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Foreclosures march upward?
Old 09-27-2004, 09:56 AM   #1
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Foreclosures march upward?

Interestingly, the author claims that most of the foreclosures are due to people getting in trouble with their credit cards-- not unemployment or rising ARM rates.

Five local articles don't make a national trend-- but is everyone else seeing this in their area?

http://pacific.bizjournals.com/bizoutlook/?jst=b_ol_lk
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Re: Foreclosures march upward?
Old 09-27-2004, 10:15 AM   #2
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Re: Foreclosures march upward?

No rise in foreclosures around here, but thats because of a housing shortage coupled with 15-20% annual increases in value. But thats obviously unsustainable.

Maybe a cause and effect problem with this article. 'People arent getting in trouble with their mortgages, its their revolving debt'.

The problem isnt the credit cards. The problem is the overall debt people have gotten themselves into. I imagine people will give up on their credit card payments before they give up on paying the mortgage...that doesnt mean the credit cards were the problem, just less urgent.

Even if you're avoiding debt like I am, the federal government is taking care of that for you. Last time I checked the 'public debt' was in the area of $30,000 per person...
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Re: Foreclosures march upward?
Old 09-27-2004, 10:56 AM   #3
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Re: Foreclosures march upward?

I couldn't find any recent numbers for us -- just an article that says "foreclosure rates are rising". And this quote:

Meanwhile, foreclosure levels are high nationwide. Mortgage Bankers Association figures collected since 1979 show that the percentage of homes in foreclosure hit a modern record of 1.51 percent at the end of the first quarter of 2002, just after the recession ended. They fell to 1.27 percent in the first quarter of this year.

The rate never cracked 1 percent until 1987.


I say blame it on the rediculously loose underwriting standards.
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Re: Foreclosures march upward?
Old 09-27-2004, 11:02 AM   #4
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Re: Foreclosures march upward?

Yep..."Have a pulse? Have a mortgage!".

I thought it was pretty funny the way ING direct did the HELOC on my wifes old house. We applied online. They called to say they were sending paperwork. We asked about appraisals, since she's owned the house for 14 years and it hasnt been appraised since she bought it. They said "No...we dont need one...we might have someone do a 'drive by' just to make sure theres a house there...but you're kinda far away from the guy that does that in your area so we probably wont bother". Paperwork arrives, we return it, a few weeks later we get a call from a notary wanting to come by the house with the paperwork. Just for fun I said we'd go to their office instead, and we did.

So we have a good sized HELOC on her house, and ING most likely doesnt even know if a home even exists on the property, or what condition its in.

Good thing we're honest.
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Re: Foreclosures march upward?
Old 09-27-2004, 11:48 AM   #5
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Re: Foreclosures march upward?

Quote:
Yep..."Have a pulse? *Have a mortgage!".

I thought it was pretty funny the way ING direct did the HELOC on my wifes old house. *We applied online. *They called to say they were sending paperwork. *We asked about appraisals, since she's owned the house for 14 years and it hasnt been appraised since she bought it. *They said "No...we dont need one...we might have someone do a 'drive by' just to make sure theres a house there...but you're kinda far away from the guy that does that in your area so we probably wont bother". *Paperwork arrives, we return it, a few weeks later we get a call from a notary wanting to come by the house with the paperwork. *Just for fun I said we'd go to their office instead, and we did.

So we have a good sized HELOC on her house, and ING most likely doesnt even know if a home even exists on the property, or what condition its in.

Good thing we're honest.
TH, if ING doesn't bother with an appraisal, how do they now if your HELOC is under their CLTV underwriting limit?
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Re: Foreclosures march upward?
Old 09-27-2004, 12:01 PM   #6
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Re: Foreclosures march upward?

Nords,
I live in Atlanta. Malls are packed, restaraunts are packed and new houses are going up everywhere.

I think the average credit card debt per household is $9,000 and going up.

If people are defauling now; imagine what is going to be like if a real ression hits.

I'm getting my house ready to sell.
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Re: Foreclosures march upward?
Old 09-27-2004, 12:37 PM   #7
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Re: Foreclosures march upward?

I have also read more than one article recently where the FBI is investigating wide spread fraud in the mortgage arena....whereby dishonest people sell houses back and forth and get inflated appraisals to justify the mortgages...these people have NO intention of ever paying back the mortgage...they will just disappear when the jig is up...wonder how many of those are floating around? If, and I say if, the housing bubble truly bursts big time, it will, imo, make the stock market crash of 2000 on look like a tea party.

I am actually, for the first time, considering taking out a substantial mortgage on my property and banking the money just in case there is a fire sale on properties....

