1. Attention: We have put together a thread with tips and a tutorial video to help with using the new software. Please take a moment to check out the thread here: Trapshooters.com Tutorial & Help Video.
    Dismiss Notice

O/T Foreclosures USA Today 11/27/07

Discussion in 'Uncategorized Threads' started by Earl4140, Nov 27, 2007.

Thread Status:
Not open for further replies.
  1. Earl4140

    Earl4140 TS Member

    Joined:
    Aug 8, 2007
    Messages:
    88
    Foreclosures- The housing downturn will shave a full percentage point off growth, with the economy expanding at a tepid 1.9% annual rate, the report says. Property values will drop by $1.2 trillion, as foreclosures mount and the housing market remains in the doldrums. Home prices will fall by an average of 7%, but price declines could range as high as 16% in California, the report says

    "Everyone has some culpability but we have to fix the problems," says Mayor Douglas Palmer of Trenton, N.J., president of the U.S. Conference of Mayors. "We can't afford not to do anything. We're losing tax revenues, have to maintain foreclosed property and we're going to see more and more homeless families."

    Federal, state and local lawmakers have struggled to respond to a growing wave of foreclosures among borrowers with higher-cost subprime mortgages. Nearly 17% of subprime adjustable rate mortgages are delinquent, a number that looks to rise as adjustable rate loans reset in coming months, often to sharply higher interest rates.

    Federal Reserve Chairman Ben Bernnanke in testimony to Congress earlier this month noted that, on average, nearly 450,000 subprime mortgages will reset every calendar quarter from now until the end of 2008.

    "Avoiding the payment shock of an interest rate reset by refinancing the mortgage will be much more difficult, as home prices have flattened out or declined, thereby reducing homeowners' equity, and lending terms have tightened," Bernanke noted. He said rising foreclosures could reduce property values, weaken struggling housing markets and the economy.

    The House has passed legislation to give federal housing agencies more freedom to lend to borrowers who would otherwise turn to the subprime market, while setting tighter standards for future mortgage lending. The Senate has yet to act on the bill. Federal and state banking regulators are trying to help loan servicing firms find ways to quickly restructure large groups of loans, instead of considering each mortgage on a case-by-case basis.

    Palmer says the mayors are looking at ways to modify existing loans, strengthen counseling services and other steps in line with what Congress is debating. The mayors will also be meeting with lenders to assess the situation.

    The Global Insight report says the housing market financial fallout will be widespread. New York City is forecast to lose more than $10 billion in 2008, followed by Los Angeles at $8.3 billion, Dallas at $4 billion; Washington at $4 billion, and Chicago at $3.9 billion.

    In percentage terms, Myrtle Beach, S.C., could suffer the biggest hit, growing 1.7 percentage points less than it would have. California will suffer the most distress.

    In other findings the report predicts that job growth will average 75,000 per month during the next six months. That's more than 100,000 fewer new jobs per month than the 2006 average. Consumer spending will expand by just 2% in 2008, buffered by falling home prices. And new home construction will fall through the spring of 2008, declining about 20% from current levels. Earl Hamman
     
  2. Fast Oil

    Fast Oil TS Member

    Joined:
    Jan 29, 1998
    Messages:
    918
    "Palmer says the mayors are looking at ways to modify existing loans..."

    Don't think it's their business to get involved in "modifying loans." Why is it that he thinks the Mayors need to micro-manage the mortgage business? Oh yea he's worried about taxes. Maybe they can "modify" taxes while they are at it. That won't happen will it?

    When a house comes out of foreclosure (sold) aren't the back taxes paid?

    Scott
     
  3. phirel

    phirel TS Member

    Joined:
    Jan 29, 1998
    Messages:
    9,556
    First, about 5% of mortgages made over the last two years were sub-prime. Seventeen percent foreclosures of 5% is not a lot considering the loans should have not been made in the first place. I am surprised it is not higher.

    Secondly, so many people lack the ability to do basic math. They took out an ARM loan at 5% and were told that the interests could go up to 7.5% and they thought this was only a 2.5% increase in interest rate. Actually, the interest rate went up by 50%. They should have paid attention in the sixth grade.

    Finally, lenders have been under great pressure to make loans to low income families. They made the loans as required by government agencies and now many are surprised that the people can't repay the loans. I know many people I could loan money to and they would promise to pay it back, but I know they never would.

    Pat Ireland
     
  4. pendennis

    pendennis Well-Known Member

    Joined:
    Jul 26, 2007
    Messages:
    1,567
    Location:
    Southeast Michigan - O/S Detroit
    Everyone needs to get a grip on the "sub-prime crisis". This is not a crisis, as people would have you believe. The sub-prime problem only amounts to between .5% and .75% of the total amount of owned housing in the U.S. There are 75 million homes in the U.S.

    I agree totally with Scott. We don't need the government at any level, to get in the mortgage-managing business. And yes, the first thing that gets paid when a house comes out of foreclosure, is payment of back-taxes.

    At this moment, Palmer is on the local Detroit radio station (WJR), since he's in town for a "conference". Palmer denies that pressure by governments on banks to ease lending requirement for poorer borrowers helped lead to this.

