Showed a home on Sunday priced at $124,900. The home was purchased in 2006 with 100% mortgage of $175,500. It was never worth that much. Of course, it is a short sale. But if the bank can't get its act together, the first-time buyer is out of luck in trying to get an agreement signed by 4/30/10.

Gerry Clinchy
03-31-2010, 09:29 AM
http://rismedia.com/2010-03-30/fed-up-homeowners-who-can-pay-the-mortgage-dont/

I find this very troubling ... an owner who can afford to pay their mortgage, but decides not to because they have the short end of the stick. The troubling part is that an individual begins to think that because somebody else got "bailed out", they should also be bailed out.

Millions saw their retirement accounts decimated by the economy (and you could look at a home as one of the assets that are part of a retirement plan), but nobody is bailing them out either.

This individual also doesn't realize that real estate proceeds in cycles. Usually, the cycles are about 7 years. Since this economic situation is drastic, this cycle could take longer. As they say, however, there is only a limited amount of real estate (land). We cannot manufacture more of it.

What has happened to the attitude of taking responsibility for bad decisions, and sucking it up?

It occurs to me that "forgiveness" of loans is not the answer. A thought occurred to me, that for those who are struggling to make their payments, but are capable of paying a smaller payment ... modify the loans to a # of years at an interest rate that can be managed. That could mean a 50-yr loan. No, the borrower will never pay off that loan. Many people sell their home long before they pay off 30-yr mortgages, too. They will be continuing to pay off some of their principal, and as the economic situation & housing prices begin real recovery, the loans can be re-financed later. Meanwhile, people get a roof over their head at a price they can afford, and lenders continue to get cash flow from the loans. Nobody gets "forgiven" ... but get a way to "weather the storm", & eventually they should be able to recoup their losses through ultimate economic recovery. The Fed funds are already allocated, but this kind of plan could make those funds could be used more efficiently this way to extend a lifeline to more borrowers. Don't "forgive" the debt. Rather, "enable" the borrowers to repay their debt.

Another incident relayed to me by a mortgage officer yesterday. Mr. Jones owns a nice home in a city-type area. Mr. Jones lives and has his small business in the same building. Mr. Jones gets an inordinately large 2nd mortgage, based on an appraisal that is really out of line with the property value, and uses that money to make a down payment on a very expensive home. Mr. Jones gets to a point where he finds the burden of the home equity loan onerous. He is still making payments on the first mortgage on that property; and is also making mortgage payments on the newly-purchased home. The HE loan is about $200,000. He complains to the bank (GMAC, quite a large lender) ... GMAC tells him to come up with $20,000 & they will erase the $200,000 loan. 10 cents on the dollar is a great deal for Mr. Jones, so he takes the deal. BTW, Mr. Jones was still running his business out of that original property.

Locally, there is a situation I have run into. Young woman purchases a home for $150,000. IMO, it was never worth that much. She has decided she'd like to move to another part of the country. A school teacher. However, the value of her home now is about $120,000, with a $148,000 mortgage. She can't sell the house for what she needs to pay off the bank. So, she puts the house on the market with an agent who specializes in short sales. This is a similar situation to the one in the article, but in dollar amounts a lot of people can relate to. The person can afford the mortgage payment, but simply decides they don't want to pay for their "mistake".

Bailing out the banks has given way to an attitude, it seems, that everyone deserves some bail-out. The housing mess would be bad enough if only the unemployed were in positions of being behind on the mortgages. When the entitlement mentality takes over, even those who could maintain their payments decide they can walk away, it makes the situation twice as bad. These "unnecessary" short sales & foreclosures make it that much worse for those who are truly in financial distress but would be willing to "modify" their loans (as I've suggested) until they can catch up again.

Gerry Clinchy
06-17-2010, 10:29 AM
NY Times today
http://www.nytimes.com/2010/06/17/business/economy/17slump.html?th&emc=th

It was only a matter of time before reality would set in. The DC solution was only a temporary bandaid on an arterial bleed.


These days, it is the buyers who are coldly seeking the absolute best deal while the sellers are left in emotional turmoil.


Everyone expected the housing market to suffer at least a temporary hangover after the government’s $8,000 tax credit expired, but not necessarily this much.

Preliminary data from around the country indicates that the housing market began swooning last month immediately after the credit was no longer available. In some places, sales dropped more than 20 percent from May 2009, when the worst of the financial crisis had subsided.



Even the lowest home mortgage rates in decades are not doing much to invite deals. The Mortgage Bankers Association said Wednesday that applications for loans to buy houses were down by a third compared with last year. Applications are back to the level of the mid-1990s, when the country’s housing market was smaller.




In some cases, agents say, sellers literally cannot afford to make concessions. Another $10,000 will push them underwater, which means they will have to arrange the sale through the bank.

“People cashed in on their houses to get money to go on vacation, for a new roof, to send the kids to college,” said Roberta Baldwin, an agent in Montclair, N.J. “They thought it was always going to be worth more.”

Even when a sale can be worked out, it is not uncommon for everyone to walk away feeling more aggrieved than celebratory.

“Buyers feel they’re not appreciated for simply making an offer,” Ms. Baldwin said. “And sellers feel humiliated and even angry. They expected to do better.”


I might add that the Realtor® is perceived as "the bad guy" in the middle.

A Sacramento agent says:

“This is the fallout from all the foreclosures: Buyers think that anyone who is selling must be desperate,” said Mr. Lyon, who employs about a thousand agents. “They walk in with the bravado of, ‘The world’s coming to an end, and I want a perfect place.’ ”

I could add that the appraisers are now "over-compensating" for their lackadaisacal attitude when the market was going up. I also had one fall apart over the appraisal recently.


The tax credit, for all its flaws, may have helped avert financial Armageddon, but the final effect is still being tallied.

