Prudent homebuyers are getting hit 3 times.

[SoCalDem]

If you were like our family , and bought a house you could "afford", rather than one you "wanted", you may think you will escape the mortgage "crunch","bubble","boo-boo"..or whatever cutesy name they are using these days...

But you WON'T.

You may be sitting there with a fixed 30-year, safe mortgage, and you are paying it regularly, with little or no problem, but your neighbors' problems will literally STEAL tens of thousands of dollars from you, AND the 2nd hit comes by virtue of any bailouts the feds try out (before they ever admit that they royally f'ed up, your tax dollars will end up subsidizing the various bandaids they test out..

You will also pay when the tax base of your county/city-town/state shrink dramatically.. Every home occupied by a buyer, had a substantial amount of the payment, "earmarked" as taxes to support schools & community services. When fewer people pay in, the ones who DO, end up paying more.

As communities fall into disrepair, due to unoccupied/vandalized homes, the grocery stores & other businesses near them will see a drop in sales, and may start closing up...taking jobs with them, and setting off a new round of people unable to pay THEIR mortgages.

Like Humpty-Dumpty, the pieces are all just being swept into tidy little piles, and then re-arranged, but there is really no way to put it all back together.

[Hydra]

1. All brought to you by Bushco

Welcome to the 1930's again.

The perfect storm is brewing, and it was created with Cheney's weather control device.

[SoCalDem]

6. The thing that really pisses me off it this..

There were enormous amounts of money made in the propagation of this gigantic FRAUD, and NONE of it will ever make it back to the people who were harmed..

and there are empty houses just sitting there, being vandalized, while people huddle to stay warm under bridges..

People with lots of cash (gotten by ripping us off) will swoop in and start buying up these houses, for pennies on the dollar, while more people move into poverty & despair..

[Hydra]

9. Yup

One of Greenspan's friends bailed with BILLIONS on a "hunch"(which I'm sure Greenspan supplied him), and now he is offering Greenspan a job. Sorry that I can't find the article right now.

A few people profited OBSCENELY and the people who were taken probably couldn't declare chapter 7 due to the new regulations.

Using the law to screw everyone. The Bushco way.

[Divernan]

20. You're right about the bankruptcy option.

A friend in SW Florida, ground zero for the bursting bubble, bought her first home at age 39. She went the fixed rate, 30 year mortgage route, on the promise by her employer (ready for this? the federal government) that she would be in that assignment for 7 years. She paid about $230,000.

Prices went up for another couple of months and then began to go down. Once W was reelected, and Jebbie wasn't running again, W's administration closed the office and she had to move out of state to find work. There are dozens of empty condos in her development now. The last one that sold went for $148,000. Factoring in the realtor's fees & other costs, it would cost my friend about $50,000 to sell the place, assuming anyone would buy. She doesn't have anywhere near $50,000. She sunk her savings into her downpayment.

She consulted with a bankruptcy atty. The atty. explained that since my friend is still employed, making a decent salary, she would be judged able to pay off the debt. The lawyer ran the numbers under the new "bankruptcy" law and explained the court would order my friend to pay some $1,800 a month for ten years. And she would no longer own the house. Those monthly payments are more than it costs her on the mortgage with the place sitting there empty. Lawyer told her to stop paying anything, contact her mortgage lender offer to give them title to the property. It costs mortgage holders about $50,000 to go through foreclosure proceedings. Due to the way the mortgages have been bundled, and then these bundles sold in fractions to various investing institutions, the financial whizzes never bothered to process the vast paperwork transferring ownership of the mortgages. The courts have started throwing out the lenders attempts to pursue defaulting owners.

What an incredible clusterfuck under the greedy administration of W and his have-more supporters.

[riderinthestorm]

33. Why doesn't she rent her condo?

Why would she just give the bank the money she's already put into it (her down payment +) by giving them the title? Why doesn't she just rent for a couple of years? Even if she doesn't achieve exact parity with her mortgage/tax payments, she's going to be recouping a hell of a lot more than letting her downpayment go down the tubes.

