The Mortgage Bankers Association announced numbers on Friday of delinquencies in the last quarter of 2009. No surprise that most journalists and government people are saying that this is "Proof we are coming out of the housing crisis". What they fail to mention is that a large- VERY large percentage of lenders put a moratorium on foreclosures over the holidays in an effort to allow homeowners to enjoy the holidays in their homes for one last year before they had to find other living arrangements due to foreclosure.
The other 'fail to mention' is the fact that there are many homeowners who took the famous pick a pay loans with teaser starter rates of 1-2% interest only that reach their 5 year re-cast period in 2010 and 2011. The majority of these homeowners will find it impossible to afford their new payments where 're-casting' calls for taking their mortage and re-setting the payment to fully amortize payoff in the remaining 25 years... at the new principal balance which now could easily be a balance that is $50,000 or more than the original loan amount. This takes into consideration that the majority of borrowers paid only the 'teaser rate' minimum payment required for the past 5 years which piled on interest not paid to the principal balance every month. Take that higher loan balance on a home financed at 100% and add the fact that most home values in San Diego County have plummeted 30% and more. DISASTER for sure. Payments could easily double and even triple according to the re-cast terms.
Add this to the commercial real estate crash thats moving in full force and the only realilty I come up with is 'This crisis is far from over..' My prediction is more bank failures and a very real possibility that our dear government will want permission to throw more bailout money to the lenders..
Deb Espinoza GRI, ABR, ePro, SFR, CNE
Stage Presence Homes
DebSDRealEstatePro@gmail.com
I am waiting for job creation before I believe it is over.
I agree with you Debbie. Also throw in the fact that lenders are spoon feeding foreclosures to the market and sitting on a boatland of homes so as not to tank housing prices even more and we have along way to go. Mike
Debbie,
That's 2009, talk to me about 2010. The MBA's are asleep at the loan mess wheel, or are they trying not to hurt my feelings?
Hi Debbie,
Welcome to Active Rain and congratulations on your first post! The opportunities to learn and network are incredible here. Best of luck to you!
-Keith
Debbie,
It will be really interesting time with the recast on residential. this may force the lenders into more loan mods. the commercial lenders don't want the properties so there are more likely to be a lot of negotiations that result in recast loan agreements and amounts.
Yesterday I read the MBA report as reported by several different sources. I was astounded how each news source chose to report not only differing segments of the report press release but how they chose to parse it. The only thing unanimous in their reporting was putting a positive spin on the report when, indeed, there was some negatives in the report.
4 more banks failed yesterday. That brings the total for 2010 to 20 banks.
....amen, the media and th egov are all in bed. if they can pull the woll over the eyes of america one more time then it will once more be good for now. hello do we all need to get into our air plane and fly into the gov. blgs. to wake up our leaders ??
Great post, and I do agree! Amen.
Good for you on this feature!
Debbie: Wow... is your post "reeking" of sarcasm. Surely, there are still many more chapters remaining in this story. One thing that many writers mention when commenting on the impending foreclosures is how "surprised" so many of the homeowner/borrowers are when the poop hits the fan, and the loans adjust.
I think many more borrowers really, honestly KNEW what they were getting into when they originally signed their papers. Or at least the borrowers that I knew about here in Texas. Disclosure was BLATANT at the closing table.
But... that is one of the beauties of being in a market such as Fort Worth. Here we are talking, for the majority of first time buyers who bought in the mid-2000's... we're talking a first mortgage of about 120,000. When that adjusts... sure, it hurts... and can be catastrophic... but nowhere near as much as a typical loan of 500,000 in markets like California.
The foreclosure crisis is far from over. Unemployment is still rising in many areas and foreclosures are not slowing down. Just driving through my town, it is amazing how many empty storefronts and office buildings are around. My biggest concern is that the government itself will go insolvent as the Chinese stop purchasing our debt.
Debbie... I just noticed that this is your FIRST blog post. Cool... very well done. And... Congratulations on joining Active Rain. This is such a great place to learn, and to share what you know with others. I am sure this will continue to be a rewarding experience for you. Once again... Congratulations. I'm glad you're here !
Debbie, thanks for bringing this up. Last year at an economic conference, it was predicted that the number of transactions in the real estate market in 2010 would be a little over half of what it was in 2009. So, how can anyone say we are out of the fire? I think I would rather be prepared for the up coming decline than continue with my eyes closed.
Debbie,
Amen Sister!!!