In Indianapolis, the number of contracts signed in May was down 32 percent compared with May 2009. They dropped nearly 25 percent in Minneapolis/St. Paul, 20 percent in Seattle, 10 percent in Sacramento and 42 percent in Hartford. (A few areas, including Miami, showed improvements instead of declines.)


The number of contracts signed in Des Moines in May was down 47 percent from last year. /QUOTE]

The "but" is a pretty big one! I'd expect that Miami may have showed improvement since it was one of the areas that had depressed so badly ... and in 2010 people were scooping up bargains.

[QUOTE]Pending contracts, if they are not canceled at the last minute, become official in six to eight weeks. Many deals done in April, when the credit was in effect, are still being completed and will be counted in May or June sales reports. So the severity and extent of the current slump will not become clear until fall.

ducknwork
06-17-2010, 11:56 AM
Faced with poor results last summer, the Obama administration pressured mortgage companies. Treasury officials summoned key executives from lenders, including Bank of America, Wells Fargo and JP Morgan Chase, to Washington. The industry was given strict orders: Sign up at least 500,000 borrowers by Nov. 1.



He argued that too many lenders were too focused on “making a quick buck than acting responsible,” that “too many borrowers acted irresponsibly by taking on mortgages they couldn’t afford” and government regulators turned a blind eye to the problem.”

How can these two statements possibly be attributed to the same person??

The first statement is encouraging 'less than intelligent', irresponsible lending and the second statement is chastising it!

Gerry Clinchy
06-17-2010, 02:24 PM
Presumably, that was a rhetorical question :-)

Indeed, I questioned the "quota" of 500,000 borrowers as well.

The latter statement was quite true ... the banks, the borrowers and the bureaucrats all acted irresponsibly in creating the mess. I saw it happening at the grass-roots level.

Extending all the troubled mortgages to a longer term, until the economy stabilized and they could re-fi, would have meant the borrowers and the banks would have had to tighten their belts to weather the storm ... but would have not rewarded the irresponsible behavior and would have saved the taxpayers a lot of money.

ducknwork
06-17-2010, 03:19 PM
Presumably, that was a rhetorical question :-) That would be a good assumption.

Indeed, I questioned the "quota" of 500,000 borrowers as well.

The latter statement was quite true ... the banks, the borrowers and the bureaucrats all acted irresponsibly in creating the mess. I saw it happening at the grass-roots level. Absolutely. I just find it interesting that President dOuble speak himself first encouraged, then condemned irresponsible behavior...

Extending all the troubled mortgages to a longer term, until the economy stabilized and they could re-fi, would have meant the borrowers and the banks would have had to tighten their belts to weather the storm ... but would have not rewarded the irresponsible behavior and would have saved the taxpayers a lot of money.That sounds like an excellent idea. But would it gain as many votes as handing out 'free' money? (another rhetorical question)

I think it can all be traced back to greed and lack of personal responsibility. Sadly, I don't see anything changing and until it does, we will never be out of the woods.

Gerry Clinchy
06-18-2010, 02:16 PM
This is a 6-mo extension. Wouldn't surprise me if it has a lot to do with the fact that many banks are taking that long to even respond to offers made on short sales.

This did NOT extend the date for having a signed agreement ... just extended the deadline for closing on those agreements that had already been in force as of 4/30.

It will keep the housing sales figures from looking as awful as they could look in July, Aug & Sept. Some of those buyers would have gone onto buy anyhow, but some would have dropped out of the market for a while. Others who missed the 4/30 deadline have already dropped out of the market for a while.

Senate Extends Tax Credit Closing Deadline
The U.S. Senate voted Wednesday to extend the home buyer tax credit closing deadline to Sept. 30, giving an estimated 180,000 buyers who met the contract deadline of April 30 extra time to close the transaction.

The extension was added to a bill to pay for jobless benefits.

The NATIONAL ASSOCIATION OF REALTORS® estimates that one-third of qualified applicants have been notified that they will be unable to close by the deadline. The Mortgage Bankers Association says delays are caused largely by the volume of transactions.

The measure still must be approved by the House.

Source: Associated Press, Andrew Taylor (06/16/2010)

Gerry Clinchy
06-25-2010, 09:12 AM
http://rismedia.com/2010-06-24/as-tax-credit-expires-new-home-sales-sink/



RISMEDIA, June 25, 2010—(MCT)—Sales of newly built U.S. homes collapsed in May 2010, the government said recently, falling to a record low and stirring concerns among some economists that the housing market would stumble again now that a popular federal tax credit for buyers has expired.

The Commerce Department said new homes sold at a seasonally adjusted annual rate of 300,000 units in May, a 32.7% drop from the revised April estimate and 18.3% below the May 2009 figure. It was the lowest sales pace and the biggest decline since the government began tracking figures in 1963. Sales fell across all regions.

While many economists are expecting sales of both new and resale homes to falter in coming months as the effects of the federal tax credit begin to wane, the May drop was significantly larger than most had anticipated.

“No two ways about it, these figures were just awful, when you look at the magnitude of the decline,” said Michael D. Larson, a housing and interest rate analyst for Weiss Research. “Obviously we were all expecting some kind of hangover impact, but this is like what you would have on New Year’s Day.”

The pessimistic read on new-home sales came as a survey released by the Mortgage Bankers Association said applications for home purchases and refinancings fell again last week, marking the sixth decline in the last seven weeks. Taken together, the reports indicate the housing market is weakening despite the availability of the lowest fixed mortgage rates in more than a year.

“The big thing is this is happening while mortgage rates have fallen to historical lows,” Irvine, Calif., economist John Burns said. “If there was ever a time to buy a home, you know now is the time.”