A lawyer told her to just stop paying??!! Wow! I do not understand.

[tsuki]

27. 1980's... Red Hill Financial, Silverado, Topsail Hill, St. Joe, Emerald

Coast Joint Ventures, and a Resolution Trust note that every taxpayer in the US has been paying off for the last thirty years.

Let's hear it for deregulation!! Nothing really changes. They get the taxcuts; we get the bill.

[bvar22]

28. The TRUTH is:

Reagan planted the seeds for the current Housing Crisis,
but those seeds were fertilized and nourished under the Clinton (DLC) administration.
Bush43 had little to do with the Housing/Mortgage crisis other than being president when the Pyramid Scam collapsed.

Deregulation of Banking/Lending is the REAL culprit.

[CANDO]

40. Thom Hartmann explained the entire thing recently.

Everyone remembers Bush's "ownership society" initiative, right? Well, turns out when more people can "own" a home they psychologically become more "conservative" in their world views. They start to turn Republican apparently. Hartmann said he modeled it after Maggie Thatcher's success with the strategy in the UK back in the 80's. Bush needed Greenspan and Congress to help him deregulate the housing credit markets and lower the interest rates. But in the end it backfired big time. It was all a gambit to help them achieve their "hundred year reign" of Republican rule. Anyone else hear Hartmann explaining this?

[krkaufman]

50. Well, it's not all brought by BushCo.

Bank home lending has been loosening for a long time, and the speculation allowed by banks was opened-up during Reagan's term. Further, Greenspan shoulders some of the blame, so anybody who kept him in his position can accept some small portion of the responsibility. </uninformed rant>

[sandnsea]

2. And completely preventable

Way back in 2001, the mortgage companies fought the laws that would have prevented this whole thing.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=2881463&mesg_id=2881463

[itsrobert]

3. I also hear, those in an HOA will probably pay more HOA fees

to offset the loss of many foreclosed homes no longer paying HOA fees.

[DURHAM D]

17. It is already happening - Associations are already a year into a real problem.

Expenses are going up for HOAs as they pay higher and higher legal fees to collection attorneys trying to get unit owners to pay up. Also, the Association must be represented at bankruptcy hearings by an attorney.

Also, if a condo owner pays their mortgage but does not pay their monthly assessment to the owners association the Association eventually has to foreclose on the owner. Each foreclosure brought by an Association costs about $2000-$2500 - paid for by the "good" citizens in the community who pay their assessments.

[canoeist52]

4. "You will also pay when the tax base of your county/city-town/state shrink dramatically"

This is the thing that will accelerate the coming crash of our living standard

[jody]

5. #41 gave us the savings & loan scandal costing taxpayers perhaps $700 billion, #43 has outdone papa.

[mike_c]

7. as a long-time renter in my local housing market I'm feeling like...

...I made the right decision several times over. First, in keeping my housing cost about half that of median priced homes in my neighborhood over the last decade. My standard of living has benefited tremendously. Second, by not paying the inflated costs of real estate I'm somewhat insulated from the financial fallout of the mortgage (and home price) collapse. I'm very pleased to NOT be holding an overvalued note on a house I could barely afford.

Finally, if we'd bought this place my ex would have gleefully taken me to the cleaners when we divorced several years ago. Instead, we made a clean break without having to deal with the effects of joint home ownership.

I feel pretty lucky, frankly. I know that I'll feel the indirect effects on the economy, but even there I'm happy to have housing costs less than half the annual cost of paying a mortgage and taxes on this place. My landlord owns the place outright, so they're making money and I'm getting a bargain. Sweet!

[SoCalDem]

11. Yep.. in your case, you are in a good place..

rents around here will probably go up, because more and more people will lose homes, and all be competing for the same places..

I know that this was foreseen, too.. About 3 years ago, SEVERAL really big aparment complexes were suddenly built.. My husband & I commented that it was really odd, since single family homes were sprouting up like mushrooms, and where on earth would they find renters for all these thjousands of apartment units?? Now we know..

apartments have waiting lists & houses are sitting empty & broken into..

