RISING FORECLOSURES in many areas of the USA: Why I see signs of excessive conspicious wealth all around?
Question:
I'm sure that most of these people facing foreclosure are well meaning types, not a bunch of house flippers and bums.
There are real people facing real drama behind the numbers. Who are they and what are their stories?
Answer:
A lot of them were suckered in by "monthly payment buying" (a similar phenomenon exists in the auto industry)....and they entered into ARMS. When interest rates started rising the housing market turned and these people were screwed.
Because of the turn in the housing market, and the fact that they barely qualified for ARMs, they couldn't qualify to ReFi into fixed rate mortgages.
I dodged that bullet and kept renting, but it could have been me. Around here you can't buy anything exept a condo for under $250K, and that's what I can afford on a good salary for someone without a degree. But there were companies three years ago that offered 'creative' lending options that would have allowed me to finance $350K or more, even though my payments would be higher than my paychecks.
They say 'pay interest only for 3-5 years and then start paying the principal', and suddenly I can get a better house with a mortgage lower than what I pay for rent--but in three years it will cost more than I can afford, but that won't be a problem--I'll sell the house then and use all the value that built up in it (from property values going up) for the down payment on my real home--the one I'll stay at for years. Then the market tanks, and if I want to sell my house, I have to do it at a loss--so instead of earning a down payment, I owe one now!--no way I can sell, no way I can make the payment.
I had friends who desperately wanted to buy a home. There is just no future in renting. They accepted a variable interest rate after a 5 year lock in at start of payments. Well wouldn't you know it the rate went up and increased their payment by 50%, that is alot when most families stretch a budget to get into a home in the first place.
Due to the newer payment and some late bills as a consequence of a modest budget they lost points in their credit score. That in turn prevents refinancing to a managable interest rate, the same one they started out with.
The bank doesn't realize that by trying to do a back door rate increase they actually lose profits in repossesd homes instead of making more by "stealing".
I see property values going up beyond fair value in my area. Developers buy out and speculate. Many of these developers are extending credit at one bank after another. They lose credit at on financer due to having empty homes for over a year. Meanwhile they can't afford to stop building and extending financing while having zero sales. There will be a fall out very soon, where banks bicker over who has ownership rights of these empty subdivisions. Then the prices and market will crash. these "wealthy" developers are all image and it will bite them in the rear very soon.
these people are americans, their stories, probably they were trying to flip but got in at the top market, etc etc. well people in foreclosure dont have the time to post on yahoo so head to a bank and ask.
Each foreclosure has it own story, but I think that people are taking on too much debt than they can handle probably due to greed in some cases but also due to poor decisions. Unless you have very very bad credit, the value of your house has decreased, been recently convicted of a crime or a complete moron you should be able to avoid foreclosure by either refinancing your house or selling it and moving into housing that costs less. I had a former client that was a large mortgage lender in the subprime market and the lenders generally want to avoid foreclosure at all costs because they will definitely take a loss on the transaction since they will have to sell the house at far below market value and lose on the income from the payments. They (lenders) have decided to foreclose more often recently because interest rates are going up fast so it is more profitable for them to foreclose on a loan that they make 5% on in order to use that money to lend to someone else at 6 or 7%. It really doesn't have that much to do with out of control spending.
Bear in mind that if the amount of people declaring bankruptcy went up then you would have an indication that people are making worse decisions than in the past.
Also, the way the free market works is that the market determines the price not the supplier. In other words the asking prices of the more expensive homes you see advertised is not always the selling price of those homes or all homes in the area.
They're the people who lied on their mortgage applications in order to afford those $300K and million-dollar homes.
They're the people who bought a new SUV last year to replace a smaller SUV that was only 3 years old.
They're the people who continue to finance their own hardships, by borrowing money on credit cards until no one will give them any more money.
They're the people who have not taken care of themselves first, and are now facing huge medical bills that cause them to fall behind everywhere else.
They're the people who bought these huge homes and didn't realize simply how much it would cost to keep them warm in winter.
They're the people whose jobs were sent to India and China.
They're the people who borrow their conspicuous wealth from the same banks that finance the companies that outsource their jobs, but don't know they're doing that.
They're the people who were given fraudulent appraisals that increased the values of their homes far beyond what was reasonable.
They're the people who did not realize that having children is very expensive.
They're the people who tried opening their own business and, for one reason or another, just couldn't keep up and had to confine themselves to the prison of wage slavery and give up their dreams of owning their own business.
They're the people whose parents needed extra care and had no one to take care of them after the small government handouts ceased.
They're the people whose children needed extra care and found that they could no longer sacrifice their family for work and their income decreased because of their commitment to their own families.
They're the people who get up every day, just like you and I, and succeed some days, fail others, and make their own decisions in life and learn from the consequences of those decisions.
They're the people who, hopefully, once they face foreclosure, realize that family and community are more important than owning the biggest house or competing with coworkers for the most debt or the least-efficient SUV.
Hope that helps.
ForeclosureFish
http://www.foreclosurefish.com/...
Look at this website before you buy. It saved me tons of money when I bought my house:
www.govntforeclosures.blogspot...
Don't get ripped off.
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