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Merlin
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Posted: Mon Dec 1st, 2008 04:01 am |
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A New Foreclosure Wave Hits The Jobless
Nov. 28, 2008
(CBS) There's a new wave of foreclosure sweeping across the country, and the people who are getting swept up are not greedy investors, or people who got in over their heads with bad loans, reports CBS News correspondent Ben Tracy. Rather, the crisis is hitting home for those who never expected to be in trouble until the slumping economy put them out of work.
As a code enforcer, Judy Jones' job was to make sure foreclosed homes, often trashed by owners on their way out the door, got cleaned up. With a government job, good credit, and a 30 year fixed rate loan on her southern California house, Judy never planned on taking her work home.
But last month she was laid off, joining a new wave of homeowners who paid their mortgages on time but now can't because they're out of work.
"The foreclosure crisis began mostly as a problem for lower income households," says Mark Zandi of Moody's. "It is now a problem for all households: low, middle income and even higher income households."
More than 2 million prime mortgages, traditional loans for people with good credit, are now delinquent. That's 624,000 more than this time last year, according to the mortgage bankers foundation, Tracy reports.
"We didn't necessarily expect the distress levels that we are seeing at this point," says economist Mark Fleming.
It used to be if you couldn't afford your mortgage you could always try to refinance or sell your home and pay off your loan. But these days, for a lot of people, those options no longer exist.
That's because 12 million households now owe more than their homes are worth, according to Moody's.
Homeowners with risky adjustable rate mortgages are getting help from banks, but there are no programs to aid those who already have good loans but no jobs.
"I wake up in the middle of the night thinking about it," says Terri Osier, a struggling homeowner.
Meanwhile, Judy Jones is hoping her bank will lower her payments until she finds work.
"If they don't, I'm not going to drain my savings, I am not going to drain my 401k, I am going to walk away," Jones says.
http://www.cbsnews. com/stories/ 2008/11/28/ eveningnews/ main4637578. shtml
____________________
"Christians should go to church."
"... it would be better for her to tie a heavy rock around her neck and jump into the midddle of deep bayou than it would to lay a heavy guilt-trip on any of God's little ones . . ."
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Carol2
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Posted: Mon Dec 1st, 2008 05:31 am |
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Merlin wrote: That's because 12 million households now owe more than their homes are worth, according to Moody's.
And that's the kicker.
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The righteous shall live by his faith (Habakkuk 2:4).
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Merlin
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Posted: Mon Dec 1st, 2008 05:35 am |
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On top of that, commercial properties are starting to be foreclosed on because of nonpayment. Nobody has money, nobody spends money. Stores close.
This is much worse than it looked at first.
From what I've read, Florida leads the nation in home foreclosures. There are 5 or 6 just on my block.... but the drug dealers are snapping them up at auctions and bulldozing the properties and putting up mansions.
I hope I live long enough to finish school, sell this place, and move to South Georgia.
M.
____________________
"Christians should go to church."
"... it would be better for her to tie a heavy rock around her neck and jump into the midddle of deep bayou than it would to lay a heavy guilt-trip on any of God's little ones . . ."
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Carol2
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Posted: Mon Dec 1st, 2008 05:41 am |
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| Yes, the financial crisis this country is facing has far reaching effects. Hang in there. Things will get better eventually.
____________________
The righteous shall live by his faith (Habakkuk 2:4).
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Evelyn
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Posted: Mon Dec 1st, 2008 05:54 am |
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Yeah, and we'll all be dead eventually too. I think this is going to be really bad--Great Depression bad. At least 7 lean years, like in the land of Egypt, and maybe more. That's what I think. I think the entire world economy is about to implode.
Some scary bedtime reading: http://www.dailykos.com/story/2008/11/30/15423/763/334/667853
I'm not going to sell my house, as this guy advises, but I think what he's saying is true. I think it's going to get way worse before it gets better.
Last edited on Mon Dec 1st, 2008 06:00 am by Evelyn
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AyHyperbole
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Posted: Mon Dec 1st, 2008 07:27 am |
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Carol2 wrote: Yes, the financial crisis this country is facing has far reaching effects. Hang in there. Things will get better eventually.