[penguin7]

37. I think the fed and the government are going to try to fix the housing market

by making it cost $1000 to fill the refrigerator.

The less the dollar can buy, the more a house will have to cost.

[AlCzervik]

8. i have a foreclosure literally right next door, i sweep the driveway and sometimes cut the lawn

and water it, the whole thing just sucks. the people living there were renters and they had to leave a week before Christmas.

[SoCalDem]

13. We have one next door too.. Boarded up(finally) but badly vandalized

before my daily phone calles to the realtor/police bore some fruit..

There's probably about $50K in damge to that house...and I fear that someone will set it on fire for the insurance :scared:..

The only good thing is that there are no palm trees (torch-trees) between our houses..

[AlCzervik]

16. gawd that sucks and blows. This one next door is ok right now but i think it's

only because i keep an eye on it, i've called the realtor more than once and i called the city as well, they just added a new feature, you can now call a special number solely for those kind of problems. How fucking bad is that, a special city number to call about foreclosed homes that aren't being tended to?

[and-justice-for-all]

25. When a house is not even worth resale...

The mortgage company just needs to right it off as a lose and give it to the city to demolish. Then the city could contact the closet neightbor to offer then the property/lot at a cheap price.

[and-justice-for-all]

23. When the house next door to us was forclosed...

because they guy just left it, I would cut the grass over there. Luckily it was a decent home and was never left in shambles and the guy did take care of it and remolded too.

[HCE SuiGeneris]

10. Nailed it again, SCD.

K & R

[Divernan]

12. Excellent analysis & here'are the 4th & 5th ways you'll be screwed.

If you reach any of those points in life where you,(the sensibly mortgaged, made a big down payment, got a 30 year fixed mortgage, and were not flipping for profit homeowner) have to SELL your house, here are TWO MORE ways, you will be economically screwed, if not destroyed.

I'm talking about, for example, someone who loses their job and has to move to a new community to find employment. I'm talking about someone whose employer closes down your office and will continue to employ you only if you move to a different location. I'm talking about someone whose job is downsized and you can no longer make your mortgage payments so you HAVE to sell ASAP. I'm talking about a family where an elderly parent dies and the house/condo they lived in has to be sold. These are all examples of homeowners who have no choice but to move, and therefore MUST sell their homes.


(1) In many communities you may find that the plummeting "fair market value" has left you with a mortgage balance far exceeding any price for which you could sell your house. And of course you would also have to factor in that 7 percent realtor's fee and some closing costs.

(2) Your house may be in a neighborhood where houses have already been abandoned, or at best are sitting empty with For Sale signs in the overgrown yards. (Many suburbs of Cleveland come to mind, as well as all the condo developments in Florida.) There are NO buyers for these homes. Who wants to move onto a block with abandoned houses?

[SoCalDem]

15. We are woefully aware of that scenario.. We have bought two houses

BOTH in a sellers' market..and every time we needed to sell...yup..buyer's market..

and now that we are getting old, and had hoped to benefit from prudently managing our money & mortgage...and end up with enough to buy something modest for our final house, our equity, (which we LEFT in) is poofed into nothingness..

the only good thing is that anyplace we would move TO, would also be devalued ..

[Divernan]

24. Way back in my youth (my 20's) I bought 2 house in California sellers' markets

During the heyday of the space race, my then husband worked for McDonald Douglas. We bought our first house in SoCal (Fountain Valley) and before we could even close, he got transferred to Sacramento. Lost the down payment on that house. My parents came through with another downpayment so we could buy a modest little ranch in Rancho Cordova. Couple of years later, everyone from the SIVB testing facility there was simultaneously transferred to Cape Canaveral. Hundreds of houses in the same little communities hit the market at once. We were lucky to find someone to assume our mortgage. Fast forward to Cocoa, Florida. Again, my Mom helped us with a downpayment ($1,000 did it back then). Three years later, massive layoffs hit the aerospace world, and particularly the Cape. Again, we were lucky to find someone to assume our mortgage.

Years later, all those properties accelerated in value at an unbelievable rate.

So hey, I feel your pain - really!