    Just another example of government do-goodism.

    Best,
    Dennis
     
  5. 100straight

    100straight Member

    Joined:
    Jan 29, 1998
    Messages:
    584
    This is a simple free market adjustment. When Mayors start talking of government "fixing" the problem, they are really talking about socialism or communism. In a free market economy we should let such problems "fix" themselves. Under socialism or communism government "fixes" these problems by controlling or manipulating (in essence "taking over") private sector businesses.

    Many of the new homes financed by "sub-primes" are probably located in residential TIF districts. This compounds the problem of a reduction in the homes' assessed values. Not only does the tax base decrease, lessening tax revenues to municipalities, but TIF revenues are also used to pay off municipal TIF debt. Mayors do not want to see any reduction in assessed value for such homes.

    Shoot well and often,

    Mark.
     
  6. grnberetcj

    grnberetcj Active Member

    Joined:
    Jan 29, 1998
    Messages:
    5,680
    Personally I see no real downside except for the "NINJA's" and those businesses with no scruples and they deserve what is currently happening.

    Curt - Delaware
     
  7. halfmile

    halfmile Well-Known Member

    Joined:
    Jan 29, 1998
    Messages:
    15,648
    Location:
    Green Bay Wisconsin
    Scott, I don't kknow how it is in your area, but if the taxes are owed the county has a lien on the property where I live.

    Some entepreneurs were using the county for a free loan a few years back when interest rates were higher, by not paying property taxes. Installing penalties eliminated that.

    If the taxes are not paid for a certain periond, (3-4 years?) the county will foreclose on the property themself.

    In wisconsin there are occasionally auctions whereby the counties get rid of property they have no desire to posess. this incldes some good stuff, and some useless stuff like unsurveyed slivers of property that went back for taxes because they were useless.

    Pendennis, You might want to rethink your statement, the subprime debacle will eclipse the S&L problem in the next year or so. Certain lenders are poised for massive writedowns and the tremors will shake the economy and put additional downward pressure an the already beleagured dollar. In our town there are an additional 400 foreclosures being filed, and weekly the legal notices cover 2 pages of my morning paper. And conditions are worse in certain areas.

    Countrywide is staggering, don't buy their stock.

    Remember, you heard it on TS.com first.

    HM
     
  8. W.P.T.

    W.P.T. TS Member

    Joined:
    Jan 29, 1998
    Messages:
    8,371
    The truth is most of the people who got "Creative Financing" couldn't of gotten into a home any other way ... The same people who got into a home could not of rented an apartment for what it cost them to buy a house that they could not afford if they had to qualify and the property had to appraise ... The bubble has burst and its time to payback which cannot be done because those who owe the money are upside down because reality has struck and their greed is going to cost them and probably everyone else before its all over ... I see property that has been walked away from, sitting with the front doors wide open and vacant all over the place ... These people knew that they could not afford to own a home before all of the interest only loans and creative financing started happening and sooner or later it was going to bite them, which is exactly whats happening now ... I just hope the rest of us can afford to pay for the mistakes that were made and we didn't stand to gain a thing when it was happening ... There are going to be some deals like we have never seen before and probably will never see again once it all get sorted out ... WPT ... (YAC) ...
     
  9. pendennis

    pendennis Well-Known Member

    Joined:
    Jul 26, 2007
    Messages:
    1,567
    Location:
    Southeast Michigan - O/S Detroit
    Halfmile, the sub-prime problem is part of the entire real estate market downturn. There are lots of foreclosures based on reasons other than bad sub-prime loans.

    The builders and developers built an unholy alliance with mortgage brokers. As the housing market started to cool in the mid-1990's, builders with unsold houses and lots, managed to ease their burdens somewhat by conniving with mortgage brokers to keep the softening market moving forward at an unsustainable pace. People were also very stupid in believing that any market could maintain sustained growth of 10%-15%, when the historic averages have been from 2%-5%.

    As I earlier mentioned, governments, in their zeal to get poor people into purchased homes, pressured banks and brokers to lower normal lending standards, creating this problem.

    The S&L fiasco had its genesis in the 1970's, when the S&L's were allowed to move into riskier loans not related to homes. The Feds also walked away from their responsibility in oversight; the state S&L's really got creative in their lending, and the state regulatory agencies went right to sleep.

    You may find that there weren't a lot of laws violated, but bankers really walked away from their due diligence in qualifying folks for home loans, and buying risky ARM's from the brokering companies.

    I haven't seen any shareholder groups fire their boards of directors over this. I don't believe that anyone will ever be held accountable, neither morally nor legally. The finance laws weren't written with stupidity in mind.

    Best,
    Dennis
     
  10. Bisi

    Bisi TS Member

    Joined:
    Jan 29, 1998
    Messages:
    3,399
    I have heard that in the really hot spots of a few years ago (Fl, NV, CA, AZ) that some real bargins can be picked up now. Is that true WPT? I would like to pick up a bargin. It has been 40 degrees, rainy with fog here and we might see snow this weekend. I'm looking for a bargin in the above mentioned states. Post any info here, on this site, as I'm sure other trapshooters are also looking.