What you say is certainly true here in Reno, NV. Most of the "pick-a-pay" borrowers I have run on to could only EVER hope to afford the negative amortization payment; makes you wonder what they were smoking in the underwriting departments. These buyers would be upside down on their loans even if they were traditional 20% down, fully amortized buyers; with neg-am added in they are so far gone they are pretty much disinterested in trying to save their homes. The one bright spot for us as an area (with respect to more REO inventory at least, although "bright" is probably not the right choice of words) is that many, many of these borrowers defaulted a long time ago after they lost their jobs and couldn't even afford the lowest payment, and they have already been foreclosed upon. Our big concerns are unemployment and the oh-so-shadowy shadow inventory.
Congrats on your first post!
Until they can start creating new jobs we will stay in the tail spin. Hopefully they will start to help mainstreet instead of help wallstreet.
Watch out for the rates...
www.georgetownmortgage.net
Great post Debbie. What good did the bailout money do in the first go around? Hope we have learned something from that next time around.
Someone needs to tell our leaders that the power of positive thinking has to have a little bit of TRUTH to it as well! You can't just keep making up good sounding lies that don't work. But it is easier when you are spending other peoples money!
Debbie,
They're asking "permission"?? I just thought they were acting anyway that they chose on any given moment of the day!!!
Debbie, I concur, even more so in the sands states.
If you are in a state that values went up by half, no worries. If you are in a state where values doubled or tripled in the past twelve years like me, it ain't over. Ugly times still ahead for the owners who bought from late 2003-early 2008. I'm in Los Angeles/Orange County and REO's will reign king for three-four more years. Chin Up!
The Main Stream Media needs to make it look like Obama and the left are succeeding when the problems are only get put off or worse.
Gene, why do you hate America? You really thing pursuing the policies of the past administration would have been better? Keep rooting for Americans to fail. That will really help your business model.
Ron: Yes... Active Rain is a great place to interact with your peers.
However... the comment section of someone else's post is NOT the right place to ask for referrals, or to post all of your personal information like you have. This is considered "Comment Spam"... and is in violation of the Active Rain Community Guidelines. This is Debbie's post... not yours. Be fair !
Great Post Debbie!
Be part of the solution, not perpetuating the problem... Enough with the doom and gloom already... Read my post about Who's market it really is from about 3 days ago... If the housing economy is soooo bad then what are you still doing in it... The definition of insanity should be continuing to do something you have no confidence in!!!
My apologize for my somewhat harsh stance on you post but I am so sick and tired of listening and reading negativity that I had to comment. If this is a members only post than fine, vent all you want... If your sending this kind of negative jargon out to the public then you are part of the problem!!!
Hey Debbie - if this is your first post, as I read above, then you did a great job getting some controversy going. But, I have to ask - How do you know lenders, "put a moratorium on foreclosures over the holidays in an effort to allow homeowners to enjoy the holidays in their homes for one last year before they had to find other living arrangements due to foreclosure." Just seems a little far fetched to me. It's more likely that so many employees were on vacation that they couldn't keep up!
Great post Debbie!!
It's absolutely amazing how many people have their head in the sand or believe everything the government and media say. Our country's stock market is driven more on emotion than raw data, thus those in control want to paint a rosy picture, not only for their own benefits, but to keep the markets from tanking.
You are RIGHT about the holiday moritorium many banks had on foreclosures, and also RIGHT about banks slowly putting their foreclosed homes back on the market. Most of the biggest banks have held back, because if all those homes hit the market right now, the vast over-supply would destroy pricing in most regions. We will continue to see these foreclosed homes on the market at above-average levels for the next few years.
Next month, the Fed will stop buying mortgage-backed-securities, which they have done for the last 15months. This will take 80% of the demand out of the market. Watch rates go up, and fast. Add that to the mix, and we're in for a couple tough years to come.
Debbie --this is just the beginning...
I'm currently reading "Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown" written by the folks who predicted the Housing Bubble crash way before it happened.
This reads like a thriller yet unfortunately is not fiction.
I urge everyone to run, not walk to get this book.
I'm not sure what you mean by "little people". For those who can take advantage of this once in a lifetime buying oportunity the crisis is indeed, over. For others maybe not so much. But that is always true as one man's problem is another man's solution.
Any media report has its own agenda. We just have to learn how to spot it and take it into consideration as we read , watch, or listen.
Welcome to AR. Your first post has obviously attracted some attentoin.