The financial crisis has me extremely confused. Things don't seem too bad from where I'm standing. It seems like costs are falling, and incomes aren't.
But if the article Evelyn posted is right - and I really don't have a strong basis to tell whether it is - we could be in for a decade or more of total economic collapse.
And I really don't know what to make of that. It seems to be suggesting that I live extremely cheaply and put half the leftover money towards additional payments on my car and the other half in an iron safe.
I also cannot even begin to conceptualize how secure my job is or isn't. My boss seems to think I'm doing an exceptional job, and he considers my position absolutely vital, so I don't think I run much risk of being fired. And our company doesn't produce any income at all, so it can't possibly fail for that reason. But there's no way to know how badly the investors are hurting. Sometimes, they say that the ultra-rich are in the best possible position to even profit from a Depression, but other times, it can obviously ruin them.
I don't know. I'm nervous. But one thing in the article really resonated with me: the excesses of the 1990s and early 2000s did seem ludicrous. He says they were much worse than the excesses of the 1920s, and while I don't have any way to confirm that, it sounds believable.
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Carol2
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Posted: Mon Dec 1st, 2008 07:54 am |
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I hate to think negative. I know things are bad and may get worse, but things may not be as hopeless as all that. I think we can pull ourselves up out of this. There are always ways to solve problems if we look hard enough. Stay positive.
____________________
The righteous shall live by his faith (Habakkuk 2:4).
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prodomal
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Posted: Mon Dec 1st, 2008 08:40 am |
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Although nursing school was, by far, the most miserable experience of my life (which is to say I've had a pretty good life.  ) Ever since I graduated, I'm happier and happier I choose to go into this field. I'll always be able to find a job no matter where I am.
Hope everyone is hangin' in there and doing alright.
Last edited on Mon Dec 1st, 2008 08:41 am by prodomal
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manonfire
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Posted: Mon Dec 1st, 2008 02:56 pm |
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Carol2 wrote: Merlin wrote: That's because 12 million households now owe more than their homes are worth, according to Moody's.
And that's the kicker.
Yep, that can happen when folks buy homes they can't afford to be in.
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Hyper, Limana, A2, and Evelyn, put your glasses down, and step away from the Kool-Aid!
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manonfire
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Posted: Mon Dec 1st, 2008 03:02 pm |
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Carol2 wrote: I hate to think negative. I know things are bad and may get worse, but things may not be as hopeless as all that. I think we can pull ourselves up out of this. There are always ways to solve problems if we look hard enough. Stay positive.
Carol, you have a great attitude! You know what? If I didn't listen to the media, I would never know about the economic woes in our country. My pastor told us once that we should stop watching, reading, and listening to the news. I think he may be on to something.
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Hyper, Limana, A2, and Evelyn, put your glasses down, and step away from the Kool-Aid!
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Tyrrho
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Posted: Mon Dec 1st, 2008 03:34 pm |
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manonfire wrote: Carol2 wrote: Merlin wrote: That's because 12 million households now owe more than their homes are worth, according to Moody's.
And that's the kicker.
Yep, that can happen when folks buy homes they can't afford to be in.
It can happen any time housing prices fall dramatically, whether folks can afford the homes they bought or not.
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This year I resolved not to make any New Year's resolutions.
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Carol2
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Posted: Mon Dec 1st, 2008 06:19 pm |
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| Yes, because we could afford this house when we bought it, but my husband's place of employment went under last year.
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manonfire
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Posted: Mon Dec 1st, 2008 06:20 pm |
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Tyrrho wrote: manonfire wrote: Carol2 wrote: Merlin wrote: That's because 12 million households now owe more than their homes are worth, according to Moody's.
And that's the kicker.
Yep, that can happen when folks buy homes they can't afford to be in.
It can happen any time housing prices fall dramatically, whether folks can afford the homes they bought or not.
I don't see what one has to do with the other.
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Hyper, Limana, A2, and Evelyn, put your glasses down, and step away from the Kool-Aid!
