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Random Quote: I've upped my standards...............so up yours
Heartened by the recent rise in home prices? Don't get too comfortable. Standard & Poor's, the credit-rating agency that tells investors what mortgage-backed securities are worth, reports that the increase was just an illusion. It predicts the nation is about to see a deluge of new foreclosures that will drive real estate values back down.
Blame the "shadow inventory" – nearly 1.8 million homes that are on the road to foreclosure but for all kinds of reasons haven't gotten there yet.
Many homeowners have fallen behind on their mortgages or stopped paying, but foreclosure has not yet arrived. Mortgage servicers, the folks who send you the bills and file for foreclosure when you can't pay them, are overwhelmed. Courts, too, are backed up. Mortgage modifications and foreclosure moratoriums have put off the day of reckoning for borrowers, but not forever. And unemployment is sabotaging more homeowners every day.
Out of more than $1.6 trillion in existing mortgages that were packaged into mortgage-backed securities by Wall Street, some $425 billion worth are extremely late on their payments, and therefore likely to go into foreclosure. Only a fraction of borrowers who fall seriously behind are able to catch up, with the help of a loan modification. And even then the majority end up falling behind again. That amount of bad mortgage debt has been spiking up every month, slowing down just a little thanks to the government's Home Affordable Modification Program, but still continuing to rise.
Meanwhile, even as the amount of unpaid mortgage debt rises, the number of foreclosed, bank-owned homes for sale has been holding fairly steady. That tells us that the number of foreclosures for sale on the market is actually just a sliver of all the ones that are really out there. S&P's chilling conclusion: "Overall, it is our opinion that recent positive housing reports should not be construed as a sign that the distress in the residential housing market is abating, but rather should be attributed to the temporarily limited supply of homes on the market."
The bottom line: just counting the homeowners who are currently behind on their mortgages, along with the existing number of foreclosures for sale, at the current pace it will take nearly three years to sell all the foreclosures out there. That doesn't include all the borrowers who haven't fallen behind yet but are going to, because of unemployment or because their Option ARM payments are spiking up or because they just decide to stop paying.
The shadow inventory is equal to half the size of the entire market of homes for sale. When it starts getting listed, expect home prices in areas with lots of foreclosures to plummet. Yes, more.
I have friends that are still involved in realstate and the situation is that the banks have been sending the threatening letters and all but, They are letting people stay in the homes for fear that all the other properties that they also are on the hook for in the same neighbor hood will tumble out of control if the truth is ever known? I am not talking about low income homes. I am talking 500,000÷ homes
I have friends that are still involved in realstate and the situation is that the banks have been sending the threatening letters and all but, They are letting people stay in the homes for fear that all the other properties that they also are on the hook for in the same neighbor hood will tumble out of control if the truth is ever known? I am not talking about low income homes. I am talking 500,000÷ homes
Same thing here in the Northeast.
Seems we've hit bottom on the low end homes, (under 300k), but looks like the next wave will be the 400k-500k on up.....
on high end, yes, i believe prime mortgages and commercial are the next to hit. supposedly it will make subprime look like amateur hour. prime mortgages are the people that were 'supposed' to have the money. we'll see what happens, but if you search some of the mortgage reset charts, prime is starting to ramp up resets.
And the Banks are still sitting on their high horses with unrealistic expectations and not getting these things off the books. Case in Point.
I recently offer $515k on a short-sale home that needs a lot of work and has not had another offer in over a year. Bank called for appraisal that came in at $550, so they say. Bank refuses offer. Short sales generally go for about 80-90% of appraised value, so my offer way well over the norm. Disgusted with them; pulled the offer. They will take it to foreclosure, incur all kinds of expenses doing so, and end up with an REO on their books. Idiots.
unfortunately provisions in our tax law effectively allow a home owner to walk away from an underwater mortgage without tax liability on the cancellation of debt income (under certin guidlines). This in turn grants an opportunity to those otherwise able to make payments to simply walk away. This in no doubt is compounding the problem we have today.
unfortunately provisions in our tax law effectively allow a home owner to walk away from an underwater mortgage without tax liability on the cancellation of debt income (under certin guidlines). This in turn grants an opportunity to those otherwise able to make payments to simply walk away. This in no doubt is compounding the problem we have today.
Its not clear to me that raising taxes on people having difficulty paying their mortage is a good thing to do.
If you can't afford your mortgage payment how could you afford extra income taxes on unrealized capital gains? I could not imagine the feeling of loosing job/business, loosing house, and then having to pay taxes for loosing the house.
If you can't afford your mortgage payment how could you afford extra income taxes on unrealized capital gains? I could not imagine the feeling of loosing job/business, loosing house, and then having to pay taxes for loosing the house.
