Can someone explain to me why Foreclosures

[cybsball20]

Did this person not see the bubble that was forming? I was telling anyone that would listen we have a problem in 2004. Once the prices started climbing that fast, it could only go one place.

That person doesn't exist, just a hypothetical but I am sure there are many out there... I know I have quite a few friends that are renting out places because of similar situations...

 

[clone52]

You suck it up. This country used to pride itself on people pulling themself up by their bootstraps. Likely the market won't stay this bad for too long so people may have to just live in their starter houses for another 2 or 3 years longer than they anticipated. Like I said I have negative equity in my house that I've lived in for 2 1/2 years and I'm 27. It happens.

You suck it up, too, and realize that not everything your taxes go towards is going to benefit you. (edit: I'm sorry, this sounds a lot more confrontational than I meant it to be.)

My point wasn't to complain about my homes value dropping (I'm not currently in that situation), but to illustrate that the move to help bailout some of these foreclosures isn't just a move to help the people who messed up in the first place, but to help protect the economy as a whole.

 

[CloneIce]

The government has actively encouraged overspending for a long time. It's the only way that they can get away with doing do the same. They've got to keep it going, or they won't be able to pay their "bills" either.

Yes exactly. Our economy of late was built on the assumption that people will spend more money than they make and live on credit and spend above their means. A good portion of this recession is just the economy resetting back down to the size it would have been if people didn't live in debt and off credit anyways. Of course that means lots and lots of people will lose jobs, and the standard of living will go down in this country. So its not pretty.

 

[BryceC]

You suck it up, too, and realize that not everything your taxes go towards is going to benefit you.

My point wasn't to complain about my homes value dropping (I'm not currently in that situation), but to illustrate that the move to help bailout some of these foreclosures isn't just a move to help the people who messed up in the first place, but to help protect the economy as a whole.

I agree, I pay a lot of taxes on things I'm never going to use. I don't have a problem with that. I have a problem with the government taking money through taxes directly from me to fund other people's crap decisions.

I am of the opinion that the country is going a way that nobody of a truly conservative mindset can possibly support. Eventually a line has to be drawn in the sand as opposed to continually allowing the government to expand with no end in sight just for the sake of protecting the economy. That's how France has ended up with a crap economy with a standing unemployment rate of 20%. If I wanted to live that way I would move there.

 

[CloneIce]

Did this person not see the bubble that was forming? I was telling anyone that would listen we have a problem in 2004. Once the prices started climbing that fast, it could only go one place.

Yeah, when I graduated in '05, everyone was telling me to buy a house.... nevermind that housing prices were skyrocketing, and I owed 6 years worth of college on my student loans, and two years spent at the bar on my credit card. People thought I was crazy for not buying a house (even though I was way in debt and had no money to put down). Everybody said, buy a house it will be worth way more in 5 years than buy a new one. Thank God I didnt listen to them.

Yeah... it seems like everybody believed they should spend, spend, spend.... nobody believed in saving, it was becoming the American lifestyle. Everybody needed to spend and stay in debt to keep that economy coming and keep profits up. Hell the day after 9/11 when the President was asked what Americans should do he said "go shopping."

 

[usedcarguy]

I guess thats true I was going to school for finance when this started to unravel and I guess I wouldn't be able to sleep if I made a loan like that. I guess thats why I know I will never be able to be a used car salesman.

Please don't lump all of us into one category unless you want to look at the finance industry in the same light.

The fact of the matter is that these loans would not have been written if there wasn't someone standing in line to buy them.

Blame the appraisers, the underwriters, the banks, the Wall Street investment houses who bought and sold them, and the borrowers.

Yes there were unscrupulous brokers who falsified information, and they are guilty as well. But for the most part, they did nothing more than matching borrowers and lenders for a profit.

 

[brianhos]

I lost a bunch of money in the .com crash of 2001, where is my check?

