Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Foreclosure Land
Old 03-23-2007, 08:06 AM   #1
Thinks s/he gets paid by the post
 
Join Date: Oct 2005
Posts: 4,898
Foreclosure Land

This article in the NY Times today is startling. I knew that Ohio was hard hit but Cleveland is really sunk. 15000 foreclosures in 2006 (versus 2500 in 1995). A picture shows the middle class suburban neighborhood of Shaker Heights. Really nice looking houses. The city is having to spend lots of $$$ to maintain the houses and keep vandals out. In Euclid, another modest suburb, 600 foreclosures in the past two years. And this is supposedly going to get worse?

The article says that elderly and minorities were the victims of predatory lenders. I know "Let the borrower beware." But this is really sad and disturbing.


http://www.nytimes.com/2007/03/23/us...html?th&emc=th
__________________

__________________
Zoocat is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Foreclosure Land
Old 03-23-2007, 08:15 AM   #2
Recycles dryer sheets
 
Join Date: Jan 2005
Posts: 115
Re: Foreclosure Land

Your right it is sad to see these people lose what they have worked so hard for.

I know a few that this is happening to..I don't feel sorry for some of the lenders though...these people tried to talk to there lender asking to change there mortgage either extend it or anything so they could keep the house and lower the payments but the lender said no. Unless the mortgage companies try and work some of these things out with the borrowers people will just walk away...I am afraid this is just the tip of the ice berg....and this is all over the country it is just starting. Very sad situtation

Kathyet
__________________

__________________
kathyet is offline   Reply With Quote
Re: Foreclosure Land
Old 03-23-2007, 08:22 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Foreclosure Land

I make no blanket judgements either way, since I m quite sure there is more than enugh blame t o go around. But I find it amazing how quickly things went from "extending the dream of homeownership to more Merkins" to "filthy, evil, rotten, rat-bastard predatory lenders." :
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: Foreclosure Land
Old 03-23-2007, 08:27 AM   #4
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 4,005
Re: Foreclosure Land

I think I'll call my credit union today to see if they'll knock a couple percent off the interest rate on my ARM. I don't really want to pay the exhorbitant rate that I agreed to 2 years ago. In the spirit of equity and fairness, I think I'm entitled to at least a 2% reduction for the rest of the life of the loan. :
__________________
justin is offline   Reply With Quote
Re: Foreclosure Land
Old 03-23-2007, 08:29 AM   #5
Thinks s/he gets paid by the post
 
Join Date: Mar 2006
Location: Houston
Posts: 2,155
Re: Foreclosure Land

Wouldn't this be a great time to jump in and invest in real estate there?

What's driving Cleveland's economy? Any chance for a come back?
__________________
Sam is offline   Reply With Quote
Re: Foreclosure Land
Old 03-23-2007, 08:33 AM   #6
Thinks s/he gets paid by the post
 
Join Date: Mar 2006
Location: Houston
Posts: 2,155
Re: Foreclosure Land

Quote:
Originally Posted by justin
I think I'll call my credit union today to see if they'll knock a couple percent off the interest rate on my ARM. I don't really want to pay the exhorbitant rate that I agreed to 2 years ago. In the spirit of equity and fairness, I think I'm entitled to at least a 2% reduction for the rest of the life of the loan. :
Nice sarcasm, justin. Your point is valid. But some people are unable to pay not because of the interest rate they agreed to in the past, but because they lost their job, and could not find anything else. These particular people deserve some help, imo.

__________________
Sam is offline   Reply With Quote
Re: Foreclosure Land
Old 03-23-2007, 08:43 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Foreclosure Land

Quote:
Originally Posted by Sam
What's driving Cleveland's economy? Any chance for a come back?
WIC? Dumpster Diving?
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: Foreclosure Land
Old 03-23-2007, 08:47 AM   #8
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 4,005
Re: Foreclosure Land

Quote:
Originally Posted by Sam
Nice sarcasm, justin. Your point is valid. But some people are unable to pay not because of the interest rate they agreed to in the past, but because they lost their job, and could not find anything else. These particular people deserve some help, imo.
Sam,

What type of help would you propose individuals defaulting on their mortgages receive? Who pays for it? What tests for eligibility for said "help" would you have in place?

I know $hit happens. I've seen a few family members in the last few years lose their houses to foreclosures or turn them over to the bank. I'd have to say it was "poor decisionmaking" on my family members' behalf, and not the mortgage co's fault.

If folks get into a loan that consumes half their income AND the loan will probably consume much more of their income in the future, what other outcome besides foreclosure would one expect?

How much more disclosure should be required beyond that required by the Truth in Lending Act and state TILA's?