I still think back to the late 80's when a couple of guys bought the Wang towers in Lowell Massachusetts for about $500K at an auction; I think they flipped it in about 3 years for $15-$20Million.


If the Merrimack Valley has a legendary commercial real estate story, it would involve the former Wang Towers at the intersection of Interstate 495 and Route 3. The towers -- originally built for computer maker Wang Laboratories for an estimated $80 million -- sold for a pittance when Wang filed for bankruptcy in the early 1990s. Two MIT graduates, including Chris King, principal of Insight Partners of Woburn, bought the buildings at auction for $565,000 -- about 35 cents a square foot. Today, known as Cross Point Towers in Lowell, the 1.2 million-square-foot complex is home to more than 60 business and is almost fully occupied.


Full story: http://www.eagletribune.com/news/sto...216/BU_001.htm

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Re: Foreclosures march upward?
Old 09-27-2004, 01:01 PM   #8
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Re: Foreclosures march upward?

". . . Across the country, residential foreclosures are up 1 percent in 2004, compared to the same period in 2003. . ."

Seems like it's in the noise to me.
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Re: Foreclosures march upward?
Old 09-27-2004, 04:52 PM   #9
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Re: Foreclosures march upward?

This is purely anecdotal, but I have heard from several real estate agents in my area that they have noticed an increasing number of short sales on the MLS.... short sales in the RE world are not like shorting a stock
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Re: Foreclosures march upward?
Old 09-27-2004, 05:17 PM   #10
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Re: Foreclosures march upward?

ING would have checked your excellent credit rating TH. No red flags! No problems!
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Re: Foreclosures march upward?
Old 09-27-2004, 06:31 PM   #11
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Re: Foreclosures march upward?

Yeah but she applied for it before we got married.

Her credit is decent, but pedestrian.

I think she probably deserved the heloc without much trouble, but I would have thought they'd have checked to see if there was a house there, or a crater, or something falling down...
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Re: Foreclosures march upward?
Old 09-27-2004, 08:11 PM   #12
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Re: Foreclosures march upward?

Quote:
No rise in foreclosures around here, but thats because of a housing shortage coupled with 15-20% annual increases in value. But thats obviously unsustainable.
Shortages are sustainable as long as the population of potential home buyers is increasing. Just don't let anyone build new homes, and the population increase will create shortages. Housing prices can be made to increase with the rise of local income by this means. Prices can be increased even more by keeping after tax interest rates lower than average home price increases, which kicks in investor demand. The bubbles can pop locally if employment lags, but is not likely to pop nationally until the population of potential home buyers stops increasing, or starts to fall. National median home prices have not fallen for decades due to a large degree to a price increasing combination of demographics and local politics.

This trend was magnified by the high inflation 70s discrediting bank cds as safe places to keep money, which made many people decide to save by building up equity in a larger house. The large size of the boomer cohort moving into their prime home buying years, and a lack of building permits did the rest.
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Re: Foreclosures march upward?
Old 09-28-2004, 01:06 AM   #13
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Re: Foreclosures march upward?

I never really understood why mortgage underwriting had become so lax until I just read an article in the NY Times about Fannie Mae's bogus accounting practicies:

Most of the mortgages underwritten in the nation today use automated programs designed by Fannie Mae. "If allegations that they engineered systems for growth without regard to safety and soundness are correct, other systems, including underwriting, appraisal and loss mitigation systems should be called into question as well,'' Mr. Rosner said.

I love this culture of corporate corruption. Doesn't it just make you want to go out and sink your nest egg into the stock market?
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Re: Foreclosures march upward?
Old 09-28-2004, 01:26 AM   #14
 
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Re: Foreclosures march upward?

It seems to me that anyone with a pulse can get a
mortgage, HELOC, auto loan or credit card. Except for me that is.
Well, I do have lots of cedit cards, but I've been turned down for new ones 6 times in a row (my credit is golden). I understand the reasons for this. Just find it a bit amusing as I know they are extended credit
willy-nilly to people who lack anything remotely close to my
financial resources.

John Galt
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Re: Foreclosures march upward?
Old 09-28-2004, 05:13 AM   #15
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Re: Foreclosures march upward?

I've heard election talk about how the Bush administration has seen more foreclosures than any other cabinet ever, and that it's still rising. I don't have anything to back that up. Personally, we have seen a minimal rise in this area (hubby works in the mortageg industry and also buys many foreclosed properties) and we expect to see a "foreclosure boom" as rates increase and many who recently financed into an ARM (adjustable rate mortgage) get to the point where they can't afford their monthly payment anymore.
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