[sarcasmo]

48. Self edit, misread your statement.

[proud2BlibKansan]

14. Good point

Our mortgage is paid off but we have sure been searching our neighborhood for real estate signs. If we see too many, it may be time to sell and get our money while we can.

[smoogatz]

21. Bad idea.

In your situation, the smartest thing you can do is stay put and wait it out.

[proud2BlibKansan]

30. If the market bounces back, yes

We are in an area where housing values hit the roof a year or so ago. If they fall, I can't see them rising back to what they were.

[Fed_Up_Grammy]

18. It will all work out---it always does.

[earth mom]

32. You wouldn't be saying that if the housing crisis had kicked you in the a$$.

The entire point is that this SHOULD NOT have happened in the first place and now the little guys of this country are paying the price. :grr:

[mike_c]

41. I disagree....

It definitely SHOULD have happened. What shouldn't have happened is the greed that fueled the incredible rise in the price of real estate. The house I live in has more than doubled in value during the last ten years, despite being exactly the same property during that entire interval. What fueled such an astronomical increase in value? There isn't any appreciable housing shortage here, despite the lamentations of developers who cry they can't make a quick buck by throwing up enough ticky-tacky suburban boxes because the county planners won't allow unconstrained growth. There is no rational reason for such rapid increase in housing costs. It was fueled by rampant greed on the part of everyone involved, including buyers who paid twice as much for the same home they could have bought for a reasonable price just a few years ago, who ASSUMED they would benefit from the next round of greed.

[Skittles]

36. no it does NOT always work out

get a clue

[Deja Q]

19. It's wrong to tell these other companies how to do things.

Just as it's wrong for people to tell others how to live.

:shrug:


(the hidden digs, whatever they might be, if they even are, might be aimed at Democrats or Republicans, depending on the situation. :D )

[and-justice-for-all]

26. Companies are not people and should be regulated...

even if that means the citizens should have enough fortiude to express their concerns to that company or file complaints to the BBB.

[and-justice-for-all]

22. I know, they could just erase all the mortgage debt!!

wipe the slate clean and start all over again. People will either forclose or file bankruptcy anyway, so erase their mortgage debt with no penalties to others who do have a problem paying their mortgage.

[InsultComicDog]

29. meh

I paid off my mortgage.

I may have ripped myself off but at least I know I won't be getting thrown out of my house. As long as I pay my taxes, that is.

[troubleinwinter]

34. I own mine free and clear too, but I worry about friends, neighbors, relatives

and fellow citizens. I worry about renters whose landlords have mortgages.

I own mine without a mortgage, but I fully expect all of this to lead to a tripling of property taxes over the next three years or so. I have witnessed this before. It will lead to retired people on fixed incomes who own their homes outright to also have to get out. Values are then caused to plunge again. Taxes go up again. And on and on.

You may think you're sitting pretty. You may not be. And you may well witness tremendous tragedy around you.

The smug "I got mine" view may not be as satisfying as you expect.

[InsultComicDog]

35. sorry, didn't mean to be smug

It's just one less thing to worry about, at least for now.

[DemoTex]

31. Top-down class warfare, redux.

Destroying the Middle Class 101 ... Prof. Grover Norquist (et.al.)

[El Pinko]

38. You're right about the taxes, wrong about the "lost equity"

If you bought before the bubble, the equity you had up until that point is still secure, and anything above that was speculative BULLSHIT and was never real to begin with.

If you bought a house in LA for $300K in 2000, then believed it was REALLY worth $600K in 2006, you're an idiot. Of course you could have sold at that point and made a bundle then bought again after the prices inevitably plunged, but that $600K valuation was never based on anything more than speculation and fly-by-night loans.

So don't whine and bitch about your house value going back to 2003 levels, because that's exactly where it would be now anyway if the lenders hadn't flooded the market with easy loans to fools.

And if you bought at the peak of the bubble, sorry, but you're an idiot. All of the reasonably intelligent people I hung with in CA in 2004 & 2005 knew it was a MASSIVE bubble. We tried to tell people. There were dozens of bubble blogs trying to get through to people that the ratio of median income to median house price in bubble areas DID NOT ADD UP. But people would not listen.