I do feel sorry for the folks losing their houses (and their wives, kids, parents, etc. that have their lives turned upside down temporarily). It sucks. I'm glad I'm fortunate enough to most likely not face that situation in the near future. However I'd like to think my "luck" was of my own creation.
__________________
justin is offline   Reply With Quote
Re: Foreclosure Land
Old 03-23-2007, 08:53 AM   #9
Thinks s/he gets paid by the post
 
Join Date: Mar 2006
Location: Houston
Posts: 2,155
Re: Foreclosure Land

Justin, I never said it was the mortgage co's fault. And I am not talking about "stupid" people who bought into the creative mortgaging either. I'm referring to working folks that bought a house using conventional mortgages but no longer able to pay because of the economy.
__________________
Sam is offline   Reply With Quote
Re: Foreclosure Land
Old 03-23-2007, 09:00 AM   #10
Thinks s/he gets paid by the post
 
Join Date: Oct 2005
Posts: 4,898
Re: Foreclosure Land

Here's an interesting chart on what states have the most the subprime lending. Wow, Ohio is at the bottom of this list.

I agree that foreclosed borrowers did not do their due diligence. They were suckers. Some lenders may have lied, but you don't have to believe everything you're told. That's being a grownup. Still, it's still sad. I'll bet a lot of those borrowers in Euclid, OH, just wanted to pay bills with their equity. These are people of modest means. They weren't out buying a boat. (Could be wrong about that though.)

I don't think a bail out is in the cards either, even though our government has a history of bailing out big corporations that get into deep water. But even if there was a consensus that borrowers in trouble needed a bail out, where would the money come from? More borrowing from China? This is a mess.
Attached Images
File Type: gif subprime states.gif (6.2 KB, 48 views)
Attached Files
File Type: gif_thumb subprime states.gif_thumb (14.6 KB, 0 views)
__________________
Zoocat is offline   Reply With Quote
Re: Foreclosure Land
Old 03-23-2007, 09:08 AM   #11
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 4,005
Re: Foreclosure Land

Quote:
Originally Posted by Sam
I'm referring to working folks that bought a house using conventional mortgages but no longer able to pay because of the economy.
When you are right-sized out of your job (with no prospects of finding a new one), it's time to right-size your housing as well.

Let's say someone gets paid 1/2 of their previous income from unemployment insurance that lasts 6 months, and they had a few months expenses saved up. Plus they have credit cards to keep them afloat in a pinch. Wouldn't they be fairly well off for a while? Add to that scenario the fact that they can downsize expenses while they are laid off.

I think we can either have easy access to credit and a high rate of homeownership, or strict access to credit and a more landless society. I really don't know which type of society is "better".

Foreclosing on houses when the borrower can't pay is a side effect of our market economy. Imagine the effects if the lender had no recourse to collect most or all of what they are owed on a mortgage. Not only would the guy who got foreclosed on not have a house, but a dozen other folks around him never would have been able to buy a house either.
__________________
justin is offline   Reply With Quote
Re: Foreclosure Land
Old 03-23-2007, 09:25 AM   #12
Thinks s/he gets paid by the post
 
Join Date: Oct 2005
Posts: 4,898
Re: Foreclosure Land

I don't think this mess is a result of an either or situation (easy credit or strict credit). Credit was made easy after 9-11 so that the economy wouldn't sink into recession. That's the analysis I've read. If anyone else has a different explanation I'd like to hear it. This mess had a cause and now here's the result. It's not entirely the borrower's fault.
__________________
Zoocat is offline   Reply With Quote
Re: Foreclosure Land
Old 03-23-2007, 09:35 AM   #13
Recycles dryer sheets
 
Join Date: May 2006
Posts: 144
Re: Foreclosure Land

I feel sorry for the other homeowners in the areas with high forclosures who are paying their mortgages but watching their equity disappear as the homes around them are forclosed on and resold cheaply.

What happens if they need to move and have now lost their equity even though they were paying their mortgages and playing by the rules...

It's the domino effect that scares me.
__________________
BarbaraAnne is offline   Reply With Quote
Re: Foreclosure Land
Old 03-23-2007, 09:37 AM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Foreclosure Land

Quote:
Originally Posted by Oldbabe
It's not entirely the borrower's fault.
So, someone put a gun to their head and told them they had to borrow all that money?
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: Foreclosure Land
Old 03-23-2007, 09:41 AM   #15
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 4,005
Re: Foreclosure Land

Quote:
Originally Posted by BarbaraAnne
What happens if they need to move and have now lost their equity even though they were paying their mortgages and playing by the rules...
These buyers took a risk by buying a house. If they had made a few hundred thousand in a bubble real estate market, do you think we would be having discussions about how unfair it is for these same homebuyers to become unjustly enriched by their massive growth in equity?

