The Financial Hammer is falling ....

[Blackhatjack]

CNN reported earlier today that home foreclosures are skyrocketing in major cities across the country. One in particular, Atlanta, showed 1 in 70 home loans were being foreclosed.

Add to this the following: the Federal Reserve is printing money and dumping it into the markets at an unprecedented rate, savings by individuals is almost non-existent, personal debt in this country is at an insanely high amount, jobs are being laid off left and right along with salaries and benefits being stripped of jobs that remain.

The new bankruptcy bill means people must continue to pay credit card holders for at least 3 yrs if they file. Credit card companies have completely changed the terms of debt held by most Americans at the time the debt was incurred --disputes must be arbitrated and courts are closed to cardholders, credit card companies can unilaterally increase the interest rates to default levels(sometimes over 30%) if you miss making a payment on time to ANY other creditor, or if THEY believe you are no longer "credit worthy".

All of these variable rate mortgages and interest only loans are ratcheting up monthly payments, and capital available for lending is drying up in this country since the return on investment is higher outside the country.

The banks, credit card issuers, and mortgage companies saw all of this coming long before they got the new bankruptcy law passed, and began putting aside huge reserves to cover defaults and foreclosures.

If you have been unaware of all these events, you will learn shortly what the "financial hammer" means for most middle class and working class Americans.

One bright spot in all of this, the richest 1% will not lose anything, rather they will pick up assets for pennies on the dollar just like Mr. Potter in "Its a Wonderful Life." Feel better?

[NMDemDist2]

1. that's why i'm cashing out my property in PHX and moving to a rural

community and buying my next house cash and staying self employed. my costs will go down by over 2/3rds and i won't owe anybody anything. i plan on growing a large part of my own food too!

scary days indeed

[Warpy]

3. It's why I decided to stay in this shabby little house in a

shabby inner city neighborhood rather than move to a "better" area like my pop and the money guy suggested.

I don't want a bigger house because I don't want to clean a bigger house.

I know and like my neighbors and I don't owe anybody but the utility companies.

[Mayberry Machiavelli]

2. Foreclosures big time in Dallas area too from what I understand.

[Ezlivin]

17. Record foreclosures in the NE Tarrant County area

Keller, Southlake and Colleyville are seeing lots of foreclosures.

Dallas County had one of the biggest increases with foreclosures up 16 percent. (http://www.dentonrc.com/sharedcontent/dws/bus/stories/DN-foreclose_19bus.ART.State.Edition1.22c42441.html)

But the building continues! There is some sort of financial insanity at work here....

[conflictgirl]

29. I'm not at all surprised by that

I lived in NE Tarrant County from 1994-2002 and there were an awful lot of people in the suburbs you mentioned (plus Grapevine) who seemed to be living well beyond their means and building insanely huge McMansions and driving luxury SUVs. I am not surprised *at all* that there are lots of foreclosures there now, especially with the increased costs for home heating (or cooling, since it's Texas lol) and gasoline.

[Deja Q]

4. Hammer into anvil.

[sofa king]

10. Bingo.

The hammer may drop, but America's heart and mind is couched in its dwindling middle class. Our nation would not function for a week if all of us were to simply default on our debts and walk away from our jobs.

This country has such an amazingly competent and hard working population because we've lined up a whole bunch of goodies along the rat-race maze, things like cars and homes and computers and DVD players and higher education, not to mention lots of gambling, sex, booze, drugs, and violent sport.

Make those things unaffordable to average Americans and they'll stop paying so much attention to the rat race and a lot more attention to things like survival... and perhaps revenge.

[MadMaddie]

5. Would you believe I have a Repug friend who told me last

night that Foreclosures won't happen in the Seattle area? I tried to tell her that the types of loans that people have taken out are more detrimental than many thought....she said oh that doesn't matter....people have jobs here...

I told her I think the housing bust this time around will be worse than the 80's!!

People only see what they want to see....Boy are they going to be surprised!!

[serryjw]

11. Sounds like you have a shortage of housing?

Top 10 Metro Foreclosure Rates

Metro Area % of households 1 foreclosure
in foreclosure in Q1 for every #households

1. Indianapolis 1.45 69
2. Atlanta 1.42 70
3. Dallas 1.01 99
4. Memphis, Tenn. 0.99 101
5. Denver 0.95 105
6. Detroit 0.83 120
7. Jacksonville, Fla. 0.75 133
8. San Antonio 0.75 133
9. Canton, Ohio 0.72 140
10. Las Vegas 0.71 140

--------------------
Foreclosure Q1 2006 1/every
rate rank MSA Jan. Feb. March Total #households
-- US 2005 104,354 117,151 101,597 323,102 358
1 Indianapolis,
IN MSA 2,820 3,771 3,529 10,120 69
2 Atlanta,
GA MSA 6,066 7,940 6,349 20,355 70
3 Dallas-Fort Worth,
TX CMSA 8,749 6,635 5,365 20,749 99
4 Memphis,
TN-AR-MS MSA 1,721 2,207 1,645 5,573 101
5 Denver-Boulder-
Greeley, CO
CMSA 2,747 2,463 4,259 9,469 105
6 Detroit-Ann
Arbor-Flint,
MI CMSA 3,669 8,551 6,182 18,402 120
7 Jacksonville,
FL MSA 1,436 912 1,231 3,579 133
8 San Antonio,
TX MSA 1,789 794 1,536 4,119 133
9 Canton-Massillon,
OH MSA 475 504 239 1,218 140
10 Las Vegas,
NV-AZ MSA 1,865 1,711 1,396 4,972 140
11 Columbus,
OH MSA 1,567 2,111 924 4,602 148
12 Austin-San Marcos,
TX MSA 1,504 929 835 3,268 152
13 Colorado Springs,
CO MSA 156 908 454 1,518 155
14 Cleveland-Akron,
OH CMSA 2,544 3,763 1,660 7,967 156
15 Stockton-Lodi,
CA MSA 385 314 503 1,202 157
16 Dayton-
Springfield,
OH MSA 1,190 958 510 2,658 160
17 Salt Lake City-
Ogden, UT MSA 707 1,138 1,143 2,988 163
18 Fort Wayne,
IN MSA 398 539 307 1,244 166
19 Little Rock-North
Little Rock,
AR MSA 539 475 476 1,490 173
20 Albuquerque,
NM MSA 625 832 197 1,654 181
21 Orlando,
FL MSA 1,088 1,546 968 3,602 192
23 Youngstown-Warren,
OH MSA 419 685 189 1,293 196
23 Lakeland-Winter
Haven, FL MSA 370 412 375 1,157 196
24 Miami-Fort
Lauderdale,
FL CMSA 2,806 2,620 2,700 8,126 196
25 Houston-Galveston-
Brazoria, TX CMSA 1,447 3,867 3,042 8,356 202
26 Tulsa,
OK MSA 720 389 580 1,689 202
27 Oklahoma City,
OK MSA 840 885 710 2,435 205
28 West Palm Beach-
Boca Raton,
FL MSA 1,173 765 738 2,676 208
29 Augusta-Aiken,
GA-SC MSA 226 387 284 897 208
30 Toledo,
OH MSA 698 451 231 1,380 210
31 Charlotte-Gastonia-
Rock Hill,
NC-SC MSA 894 1,263 768 2,925 214
32 Lansing-East
Lansing, MI MSA 160 354 260 774 235
33 Tampa-
St. Petersburg-
Clearwater,
FL MSA 1,276 1,801 1,651 4,728 242
34 Philadelphia-
Wilmington-
Atlantic City,
PA-NJ-DE-MD
CMSA 2,893 2,791 2,402 8,086 258
35 Pittsburgh,
PA MSA 1,193 1,293 1,496 3,982 271
36 Nashville,
TN MSA 640 878 580 2,098 273
37 Grand Rapids-
Muskegon-Holland,
MI MSA 334 704 580 1,618 276
38 Sacramento-Yolo,
CA CMSA 600 909 1,005 2,514 284
39 El Paso,
TX MSA 284 255 236 775 290
40 Raleigh-Durham-
Chapel Hill,
NC MSA 526 692 474 1,692 293
41 Chattanooga,
TN-GA MSA 192 310 190 692 297
43 St. Louis,
MO-IL MSA 962 1,629 1,249 3,840 298
43 Saginaw-Bay City-
Midland, MI MSA 137 302 117 556 298
44 Kalamazoo-Battle
Creek, MI MSA 165 214 256 635 302
45 Tucson,
AZ MSA 521 325 353 1,199 306
46 Phoenix-Mesa,
AZ MSA 1,250 1,559 1,497 4,306 309
47 Daytona Beach,
FL MSA 267 244 168 679 312
48 Chicago-Gary-
Kenosha,
IL-IN-WI CMSA 3,424 3,590 3,899 10,913 317
49 Modesto,
CA MSA 148 160 148 456 331
50 Pensacola,
FL MSA 162 175 161 498 349
51 Los Angeles-
Riverside-Orange
County, CA CMSA 5,001 4,695 5,678 15,374 353
52 San Diego,
CA MSA 953 881 971 2,805 371
53 Cincinnati-
Hamilton,
OH-KY-IN CMSA 807 853 564 2,224 375
54 Knoxville,
TN MSA 263 318 247 828 394
55 Sarasota-Bradenton,
FL MSA 302 287 213 802 400
56 Kansas City,
MO-KS MSA 526 748 668 1,942 405
57 Melbourne-
Titusville-Palm
Bay, FL MSA 205 134 194 533 417
58 Seattle-Tacoma-
Bremerton,
WA CMSA 754 1,258 1,064 3,076 419
59 New York-
No. New Jersey-
Long Island,
NY-NJ-CT-PA
CMSA/NECMA 6,301 5,276 5,718 17,295 434
60 Bakersfield,
CA MSA 187 185 158 530 437
61 Charleston-North
Charleston,
SC MSA 234 242 53 529 440
62 Greenville-
Spartanburg-
Anderson, SC MSA 203 333 450 986 448
63 Louisville,
KY-IN MSA 367 357 202 926 457
64 Spokane,
WA MSA 138 115 107 360 486
65 Rochester,
NY MSA 389 407 69 865 522
66 Greensboro-Winston-
Salem-High Point,
NC MSA 314 470 309 1,093 527
67 Des Moines,
IA MSA 89 163 112 364 548
68 Milwaukee-Racine,
WI CMSA 107 842 301 1,250 554
69 Omaha,
NE-IA MSA 298 127 105 530 583
70 Fresno,
CA MSA 194 151 188 533 584
71 Columbia,
SC MSA 110 87 81 278 638
72 Portland-Salem,
OR-WA CMSA 494 439 432 1,365 659
73 San Francisco-
Oakland-San Jose,
CA CMSA 979 934 1,420 3,333 686
74 Johnson City-
Kingsport-Bristol,
TN-VA MSA 91 77 92 260 718
75 Hartford,
CT NECMA 41 391 278 710 727
76 Harrisburg-Lebanon-
Carlisle, PA MSA 82 168 27 277 783
77 Lancaster,
PA MSA 60 97 72 229 786
78 Scranton-Wilkes-
Barre-Hazleton,
PA MSA 155 18 156 329 853
79 Santa Barbara-
Santa Maria-Lompoc,
CA MSA 48 47 45 140 1,021
80 Buffalo-Niagara
Falls, NY MSA 179 187 87 453 1,129
81 Allentown-
Bethlehem-Easton,
PA MSA 99 73 52 224 1,188
82 McAllen-Edinburg-
Mission, TX MSA 60 67 32 159 1,212
83 Minneapolis-
St. Paul,
MN-WI MSA 149 338 524 1,011 1,232
84 Wichita,
KS MSA 89 44 45 178 1,340
85 Syracuse,
NY MSA 75 93 47 215 1,459
86 Springfield,
MA NECMA 17 76 66 159 1,739
87 Washington-
Baltimore,
DC-MD-VA-WV CMSA 724 405 300 1,429 2,087
88 Birmingham,
AL MSA 42 27 117 186 2,268
89 Norfolk-Virginia
Beach-Newport News,
VA-NC MSA 101 56 74 231 2,695
90 Richmond-Petersburg,
VA MSA 79 29 36 144 3,022
91 Boston-Worcester-
Lawrence-Lowell-
Brockton,
MA-NH NECMA 40 270 337 647 3,503
92 Honolulu,
HI MSA 19 29 30 78 4,051
94 Albany-Schenectady-
Troy, NY MSA 54 14 25 93 4,153
94 Baton Rouge,
LA MSA 26 24 16 66 4,154
95 Lexington,
KY MSA 14 13 11 38 4,613
96 Jackson,
MS MSA 17 10 13 40 4,914
97 New Orleans,
LA MSA 49 16 37 102 5,932
98 Mobile,
AL MSA 12 8 19 39 6,138
99 Madison,
WI MSA 15 1 4 20 9,020
100 Providence-Warwick-
Pawtucket,
RI NECMA 3 4 2 9 48,871