 

[usedcarguy]

I work at a bank in Iowa. What we are seeing in this area of the country is much different than in many of the large metro area on the coasts. I have had to go through a number of foreclosures and unfortunately, most of them can be declared a direct result of poor decisions. I have seen a number of spouses quit $35,000 per year jobs because they had a baby and wanted to stay home. I've seen people that easily qualified for the house loan go out and buy RV's , boats, expensive vehicles and other toys that made it so they couldn't afford to make the house payment any more. Most of these people refuse to sell the toys because they owe more than they're worth. There are people that should be able to make the monthly payments, but when you look at the checking account and they are spending a large portion of their income eating out, buying video games, and traveling.
Unfortunately, our government always trys to paint the picture that these people are victims. There are some people that have just had some bad luck and lost jobs due to medical issues or shutdowns. Most banks will work with these people and try to find a way to keep them in the house. However many people know how long they can live in a house for free before they will get kicked out and basically say the heck with it. They don't pay the taxes or insurance, many don't pay utitlites and many abuse the house to the point of needing significant repairs and cleanup when they are finally removed.
This plan will help some people. Unfortunately, it will also be abused by many people that are victims of their own doings.

Having done a prior stint in lending several years ago, I agree with you 100%.

Where I feel the real failings of people lie is in their inability to understand the concept of a personal balance sheet. They run on too little cash, ignorant of the fact that they could become sick or injured, or unemployed.

Just another symptom of our immediate gratification society.

 

[usedcarguy]

How many 25 year olds plan on staying in their starter house for 10 years?

We were in ours for 7.

 

[2forISU]

I'm taking full advantage of the down economy. It’s a great time to buy homes and rent them out. When the market turns around you will make some good money.

A lot of these foreclosures are in Florida, Arizona, NY and Cali. House prices in these areas are crazy high.
Change is coming...Right Mr. President He doesn't have a clue what is going on. Throwing money at the problem doesn't fix it...it's just a short term fix.

 

[CloneIce]

I'm taking full advantage of the down economy. It’s a great time to buy homes and rent them out. When the market turns around you will make some good money.

A lot of these foreclosures are in Florida, Arizona, NY and Cali. House prices in these areas are crazy high.
Change is coming...Right Mr. President He doesn't have a clue what is going on. Throwing money at the problem doesn't fix it...it's just a short term fix.

There is no "fix" for this problem. I would hope everyone is well aware of that. All of this is simply to cushion the blow and attempt to keep the cycle from getting too far down, to the point where we will be mired in a bad economy for decades.

 

[usedcarguy]

But if all these houses forclose the market will only get worse. That 150,000 house you bought is now worth $100,000 and you can't take the new job you got offered because you can't write a $50,000 check to get out of your house...

Yeah it sucks, but it is reality. The only things I can really say is that if one's career was such that relocation was necessary to move up, then they had no business buying in the first place.

Imo it would be better long term for home values to completely crash and rebound than it would be to drag out the misery for years as the debt we're rolling up for this housing "band aid" is going to prevent the economy from working it's way out of the hole.

 

[alarson]

That is frustrating. People who want to do the honest thing have a harder time getting help than those who just dont pay their bills.

 

[Knownothing]

I planned on staying in my house for 4-5 years when I bought it. I thought it would be worth a little more. I am going to have to stay in it probably around 8-9 years now. It's the risk I took when I bought the house. It sucks but oh well.

I guess I should just let it go into forclosure. Then get bailed out. Meantime I can use the money from my house payments to buy half price stock. Then when the market goes back up. I not only make the money from my house payments I used to invest. I am up to speed on my house payments and I win the whole time. Thank you Taxpayers for investing in my future retirement/boat buying ability.

 

[cycloneace55]

As someone who has always lived within my means and with the exception of my first 2 years at ISU have always had at least one job since I was 15. I have never had any large amounts of debt and have paid my credit cards in full every month. I managed to buy a car using cash and have passed on buying things I wanted becasue.... I could not affod it. I will admit that I am in the minority in this day and age but I can't help but feel that I am paying for the sins of others.