"They're not making any more land"
"Don't be priced out forever"
"The Bay Area is special, prices here will always go up"

or so they said.



You have my sympathies about the decay of your community, etc. But you haven't lost any extra equity. It was never really there.

[SoCalDem]

42. "We" are just fine.. (we bought in '82)..Sorry if you thought I was "whining".

I merely stated facts about well-accepted issues involving the current state of real estate.. In SOME parts of the country, property taxes INCREASED, due to the "appreciation" in "value", and I would not expect them to decrease much, as communities struggle to hold on to every dime they can.

You sound quite belligerent, and I'm not exactly sure why.. perhaps someone in your own family is in some difficulty..

Whether you "accept" it or not, this whole issue is a spill-over issue for everyone..even renters..and people whose homes are owned free & clear..and for anyone who pays taxes..

Oh..

Have a nice day :)

[El Pinko]

47. Sorry, I don't mean to be belligerent, and yes, everyone is going to be affected by this...

...one way or another.

I'm glad for you that you bought when you did.

It just seems that there are so many people who seem to think they're entitled to 15% annual appreciation, it gets kind of annoying.

As for property taxes, I think that homes with severe depreciation can get reassessed and their taxes adjusted accordingly.

In California, that's probably less of an issue for you thanks to Prop 13?


:hi:

[smoogatz]

39. We've managed to avoid the foreclosure debacle here so far

—or at least the worst-case-scenario fallout you're experiencing. We managed to sell our former house at near our asking price a couple of months ago, and our current mortgage is a straight-ahead fixed rate deal without bells, whistles or complications. Our neighborhood is pretty established and remained relatively unchurned during the recent bubble. There are no foreclosed properties for sale in our neighborhood as far as I know, and certainly none that have been abandoned or vandalized. That said, we probably paid a bit too much for our current house, and factoring in all the improvements we've made (and will have to make going forward), it'll be awhile before we recover our investment—but our expectation is that we'll be here for at least ten years, so it's not an urgent problem. Of course, it's the midwest so we're always months or years behind the coasts; it's possible that things will get a lot worse before they get better.

[SoCalDem]

43. Personally, we are fine.. We have a 30-yr fixed at 5.25

and can well-afford our home, but others in our neighborhood are not so fortunate :(

[lpbk2713]

44. Here's another way I'm getting squeezed ...

Anyone who lives in Florida (like me) can tell you the price of home insurance is skyrocketing. Some homeowners can't even find insurance. Their current policies are being cancelled and they can't find a new insuror. If you live on the coast you are SOL. This is all to make the greedy insurance companies wealthy. They say they lost a lot of money in the hurricanes of the past few years but their Profit and Loss Statements say otherwise. Anyone who has a home mortgage is required to have home insurance and the insurance companies have them between a rock and a hard place and they have the state and local politicos in their pockets to back them up.

[SoCalDem]

45. Yup.. there's that too.. As the "pool" shrinks, we all pay more

and get less... and yet.. the insurance companies still pay out mega-bonuses and build glittering buildings all over the place..and sponsor sporting events ..and run millions of dollars worth of stoooopid commercials

[NashVegas]

46. That Sucks So Bad

Sorry :(

[TalkingDog]

49. I call BS. Explain to me, with concrete examples how this works:

"...your neighbors' problems will literally STEAL tens of thousands of dollars from you..."


I agree with your 2nd point. The decrease in tax revenue will be problematic for everyone. Rich, poor, banker, beggar.


But if you must direct your ire at someone, try at least including the folks that made it all possible. Without "creative investment vehicles" dreamed up by bankers, stock traders and businessmen to increase their money and decrease their risk and accountability, this literally could not have happened.


Taking a stun gun or a water cannon to a broken, sickly cow because you want it on it's feet for easy slaughtering might be a satisfying way to vent your spleen. But ultimately it says more about you than the misbegotten creature being abused.

[SoCalDem]

51. arf

:hi: