There is No Foreclosure Crisis

Bill Call · Post by **Bill Call** » Sun Feb 22, 2009 8:59 am

The title says it all.

The foreclosure crisis is confined to a few states that experienced double digit increases in home prices over the last ten years. Prices in California are 50% higher now than they were 5 years ago. Is your home worth 50% more than it was 5 years ago? If it was would you call it a crisis?

http://www.nypost.com/seven/02212009/po ... 156287.htm

ryan costa · Post by **ryan costa** » Sun Feb 22, 2009 5:05 pm

I believe the majority of homes are presently appraised at far more than they are worth. how many of those are owned by people who still owe over 10 years of mortgage payments is a big question?

There is no feasible way to extricate the mortgages from their chains of conversions to weird AAA Junk bond pools and side-bets or derivatives on them. the bailout is again mostly to reward the high stake players who got involved for millions or billions of dollars worth of future ARM interest the banks will never collect.

the idea that most homes should appreciate every year is going to have to go extinct. it essentially amounts to inflation. inflation was masked by outsourcing manufacturing. tricky zoning and highways allowed the top gainers in finance and insurance to move to the right suburbs fast. all those ideas have to end.

Here's an interesting quote of third-hand information from http://www.hipiers.com/newsletter.html

My daughter found an article on the changing value of the dollar. What would a thousand dollars in 1906 be worth in 2007? Different authorities have different answers. The Federal Reserve says a 1900 dollar would be worth $20 today. Another says that a thousand dollars worth of 1900 gold would be worth $36,500 today; that's a 36-fold gain. A thousand dollars worth of labor in 1900 would be worth $20,000 today. Real estate you could buy for one year's wages in 1900 would cost more than fifty years' labor today. It concludes that the consumer price index does not tell the whole story. It sure doesn't! The government wants to pretend it keeps inflation down, so it jimmies the figures.

Will Brown · Post by **Will Brown** » Sun Feb 22, 2009 11:31 pm

I agree that the extent of this problem is exaggerated, probably for political advantage.

First, they tell us that anyone who is upside down (owes more on the mortgage than the property is worth) is in dire straits. But it seems to me that this person has a place to live, and whether he owes more or less on it is almost irrelevant, until some outside circumstance forces him to sell. So if they can make their payments, and don't have to move, there is no crisis; there is just an investment that won't return as much as they hoped. The only real problem they have is that their ability to relocate without taking a loss is reduced, but I don't think that is enough of a problem to warrant selling our grandchildren into government servitude.

Admittedly, there are people who have acted foolishly, buying without the necessary foundation, and buying SUVs and boats they can't afford, and visiting Vegas twice a year. I think these people lack the training and self-control to manage their own finances, and I think rescuing them without requiring that they correct their foolish ways is only a temporary fix, as they are not going to analyze their own behavior and correct it; they are going to think they have found the golden goose, while responsible citizens, and their descendents are getting goosed. In America, we seem to have accepted the idea that people cannot be held responsible for their own failings, and it is forbidden to tell them that they have been foolish. It is as though a second grader who responds that 2 plus 2 is 5 cannot be told that he is wrong; he is told that he is almost right, and that is very good.

So if we are going to toss these people an expensive lifeline, it should be on the condition that they will accept close supervision of their entire financial life. We could provide monitors (think of all the new jobs) who would have the responsibility and authority to control every financial action, so when the recipient decides he needs a new SUV because his old one is passe, the counselor should be able to say no, you don't really need that as much as you need to build up your cushion of savings.

I know it seems to be a harsh solution, but it would be limited to those who have demonstrated financial ineptitude and taken assistance, because just throwing money to someone who has proven they can't handle it is a pure waste. If private citizens want to throw money, that is their business. But when the government compels us to waste our money, that is grounds for revolution.

As to bailing out those greedy and reckless people who bought hedge funds and other junk, the best lesson would be to let them go belly-up.

Bill Call · Post by **Bill Call** » Tue Feb 24, 2009 11:13 am

Will Brown wrote:I agree that the extent of this problem is exaggerated, probably for political advantage.

Take a look at this:

http://articles.moneycentral.msn.com/Ba ... yCity.aspx

Over the last five years home prices have increased:

37 % in Tampa

58% in Mesa and Phoenix (Mesa is where Obama gave his speach about the housing crisis. He said his program would aleviate the disasterous affects the decline in housing prices had on the City.)

44% in Philidelphia

There are similar numbers throughout the country (except for Cleveland).

Much of our current financial distress is an artificial creation. Recession by design? Yes, in part.

If it is the governments job to guarantee 10% annual returns on real estate shouldn't all city's get that guarantee?

Jim DeVito · Post by **Jim DeVito** » Tue Feb 24, 2009 12:18 pm

Will Brown

because just throwing money to someone who has proven they can't handle it is a pure waste.

Thanks Will. You just gave me a good argument for no longer paying federal taxes.

Bill Call

There are similar numbers throughout the country (except for Cleveland).

Why not cleveland?

Bill Call

Recession by design? Yes, in part.

