Foreclosures at record high in first half 2009 despite aid

[Joanne98]

Source: Reuters

NEW YORK (Reuters) - U.S. home foreclosure activity galloped to a record in the first half of the year, overwhelming broad efforts to remedy failing loans while job losses escalated.

Foreclosure filings jumped to a record 1.9 million on more than 1.5 million properties in the first six months of the year, RealtyTrac said on Thursday.

The number of properties drawing filings, which include notices of default and auctions, jumped 9.0 percent from the second half of 2008 and almost 15 percent from the first half of last year.

"Despite everybody's best efforts to date we're not really making any headway against the problem," Rick Sharga, senior vice president at RealtyTrac in Irvine, California, said in an interview.

Loans that were temporarily frozen by various state and federal programs, which mostly ended in March, started pushing through the process in the past three months.

One in every 84 households with loans got at least one foreclosure filing in the first half of this year


Read more: http://www.reuters.com/article/topNews/idUSTRE56F0XK20090716

---

The aid never made it down to the people.

[bulloney]

1. Loose distribution of credit. High unemployment. Trickle-down aid packages. Is anyone surprised?

[corpseratemedia]

2. helping the banks to cash in on their bonuses, and not the people, was the big problem

[SpiralHawk]

3. Thanks a pantload, republicon 'conservatives'

This is STILL your mess, and everyone knows it.

[Steerpike]

4. This is our mess now!

And we have to fix it now...no more excuses. The time is quickly passing where we can say that is Bush's fault. We are in power now. If we intend to maintain Democratic Rule then we need to start helping "The People" and not just Corporations and Corporate Whores.

[Name removed]

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[Name removed]

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[Pacifist Patriot]

8. They're mess, our clean up. Sucks, but that's the reality.

Come to think of it, it kind of reminds me of being a mom. I didn't soil the diapers, but who did so doesn't really matter. I still have to clean up the bum. Yes, I do indeed sometimes think of the previous Republican administration as babies sitting in their own shit without the ability to do anything else but add more excrement to the pile. They've been crapping in their nappies for awhile now. All we can do is hold our nose and start cleaning.

[Pacifist Patriot]

7. What aid? The aid to the banks that have the mortgages in the first place or...

to the homeowners struggling to make payments on those mortgages? Oh wait, I don't recall there being any to the latter group.

[live love laugh]

32. I know..."despite aid"????? First of all, whatever aid there was came in the2nd qtr.

The housing market was in a nosedive already.

Furthermore, the "aid" is too little. I won't say it is too late but credit restrictions are tighter than they were even at the beginning of the year--people can't get loans to buy up the properties on the market. Believe me, I know first hand because I am a seller who has paid a mortgage for 16 months while trying to sell my own home. I'm on the verge of becoming one of these statistics because of the restrictive "aid" that does not provide a relief to me.

I have worked hard to build up A+++ credit but that may be ruined soon. I am sure that people like me then become part of the reason that the market can't recover because if I foreclose, then I become a credit risk when in reality, I can pay a mortage--I just can't pay two mortages...one for the house I can't sell and one for the house I need to move into.

[xchrom]

9. an incredible loss to the economy.

it's sad to watch these numbers -- at the end of the numbers are people.

who should have gotten the aid.

[slackmaster]

10. It's not really a loss to the economy in the long run

Prices are already starting to go up because sales are up. Some people who could not afford to buy a home two years ago are able to do so now.



Of course it's a personal tragedy for anyone who loses a home, but they usually recover and get on with their lives.

[Steerpike]

11. Whose buying up these firesale homes?

Is it rich people buying up forclosed properties to use as rentals? It was my impression that you have to have a real high credit rating to get a loan for 300 k right now. Not something a working class family has. I see this more as an opportunity for the wealthy to consolidate property into fewer and fewer hands.
I hope your right about people recovering from losing their jobs, and losing their homes. Of course there is a lot to be said about the power of positive thinking.

[slackmaster]

12. People like my friend Dan the middle school teacher

Age 42, bachelor. Saved up for over 10 years to put a down payment together, while living in cheap rentals in shitty neighborhoods.

He bought his first house in October 2008. It's on top of a ridge in a nice part of a generally disreputable but upcoming part of San Diego.

The previous owner had bought the place about 14 years earler (for just about the same price my friend paid), and leveraged himself into about $450,000 of debts he couldn't pay.

He lost his home, probably drove off in his big SUV towing the boat he bought with the borrowed money. The lender (who happened to be a subsidiary of AIG) lost about a quarter million on the sale.

The irresponsible homeowner and the evil corporation lost. A good man bought his dream home. Sounds like a win to me.

Only about 20% of foreclosure sales in California are going to people who plan to rent them out.