While new home sales make up a much smaller share of the housing market than do sales of previously owned properties, analysts watch them closely to get a read on consumer sentiment and job creation, particularly in the construction industry.

The new-home sales figures also give an indication as to where the broader market might be headed in coming months as new-home sales are recorded when a buyer signs a purchase contract—as opposed to sales of previously owned homes, which are measured when deals close.




Sales of previously owned homes fell 2.2% in May when compared with April, a separate group reported.

The median sales price of new houses sold last month was $200,900, a 1% increase from the previous month but a nearly 10% decline from the year-earlier median. The Commerce Department estimated that 213,000 new houses were for sale at the end of May, representing a supply of 8 1/2 months at the current pace.

Not all the news was bad. For the first time in two years, fewer homeowners are missing mortgage payments, Treasury Department regulators reported.
Three years have passed since the mortgage debacle made most subprime and nontraditional loans unavailable, and most loans since have been “plain vanilla” fixed-rate mortgages to prime-credit borrowers. The better-performing newer loans stand in contrast to the dicey old ones that finally are being flushed away for good.




The numbers increased, however, in all foreclosure categories. Compared with the previous quarter, newly initiated foreclosures increased 19% to 370,536; foreclosures in process increased 9% to 1,170,874; and completed foreclosures increased 19% to 153,654.




The U.S. Treasury gave final approval to a previously announced plan to provide $1.5 billion in federal funds to support anti-foreclosure programs in the five states hit hardest by the housing collapse, including $700 million in California to assist moderate-income families and military personnel.

Steven Spears, executive director of the California Housing Finance Agency, said plummeting housing prices and high unemployment “have created a homeownership crisis” in the state.

The state plan includes three mortgage assistance programs and help in finding rental housing for borrowers who cannot afford to stay in their homes after exhausting all other options.

Gerry Clinchy
09-06-2010, 01:04 PM
http://www.nytimes.com/2010/09/06/business/economy/06housing.html?pagewanted=1&th&emc=th
NY Times

They finally realized that you cannot "prop up" a failing housing market!

Suppose they had actually used the $30 billion in credits to modify the underwater loans & keep people in their houses? That would have decreased the inventory, thereby keeping prices higher.

If they can make a law that forces us to buy health insurance, they couldn't make a law that forced banks to modify loans?

FWIW, I would NOT have decreased principle, I would have extended the term and modified escalation on adjustable rate mortgages to make payments affordable. That wouldn't have "saved" people who lost jobs, but could have helped others.

What's happening FL is pretty dispicable ... foreclosures by banks who don't even own the loan ... and many other irregularities.

Gerry Clinchy
10-03-2010, 10:01 AM
NY Times
http://www.nytimes.com/2010/10/02/business/02mortgage.html?th&emc=th

Seems like the FL situation I mentioned last month is only the tip of the iceberg in the large lenders trying to shortcut the foreclosure process.

You may recall that many months ago, the banks said the reason they couldn't handle the short sale and foreclosure workload was due to lack of trained workers. I thought back then, with the unemployment rate so high (many of them the mortgage loan officers for whom the loan business dried up) might provide a ready source of labor if the banks were serious about solving the problem. Sure enough ... somebody else finally agrees with that ...



Thomas Lawler, a housing economist, said the current mess was predictable and probably inevitable. Lenders made their money by making loans and then simply and efficiently servicing them by collecting the checks every month. They were never prepared to deal with the labor-intensive problems of delinquency and foreclosure.

“However, the foreclosure crisis is now almost three years old, and not having staffed up sufficiently to deal with the problems with inadequate staffing borders on criminal,” Mr. Lawler said. “I mean, jeepers, look at the unemployment rate; how hard would it have been to hire more folks?”



Mark Stopa, a Florida lawyer who represents defaulting homeowners, said the magnitude of the current troubles depends on how title insurance companies react. If those firms begin to shy away from insuring foreclosed properties because they think those properties are vulnerable to claims, he said, the entire housing market could suffer.

“Judges have to force banks to do foreclosures correctly,” Mr. Stopa said. But he noted that would require a significant increase in staff. “I’ll believe it when I see it,” he said.

Stocks of the major title insurance companies dropped on Friday amid concern that their business would suffer as a result of the foreclosure freezes. Fidelity National Financial (http://topics.nytimes.com/top/news/business/companies/fidelity-national-financial-inc/index.html?inline=nyt-org) fell more than 4 percent, while First American Financial dropped 3 percent.

One firm, Old Republic National Title, said this week it would not issue policies on GMAC foreclosures until further notice.

Now there's a wrinkle even I hadn't thought of ... yet, I should have, since I ran into just this kind of situation last year.

A client was purchasing a property which the present seller had purchased 13 years earlier as a bank repossession (foreclosure). Prior to the present owner purchasing the property, it had passed through the hands of more than one bank. Among those bank owners was one that had been "absorbed" by a larger bank; and then that bank absorbed by yet another larger bank. End result, the title search for my client revealed that one of the deeds in the chain of title indicated a bank-seller who did not own the property at the time of the "alleged" sale. The buyer could not get title insurance; therefore, no mortgage; therefore, no sale. In this case, it took about three months to get the sale consummated; eventually through an action to quiet title (through the court system). It cost the seller of the property about $5,000 in legal fees. (a long story on why this came to pass)

Imagine this type of problem compounded by millions of improperly filed foreclosures! If something like 25% of the housing inventory is short-sale (often multiple lienholders in the 100% financing schemes or home equity loans) and foreclosures, what will this do to home sales over the next six months?

Not only did the banks create the mess to begin with, they are now making even more of a mess by trying to short-cut the costs of staffing and proper procedures. Seems like the attorneys assisting the banks in their bungling are making a pretty penny doing so.

