Why do you think there is a high foreclosure rate

[Maggie_May]

Do you think is from interests rising from arm mortgages? Do you think it is people taking on more than they could handle? Do you think it was lost jobs? Whats your take on whats happening in your state or neighborhood.

[BlooInBloo]

1. Because people took out loans irresponsibly, and the banks irresponsibly let them.

[Zorro]

11. A lot of people wanted to get rich quick

They were blinded by their greed. They took out the biggest loans at the lowest rates they could get on the most expensive homes they could buy, expecting to get a greater return on their investments when they flipped the property.

And now that the market has turned, they're looking for others to blame for their fiscal irresponsibility.

[emilyg]

23. Yes. To the point.

[Mayberry Machiavelli]

2. All of the above. Mostly people taking out ARM or interest only loans for homes they really couldn't

afford.

[Demit]

3. People didn't read the fine print. They let themselves be talked into deals that were too good to be

true. And it turned out they were too good to be true. Another old saw—didn't these folks learn them too?—now they have to pay the piper.

[Lucinda]

4. Its probably a combination but

around here, it appears that lots of people took out the maximum loan they could, with variable rates, which led to problems.

stretched to the max to make their payments
+ loan jumps up several hundered dolalrs a month due to variable rate
= Screwed

A friend of ours had his payment go up almost $400 VERY quickly

[Myrina]

5. a combination of all the factors ...

... things were pretty darn okay in the late 90's and alot of people bought 'up' - more house than they needed, than they could afford, perhaps they built new because of all the sweetheart developer deals to get them into a shiny new McHood with all the perks rather than buy existing and refurbish.

Then the Bush economy hit: wages have stagnated or jobs have gone completely away, the homeowner's ARM has readjusted upward, and with the reduction in federal dollars to state/local infrastructure alot of municipalities have had to raise property taxes, making that "American Dream" almost impossible to maintain.

Any one of these things by itself might have hurt a marginal homeowner's ability to hang on, but the symbiosis of "all of the above" has thrown them quite a sucker punch.


:hi:

[JVS]

6. risks are taken. sometimes they turn out poorly

[napi21]

7. There's a number of reasons and lots of blame to go aound,

Lenders gave $$ to anyone and everyone without any qualifications! Did ya hear about the no doc loans?

Many people took advantage of the "variable interest" mtg's, foolishly ignoring how much their payment could increase if the Fed raised the rates. I guess a lot of them had seen low interest rates for so long, they were betting they'd never rise, and they lost that bet!

Foolish, non thinking buyers ran the prices of homes up way beyond their real value! There's no way ANY home should increase 100% in 2 years!!!!! But some foolish buyers were willing to buy them anyway!

Many people simply bought homes far bigger than their income allowed. They took a gamble and lost.

Some buyers lost that good paying job, and the only job they could find simply couldn't pay the mtg!

And finally, SHRUB kept preaching to everyone that EVERYONE COULD BE A HOMEOWNER! He's been barking that pitch for a number of years now. Too damn many people believed him instead of THINKING FIRST!

[skepticscott]

15. Not just that everyone could be a homeowner

One of the core messages of the Republican party going back to Reagan is that you should be able to have as much as you want of anything you want, and be able to put off paying for it for as long as you want. That's what they've encouraged in individuals and that's what they've done with the federal budget. No politician has hurt themselves yet peddling that message because it's what people want to hear. No one wants to be told that they have to sacrifice and exercise restraint.

[napi21]

17. RESTRAINT? How about a little bit of rational thinking?

There are lots of thinks we ALL would love to have, but I really do believe it's the responsibility of each individual to think about the consequences. After doing that, if you still decide to take the chance, knowing that you could face bankruptcy (under it's present laws), and lose everything you currently have and ruin your credit for at least 10 years, that's fine! Take the chance. But damn it! It really IS up to each individual to THINK!

[Vincardog]

8. IT is because a lot of "investors" took out loans on speculative properties with little

or nothing down. They were betting on prices rising forever and when the dipped the "investors" bailed.

[skepticscott]

9. People swallowed the sales pitch about how much they needed in a house

They let greed and desire for status get the better of good financial judgement and let themselves be convinced that they needed 5000 square feet for 4 people, the 3 car garage, the huge kitchen with Sub-Zero appliances and Viking range, home theater, super-sized master suite, etc., etc.

[CK_John]

10. More house than money. n/t

[Atman]

12. Lenders remember BushCo's Silverado collapse...and the bailout. No risk. No problem.

They probably rightly figured that BushCo would once again ride to the rescue of the corporations and donors, leaving the consumers out in the streets. Literally and figuratively. There is rarely any risk for a corporation doing business in the BushCo age. Anything goes, and W's always got your back.

.

[TahitiNut]

13. War on the working class. The "bottom 90%" earn less and less in real terms each year.

The employment downturn in August is not an anomaly. It's NOT the wealthy who employ people; it's the "bottom 90%" who employ people ... but those people are increasingly in China, India, and other countries. And more and more of the wealth created by labor is exported for the sake of profits for the very few ... who 'invest' in off-shoring more and more. Our tax policies have shifted the burden of sustaining this system of off-shoring to the very people who are disserved by it: the working class, who're taxed at more than double the rate as the "investor class."

Between increasing health care costs and increased energy costs (and others) and reduced labor income, less and less is available to pay a mortgage ... habitually taken out in expectation of (1) labor income that increases with cost of living AND skill and experience, and (2) a real estate market that historically has leveraged equity against increased asset value. Both expectations have not been met. Since these 'expectations' have a certain synergy, they go up and down together.

