Jan 30, 2010
Increased Foreclosure Rates in US
The recent housing market boom has left many people in homes that they cannot afford with loans that they never should have been granted. This is resulting in a 72% increase in foreclosures from 2005 to 2006 according to recent reports. Foreclosure rates are increasing in 2007 due to lack of home sales and increasing mortgage rates. There is also a jump in the delinquency rate on US home loans. The biggest increase in delinquency is on sub prime mortgages where the current rate is up from 12.56% to 13.33%. FHA loans are also not far behind with a delinquency rate of just over 13.46%
This increase in foreclosures has affected all areas of the housing market: from starter homes to luxury residences. Industry experts believe that there are several reasons for this increase in home loan delinquencies and the increase in foreclosures. Consumer confidence in the current market might make many first time homebuyers, especially couples, take on a larger mortgage that they can afford. If they are unable to make payment due to a loss in employment for one of the partners, they usually lose their home to a foreclosure. Some experts believe that rising energy prices are also putting a strain on household budgets making it difficult for some consumers to make their mortgage payments.
Another important factor is the cooling off the housing market in some areas of the US. With the decrease in the rate of house sales in these areas foreclosure rates are on the rise. A decline in the price of housing also leads to a loss of equity for the homeowner that makes it difficult for him or her to leverage their property in case of difficulty with payments. The states with the highest current foreclosure rates are Michigan, Mississippi and Louisiana.
Foreclosure rates are high among ARM borrowers. ARM or adjustable rate mortgages frequently offer a low introductory interest rate, which is very tempting to potential homebuyers. Once signed on homeowners might experience an increase in their monthly payments due to increases in current interest rates. This might sometimes prove mortgage unaffordable to some homebuyers and lead to the loss of their property in a foreclosure.
The scenario is not one of doom and gloom however. This is a great time for those interested in purchasing foreclosed properties either as their primary homes or as investment properties. Foreclosure sales can allow one to purchase very desirable residences at a fraction of the real value providing one with instant equity and relatively low monthly payments.
Watch the video related to property foreclosure
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Help answer the question about property foreclosure
Purchaser of foreclosure property responsible for 2nd mortgage forgiven in bankruptcy?
2nd mortgage relieved in bankruptcy & home is now in foreclosure with 1st mortgage bank. If someone buys the property, will they have to pay the 2nd mortgage or is it gone because it was part of the bankruptcy? BTW, the property is in Michigan.
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Oh, but wait! The change is coming, I promise. It'll happen…lol.
Potentially, any mortgage runs the same risk. If people made bad loans, they are at risk.
This is the nature of banking, incidentally.
EDIT: Steve C., who "put them into the homes?" I didn't know anyone but me put me into a home.
Homeowners need jobs.
Period.
Just giving them money might make a couple of mortgage payments, but there is upkeep, and property and school taxes to consider too.
When a company goes out of business, whole towns can be made worthless, you can't sell when there is no more business for people to be employed in order to pay for those homes.
As to how high unemployment will go, I'm thinking possibly as much as twelve percent. More probably ten.
Its not going to be pretty and its not going to be over this time next year.
Answerer 2 is correct mortagage companies sold that loan in little pieces to other companies, they already got their money and they don't care about making arrangements.
And as to flipping burgers…you would need to work two full time jobs to make a thousand a month, and thats a pretty average mortgage payment. Not even counting those who pay far, far, more.
HUD does not lend money, so whoever you are talking it, it is the wrong person.
It sounds like when you "trying to do the right thing" you screwed up and got yourself an ARM loan. The "right" loan for a homeowner is a fixed on.
I understand your frustration. I do think you are in the minority and the majority of these problems (foreclosures) are based on loose lending rules in the last 3 years that allowed too many folks to buy houses at perhaps more than they could afford.
Your situation simply reveals that real estate is indeed truly an investment. It's generally much safer than say the stock market, but also carries risk just like ANY investment. While usually, it is a low risk and your investment appreciates in value, many people have experienced what you have and have lost equity and if they had an ARM loan, may very well have no option but to get foreclosed on.
I'm very sorry this happened as I understand you had the best intentions and could not have known the market would go the way it did. People lose money in stocks all the time, and sometimes people lose money in Real Estate.
Democrats want people to believe it's Bush's economy unless there is a substantial recovery and greatly reduced unemployment. Some of us will remember that the "stimulus" was supposed to hold unemployment at 8% and that's why it supposedly had to be passed immediately. Obama started his Presidency off with a $787 billion dollar lie! As for that BS about "underestimating the damage Bush caused" I'm one of many people who isn't buying it. What kind of idiot introduces a $787 billion dollar piece of legislation if they don't know the real situation? Obama works for the big bankers, not the American public.
I love how you post these great references, yet the libs can only talk about how they won the election. LOL!
I learned in college about the need to look at the premise that underpins a question, and yours fails every test. Why? Because foreclosures prove that capitalism works, not that it fails, or is failing. How do I know this fact? Because I am living in a house that some greedy bastard tried to by with sketchy income and little down payment. He foreclosed, and my wife and I came in with solid jobs and a down payment of 25%. I love capitalism.
Another opinion. And you know what they say about those.