Akron, Ohio
I don't see stating facts and reality as being "negative" as John puts it; and I am part of the solutions. A big , helpful part of the solution in my area. #1 Because I make it my mission to know what the facts are and how to help people make decisions in regards to the situation they find themselves in and #2 because I don't help perpetuate the problem by letting people stay in their fantasy world that doing nothing will solve a problem. Maybe a lot of your areas are not the same as mine. Here is the reality of my area. LOADS of people got real estate licenses to do mortgages and real estate to make the 'big bucks.. easy money' that they saw available because for some reason the government thought everyone had the 'right' to own a home. Yes, it is an American Dream- but lots of people didn't know the details of the dream, and 'newbies' in the business didn't give one darn about education of their clients they were just out for the almighty commission. They did a disservice not only to strangers that walked in their doors or phoned them for great rate loans or the purchase of a house; but they did this to FAMILY and good friends. All of the sudden we have waitresses, hairdressers, car salesmen, lawyers... with real estate licenses jumping into the frenzy to get some of that big easy money. No experience, no education, no conscience.. and I'm not saying that this was all on purpose, although right now in the case of attorneys and loan mods.. but that's another BLOG :-) So, in our area we have a big % of these 'newbies' now out of the business, a huge percentage of them- surprise, surprise- have their own "listings" in the newspaper under the NOS section, and many of them have helped to include their friends and family members in that section right along with them, because of an eye on the wrong 'prize'. The blame for this whole situation sits on A LOT of different people and entities- From Gov't, Fannie, Freddie, Banks, Investment houses, appraisers, lender reps, title reps, RE brokers, LO's, agents, and the homeowners. Not all participated- BUT a lot did. It became all about the money- the homeownership- the refi to get what "the Jones" had. And unlike Karen's experience in the Texas market; we didn't have great 'disclosure' of the loan facts. Many minorities couldn't even read or understand the paperwork, many of the LO's were fresh out of the restaurant and didn't understand the loans themselves so how could they explain them to family and friends and innocent walk ins who heard the radio ad of $350K loans for payments of $1100?? (all they knew was these loans paid the higest commission based on a "margin" the client wouldn't know about in the near future), and although we all like to think most of us 'know better" the truth is that the human psyche wants to believe the 'best' things they hear and they will shut out the still small voice that says "Gee, that doesn't make sense". It is STILL HAPPENING with people trying to hang on for dear life to properties they can't afford, or pretend that if they just ignore the collection calls that one day they will finally lose their house to foreclosure and that's the only option they have, or listen to some lawyer who says 'for $3500 I can save your house' or I can do a 'forensic audit' on your loan paperwork and meybe even get you your home for FREE" PULEASE... Sarcasm, yes I reek of it when I get going. We did it, we got here, now lets do what we can to get out of it. That is not 'doom and gloom' it IS.
I had to dash a few people's dreams- sit down and write out the whole 'homeowner's budget' for some who in a moment of crazy excitement riding around with a Realtor friend found a dream house and put an offer in on a home they could NEVER afford. Heck, when there's no money to get in, low low interest only or teaser rate interest payments on loans that anyone who has breath can qualify for (my gosh when you think back on it- that should have scared the crud out of us!), in most cases the property taxes were not addressed in the monthly payment, insurance, maintenance, water bills... Sure it hurt then, and I wasn't making anything but the reputation that if you want the truth, and you want help- Deb will give it to you so you won't make a bad choice; and believe me- They are thankful now- and so am I! So the question we need to ask ourselves now is: How are we going to help this situation? are we going to let these 'sunshine and roses' people keep blowing sunshine up our backsides? or are we going to work with the truth and do what we can to provide solutions for our clients?
We obviously can't make the banks or the government do what we think is the fastest and best solution, but we can know the facts of what they are doing by staying educated on decisions they make and knowing how that affects homeowners so we can be the educators and help them in the situations they find themselves in- yes, in some cases by their own fault- But does that make it right to not help them find a solution?
The crisis will be over when homes purchased during 2005-2007 fuly recover their original purchase prices, and this won't happen for a decade or more. Congrats on the feature!
In response and with respect to John, we can all be frustrated, humans can only take so much negativity, but the truth needs to be told. We are not out of the woods, Debbie is right on target, the same numbers showing a decrease are being aritificailly manipulated. The numbers areebing spun and it makes the problem worse, not better. If we tell people things are great when they aren't, we lose their trust
Welcome to ActiveRain. This is a great community to network with others as well a great place to learn from other's experiences and knowledge. I've enjoyed it; I hope you enjoy it as well.
We probably have a few years before we are totally out of the woods, but that should be just fine with the creative and opportunistic entrepreneurs out there. The opportunity in this market is huge, and I'm more excited about real estate today than I have ever been.
Oh, Yeah, Debbie.....and all those unemployment figures they present are bogus....too much not taken into consideration. No Job - No Money