Gerry Clinchy
10-25-2010, 11:17 AM
NY Times
http://www.nytimes.com/2010/10/25/business/25short.html?pagewanted=1&_r=1&th&emc=th



Because of such concerns, homeowners often are instructed that they must be delinquent and they must apply for a modification first, even if chances of approval are slim. The aversion to short sales also leads banks to take many months to process applications, and some lenders set unrealistically high sales prices — known as broker price opinions — and hire workers who say they are poorly trained.

As a result, quite a few homeowners seeking short sales — banks will not provide precise numbers — topple into foreclosure, sometimes, critics say, for reasons that are hard to understand. Ms. Sweetland and her broker say they are confounded by her foreclosure, because in Arizona’s depressed real estate market, foreclosed homes often sit vacant for many months before banks are able to resell them.




Homeowners, advocates and realty agents offer particularly pointed criticism of Bank of America, the nation’s largest servicer of mortgages, and a recipient of billions of dollars in federal bailout aid. Its holdings account for 31 percent of the pending foreclosures in Maricopa County, which includes Phoenix and Scottsdale, according to an analysis for The Arizona Republic.

The bank instructs real estate agents to use its computer program to evaluate short sales. But in three cases observed by The New York Times in collaboration with two real estate agents, the bank’s system repeatedly asked for and lost the same information and generated inaccurate responses.

In half a dozen more cases examined by The New York Times, Bank of America rejected short sale offers, foreclosed and auctioned off houses at lower prices.


What isn't even mentioned in this article, but which compounds the folly ... foreclosure proceedings cost $ for the lender, so add those amounts to their ultimate "losses". Foreclosed properties often remain vacant for several months (a year?) before they finally get to the market and are available for sale. During that time the lender has to pay the property taxes & liability insurance. By the time the property is vacant for several months it looks much less nice than when it was inhabited.

Have to agree with whoever mentioned that rewarding incompetency (bail-out) did not encourage these businesses to use any common sense



Fannie Mae (http://topics.nytimes.com/top/news/business/companies/fannie_mae/index.html?inline=nyt-org), the mortgage finance company with federal backing, gives cash incentives to encourage servicers, who are affiliated with banks and who oversee great bundles of delinquent mortgages, to approve short sales.

But less obvious financial incentives can push toward a foreclosure rather than a short sale. Servicers can reap high fees from foreclosures.

And, then, in many states, the lender can put a lien on the former borrower for these fees in excess of the amount the home is ultimately sold for. So, years later, the borrower may still have lien so large it prevents them from buying another home, and remains a big negative on their credit report. This can be a huge plus for the servicers, who may then sell these "receivables" to collection agencies for pennies on the dollar.


And lenders can try to collect on private mortgage insurance (http://topics.nytimes.com/your-money/insurance/index.html?inline=nyt-classifier).


Some advocates and real estate agents also point to an April 2009 regulatory change in an obscure federal accounting law. The change, in effect, allowed banks to foreclose on a home without having to write down a loss until that home was sold. By contrast, if a bank agrees to a short sale, it must mark the loss immediately.

Unexpected consequences to something that seemed like a good idea at the time? But even if they have to take the loss immediately, they get the cash in hand ... which might allow them to hire and train the staff they need to fix the whole mess! The banks have complained often that they just can't find the staff. Yup ... millions unemployed, and they can't find the employees that can do this?



By facilitating short sales, the banks could get a large portion of their cash on those mortgages back into their coffers. Yes, they'd take a loss, but they would take less of a loss than with the foreclosures (due to the reasons mentioned above). Of course, a couple of years from now, when they are taking the larger losses on the foreclosures they can always go whining back to the govt to help them "survive" their plight ... which they will have created themselves!

I just went through this with a foreclosure ... no sale ... on a true "DOG" of a property that has passed through several hands of "investor groups" and has been sitting around for literally YEARS unsold ... and still is!

depittydawg
10-25-2010, 09:23 PM
http://news.yahoo.com/s/ap/us_housing_plan_one_year_later
This is an AP writer. The piece appears on Yahoo News.





Personally, I don't buy that last sentence. As a Realtor, I might say they could have made a lot of headway a lot faster by using their existing mortgage loan officers/brokers. Since houses weren't selling at the rates of the boom time, these guys had time on their hands. The banks would have had to pay them to do it, as these fellows work on commission. A more reasonable investment for the banks than the mortgages they had written to cause the problem! The banks could have even used a flat rate fee schedule for these loans which were essentially a form of re-fi.

They could have even recruited Realtors® who certainly had time on their hands :(. Experienced agents know quite a lot about the loan process ... would NOT it into the category of "no previous experience with the mortgage industry." Again, a flat fee payment for guiding a borrower through the process would have been an easy fix for the manpower issue that is cited.



Cut me a break! How hard is it to make a list of the paperwork needed? We do it every day of the week to get first-time buyers into the mortgage process. And these people with mortgages already have some familiarity with the process. You just have to give them a list of what you need. Then don't lose it when it arrives.

Occurs to me if these banks are this incompetent, it would have been better to let them go down the toilet. These excuses are just plain lame.




Faced with poor results last summer, the Obama administration pressured mortgage companies. Treasury officials summoned key executives from lenders, including Bank of America, Wells Fargo and JP Morgan Chase, to Washington. The industry was given strict orders: Sign up at least 500,000 borrowers by Nov. 1.

And suppose there weren't 500,000 borrowers who could qualify to reasonably expect to make reasonable payments?

To meet that goal, most companies allowed homeowners to enroll in the program without proof of income. That was the same low standard that lenders used when they made some of the riskiest loans that fueled the housing frenzy.

Geez! You'd think they have learned the first time around!
Getting the documents in advance would have been a better idea, Heid said.

Geez, Louise! I guess so! One presumes that Mr. Heid should know something about the mortgage industry since he's co-President of Wells Fargo home mortgage division!