http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/05-23-2006/0004367116&EDATE=

quote........
Housing Shortage in Seattle Leads to Decline in Foreclosure Activity According to Default Research
Tuesday May 9, 9:55 am ET


MT. PLEASANT, Pa., May 9 /PRNewswire/ -- Limited available housing in Seattle has led to a decrease in foreclosures all over the area, with Pierce County, down 50 percent in one month, leading the way, according to Default Research (www.defaultresearch.com), the rapidly growing real estate research company for foreclosure properties. While Pierce County had the lowest foreclosure rate in April, Snohomish County was second, down almost 35 percent, and King County was 13 percent lower

end quote....
http://biz.yahoo.com/prnews/060509/cltu061.html?.v=49

[Mayberry Machiavelli]

13. Interesting... I wonder why the rates aren't highest in the most expensive

cities like San Fran, Washington D.C., Boston etc.? Foreclosure rates that is...

[serryjw]

15. A guess

but housing is SO EXPENSIVE that even 'creative financing' wouldn't help most middle income people

[spooky3]

27. my guess is it's because unemployment is low

and if you can keep your job (or get a comparable one if you lose it), then you can keep your payments up.

These #s surprise me too, though.

[Mayberry Machiavelli]

12. Yeah, if people have jobs that barely make the mortgage, and then ARM

rate increase kicks in... game over.

[Blackhatjack]

6. 1 in 70 foreclosures means upper class loans are included in number

only the richest 1% are likely to avoid the "hammer" and these numbers should shake up any economist looking at the rising default rates.

[burythehatchet]

7. yet in Atlanta

he only new construction of single family homes are in the 800,000+ range, it seems.

[Kurovski]

8. The great redistribution of wealth for this century is on.

Wealth is for the wealthy.

Who was it who said that the Great Depression put money back where it belonged? I thought I'd recently heard a comment made by a famous 20th century magnate along those lines. My memory fails me.

[1932]

22. It's been growing geometrically for 30 years. Next 5-10, exponentially.

[Kurovski]

24. Time to cash in and let us serfs know once and for all what's what.

EDIT: Just to be clear, I'm speaking rhetorically, Not to you personally. :-)

[peace frog]

9. I saw the writing on the wall last year,

sold my large expensive home for the asking price and got out while the gettin' was good in a hot market. That same home today would not sell for the same amount less than a year later, the formerly hot market is now lukewarm. Bought a small house in a rural residential area, gave up a stressful job for one much less so. Downsizing and simplifying is the way to go in today's uncertain economy.

[Blackhatjack]

14. Never missed a pmt, Credit Card Co raised rate to 26.6% because

.... they unilaterally determined the person was no longer creditworthy. However, when pressed for a reason they refused to give one over the telephone. A letter arrived in a few days saying the person could write to them in the next 30 days requesting the reason, and that the Credit Card issuer would respond within 60 days after receiving the written request.

So conceivably there is a 90 day period of time that could pass before the credit card holder even learns what the "reason" was the credit card issuer relied upon to support their decision to raise the interest rate --which could be entirely inaccurate information.

At the time the card was issued, and debt incurred, the rate was at least 10% less.

Imagine for a moment this is multiplied by several credit card holders at once, who take this same action based upon this one credit card issuer reacting this way in the first place.

[kerry-is-my-prez]

16. It used to be that the highest the credit co's could raise rates is 18%

until the Repubs came into power.