    Bisi
     
  11. 22hornet

    22hornet Well-Known Member

    Joined:
    Jun 22, 2007
    Messages:
    1,461
    Location:
    Hanford, CA
    Speaking of Trenton Mayor Palmer...has anybody been to Trenton lately? My God!
     
  12. hmb

    hmb Well-Known Member

    Joined:
    Jan 29, 1998
    Messages:
    9,436
    There will be alot of bargains out there in the near future. A little known fact is that on a foreclosed home where the motgage was not payed off in a timely fashion the bank that is holding the mortgage has to place an amount of money equal to the outstanding loan in esrow and that money is frozen until the property is sold. Make them an offer and you will be pleasently suprised at how little you will have to pay. HMB
     
  13. SirMissalott

    SirMissalott Active Member

    Joined:
    Mar 29, 2006
    Messages:
    2,241
    Its funny the Mayor's weren't objecting when the windfall money was coming in from all the sub-prime business a couple of years ago. Stevie Wonder could have seen what was coming. I talked to a tax appraiser during that period and asked him what they were going to do with all that extra revenue. He sarcastically answered me that if they had too they would buy new snowplowing equipment. It didn't make sense to me living in central "FLORIDA", but who am I.
     
  14. phirel

    phirel TS Member

    Joined:
    Jan 29, 1998
    Messages:
    9,556
    I am sure Jimmy Borum would pay back any money I loaned him. Jimmy, just send me an e-mail with your home address and the Counties in Texas where you have real estate. I can look up the legal descriptions on the net. I will send you a little paper work and after I get it back, I will send you a check. Don't worry about the wording of the contract I will write. Details such as compound adjustable rates and negative amortization are just words.

    Pat Ireland
     
  15. glenn mcleod

    glenn mcleod Member

    Joined:
    Jan 29, 1998
    Messages:
    528
    One of the biggest mistakes was making the loan officer a commission employee rather than a concerned salaried employee. They had no reason to give good sound advice to buyers, their only concern has been to get the loan closed so they made more commission and the bank/mortgage co. could get their closing fees and then to show their concern for their customers the lender would sell their paper on the secondary mortgage market and if it would just remain solvent for 12 months their worry of getting it back was gone. Somewhere along the way I think a used car salesman got involved with the banking business. Glenn
     
  16. Brian in Oregon

    Brian in Oregon Well-Known Member

    Joined:
    Jan 29, 1998
    Messages:
    25,254
    Location:
    Deplorable Bitter Clinger in Liberal La La Land
    hmb, quote: "There will be alot of bargains out there in the near future. A little known fact is that on a foreclosed home where the motgage was not payed off in a timely fashion the bank that is holding the mortgage has to place an amount of money equal to the outstanding loan in esrow and that money is frozen until the property is sold. Make them an offer and you will be pleasently suprised at how little you will have to pay."<br>
    <br>
    That's how I picked up my home many years ago. The bank had held on to it for seven months after they foreclosed (and I'm not sure how long that process took), and had to overhaul it. We got a smokin' deal with a low interest rate, the price cut, and not much down, simply because they wanted it off their hands. It went on the market on a Friday and we signed the papers Monday morning.
     
  17. phirel

    phirel TS Member

    Joined:
    Jan 29, 1998
    Messages:
    9,556
    In most states, or at least in most title theory states, foreclosed property must be auctioned literally on the steps of the county court house. I have been to several of these auctions and have not yet found a bargain.

    I have found some good deals when individuals need to sell property fast. If it is a property I am interested in, I can close in 3-5 days.

    Pat Ireland
     
  18. hmb

    hmb Well-Known Member

    Joined:
    Jan 29, 1998
    Messages:
    9,436
    Pat,

    I believe those auctions involve non payment of real estate taxes, a process which usually takes a minimum of three years to get to the steps of the court house.

    The Arabs just sent Citi Bank 7 billion dollars at 11% interest to help bail them out. You think they are in trouble? You think they are looking to make deals? I think you were standing on the wrong steps. HMB
     
  19. W.P.T.

    W.P.T. TS Member

    Joined:
    Jan 29, 1998
    Messages:
    8,371
    Bisi,

    There are deals out there now but nothing like the deals yet to come in the near future ... There is a house across the street from mine that sits on a Golf Course, 2 bedroom, 2 bath, 2 car garage, approx 1600 sq ft. that the bank is trying to sell ... They hold paper on the home for $240,000 and have it listed for $193,500 or best offer ... I offered them $160,000 and would use it for a rental, so far they haven't taken it but have called and asked if I would consider paying more for it ... WPT ... (YAC) ...
     
  20. Easystreet

    Easystreet Well-Known Member

    Joined:
    Jan 29, 1998
    Messages:
    1,463
    The temperatures here in Florida have been in the upper 70's to low 80's for the past several weeks with little or no rain. More of the same is expected for at least the next 5 days.

    If I were freezing my butt off up north, I'd start searching in a warmer climate right now. You should be able to find some good deals on houses. Make an offer. The worst the seller can do is say "no".
     
Thread Status:
Not open for further replies.