October 25, 2006

A million foreclosures in the US this year alone - and we're just getting started


Good video on the foreclosure time bomb on NBC Nightly News.

Tick tick tick.

Pretty standard report these days, with the couple who "didn't understand" the mortgage they signed up for. Not sure if I believe that, but Americans are so financially ignorant, it could be true. This couple's mortgage went from $1700 a month during the "teaser" period to almost $4000 a month today.

Yes, make that 1,000,001 foreclosures...

After the smoke clears and all is said and done, especially with all the resets happening over the next three years in the middle of a housing price collapse, you'll be looking at 5 million, maybe 10 million or more foreclosures in this country post-bubble. It used to be easier to avoid, as you'd just sell the home, but now if you sell you're below water, so it's just a matter of time.

Again, the human face of the housing bubble will be seen with these foreclosures. Lives ruined. Families on the street. Financial devastation.

And realtors and mortgage brokers on commission laughing all the way to the bank.

63 comments:

Bubba2Friday said...

Locked up market right now with too many homes up for sale...

Just wait until the auction market gets rolling. One auction in Naples, Florida, last weekend (45 homes starting at $1) shaved an average 35% off the 'Zestimate' price. Can't help but to believe comps will be effected... I bet the Fed statement continues to include a line about the 'moderating' housing market...

Otto Ohlendorf said...


you'll be looking at 5 million, maybe 10 million or more foreclosures in this country post-bubble.

What would 10 million desperate men do to feed and house their families?
Would they execute the traitors and drive the foreigners out? When the troops come home to all this what will they be capable of doing?

real estate 101 said...

Realtors and mortgage bankers to blame? How about blaming the consumer for over consuming? 99.9999% of the borrowers know exactly what an ARM is and means. They put their blinders on and focus on that low payment.

keith said...

oh, there's enough blame to go around, and I first and foremost blame the people who signed for the loan

but in many cases, you're talking about financially ignorant people, the least sophisticated amongst us, being manipulated into a dirty loan by very sophisticated people - the mortgage brokers and realtors on commission

oneclickplus said...

Personal responsibility ... I've mentioned it before. You have a question or concern about a product (mortgage)? Then enlist the help of a trusted friend or advisor; NOT the soul that is selling you the product. How many of you trust the car salesman to give you the best advice / deal? While there may be plenty of blame to go around, the borrower is primarily responsible for his/her troubles. And I'll waste no sympathy on them while they try to off-load some of THEIR responsibility: "We were tricked" "No one explained the mortgage to us" "That's not what they told us". Geez - the damn mortgage document is in english (I think). Ignorance does not mean stupidity. Hire an attorney / advocate to explain it to you if you don't understand. That would make you wise. Don't want to do that? Now, you're both ignorant AND stupid.

Anonymous said...

Americans are financially ignorant

I'm a local lender, have been since '87, probably for not much longer. Local lenders will disappear alongside the independent bookstores, music stores, hardware stores, travel agencies and so on. National mortgage lenders are the equivalent of the Big Box stores. (And like manufacturing, some aspects of mortgage lending are being outsourced to processing centers in Bangalore.)

Our firm reduced 2 clients to tears last week. They had been qualified elsewhere but were astonished when we disclosed the monthly payment. We're assuming the other lenders stressed the P&I rather than the PITI. One client walked away from the transaction, the 1st of 3 sales. The other seemed intent on purchasing a home for $270k, he earns $14.50/hr. Wife is currently unemployed. He's elected to continue to work with his out-of-state lender even though he was informed that the lender had erroneously included his overtime income - a no-no for this 100% LTV product.

When this all shakes out, it would be nice if the industry would identify the percentage of defaulted loans in which the application was originated by phone as opposed to a face-to-face interview. With risk based pricing, they probably don't care.

FYI - we're not laughing.

keith said...

last poster - pick a username so we can track your comments. your input will be great to hear as the ponzi scheme unravels - and countrywide goes belly-up

keith said...

oh, you guys like my new profile picture?

Patch Tuesday said...