[Blackhatjack]

19. The Feds are trying to preempt "Predatory Lending Laws" here

to make it easier for the "Big Boys" to charge interest rates in North Carolina that exceed 30% with horrendous fees schedules.

It is out and out theivery of the most outrageous order.

There are credit card offers being sent out that use credit line numbers of up to $10,000, but in the fine print that amount they are likely to get is less than $600.00, and up to $125.00 will be charged against that amount before it is received by the applicant as a "processing fee" with additional annual fees, monthly fees, all in addition to the the regular interest rate and principal repayment. Just by applying these folks are indebted at usurious rates with very little received in return.

It should not happen. And the Feds should not disable a State law that prevents it, so that their fatcat banking lobby can engage in this kind of theft.

[cliss]

18. Here in Portland, we're gearing up

for some pretty wild times. My brother in law has a friend who is the branch manager for a US Bank. He apparently told my in-law that "in the next few months, we're going to see a dramatic upturn in foreclosures".

Apparently, the interest-only loans + the ARMs are going to kick in around June. The banker is expecting a glut of them.

I have several friends who are going to play 'vulture' in the coming hard times. They are setting up their own businesses, in order to capitalize on the many New Homeless on the horizon.

It's scary times, just ahead. I agree with other posters, who say that we need to 'think small', live below our means, don't buy anything we can't afford, and LAY LOW.

This is what we're doing, as well.

[earth mom]

26. With "friends" like that I'd watch my back....

:scared:

[DoYouEverWonder]

20. Just spoke to a realtor friend in Miami

She says nothing is selling.

The last few years you couldn't get the sign into the lawn before a house was sold. Now nothing is moving.

[1932]

21. Seriously. During the last 30 years, the difference between rich and poor

has grown astronomically and the next 5 or 10 years, I'm guessing, will be story of the richest using that huge differential to suck all the wealth out of the working class and put it in their bank accounts and portfolios for the next 50 years...unless we elect a government which believes that a strong middle/working class is the cornerstone of democracy and a functioning economy.

[Blackhatjack]

23. Every time there has been a "crash" someone profitted ....

When the stock market crashed in 1987 and 1929, millions lost fortunes instantly --HOWEVER, a hand full of rich individuals and companies picked up the assets for pennies on the dollar, and when the economy eventually recovered these individuals and companies became even richer than before the crash.

That is what I see on the horizon this time. One difference, this time there will be a massive transfer of investment "out" of the country into foreign investments during the turmoil, which will allow the rich to have their cake and eat it too.

[LiberalArkie]

25. My mom told me a story of a maid and her husband who were

grounds keepers at a wealthy persons house in my home town. They had saved just about every penney they had made. This was how poor people lived back then, as only the wealthy could get loans and such. When the great depression came along, their employers lost everything including their property. The maid and her husband bought it for a penny on the dollar (back taxes). My mom told me that a couple of years later, they sold it and never had to work again.

[Robbie Michaels]

28. The foreclosure bomb is still ticking

I used to work as a loan officer for a few subprime mortgage lenders and many customers in CA signed up for those PayOption ARM loans World Savings, Countrywide, and others offered. I told people who took them not to, but they did anyway.

The reason why you won't see too many foreclosures in CA right away is that those PayOption ARMs had a fixed-interest rate of up to five years. When those loans become adjustable, then the foreclosure bomb will go off.

[radfringe]

30. it's not Trickling-DOWN

despite the rosey-happy-happy talk from repubs about how 'well' the economy is doing - the fact of the matter is the money isn't trickling down

two things are directly impacting most "regular" Americans - gas prices and credit card rates.

credit card companies are able to raise the rates because of the Bankruptcy act - thanks to the REPUBLICANS/bush who rubberstamped the "legislation" written by these industries

Gas/fuel is up - no matter who you want to blame for it - it's hurting our pockets every week

gas/fuel prices are also indirectly effecting our pocketbooks at the grocery stores - it costs more to "ship" the goods to the stores and this is passed along to the consumer.

there's more but I don't want to ramble...

the bottom line is that the "economy" is not trickling down - it's constipated.