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manonfire
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Posted: Mon Dec 1st, 2008 06:23 pm |
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Carol2 wrote: Yes, because we could afford this house when we bought it, but my husband's place of employment went under last year.
Unfortunately, those situations can happen. However, I don't think that is what Tyhro is talking about.
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Hyper, Limana, A2, and Evelyn, put your glasses down, and step away from the Kool-Aid!
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Cajun
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Posted: Mon Dec 1st, 2008 06:34 pm |
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Yup. But I wonder how many of these unemployed are because they cannot find work or do not want to find work?
I've seen plenty of companies and businesses locally hiring.
Hey, until something better comes along, a job and income are better than nothing.
And meanwhile... little old me, being the pessimist and people looking at me askance a year ago like I was some boy crying wolf or chicken little...
I'm still slowly building up my food stock. Something is better than nothing.
... and winter's coming on. We just had our first snow of the season this weekend into today.
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Evelyn
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Posted: Mon Dec 1st, 2008 06:36 pm |
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manonfire wrote: Tyrrho wrote: manonfire wrote: Carol2 wrote: Merlin wrote: That's because 12 million households now owe more than their homes are worth, according to Moody's.
And that's the kicker.
Yep, that can happen when folks buy homes they can't afford to be in.
It can happen any time housing prices fall dramatically, whether folks can afford the homes they bought or not.
I don't see what one has to do with the other. And you're a businessman?
Sure, if I buy an affordable house and the price falls but I stay in my house, I'm fine. But if I buy an affordable house and the price falls and I have to move--because I get transferred or my company goes out of business or my husband dies or whatever, then I've got a problem. When prices are falling, it basically freezes everyone in place.
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manonfire
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Posted: Mon Dec 1st, 2008 06:40 pm |
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Cajun wrote: Yup. But I wonder how many of these unemployed are because they cannot find work or do not want to find work?
I've seen plenty of companies and businesses locally hiring.
Hey, until something better comes along, a job and income are better than nothing.
And meanwhile... little old me, being the pessimist and people looking at me askance a year ago like I was some boy crying wolf or chicken little...
I'm still slowly building up my food stock. Something is better than nothing.
... and winter's coming on. We just had our first snow of the season this weekend into today.
Where I live, if you can't find a job it's because you aren't looking.
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Hyper, Limana, A2, and Evelyn, put your glasses down, and step away from the Kool-Aid!
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Tyrrho
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Posted: Mon Dec 1st, 2008 07:07 pm |
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manonfire wrote: Tyrrho wrote: manonfire wrote: Carol2 wrote: Merlin wrote: That's because 12 million households now owe more than their homes are worth, according to Moody's.
And that's the kicker.
Yep, that can happen when folks buy homes they can't afford to be in.
It can happen any time housing prices fall dramatically, whether folks can afford the homes they bought or not.
I don't see what one has to do with the other.
If you buy a house with a 20% down payment, and then the value of the house declines by 25%, you will owe more than your house is worth. Note that this has nothing to do with whether you can "afford to be in" the home you bought or not.
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This year I resolved not to make any New Year's resolutions.
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Cajun
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Posted: Mon Dec 1st, 2008 07:29 pm |
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manonfire wrote: Where I live, if you can't find a job it's because you aren't looking.
That's exactly it.
I realize that there are people who seriously do have difficulty finding work. The issue revolves around the fact that people don't want to step backwards in their careers or job market. But, when push comes to shove and you're forced with the real possibility of zero income and thus no food, shelter or anything, I think many people just need to suck it up and take what they can find as they continue to look for the better job. Some income, some food and shelter is better than absolutely nothing.
I know a person who waited over a year before she got a job because she spent that entire year looking in a very specific field. Granted, she also was in a position where she could do it - veritably mooching off family - but the fact is, most people don't have that luxury. Finally, after well over a year she went to a temp agency and they found her basic employment and during that time, she found a job within her prior field. The downside was that it didn't pay what she felt it should... but, when you get too chosy, you're left with few excuses.