It's going to get worse before it gets better. Count on it.

[Rosemary2205]

14. Greed and stupidity.

People buying way more house than they could afford thinking they will "make a killing" in just a few years when they sell it and taking fancy, high risk loans to do it. Then all the speculators who blew up the Tech market in the 90's who were the one's driving the real estate bubble all decided to cash out at the same time and left homeowners looking to make a killing holding a fancy loan with terrible condition and no one who'll buy the house at that inflated price.

Unfortunately, whatever the speculators dream up to fuck us with next will be financed by the same banks and the same stupid people will risk their family's well being to "make a killing". Some people really just need to read "The tortoise and the hare" again.

[Lorien]

16. The above, plus over-valuation of real estate and shrinking salaries

I live in a historic neighborhood in Central Florida. Back in my home state of Ohio, the neighborhood I live in would be considered middle class to lower middle class (at least on my end of the street. The opposite end sports massive turn of the century mansions which are worth millions). The average home in my neighborhood might look a bit like this:



1700 square feet or so. A small backyard, maybe a garage, maybe not. Price? 500-700k. That's a good bit more than the average middle class family can afford, no?

I've taken a 70% pay cut since the Clinton years, as have most of my former co-workers (freelance artists or animators). I suspect that many others have as well. The middle class is swiftly being shut out of the real estate market in most "livable" communities.

[tomreedtoon]

18. Because the Business Press LIED to you.

This should teach you, but it probably won't, that "business" is not a process for doing things. It is a religion. A pagan religion, at that.

There is more self-delusion in the typical business conference than at any science fiction convention. Heaping helpings of wishful thinking, often sold as multi-CD inspirational lectures or multiple volume books.

There are two differences. The members of the 501st Imperial Legion (Vader's Fist) know that they're only wearing plastic costumes and that their blasters don't work. The worshippers at the altar of Business are certain that what they're doing with their business plans and fax machines is real, and will help America and (most important) themselves. Also, the 501st members donate a lot of their time to children's hospitals and charitable causes. The acolytes of Business want to keep all their time and money for themselves. They follow the five-word Libertarian philosophy: "I've got mine, f*** you."

It's a comfort seeing these so-called Jedi of the Business Week Temple falling into economic ruin. Schadenfreude, in a word. And even though the rest of us will be falling with them, we've been down in the gutter for a long time. This will be their first trip.

[Frogger]

19. It's from taking

on variable interest loans. This seems to me the very stupidest thing that people could do.

They need to figure out what they can pay, and get a house for that price at a fixed rate interest. What did they expect, that the mortgage companies would give them a free ride forever??

I feel a certain sympathy for them, but what has happened has been perfectly predictable since these variable rate mortgages first came into being. Only a fool would fall for it. But conmen always find the fools.

[lligrd]

20. Predatory Lending Practices

Banks ripping people off and crying when the people can't or won't pay.

[Not Me]

21. Actually, not the banks so much

The banks are regulated; it is a new industry of unregulated mortgage brokers that took on very high risk loans with teasers like "No credit check" etc. and then hoped to sell them off. It worked...for a while.

[KoKo]

22. Everyone's to Blame but the loosening of Regulations are the Most to Blame...

Greenspan's Federal Reserve and Congress chipping away at Banking reforms that were put in place after the Great Depression.

Bubbles were created to cover up the great NAFTA (Ship our Jobs Out) Debaucle...and the Reagan Supply Siders never met a regulation they liked so they worked hard to get rid of safeguards that might have reigned in the the Dot Com Bubble and the Housing Bubble. Those bubbles covered a lot of economic woes and for awhile made average folks feel they had a chance to become rich too...and have a nice house, two cars and eat out once in awhile ...as payment for working three jobs and low interest rates that suckered them into constant debt.

[MissB]

24. Like everyone else has said: lots of factors.

My mother was tasked with looking into a refi on the home that my brother had bought her. He owns the title to the home, mostly because her dh simply can't be trusted not to screw them out of another home (long, painful story).

Anyway, my mother called me one day to talk to me about a mortgage deal she'd found. The mortgage broker - who she found through a friend of hers - convinced my mother that she could get a mortgage for only 1.5% interest. She had some sort of trust for this mortgage broker, because a friend had told her that he'd get her a great deal.

Mom is older. She is in her late 60s and isn't suffering from Alzheimers or anything like that. She just isn't that good at the financial stuff. 1.5% sounded good to her. I had to explain for nearly an hour that her "good deal" was really a poor financial decision.

Should people that don't understand how non-traditional mortgages work own homes? She owned many homes with my father when they were married. They signed on for many 30 year fixed mortgages and sold them, so she'd been through the process before. She just wasn't aware that there were non-traditional mortgages such as ARMs out there.

[Iris]

25. According to the AJC, subprime loans are 9 times as likely to be foreclosed than prime mortgages

"The uptick in foreclosures is tightly tied to another trend: the spread of subprime lending across the region. A high-interest, subprime loan financed one in every four home purchases in metro Atlanta in 2005, according to a Journal-Constitution review of federal mortgage lending data. In Georgia, subprime mortgages are nine times more likely than prime mortgages to be seriously delinquent or in foreclosure."

"Half of metro Atlanta foreclosure starts this year involved adjustable-rate mortgages, according to the data compiled by Equity Depot. Half also involved home purchases made recently —- either in 2005 or 2006."

http://www.ajc.com/search/content/foreclosure0909.html