For the past few decades the government has given big banks and people who like to live beyond thier means more then enough rope to hang themselves and our economy. The govenrment has now decided the capitalism is no longer working and is pumping money into businesses that don't seem to be changing the way they do business. Isn't the definition of crazy, doing the same thing over and over and expecting different results? The laws of supply and demand tend to take care of themselves and while I feel for people who are in financial straights (I know more then a few here in So. Cal) most of the ones I know brought it on themselves. Just because you got approved to 2 million doesn't mean you have to take it. This is not the first time housing markets have crashed and we as a country have gone into recessions.

The simulous package is designed to do nothing more then get funding for pet projects (see the wetlands mouse: Washington Times - Pelosi's mouse slated for $30M slice of cheese) under the guise of creating jobs and stimulating the economy. We as a nation should be furious with those we have elected to office to represent the country's best interest.

Either way you look at it and which ever side of the political fence you sit on this will get far worse before it gets any better.

BTW: I do not own a house and with the way things look it will be a while before I will be able to any way.

 

[Wallruss64]

http://http://news.yahoo.com/s/ap/20090218/ap_on_go_pr_wh/obama_home_foreclosures

I think you guys should read this. It seems like this bill is going to help the people who actually deserve it as well. It seems the guidelines are very straightforward as well too.

 

[Racer68]

Having done a prior stint in lending several years ago, I agree with you 100%.

Where I feel the real failings of people lie is in their inability to understand the concept of a personal balance sheet. They run on too little cash, ignorant of the fact that they could become sick or injured, or unemployed.

Just another symptom of our immediate gratification society.

Well said! I realize that some people were duped into these loans, but these same people are the ones who have never looked at their personal balance sheet nor do they have a "rainy day fund." My wife and I have gotten to a point in our lives where we are paying down debt at a very nice rate...with a "rainy day fund' in place should something happen to either of our jobs. Heck, we have been in our starter home for 8 years, which we knew when we bought it that we could afford it (resisting 5 year ARM's from multiple lenders by the way).

Our society has been too much of an instant gratification society and it is biting us in the rear...hopefully all of this will make all of us a lot smarter about our personal finances and teach us to BUDGET!!!

 

[mt85]

I look at this problem from a slightly different perspective. Attempting to solve these issues through government intervention only forestalls the painful resolution and will result in a weaker long term recovery.

As difficult as it may seem, I feel that the free markets as painful as the process would be are the only effective and efficient way to correct the issues that we now confront.

The free markets would reward those that are fittest and punish those that are not. The strong would emerge from the ashes, and we would have those that made the correct choices moving forward as decision makers. Capital would be properly allocated to the best decision makers, and the recovery would result in a stronger economy in the long run.

Instead government involvement sustains those that the free markets should punish, and places the burden on the fittest. This weakens the fittest in the long run, and makes long term recovery that much more difficult and inefficient.

 

[HILLCYD]

I look at this problem from a slightly different perspective. Attempting to solve these issues through government intervention only forestalls the painful resolution and will result in a weaker long term recovery.

As difficult as it may seem, I feel that the free markets as painful as the process would be are the only effective and efficient way to correct the issues that we now confront.

The free markets would reward those that are fittest and punish those that are not. The strong would emerge from the ashes, and we would have those that made the correct choices moving forward as decision makers. Capital would be properly allocated to the best decision makers, and the recovery would result in a stronger economy in the long run.

Instead government involvement sustains those that the free markets should punish, and places the burden on the fittest. This weakens the fittest in the long run, and makes long term recovery that much more difficult and inefficient.

Making sense will get you nowhere in the cave.

 

[erikbj]

the only answer is for those hard working people to revolt against the government like Washington and Jefferson did against the Brits. Our government is heading down the road of bankruptcy and again we will get screwed.