I know another person - same family - that hasn't worked in a number of years. Up until a couple of years ago they were financially stable enough that she didn't have to work. Lo and behold her husband had a series of physical ailments requiring surgeries and he lost his job. She sank into a depression and in the meantime, she'd continue to say how she needed to get a job, but would never look, even though her family came to them several times offering various means of assistance to put her back into employment. The husband eventually got well enough he could find work again, but at now 63, how long can he continue to do manual labor work - and worse, making nearly half what he did two years ago?! In theory she's making a new concerted effort to prepare to reenter the job world - she needs new training - and she's now on anti-depressants, but she's still not even just looking for an interim job. And so their credit card debt continues to rise and they are in the very real situation that they may lose their home due to the fact that their bills are more than their single income... oh yeah, and the husband may well be getting a second job - whether or not she gets one.
Such a situation is unfathomable to me. Within two days of moving up here, one of the first things I did was apply at a temp agency with the intention of getting interim employment while I could find a "good" job. Within a week or less they'd placed me with a company. After a few months I decided to work for them fully after being urged by them to apply and finding it an acceptable company and income.
I have lived many years meagerly and had many jobs that were no doubt "beneath" me, but I've never been one to be choosy. You do what you have to do because to do otherwise is senseless.
I'm currently a stay-at-home dad, but if a situation arose and I had to get a job, even if all I could find was scrubbing toilets at a roadside reststop, I'd do it, because something is better than nothing, and I refuse to sit on my ass hoping for something better or crying that there's just no work... or no work for what I "want" to do.
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Like water on a duck.
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Cajun
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Posted: Mon Dec 1st, 2008 07:43 pm |
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Tyrrho wrote:
If you buy a house with a 20% down payment, and then the value of the house declines by 25%, you will owe more than your house is worth. Note that this has nothing to do with whether you can "afford to be in" the home you bought or not.
We bought the home we live in just over a year ago, just as the market was really beginning to falter.
Our prior house sat on the market for 3 months before we got a bid, and I think it was another month or two before everything was a done deal and we were in this home. We were days away from taking the house off of the market and just sitting on it. We had an ARM because we'd planned a couple of years prior to "upgrade", thus it was reasonable to help our budget with an ARM. Had we stayed in the other house, we'd have refinanced asap with a fixed rate.
Some of the things that we did and that helped us was that we intentionally stayed away from newer homes in the new subdivisions. Furthermore, we stayed within our budget. We wanted a larger home with a fixed rate mortgage that was no more than 3 times our gross income. We also had planned and knew that our income would be increasing substantially in less than a year as my wife would be getting a sweet raise with a pay scale change due to getting her Masters +30. We also talked with our agent about finding a home that was "properly" priced, as well as "properly" pricing our own home for sale. We had to shave/bargain off a couple of grand on our end, just as the owners of our "new" home had to do likewise - and they'd been sitting on their home for sale for over 6 months with a prior bid having fallen through. And while our home value may have decreased slightly over the past year, we believe we bought a home - and are in a region - that won't be as badly affected, not to mention that as part of our long-term plans, we don't intend on selling this home for at least another 5-6 years. Lastly, if things got really bad, we could willingly stay here, as the house and property are large enough for improvements and expansion.
We live meagerly, but with short-term and long term goals as well as a sensible understanding about our finances such. I think that many, many people who're getting the effects of this economic crises didn't do some basic homework or have a "what if" in mind when they bought their "dream" home or got that ridiculous mortgage.
We bought our home with zero down, but with a 6.5% rate.
Something else that I think many people don't plan for are increases in taxes or insurance policies. Our taxes and insurance are rolled into our mortgage, so we pay into an escrow over the year. Well, our monthly went up on the year anniversary. I bet that smacks quite a few people heavily in the wallet, especially if they bought some home that was ridiculously overpriced to begin with and/or was substantially over their budget... but they just believed they could have that American dream... or own their own "mini" mansion.
Last edited on Mon Dec 1st, 2008 07:51 pm by Cajun
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Like water on a duck.
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