Tuesday, July 21, 2009

How About The Truth?

This US News/Yahoo article lists several reasons why foreclosures continue to rise and talks about the outlook for the markets. They are all valid reasons, but none of them are the actual reason. The author of this piece either works for the NAR or he's totally deluded.

His first argument is unemployment. I don't really buy into this reason. Every downward cycle in the economy has had its unemployment casualties. While I can't find any hard numbers, I am guessing the relationship between foreclosures and unemployment has been fairly closely related from one recession to the next. I feel for the casualties of the recession. These people are usually the innocent bystanders.

The author’s next contributing factor is plunging home values. I guess I see the rationale here. Why pay for something that is worth less, or even way less than you owe? However, I don't buy that there are massive hoards of people sending the keys to the bank and walking away from a mortgage that they can afford. If you’re walking away from a mortgage you can afford, I can understand the business rationale, but I still think you’re the scum of the earth for bailing on a contractual agreement.

Lastly, the author cites the end of foreclosure moratoriums. This is just camouflage. Someone who got a free ride for the last 6-8 months, finally getting foreclosed does not mean there is a rise in foreclosures. They should have gotten the ax months ago, but we decided to pause and look around and see if there was a way to avoid the inevitable. These are the exact fools who provided the fuel for this debacle. I despise you, because I am the person who you priced out of the market and I am the person who is now getting stuck with the tab for trying to bail you out.

Not once, not one single time in this 750 word piece did the author cite the one reason for all these foreclosures. An overwhelming majority of the people getting foreclosed today, are getting booted from their homes because they were fools who couldn't afford the house in the first place. Its that plain and simple. I don't know why our media and elected leadership in Washington can't get that through their thick skulls. Robert Reich said in his blog that we're basically playing a new ball game. Thats a pretty accurate apprasial of the situation. I believe that the more time and resources we devote to trying to get back to playing the old game, the longer and more difficult this recession will be.

16 comments:

Anonymous said...

How much longer will we be able to afford the rich...

Anonymous said...

Thank you for saying what so many people have been wanting to say.

If you bought too much house and are now in foreclosure...tuff uckers! And I bet you cant really afford the cars in the driveway or the plasma tv's hanging inside can you? Saps!

Richie said...

Excellent! Well said!

Dead End said...

I'll pose a better question. How much longer can we afford piss poor government?

Anonymous said...

Walking on a mortgage is not "breaking a contract". The contract stipulates that the borrower pledges the home against the cash. In the event the borrower is unable or unwilling to repay the loan, the lending institution gets the house.

This is a very common practice for corporations. Why should individuals be castigated for perfectly sound business practices?

You are confusing ethics and law.

Dead End said...

I think your reading comprehension is a bit lacking. I called people who break contracts scum, not felons.

JOHN said...

The California real estate cycle is 8-10 years up and 8-10 years down. It's so big, what the govt. does will not change this. Yeah, +1-2 years on each cycle, but basically, it's the 8th largest economy, and it runs the State & Fed. Govts. If you buy at the bottom, sell at the top you will make $millions! Really! I have done it 100s of times (escrows).

geordie said...

'Saving' them from their bad decisions is the worst way to handle this. Banks who made bad loans should lose the money and people who took on debts they couldn't pay should be not be able to escape from it. The flip side is that protecting foolish borrowers and lenders just encourages irresponsible behavior and economic disaster... which is where we are now.

Anonymous said...

All of these folks could afford the mtg. The lenders made certain of that before profering the loans. There is a clause in every contract saying the lender has the right and duty to make sure the buyer can afford the loan. When the buyer can no longer afford the loan for whatever reason there is foreclosure. It is not an ethical issue it is business. The banks know this yet they gave out the loans. It was their decision to give the loans. They could have stopped at any time. If someone is thirsty for a house and you give them water in the form of a loan will they not drink? You gave them the water and said they were qualified to drink it. Some will vomit it back into your lap if you give them too much.

Anonymous said...

This is a Two Edge Sword! The Banks and Wall Street had a huge roll in this.

So before you call the homeowner stupid you need to consider the lending institutions position. They both deserve each other.

-Ben Dover

Dead End said...

That’s a valid point, Mr. Dover, however, you can blame the seller for a lot of big ticket purchases. Bloomingdales will be glad to sell your wife a new mink coat, even if you have no business buying a $15k coat and charging it on the brand new store credit card they gave you to pay for it. Similarly, Mercedes Benz will sell you SL550, if Experian tells them you can "afford" the payment. I can afford the payment on that car, of course I then can't really afford the rest of my bills.

With personal responsibility, it is incumbent upon you to look at the cost of a purchase and decide if you can truly afford it.

Right now, our elected leaders are driving a stake through the heart of personal responsibility.

Read a little further in this blog, the banks get their too.

Anonymous said...

Understood, however, what about those that were able to get by in the first place now they just got fired or going to get fired. Hell they got from here till 2011 or 12 to get fired right? Can they pay their mortgage then. So, that would be a direct correlation to their unemployment and now having to foreclose the house. The article interviews examples. You know I understand that the mainstream media is usually full of crap, but if your reporting is just to fight the mainstream with out effective reporting, then 2 wrongs dont make a right. Its like people now a days saying is either capitilism or your communist! They both have flaws.

Dead End said...

This is a blog, not ABC or CNN who are running around trading on their good names earned upon years of top notch journalism. The mainstream media is a just a sespool of spin and mostly liberal agendas.

I am sure Cronkite turned over in his grave as soon as they put him in the ground.

kerlotle said...

There is no intrinsic price for anything. Most people can only go by what their neighbours are paying - if you have a family and if you didnt want to live in a crappy apartment, if houses seemed to hold and go up in value - thats what seems natural to do. I dont think the common man holds all the blame.

That said, the conclusion is agreeable - the common man probably cannot afford the house he lives in now.

accuriz said...

Instead of a rental payment, let the homeowner make the payment toward the mortgage and the government can cover the difference in a mortgage assistance program which will be repaid over time.
Here is an example of how it could work.
• Mr. and Mrs. Z have a mortgage payment of $1,170 ($200,000 loan with 30 year payout at 5.75% interest).
• The Z’s lose their job and can only pay $470, so the government pays the difference of $700
• The Z’s remain homeowners and work through their problem. It takes the Z’s 10 months to get back on their feet, the government paid out $7,000 and now the Z’s owe the government.
• But the government says okay, you can start paying us back in seven years and the payment will be over 10 years at an interest rate of 3%.

www.accuriz.com

Dead End said...

Why don't we just let the government own all the homes in this country and then have people move in where ever they want and pay whatever they want? Honestly, I'll settle for the Three Ponds Estate in Bridgehampton. I promise to pay it off in a 100, perhaps 120 years.