Foreclosure Alley
#1
Foreclosure Alley
This makes for sobering viewing. Anyone on the board from this area, is it as bad as they make out?
http://kcet.org/socal/2008/09/foreclosure-alley.html
- Tim
http://kcet.org/socal/2008/09/foreclosure-alley.html
- Tim
#2
Re: Foreclosure Alley
This makes for sobering viewing. Anyone on the board from this area, is it as bad as they make out?
http://kcet.org/socal/2008/09/foreclosure-alley.html
- Tim
http://kcet.org/socal/2008/09/foreclosure-alley.html
- Tim
#4
Re: Foreclosure Alley
This makes for sobering viewing. Anyone on the board from this area, is it as bad as they make out?
http://kcet.org/socal/2008/09/foreclosure-alley.html
- Tim
http://kcet.org/socal/2008/09/foreclosure-alley.html
- Tim
This whole thing was driven by greed. That may sound pompous but it's the truth. Back in 2003 we were looking to buy our first house, we were looking at an area of Long Beach as I saw it as an up and coming area that was being re-developed and one of the last affordable areas close to the water. Within about 18 months I saw tiny houses of 1000 - 1200 square feet go from $280K to the mid and upper $400K and even $500K. Many listings would appear multiple times within that period as houses flipped, reflipped and flipped again, many bought by realtors who would not even return your call as they were too busy making money themselves rather than having to bother with selling a family their first home. I eventually gave up and remember saying to my wife that these houses were half a million dollars, in a so-so neighborhood, average school district and gangs only a few blocks away, it seemed like madness and half a million is still half a million dollars.
My bank offered me a 5 year interest only ARM to get me into 'a house'. My first question was what would happen when the loan adjusted and why couldn't we get a fixed 30 year as interest rates were the lowest in 40 years. Now seemed like a good time to lock it in. The general answer was that the house would keep going up, infinitely, it seemed. My bank didn't offer fixed loans and bought ARM's from Washington Mutual. After some heated discussions with my bank I walked away. It all just seemed like another internet bubble. I'm no expert as I was a first time buyer, but it looks like I was spot-on. Like I said. Greed by banks, realtors and house flippers. Unfortunately there are also many young families who jumped in over their heads as the thought was that , we better buy now while we can still afford a house and it will never stop going up. The other issue was people with equity in their homes cashing in to do kitchen remodels, buy a big SUV or go on vacations. That's another story and this post is long enough. Just my 2 cents.
#5
Re: Foreclosure Alley
What a waste! I can't believe all that good stuff going straight to the tip
The whole financial thing is an utter shambles, it's hard to believe it's gone as far as it has with little or no intervention until now. And if you believe the guy in the interview it looks like the foreclosures are going to continue for some years.
The whole financial thing is an utter shambles, it's hard to believe it's gone as far as it has with little or no intervention until now. And if you believe the guy in the interview it looks like the foreclosures are going to continue for some years.
#6
Re: Foreclosure Alley
Where we are the market did not fluctuate nearly so much, foreclosures are not that common here from what I've been told.
#7
Re: Foreclosure Alley
BTW, those houses I mentioned in LOng Beach are now back around the $300 - $330K mark. So someone lost their ass at the tail end of that boom
#8
Lost in BE Cyberspace
Joined: Jan 2008
Posts: 41,518
Re: Foreclosure Alley
We took on a big mortagage when we moved here, the lenders were encouraging us to take on even more with phrases like, "This is California! You have to have the great lifestyle!"
We know a few people in difficulties.
We know a few people in difficulties.
#9
Forum Regular
Joined: Sep 2006
Posts: 71
Re: Foreclosure Alley
I don't care how that clown on the video was putting it, taking all that stuff away to the landfill is totally ludicrous.
#10
Re: Foreclosure Alley
At the risk of sounding a bit controversial, in general I'm getting a fed up about how all of this is "the banks fault".
While I do have quite a lot of sympathy for the young couples trying to get on the ladder and stretched their budgets to do so, and then fell into a bit of trouble, or people who were hit with job losses at the wrong time - those homes on that video are Mac-Daddy McMansions. Most of the people who stretched to the max to buy them could've bought smaller, they could've used their brains a bit and figured out that the bank being prepared to lend x amount doesn't necessarily mean they could afford it.
This "Blame the Banks" seems to becoming to be a ready get out clause for not wanting to take any personal responsibility for their own mistakes and greed, for a lot a people.