If you buy a house with next to nothing down, and you end up owing the bank when you sell, then you got what you would expect to get.
__________________
justin is offline   Reply With Quote
Re: Foreclosure Land
Old 03-23-2007, 09:47 AM   #16
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 4,005
Re: Foreclosure Land

I'd like to see a story about a responsible borrower who is now in default/foreclosure. You know, someone who saved up enough for a real down payment of 20%. Bought a house with long-term payments (including taxes and insurance) no more than 25-30% of their incomes.

It seems like the trend was to buy as much as you can possibly afford and just cross your fingers that no one got sick or got laid off. Getting sick or getting laid off seem like things you can and should plan for. I don't know about others, but investing a day or two into analyzing "what-if" scenarios before you spend HUNDREDS OF THOUSANDS of dollars on 4 walls and a roof seems like a pretty darn good idea to me. If figure most people spend at least a day or two researching and shopping for their big screen HDTV's or jet skis. :

I'm just left with a big ole "glad it ain't my problem!" feeling.
__________________
justin is offline   Reply With Quote
Re: Foreclosure Land
Old 03-23-2007, 09:51 AM   #17
Thinks s/he gets paid by the post
 
Join Date: Feb 2007
Posts: 2,424
Re: Foreclosure Land

I'm familiar with Cleveland and Shaker Heights. Cleveland has been circling the drain for a few decades. One of the problems with Cleveland is that the City Of Cleveland schools are so bad that no one wants to live there. Everyone runs to the suburbs. Many of the manufacturing businesses left Cleveland for cheaper labor elsewhere, that happened to many cities.

Shaker Heights is almost all residential. There are some areas of affordable, average sized houses and then there are large neighborhoods of mansions. These are not the new McMansions with all the new toys. These are the older mansions with handcrafted details, tons of character. Shaker Heights has very high property taxes. It's expensive to live there. They support their schools completely. That's part of the property taxes.

I'm surprised to read about foreclosures in Shaker Heights but it seems to be a common problem in any zip code.
__________________
Married, both 62. DH retired June, 2010. I have a pleasant little part time job.
Sue J is offline   Reply With Quote
Re: Foreclosure Land
Old 03-23-2007, 10:09 AM   #18
Thinks s/he gets paid by the post
 
Join Date: Oct 2005
Posts: 4,898
Re: Foreclosure Land

Quote:
Originally Posted by brewer12345
So, someone put a gun to their head and told them they had to borrow all that money?
If a lender lies to or misleads a potential borrower then the lender has to take some part of the blame when the loan goes bad. I was surprised to learn that many of these subprime mortage lenders are not under regulatory jurisdiction of the FDIC, only the state. In Colorado the regulations are very lax.

Here's an interesting article by a conservative economist about the wider implications.
http://www.rgemonitor.com/blog/roubini/185098

Justin, I wouldn't rest too easy just because you don't have a mortgage problem. If this mess gets worse and we end up in a recession, it can bite you in the a** in many unexpected ways.


__________________
Zoocat is offline   Reply With Quote
Re: Foreclosure Land
Old 03-23-2007, 10:33 AM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Foreclosure Land

I agree that supervision of most of the big subprime shops was essentially non-existant. Regulated depository institutions (banks) were subject to pretty strict oversight, which is why most of the lenders blowing up are not banks. So clearly there should be better oversight.

But there is a basic level of personal resposibility required of adult Merkins. That includes understanding the terms of any financing agreements you enter into when you sign on the dotted line. So as far as I am concerned, get those short sales and foreclosure auctions going.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: Foreclosure Land
Old 03-23-2007, 10:36 AM   #20
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 4,005
Re: Foreclosure Land

Quote:
If a lender lies to or misleads a potential borrower then the lender has to take some part of the blame when the loan goes bad.
Well, folks have ample opportunity to sue for fraud, breach of contract, unfair or deceptive acts or practices, or improper disclosure. There's a lot more laws protecting consumers than there are laws protecting "big bad lenders".


Quote:
Justin, I wouldn't rest too easy just because you don't have a mortgage problem. If this mess gets worse and we end up in a recession, it can bite you in the a** in many unexpected ways.
I intend to rest pretty easy. But thanks for the concern. I have structured my affairs in such a manner that a major recession won't impact me that much (at least as compared to 90% of the rest of folks out there). In fact it could be a good opportunity for certain things.
__________________

__________________
justin is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Retirement Land Lazarus Other topics 63 02-13-2007 07:23 PM
Raw Land Financing bbuzzard FIRE and Money 15 11-29-2006 11:06 AM
Getting rid of the land line and 911 cube_rat Other topics 18 10-14-2006 06:09 PM
Trailer Home with Land or Small House...You Decide daystar Young Dreamers 18 12-04-2004 11:20 AM
Raw land returns? brewer12345 FIRE and Money 11 11-08-2004 03:45 AM

 

 
All times are GMT -6. The time now is 03:28 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.