[Steerpike]

13. Well that does not sound like a win for the previous owner.

Is everyone who loses their homes irresponsible hooligans? Are there no families that are being evicted? No women and children? No seniors out on their asses? I do trust you...but I would still like to see some real numbers.
You are making it sound like these people who are losing their homes are all bad people who deserve their misfortune. I think the law of averages would place some of these people in other columns.

[slackmaster]

15. I gave one anecdote based on a situation I have personal knowledge of

I did not intend to try to characterize all foreclosure situations. Every one is unique.

I know about another one across the street from me and a few doors up. Owner, a single mom, apparently came into some money in about 1994. Bought the house, leveraged equity over the years to customize it, and did a horrible job. She used very poor judgement in selection of materials and design. There's lots of non code-compliant plumbing, wiring, and construction. The layout of the house is so "custom" that it's highly unlikely anyone is going to look at it and say "That's the house I dreamed about last night!".

She spent the money on crap work rather than basic maintenance. The receiver just tented what's left of the structure. There is massive termite damage. It's going to cost close to $100K to make the place sellable, and they're not going to get anywhere near what the final debt load was.

BTW, I just checked some figures for San Diego County. Of transfers within the last 90 days, about 5,700 were owner-occupied and 3,600 absentee owner (including all residential property types, i.e. apartment buildings, condos, single-family detached, mobile homes, etc.). That's more like 39% rentals. In "normal" times the figure is closer to 20% in California in general.

[Steerpike]

16. I appreciate your position.

But, personal ancedotes are no way to anylize "big picture" situations. I think the numbers you found (and thank you for looking them up) regarding rental ownership being up by 19 per cent are really indicative of what I was talking about. The consolidation of real property in to the hands of the rich is not good thing.

[slackmaster]

22. We've had gluts of rental units before

It always leads to lower rents, which suppresses the value of rental property.

[Steerpike]

23. I can see that.

So do you feel this is a normal downturn that will naturally lead to a healthy recovery? And, if so, when will this recovery occur?

[slackmaster]

25. I think this is an unusually bad turndown that is the natural result of an unusually large bubble

In three years it will seem like a bad dream.

[Steerpike]

28. Well sir,

I hope you are right about that.

[Igel]

36. You list four categories as though they were mutually exclusive.

They're not.

The house we bought had been inhabited by a family and were also irresponsible hooligans. Father, mother, and at least two kids (and dog). Yet in just over three years they managed to wreck the dishwasher and stove, put holes in the linoleum and walls, ruin windows, etc., etc. Their dog had nearly clawed through the drywall near the front door. The garage door was broken. The place needed thousands of dollars in work, and they lived here for barely more than three years. They couldn't even afford to replace the air conditioner filters, but had cable, satellite tv, and three phone lines until they moved out.

Now, they almost certainly had a subprime mortgage, and probably assumed that the house would appreciate so they could refinance. It did appreciate for the first year or two. Then the price dropped. They gambled in their greed and lost. They were a family, a mother and her kids (and their father), and also irresponsible hooligans. It might be that they fell on economic hard times, that one of them lost his/her job and they couldn't make mortgage payments ... but you'd expected the phone and cable to bite the dust so they'd have a functioning stove, no? In any event, the house was already distressed after 3 years, and if they'd stayed here a few more years the house would have a real dump.

[Steerpike]

37. I'm sorry I did not make myself clear enough.

I seem to get the impression that some people here feel that the majority of people who have lost their homes are "bad people" who deserve to be homeless. I take the position that the law of averages would show that at least half (possibly more) are good people who have been caught up in a Conservative Web of Deceit.

Now this is just me, but I also feel that as human being we should have a little more sympathy for those old people, women and children who have lost it all in this downturn. It seems a little too convenient to posit that only stupid dirty bad people have lost their homes.

[Bluenorthwest]

14. Of course it will consolidate ownership

and that has been the CA plan since Prop 13. Lots of property for large management companies and investment groups to rent out to people for great profit.
In San Diego County, the median household income in 2007 was $64,273, not adjusted for inflation. So those people are clearly able to buy a 300K house with a decent down payment, say 10%. 30K. Nearly half a year's income! For the down! So yeah, sure, lots of people can 'afford' houses now that they are 'cheap' at over 300K. Good for the economy!
And of course, the State in which that county sits is broke. Utterly broke and issuing IOUs. So clearly, this is really good for the economy!

[Coventina]

17. My SIL & her husband were able to buy a home in LA.

That would have never been possible, if it hadn't been for this economic downturn.

Now, that doesn't mean that I'm glad we had this crash. I would much rather see them renting forever (not the end of the world), than the widespread hurt that has come to millions.

Having said that, I am happy for them. It means a lot to them personally.

BTW: The house they bought was not a foreclosure, but the price had come down considerably because of the depressed market.