That's because lenders have struggled to get homeowners to complete all the required documentation. Many don't comply, despite repeated phone calls, mailings and even in-person visits by notaries.

I find that last sentence extremely difficult to believe. Who were they calling? Reports from one of my own clients this past summer was the problem of finding anyone at their lender who had any information for them.

As usual, they forgot to turn on the faucet, so nothing "trickled".

cotts135
10-26-2010, 06:32 AM
This whole episode of the mortgage crisis is the definition of Greed and Fraud. What the banks did by reselling these worthless mortgages multiple times to state pension funds is criminal. I really hope that someone has the guts and fortitude to investigate and prosecute any and all people in this business who broke the law.

I would just like to comment on what Gerry has said in one of his post's.

"I find this very troubling ... an owner who can afford to pay their mortgage, but decides not to because they have the short end of the stick. The troubling part is that an individual begins to think that because somebody else got "bailed out", they should also be bailed out."

"What has happened to the attitude of taking responsibility for bad decisions, and sucking it up? "

Why shouldn't a homeowner make a business decision to stop making payments on a mortgage he no longer can afford? Businesses do this all the time, they write off bad debts and move on, however what is happening is that they want to recoup their lost money from taxpayers.
I am just not buying this mindset that I have an allegiance to a bank who at the drop of a hat would screw me anyway they can while they expect me to drive myself and family to financial ruin so they can get their money. They get the house, I go bankrupt and lose any hope of getting a loan for at least seven years. If that is in my best interests than that's what I would do.

Hew
10-26-2010, 07:42 AM
This whole episode of the mortgage crisis is the definition of Greed and Fraud. What the banks did by reselling these worthless mortgages multiple times to state pension funds is criminal. I really hope that someone has the guts and fortitude to investigate and prosecute any and all people in this business who broke the law.

I would just like to comment on what Gerry has said in one of his post's.

"I find this very troubling ... an owner who can afford to pay their mortgage, but decides not to because they have the short end of the stick. The troubling part is that an individual begins to think that because somebody else got "bailed out", they should also be bailed out."

"What has happened to the attitude of taking responsibility for bad decisions, and sucking it up? "

Why shouldn't a homeowner make a business decision to stop making payments on a mortgage he no longer can afford? Businesses do this all the time, they write off bad debts and move on, however what is happening is that they want to recoup their lost money from taxpayers.
I am just not buying this mindset that I have an allegiance to a bank who at the drop of a hat would screw me anyway they can while they expect me to drive myself and family to financial ruin so they can get their money. They get the house, I go bankrupt and lose any hope of getting a loan for at least seven years. If that is in my best interests than that's what I would do.
The Obama voter mindset. If banks/mortgage lenders can get away with greed and fraud that grants me the moral and legal authority to also get away with greed and fraud, too!

BTW...isn't it funny (odd; not haha) that the folks who most often speak of the supposedly magic wand of writing a bad debt off have never actually written a bad debt off....or had to make payroll, or had to write a check to the govt. for someone else's FICA, or have read a P&L statement, or...well, you get the point.

Bayou Magic
10-26-2010, 08:21 AM
The newest proposal to avoid outright foreclosures ... is to incentivize "short sales".

Pay the homeowner $1500 to relocate out of the home; provide $1000 to the servicing company; provide $1000 to the second-mortgage-holder; and compel the first-lien-holder to accept the appraised price for the home.

That still doesn't quite solve the manpower problem for the mortgage companies to actually implement the program proposed. The figure for borrowers at least 2 mos behind on their mortgage payment was estimated at 500,000.

Showed a home on Sunday priced at $124,900. The home was purchased in 2006 with 100% mortgage of $175,500. It was never worth that much. Of course, it is a short sale. But if the bank can't get its act together, the first-time buyer is out of luck in trying to get an agreement signed by 4/30/10.


WHAT???? WHO PAYS???

cotts135
10-26-2010, 08:46 AM
The Obama voter mindset. If banks/mortgage lenders can get away with greed and fraud that grants me the moral and legal authority to also get away with greed and fraud, too!

What are you talking about, If you read what I wrote you will notice I never made that equivalancy


BTW...isn't it funny (odd; not haha) that the folks who most often speak of the supposedly magic wand of writing a bad debt off have never actually written a bad debt off....or had to make payroll, or had to write a check to the govt. for someone else's FICA, or have read a P&L statement, or...well, you get the point.

Get off your high horse, you have no idea what my situation is and what I have been through to be making an that kind of implication.

dnf777
10-26-2010, 09:05 AM
If you check, I think most bancrupcies are middle-class, employed citizens who suffer an illness or divorce. Most have probably done the things you mentioned. (for the sake of conversation, I equated your "writing a bad debt off" to those declaring bancruptcy. I realize that's not 100% correlate, but you get the point)

Hew
10-26-2010, 09:05 AM
Get off your high horse, you have no idea what my situation is and what I have been through to be making an that kind of implication.
You're right. I don't know you. But I know that anyone who says something as blithely naive as, "Businesses do this all the time, they write off bad debts and move on," has likely never written off a bad debt and therefore probably hasn't the foggiest idea of what it means to write off bad debt and who is affected when that happens. As if the business has no owners, no employees, no shareholders...the debt just dissappears to Magical Bad Debt Land.

Hew
10-26-2010, 09:11 AM
What are you talking about, If you read what I wrote you will notice I never made that equivalancy.
You bemoaned the greed and fraud of lenders that you believe caused the mortgage crisis and then a couple of paragraphs later excuse the greed and fraud of people who walk away from their mortgages. Because you don't see the equivalency of those two scenarios is why I commented in the first place.

cotts135
10-26-2010, 09:46 AM
You bemoaned the greed and fraud of lenders that you believe caused the mortgage crisis and then a couple of paragraphs later excuse the greed and fraud of people who walk away from their mortgages. Because you don't see the equivalency of those two scenarios is why I commented in the first place.