Life is not without risks. Some people have to lose, it's the only way the system works.
If you can't afford your mortgage payment how could you afford extra income taxes on unrealized capital gains? I could not imagine the feeling of loosing job/business, loosing house, and then having to pay taxes for loosing the house.
Its not the people that can't afford the morgage that is the problem. Now many people who still have their jobs are choosing to walk away from their mortgages even though they can still afford the payments. Their reasoning is that the $750k home they bought 3 years ago is only worth $500k now, so the credit hit they take from a foreclosure is much less costly than the $250k difference on their home.
Its not the people that can't afford the morgage that is the problem. Now many people who still have their jobs are choosing to walk away from their mortgages even though they can still afford the payments. Their reasoning is that the $750k home they bought 3 years ago is only worth $500k now, so the credit hit they take from a foreclosure is much less costly than the $250k difference on their home.
Thats rare because they still need a place to live, maybe down in florida where people were flipping homes, but not on their main residence, and those numbers are way off, itleast where i live, nobody lost a third of their value on their homes in NJ, even at the peak in 05.
I see your point, but that is probably more of an investor type owner. I think most people want to keep the home they live in. I know I do- no matter what it's worth on paper.
...here's an idea. make the banks burn down all foreclosed homes. That way it reduces inventory, and does not affect home values for the other homes in the neighborhood.
I think we can all agree that the current foreclosure practice is not working. Something needs to be done.
Thats rare because they still need a place to live, maybe down in florida where people were flipping homes, but not on their main residence, and those numbers are way off, itleast where i live, nobody lost a third of their value on their homes in NJ, even at the peak in 05.
Unfortunately it is not as rare as you think. I know more than a few people in south florida that have just completely copped out as far as paying their mortgages because of what was referenced above. They take less of a hit just claiming bankruptcy or trying to cut some type of deal with the bank to get their payments lowered. Some banks will actually go for the deal if the customer hasn't been paying their mortgage simply because it is less of a hassle for the bank and they lose less money by cutting the payments down. Some of the people have stopped paying their mortgages a year or more ago and they still live in the same damn home!!! The banks can't keep up with all of it. It makes me sick to see americans doing this kind of thing when they damn sure know they can pay for it. Some people can't pay for it due to layoffs and losing income which is a different story all together but as for the people that can afford it, they are just adding to the problems. It is sad to see this shit happen in our country. Just plain sad. What ever happened to living within your means? I guess they stopped teaching that in school, who knows?
My BIL hasn't paid his mortgage in a year and makes too much money to claim bankruptcy, he says he worked it out with the bank. I don't know how he gets away with it and we are in FL.
Thats rare because they still need a place to live, maybe down in florida where people were flipping homes, but not on their main residence, and those numbers are way off, itleast where i live, nobody lost a third of their value on their homes in NJ, even at the peak in 05.
I'm in North Jersey, and I can think of a number of people that paid $500K for a house that is now worth in the $300K range. Bergen, Passaic and Hudson Ctys.
In South/Central East Jersey, there are several people that paid in the $800K range for homes that can't get $500K now. Ocean and Monmouth Ctys.
Thats rare because they still need a place to live, maybe down in florida where people were flipping homes, but not on their main residence, and those numbers are way off, itleast where i live, nobody lost a third of their value on their homes in NJ, even at the peak in 05.
Im in little egg harbor on the water and at the peak my home was worth about 350-375K now I might be able to get 250K for it.
Glad I don't want to or have to sell. I paid 170K back in 02'
Thats rare because they still need a place to live, maybe down in florida where people were flipping homes, but not on their main residence, and those numbers are way off, itleast where i live, nobody lost a third of their value on their homes in NJ, even at the peak in 05.
Its called a "strategic Default/ Foreclosure" and unfortunately, it may be more common than you think. Maybe loosing a third of your value is a little extreme for most areas, but I'd say home prices are down close to 20% here in NC.
Your right in that family still may need a place to live for the short term so that their credit will be repaired. However, there are now tons of homes for rent for very affordable prices. So when they default on their home they save themselves from a huge depreciation hit and their monthly costs go down.
You can google the term and there are articles about it in all the major financial papers/magazines.
Its not rare. They are walking away and renting someone elses under water property?
Quote:
Originally Posted by Deep Run
Thats rare because they still need a place to live, maybe down in florida where people were flipping homes, but not on their main residence, and those numbers are way off, itleast where i live, nobody lost a third of their value on their homes in NJ, even at the peak in 05.
Is elvis still alive also? No body lost a third of their homes value in NJ????? Wana bet$?
The biggest problem is the bank people are trying to protect their own reputation and not short sell? Its a joke trying to get the banks to be realistic?
The Coming Foreclosure Flood 