That might be pushing it. Recession by lack of understanding, irrational responses to rational events, and what the hell throw some design in there too. ;-)

Danielle Masters · Post by **Danielle Masters** » Wed Feb 25, 2009 11:44 pm

Last week I was sitting in the office to see my shrink. I won't mince words here. Since I have no healthcare I go to a wonderful clinic that treats me for free, thank goodness for charity. This office is Ohio City. In the waiting room was a woman telling about how she is now living in a shelter because she was evicted from the double that she had been paying rent on but apparently the landlord hadn't paid the mortgage on. Like many people in her situation she has limited funds. So now the money that she earned and the money that she paid to her landlord is lost. Apparently her landlord is doing well in his non-foreclosed house in Westlake. I am sure he like many people didn't think it was worth it to continue to pay for a home that wasn't worth anything. I guess I should tell her it's okay there is no foreclosure crisis, next week when I am there I will make sure to tell her. Nothing is real until you face it.

sharon kinsella · Post by **sharon kinsella** » Thu Feb 26, 2009 11:53 am

Thank you Dannielle.

People who are isolated from those that struggle everyday just to eat and have a place to sleep are quick to judge.

I know 3 people in my circle that last their homes due to ARMS. They didn't really understand much about it, they just kept thinking, my own home, I'm going to have my own home.

The clinic wasn't, by any chance Neighborhood Family Practices Tremont Offices was it? I go to the one on Ridge and Denison. My GP is there and I've been going there over 20 years because of the level of care I get and to support the work they do. I have govt. health insurance because of my illnesses, but there were times that I and my kids had nothing and we were taken care of there with a smile.

My specialists are at metro and I'm very pleased with the care I'm getting.

Tim Liston · Post by **Tim Liston** » Fri Feb 27, 2009 11:03 am

I don't think Bill was saying that there are no foreclosures. There are.

This just crossed my desk, I found it interesting, and it does back up the point Bill was making....

Eighty Seven Percent of Housing Value Loss in Just Four States

California, Florida, Arizona and Florida account for 87% of lost housing value and 55% of foreclosures. Folks that bought homes in those stated in the 2003-2007 time frame have gotten creamed. That's a crisis for sure. I don't think there's a foreclosure crisis in the other 46 state. Unemployment crises, probably. But not a foreclosure crisis.

sharon kinsella · Post by **sharon kinsella** » Fri Feb 27, 2009 11:24 am

Here's the numbers and the facts from the Ohio Supreme Court -

http://www.sconet.state.oh.us/Communica ... 021109.asp

From their mouths to your ears.

Will Brown · Post by **Will Brown** » Fri Feb 27, 2009 11:39 pm

Leaving aside the question of whether a press release from a politician at the Ohio Supreme Court is authoritative, or even accurate, a thinking person would have notice the release says:

Courts across Ohio last year reported 85,773 new foreclosure filings, marking the 13th consecutive annual increase. One bright spot, however, shows that 2008 represented the smallest percentage increase (3.1 percent) in the number of foreclosure filings over that same 13-year time period.

Which would seem to indicate that foreclosures in Ohio have been increasing over the last 13 years, consecutively, and that the increase for 2008 was the smallest increase, by percentage, of all those years.

Hardly evidence of a recent crisis.

I'd be interested in hearing how a tenant lost all the money from her years of renting; Tenants don't earn equity in the property they rent. If they want the equivalent of equity, they have to put some of what they save by renting into savings.

As for people who lost money on an adjustable rate mortgage, they knew when they signed for the mortgage that they were electing the adjustable rate, with a lower payment, than a fixed rate, with a higher payment. If they couldn't understand that, perhaps they shouldn't have tried to get into the home ownership field. I think the idea, pushed so hard by so many politicians, that everyone should own their own house fails to recognize that some people are just not equiped to deal with mortgages, taxes, insurance, repair costs, and all the variables of owning a home.

sharon kinsella · Post by **sharon kinsella** » Sat Feb 28, 2009 1:04 am

How about the fact that they don't get back their security deposit. That's a big one. In additions at certain income levels, people need to save to be able to pay for a move. You can't save when you don't know. That money should be made available to them. Instead they're just plain old out of luck, but I'm sure they deserve that.

No not everyone is as advanced in knowledge as you are, it doesn't mean they don't want to have a home of their own. Maybe they didn't understand because they were fast talked, because of course, that would never happen to someone like you.

The press release was about the trend over 13 years. Predatory lending has been around for quite a while Will. While 3.3% is a slow down, tell that to the people who were part of that that lost their homes.

Oh well, they didn't deserve to have one anyway.

I also know that you possess so much more knowledge than the judges involved who released those figures.

Isn't deniability supposed to be plausible? Oh heck, what do I know about any of this stuff anyway.

Nice to be you, or so you think.

sharon kinsella · Post by **sharon kinsella** » Sat Feb 28, 2009 10:13 am

Anyone who reads the above two posts and thinks that this is the reason no one can talk to me please consider the following: How would you feel if you read this and you were a low-income person who just lost their home because the landlord was foreclosed on and then read this post. Insulted, yes. Slapped in the face, yes. Put in your place, yep.

In addition, consider the statement about not being qualified to live the American dream because you're not necessarily used to being hustled on that magnitude and really don't understand or know about ARMS and some of the crooks that were doing ARMS. You also might not know about all the costs involved with owning home but probably could have dealt with it when it happened. After all, you've survived tough economic situations all your life because of familial history of low-income circumstances.

No one in your family ever owned a home, you're the first, no one in your family ever graduated from high school, your the first. You thought you were climbing out, you thought you were going to be able to give your kids a good life and then, one day all your dreams are dashed. Then you read this and find confirmation that your not good enough.