First it is not fraud to declare bankruptcy because you can't pay your mortgage. I don't believe it to be greed when you make a financial decision that stops you from paying a debt that you have no real chance of ever recovering.

I am guilty however of over generalization when I said businesses routinely write off bad debt. Most businesses in this country are of the small variety and these people certainly feel the consequences of doing that more than the big businesses of this country such as Insurance companies, big banks, oil, pharmaceuticals etc. It is also painful for most people to walk away from a home and it is not without consequences to do so.

Hew
10-26-2010, 10:16 AM
First it is not fraud to declare bankruptcy because you can't pay your mortgage. I don't believe it to be greed when you make a financial decision that stops you from paying a debt that you have no real chance of ever recovering. There's distinctions between your two examples above. Bankruptcy for when you CAN'T pay your mortgage is entirely different then "paying a debt that you have no real chance of ever recovering." I understand the former...you can't get blood out of a turnip. Walking away from your debt, your OBLIGATION, what you signed your name to and promised to pay because you made a bad decision or gambled poorly is to me, however, fraud and greed; exactly what you accused the lenders of doing. And when someone walks away from their debt, their OBLIGATION, because it's no longer in their financial best interests then they are F'ING over the rest of us who pay our mortgages and have either sucked it up/tightened our belt and/or made wise choices/decisions. And that screwing isn't a WHIT different than what the lenders gave to us.

I am guilty however of over generalization when I said businesses routinely write off bad debt. Most businesses in this country are of the small variety and these people certainly feel the consequences of doing that more than the big businesses of this country such as Insurance companies, big banks, oil, pharmaceuticals etc. It is also painful for most people to walk away from a home and it is not without consequences to do so. And they have passed on much of their pain and consequence to the rest of us who haven't walked away from our homes or filed bancruptcy.
.......................

dnf777
10-26-2010, 10:42 AM
You're right. I don't know you. But I know that anyone who says something as blithely naive as, "Businesses do this all the time, they write off bad debts and move on," has likely never written off a bad debt and therefore probably hasn't the foggiest idea of what it means to write off bad debt and who is affected when that happens. As if the business has no owners, no employees, no shareholders...the debt just dissappears to Magical Bad Debt Land.

I hear your point Hew, but anyone who has tried to collect from a big corporation knows all too well how with a big enough team of corporate lawyers, they create so many shell companies, that you NEVER find a responsible party! Talk to the people around here who had their wells destroyed by oil and gas drilling. You can't pin responsibility on them if you spent a million dollars in legal fees. Again, I know that's slightly off topic, but the principle is the same. Big corps CAN and DO hide liabilities and debt. Just ask Arthur Andersen.

ducknwork
10-26-2010, 12:06 PM
This whole episode of the mortgage crisis is the definition of Greed and Fraud. What the banks did by reselling these worthless mortgages multiple times to state pension funds is criminal. I really hope that someone has the guts and fortitude to investigate and prosecute any and all people in this business who broke the law.

I would just like to comment on what Gerry has said in one of his post's.

"I find this very troubling ... an owner who can afford to pay their mortgage, but decides not to because they have the short end of the stick. The troubling part is that an individual begins to think that because somebody else got "bailed out", they should also be bailed out."

"What has happened to the attitude of taking responsibility for bad decisions, and sucking it up? "

Why shouldn't a homeowner make a business decision to stop making payments on a mortgage he no longer can afford? Businesses do this all the time, they write off bad debts and move on, however what is happening is that they want to recoup their lost money from taxpayers.
I am just not buying this mindset that I have an allegiance to a bank who at the drop of a hat would screw me anyway they can while they expect me to drive myself and family to financial ruin so they can get their money. They get the house, I go bankrupt and lose any hope of getting a loan for at least seven years. If that is in my best interests than that's what I would do.


Just so you noticed....You aren't talking about the same thing....

If you are able to pay your bills, you should. PERIOD. If you honestly can't, that's a different story.

menmon
10-26-2010, 12:17 PM
I so tired of the spin that this is Obama's fault. He has tried his best to ease the pain of those in distress and help get rid of the excess inventory with his first time home owner deal. We all enjoyed this high time and no one was complaining when money was flowing like crazy as they over built and over financed.

Now that we have come down off the high and are in rehab, all anybody can do is blame the guy that is trying to help us through the pain. Construction creates lots of jobs and associated durable good sales, so until the market can digest this excess, the real estate market and new construction will not be creating too many jobs.

As for the retooling of these loans, banks are going to qualify anyone that can pay since a performing loan is better than a non-performing loan.

Capitalism works well and corrects itself and when it does it ussally leaves bodies in its wake. Now we all enjoy the governments redistribution by way of public education, roads, airports, military, etc. that creates jobs when pure capitalism would not. If you want a model of pure capitalism, go look at Hong Kong, and while you are at it, look at what type of jobs there are there and go ahead and look at the middle class, too.

So all I'm hearing is people talking out of both side of their mouth here. Damn government want make me a job, damn government wants to tax me to pay for it and your mad because you didn't get anything but taxes. Ask who paid for you road, schooling, ect., then add up how much tax you paid over your lifetime, how much you paid into social security, medicare and then figuare out what all this stuff cost and think about the grand deal you are getting.

dnf777
10-26-2010, 12:37 PM
Funny thing. There's been a house in relative disrepair for some time. For sale sign in the yard. McCain/Palin and Palin 2012 signs in the yard. Then a "bank-owned" banner went on the sign.

Then someone took down the McCain and Palin signs. Wonder who did that and why. Nobody bothered to do so for two years.