[Bluenorthwest]

18. Of course people get bargains

I'm going to be one of those people. Not in SoCal, where I am from, as it is not done with crashing yet, no matter what some here think. The state itself is insolvent, and those that remain there have mostly not figured out what that will mean.
But me or others getting a bargain, that does not mean that what has happened is 'good for the economy'. It means it is good for me and your friends. Not the same thing. It is still not at sustainable levels in relation to income. Which is what matters.

[Steerpike]

19. You are absolutely right!

But, I'm still glad that you, coventina's sil and yes even dan were able to buy homes. Home and family are what it's all about.

[Coventina]

20. I specifically stated in my post that it would have been better

for them to rent forever than to have the crash!

[Steerpike]

21. Yeah if you had to choose....

But really, your sil should be able to have a home if that's at all possible.

peace out...

[Igel]

35. We bought one.

I'm a stay at home dad, for now; my wife works at a university. We saved up for the downpayment, and then sat and waited.

Her lowest-out-of-three credit rating, the one that the bank used, was 760. Mine was 810. It's not hard: You simply live well within your means, so that even when you're a starving grad student or you're a family of three living on $24k you pay every bill on time. With automatic bill pay these days it's a snap ... assuming you live within your means.

[Steerpike]

38. Well so speaks the elite.

So if you go to college for 6 years and you marry well you too can join the elite. I guess the rest of us can just go suck lemons. Hell you don't even have a job and your credit rating is in the top percentile. You should write a book or do some sort of infomercial thing.

Raising a family of three on 24k a year...is that poverty level? That's about 500 a week before taxes...and you bought a house? Really...Shit you should run for President...you have my vote

[Stellar]

24. I remember when Obama said early on, that our situation was dire.

and that our economy was in free fall off a cliff. Bill Clinton wanted Obama to use more upbeat rhetoric so as not to scare people to death. This brings to mind an interview of this guy (that interviewed Obama on CBS's '60 Minutes') on the Charlie Rose show (sorry, cant remember his name). He said he asked Obama what happened to all that stimulus money he and McCain approved of that the banks and other companies were asking for last year. He told Obama he didn't see where anything had changed. Obama said, your question should be what would have happened if we didn't give out that money.

The only thing came to mind at that point is a chain reaction of events that would have touched each and every one of us and people around the world. After all, our economy is interconnected with other countries too. This is going to take more then a year to solve our economy problem.

[Steerpike]

27. I just don't understand why .

Why can't we survive without the rich? Can't we grow our own food without the rich? Can't we start our own business'? It sounds like we're giving money to people who are holding a gun to our collective heads. Why isn't there a better way? Will we always be economic slaves to the uber-rich?

[KansDem]

30. "Why can't we survive without the rich?"

We can. And this is proven by the crash of "Reaganomics." The whole mantra that giving the wealthy more money will create jobs was pure rubbish. However, Reaganites pushed this beginning in the 1970s and still pushed clear up through Bush the Unelected. However, we saw the wealthy didn't use their ill-gotten swag to "invest" in new businesses and industries thereby creating jobs; they squirreled it away in secret, off-shore tax havens. And the rest of us lost--big time!

Nah, the "trickle-down" era is over. It was a huge lie and a colossal failure and the sooner we all accept that, the quicker we can get to work repairing the economy it destroyed...

[Xithras]

26. We're seeing a rapidly expanding number of "negative equity walkaways" around here.

"Around here" is Central California, btw. People are looking at their homes with $400k and $500k mortgages that are worth $100k to $150k today and are simply deciding that the homes aren't worth it. They are looking at a pretty grim choice...spend the next 30 years paying off $900,000 in total debt on a home that might be worth a third of that when it's all paid off, or deal with three to four years of bad credit from a foreclosure and buy something comparable at a fraction of the cost.

When you're sitting in suburbia looking at spending $900,000 on a home over the next few decades, and you find out that the guy who just bought the nearly identical foreclosure next door will only be spending $350,000 over the same period for the same property, any sane person would sit down and ask themselves whether the home is really worth the extra funds. An overwhelming number of people would answer NO to that question, and an increasing number are just walking away. It's been happening since the start of the downturn but has been taking off this year.

Principal reductions are the only real way to head that tsunami off.

[Coventina]

29. It's happening a lot here as well.

Phoenix area.

[DebbieCDC]

31. The banks/finance companies don't want to renegotiate these loans

It's that plain and simple. They'd just rather sit on their TARP money and a bunch of properties they can't sell. As long as the CEOs are taken care of, fuck everyone else.

[live love laugh]

33. Exactly. So the same to them. I'll give them my house. nt

[dixiegrrrrl]

34. If the banks have to renegotiate, they have to admit to losses on their books

and lack of sufficient capital to cover those losses, ( insolvent ) banks are not willing to re-fi.
However, it is being reported that for the same reason,banks are increasingly unwilling to even foreclose anymore, since that will also trigger writedowns on their books.
INteresting turn of events, since some homeowners are now living in their houses but making no payments.