While I do have quite a lot of sympathy for the young couples trying to get on the ladder and stretched their budgets to do so, and then fell into a bit of trouble, or people who were hit with job losses at the wrong time - those homes on that video are Mac-Daddy McMansions. Most of the people who stretched to the max to buy them could've bought smaller, they could've used their brains a bit and figured out that the bank being prepared to lend x amount doesn't necessarily mean they could afford it.
This "Blame the Banks" seems to becoming to be a ready get out clause for not wanting to take any personal responsibility for their own mistakes and greed, for a lot a people.
#12
Bloody Yank
Joined: Oct 2005
Location: USA! USA!
Posts: 4,186
Re: Foreclosure Alley
The problem is fairly straightforward. When only low down payments are required, default rates go up. When no repayment of principal is required (interest-only), default rates go up. When unsophisticated borrowers are given variable rate loans, you turn them into interest-rate speculators, and default rates go up.
These are statistical realities, and banks have enough historical data to forecast these eventualities. But they cherry picked the data and ignored the unpleasant bits in order to avoid confronting this reality, because they wanted to sell off these packages to investment banks, investors and hedge providers, who all did the same.
Blaming the borrowers is a bit like blaming the sinking of the Titanic on unruly passengers. While I am sure that there were some deaths caused by poor lifeboat etiquette, the whole voyage was doomed when the captain took unnecessary risks and assumed that his ship could not sink.
#13
Re: Foreclosure Alley
I believe that you are missing the point here. The banking system created enormous systemic risks that were bound to eventually fail. These risks would have been predictable had greed not gotten in the way.
The problem is fairly straightforward. When only low down payments are required, default rates go up. When no repayment of principal is required (interest-only), default rates go up. When unsophisticated borrowers are given variable rate loans, you turn them into interest-rate speculators, and default rates go up.
These are statistical realities, and banks have enough historical data to forecast these eventualities. But they cherry picked the data and ignored the unpleasant bits in order to avoid confronting this reality, because they wanted to sell off these packages to investment banks, investors and hedge providers, who all did the same.
Blaming the borrowers is a bit like blaming the sinking of the Titanic on unruly passengers. While I am sure that there were some deaths caused by poor lifeboat etiquette, the whole voyage was doomed when the captain took unnecessary risks and assumed that his ship could not sink.
The problem is fairly straightforward. When only low down payments are required, default rates go up. When no repayment of principal is required (interest-only), default rates go up. When unsophisticated borrowers are given variable rate loans, you turn them into interest-rate speculators, and default rates go up.
These are statistical realities, and banks have enough historical data to forecast these eventualities. But they cherry picked the data and ignored the unpleasant bits in order to avoid confronting this reality, because they wanted to sell off these packages to investment banks, investors and hedge providers, who all did the same.
Blaming the borrowers is a bit like blaming the sinking of the Titanic on unruly passengers. While I am sure that there were some deaths caused by poor lifeboat etiquette, the whole voyage was doomed when the captain took unnecessary risks and assumed that his ship could not sink.
However, I feel that the greed thing got a hold of everyone; and to use as similar example to yourself, it became a huge supply and demand thing - if people hadn't bought into the whole "I can have it all" mindset, the incentives for the banks to make these outrageous loans wouldn't have been there; so they wouldn't have made them.
The lenders are at fault for egging "everyone" on; but in turn, "everyone" should've had the nouse to see where it was headed. We qualified for a mortgage 4 or 5 times greater than the one we have. Did we take it? No - because it was quite clear to me that it was ludicrous.
#14
Re: Foreclosure Alley
At the risk of sounding a bit controversial, in general I'm getting a fed up about how all of this is "the banks fault".
While I do have quite a lot of sympathy for the young couples trying to get on the ladder and stretched their budgets to do so, and then fell into a bit of trouble, or people who were hit with job losses at the wrong time - those homes on that video are Mac-Daddy McMansions. Most of the people who stretched to the max to buy them could've bought smaller, they could've used their brains a bit and figured out that the bank being prepared to lend x amount doesn't necessarily mean they could afford it.
This "Blame the Banks" seems to becoming to be a ready get out clause for not wanting to take any personal responsibility for their own mistakes and greed, for a lot a people.
While I do have quite a lot of sympathy for the young couples trying to get on the ladder and stretched their budgets to do so, and then fell into a bit of trouble, or people who were hit with job losses at the wrong time - those homes on that video are Mac-Daddy McMansions. Most of the people who stretched to the max to buy them could've bought smaller, they could've used their brains a bit and figured out that the bank being prepared to lend x amount doesn't necessarily mean they could afford it.
This "Blame the Banks" seems to becoming to be a ready get out clause for not wanting to take any personal responsibility for their own mistakes and greed, for a lot a people.