Hew
10-26-2010, 06:02 PM
Funny thing. There's been a house in relative disrepair for some time. For sale sign in the yard. McCain/Palin and Palin 2012 signs in the yard. Then a "bank-owned" banner went on the sign.

Then someone took down the McCain and Palin signs. Wonder who did that and why. Nobody bothered to do so for two years.

Yeah, I hear ya, bro...that is, like, totally funny and so meaningful. There's a house down the street from us that had Obama/Biden and Obama 2012 campaign signs all over their yard. Then the husband got arrested for molesting little kids, the mom got arrested for selling her welfare and foodstamp checks, and their children were cutting school and robbing from the neighbors. After all that news broke the Obama signs, like totally, you know....disappeared! Crazy stuff. That means, ya know, like all democrats are welfare cheats who molest little kids and raise criminals.

JDogger
10-26-2010, 07:51 PM
Yeah, I hear ya, bro...that is, like, totally funny and so meaningful. There's a house down the street from us that had Obama/Biden and Obama 2012 campaign signs all over their yard. Then the husband got arrested for molesting little kids, the mom got arrested for selling her welfare and foodstamp checks, and their children were cutting school and robbing from the neighbors. After all that news broke the Obama signs, like totally, you know....disappeared! Crazy stuff. That means, ya know, like all democrats are welfare cheats who molest little kids and raise criminals.


Funny thing is though, there's a handful here that honestly believe that. It kinda balances out the handful that believe that all conservatives are head-stompin' loonies. :rolleyes:

JD

dnf777
10-26-2010, 07:52 PM
Yeah, I hear ya, bro...that is, like, totally funny and so meaningful. There's a house down the street from us that had Obama/Biden and Obama 2012 campaign signs all over their yard. Then the husband got arrested for molesting little kids, the mom got arrested for selling her welfare and foodstamp checks, and their children were cutting school and robbing from the neighbors. After all that news broke the Obama signs, like totally, you know....disappeared! Crazy stuff. That means, ya know, like all democrats are welfare cheats who molest little kids and raise criminals.

You draw some hefty conclusions there. I was merely showing that indeed, middle class conservatives may, just may, be part of the problem also.

menmon
10-27-2010, 11:48 AM
I can't wait for this election to be over with and the majorities return to the republicans so that all the brain washed sheep will think their lifes are good again and start spending money they don't have to feed the consumer products market so that I can get a nice bump in my stocks before year end, then I'll short the same stocks next year when they have blown their wads.

See you can make money no matter who is in office, just have to know which way the wind is blowing.

Buzz
10-27-2010, 12:32 PM
I can't wait for this election to be over with and the majorities return to the republicans so that all the brain washed sheep will think their lifes are good again and start spending money they don't have to feed the consumer products market so that I can get a nice bump in my stocks before year end, then I'll short the same stocks next year when they have blown their wads.

See you can make money no matter who is in office, just have to know which way the wind is blowing.

You must be reading my mind, LOL!

Gerry Clinchy
10-27-2010, 02:02 PM
Why shouldn't a homeowner make a business decision to stop making payments on a mortgage he no longer can afford? Businesses do this all the time, they write off bad debts and move on, however what is happening is that they want to recoup their lost money from taxpayers.

I am just not buying this mindset that I have an allegiance to a bank who at the drop of a hat would screw me anyway they can while they expect me to drive myself and family to financial ruin so they can get their money. They get the house, I go bankrupt and lose any hope of getting a loan for at least seven years. If that is in my best interests than that's what I would do.

First off, the comment I made was about people who could make their payments, but choose not. Didn't lose their jobs; not "working poor." Had they bought stocks that took a nose dive would they expect not to take their own loss on that? Bad choice or bad timing.

While the banks' behaviors were certainly to be faulted, nobody held a gun to the heads of these buyers to buy the home. They wanted more than they could afford, and the greed (engendered by the housing bubble) was on the side of the buyers as well as the banks.

Second, the housing market cycles. These "under water" homes will eventually regain value ... but this particular group is unwilling to wait for that. The term "instant gratification" comes to mind.

Having been a buyer, many years ago, in a similar market of increasing prices ... I simply made the decision to wait and defer the gratification of purchasing a home. I ultimately bought when the market started down again.

Gerry Clinchy
10-27-2010, 02:09 PM
As for the retooling of these loans, banks are going to qualify anyone that can pay since a performing loan is better than a non-performing loan.


Missing my point here ... banks could accept the "short sale" prices now (a bird in hand ...), but are choosing to foreclose instead. In the end, the foreclosure will net them less (there's stats in that regard & logical reasons why the loss ultimately ends up being greater for the lender). When the banks ultimately write off the foreclosure losses (maybe two years from now), the spit will hit the fan AGAIN.

menmon
10-27-2010, 02:22 PM
Missing my point here ... banks could accept the "short sale" prices now (a bird in hand ...), but are choosing to foreclose instead. In the end, the foreclosure will net them less (there's stats in that regard & logical reasons why the loss ultimately ends up being greater for the lender). When the banks ultimately write off the foreclosure losses (maybe two years from now), the spit will hit the fan AGAIN.

Banks do what is good for them. If they are happy in their collateral position, they foreclose and then sale the property. If their collateral position is weak, they try to sale the loan at a discount. Don't ussually write down a note to the original borrower.

Gerry Clinchy
11-27-2010, 05:39 PM
http://rismedia.com/2010-11-06/how-decrease-in-nationwide-mobility-is-affecting-underwater-homeowners/

How Decrease in Nationwide Mobility Is Affecting Underwater Homeowners


Melinda Thompson can’t afford to live in North Jersey. And she can’t afford to leave. Her property taxes have risen from about $7,000 to about $12,000 in just seven years. She struggles with her mortgage payments, even after her lender modified the loan. But she can’t sell her raised ranch in Little Ferry, NJ unless she’s willing to take a substantial loss. And she thinks her job prospects wouldn’t be nearly as strong in other regions.

Like Thompson, many homeowners think about leaving New Jersey, but feel trapped. For years, Northeastern states have annually lost thousands of people who migrated to other states, especially the sunshine states of the South and West. (New Jersey’s population has continued to grow, however, because this flight was more than offset by new births and foreign immigration).

But domestic migration has slowed dramatically since the recession of 2007-09, according to a recent study by Rutgers University economists. In 2006, 76,853 more people moved out of New Jersey than moved into the state (not counting foreign immigration). In 2009, that number fell by almost 60%, to 31,690. The situation reflects a steep drop in mobility nationwide, and is mostly caused by two factors: plummeting housing values and a lack of job opportunities around the nation.

“If you can’t sell your house, you can’t move,” said Joseph Seneca, a Rutgers economist who co-authored the report, Post-Recession America: A New Economic Geography?

Many homeowners who want to move would have to take a loss on their homes. About 15% of New Jersey homeowners with mortgages (and 23% nationwide) are “underwater”—that is, they owe more on their mortgages than their homes are worth.

And with job losses widespread across the nation, it’s not as if there are great employment opportunities luring New Jerseyans to other states. As the economy expanded from 2003 to 2006, the West and the South led the way in creating jobs, drawing people from the Northeast.

But when the recession hit, the West and South lost jobs at a faster pace than the Northeast. “So instead of people being attracted to job opportunities elsewhere, the job opportunities don’t exist elsewhere,” Seneca said.


I suppose that it is simplistic, or I am dense ... but while the Fed govt was trying to shore up the housing market with gimmicks, keep Wall Street solvent, and devising the health care bill ... they seem to have missed the point that the real "engine" that would fix all of those things was jobs.

People can't make a mortgage payment without a job. People can't buy products if they don't have a job. People can't even afford a govt health insurance option if they don't have a job. Where will the taxes come from for the health care subsidies, if there are not enough people with jobs paying taxes to provide the subsidies?

dnf777
11-27-2010, 08:02 PM
[URL]
People can't make a mortgage payment without a job. People can't buy products if they don't have a job. People can't even afford a govt health insurance option if they don't have a job. Where will the taxes come from for the health care subsidies, if there are not enough people with jobs paying taxes to provide the subsidies?

You have a way with words!
What you said seems very basic....but I honestly wonder if Obama or any of his economic cronies really understand that? Same for the last crowd also. Those people have had so much money, for so long, that having a job is a way to pass the time for them and stay in the spotlight. I think they've forgotten that most of Americans work and pay bills month to month.

Gerry Clinchy
11-28-2010, 01:23 AM
Those people have had so much money, for so long, that having a job is a way to pass the time for them and stay in the spotlight. I think they've forgotten that most of Americans work and pay bills month to month.

Yes, Dave, I think this "insulation" from the facts of life show up in many ways.

While we did "cash for clunkers" (which didn't accept the oldest, most polluting vehicles), China built a solar panel industry. While we worry about our carbon footprint, China is burning coal like crazy. While the general populace pays 30% to 50% more for electricity, Al Gore racks up a wasteful $12,000/month for electricity on his personal residence without breaking a sweat, while telling "everybody else" to suck it up.

I'm still puzzled where China gets all the money to lend us when so many Chinese live at a poverty level? We bitch & whine about the gap between the richest & the poorest in the US, while hardly anyone points to that kind of gap in China. Evidently, distributing the wealth in the communist version, doesn't quite do the trick much better (if at all better) than capitalism.

I recently read an article about saving on home heating. I wonder if the White House or the govt chambers have turned down their thermostats & donned sweaters as that article suggests we do? Have members of Congress done that in their residences as well? Somehow I just don't think so.

luvmylabs23139
11-28-2010, 11:36 AM
Everyone wants to blame the big bad banks. Lets also look at this recent example.
This person's property taxes jumped from $7000 to $12000 per year. Think about it. If this person had property taxes escrowed as a condition of the mortgage the house payment jumped $417per month and that had nothing to do with the bank's practices.
This person pays $1000 per month in property taxes on a raised ranch.
That is more than my real mortgage, principle and interest is per month.
When we consider housing we must also consider the insane increases in property taxes.

Gerry Clinchy
11-28-2010, 12:26 PM
When we consider housing we must also consider the insane increases in property taxes.

You are absolutely correct!

Some locales (my own area included) are raising the individual personal income tax to circumvent using the property taxes. The City of Allentown (PA) has the highest property taxes in our little region. Can you imagine a home priced at $239,000 with property taxes of $9300/year? It's a fact. That's $775/mo JUST for property taxes.

Now the City is in the red again this year, so they have raised their individual local income tax from 1% to 1.4%. FYI, there are no "deductions" allowed on the local taxes, but it is a tax on "earned" income, so pensions, SS, interest are not taxed.

All people who reside or work in the City (and reside elsewhere) will now pay this increased personal income tax rate. In the long run, this will encourage businesses to move their business outside the city limits (surrounding townships typically have a 1% tax rate) ... thus pushing the city's money crunch even further down the toilet. A short-term solution that will not sustain itself on the longer term.

Right now, with jobs scarce, surveys of employees indicate that employees are just happy to have a job, but as the job market gets better, it means that employees will seek more tax-friendly locations to work or expect city employers to pay them a higher wage to offset the higher wage tax.

Unfortunately, during the "good times" municipalities and states behaved just like the Federal govt ... spending money & just raising taxes to pay for new pet programs. Even without the recession, I think it was getting to the point where the middle income citizens were going to start feeling that squeeze & start objecting to lawmakers who expected the taxpayers to economize, but were not willing to do the same as their constituents.