I caugth that newscast as well. It's amazing that we have went from the media publishing bubble on the Internet to the press broadcasting television reports slamming real estate almost daily now.

darreningainesvillefl said...

This is how it went with that couple, Wife "honey our friends and everyone we know is buying a nice big house with those granite countertops and wood floors and we live in this little house and i can not invite anyone over and i feel so depressed". Husband (hunter-gatherer )"I must get my wife that house, must figure out a way, finds brochure at bank on option arm and sees he can make a $1700 payment and he really knows it could be a bad loan, but he sees his wife happy when he tells her she can buy that house and so he does loan and hopes to figure out later what to do about higher payment but forgets quickly as his friends come to parties hosted by the granite counter queen.
Oh well, better three years of happiness than a depressed wife.

darrenin gainesville said...

I belive in the coming years you will find that many wives were the cause of the crazy loans being done
once they go granite counter mad.
If she ain't happy, no one is happy. My wife wants that to but is happy to wait until prices come down. We do own a house we bought back in 2002 for 124,900 and put 10% down and we will stay there with no regrets.

michael said...

i guarantee you that a year ago that weeping wife was very gung ho about buying that house.

"it has stainless steel":

"it has granite"

"pleaseeeeee"

in the beginning it was the forbidden fruit from the tree of life.

today, its granite countertops.

Anonymous said...

Report said that 39% of mortgages for the first half of 06 were exotic.

Insanity still goes on.

Metroplexual said...

HOw do you put a profile picture in?

WAWAWA said...

HOw do you put a profile picture in?

Anonymous said...

The Existing Home sales report: Sales declined more than expected. The writing is on the wall, but just look at the desperate denial:

http://www.bloomberg.com/apps/news?pid=20601087&sid=a8tfln5YcPLc&refer=home

``We may be setting the stage for a bottoming out,'' in the existing home sales market, Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut.

aha aha ahahahaha!

Disgorge! said...

Housing market meltdown!

Disgorge! said...

"The worst is behind us as far as a market correction _ this is likely the trough for sales," said David Lereah, the Realtors' chief economist. "When consumers recognize that home sales are stabilizing, we'll see the buyers who've been on the sidelines get back into the market."

We can now confirm that Liareah really is a sh!t.

Metroplexual said...

Nevermind, I just had not been to my profile page in a while.

keith said...

metro - you win for best picture, hands down

Anonymous said...

I can just imagine the wife before buying, screeching in shrill Spanish-accented talk: Weee musy Buuuy dis house, damn you!

Poor bastard.

Anonymous said...

"How many of you trust the car salesman to give you the best advice / deal?"

There is a clear difference between a car salesman and a Realtor(TM). First a car salesman works for the company that typically owns the car- a realtor does not work fo a company that owns the house. Second, one does not call an agent to assist them in the purchase of a new or used car. Indeed, a potential home buyer calls an agent to act on their behalf and represent THEIR interests in the home buying process. This is exactly where the probelem arises- buyers agents have a duty to represent the client first- not their self interest. Their very occupation shoudl be regulated according to a Board (such as with Doctors and Lawyers), according to a code of ethics where violation thereof is cause for disbarment and/or as evidence of misconduct/fraud. Absent that, they need government regulation as they have shown that they cannot manage their own.

Anonymous said...

about blaming the consumer for over consuming?

HAHA that's rich. stir the frenzy: You'll NEVER get in if you dont get in NOW! You'll be priced out of the market!

now, blame the victim.

Ronald McMansion said...

two neighbors pulled their homes off the market last week, over 9 months and no offers.

Anonymous said...

Patch Tuesday said...
I caugth that newscast as well. It's amazing that we have went from the media publishing bubble on the Internet to the press broadcasting television reports slamming real estate almost daily now.

Wednesday, October 25, 2006 1:31:53 PM


almost like it turned on a dime

borkafatty said...

Personal responsibility:

Stupid people have no Personal responsibility, that is why they are stupid.

Anonymous said...

Anonymous said...
I can just imagine the wife before buying, screeching in shrill Spanish-accented talk: Weee musy Buuuy dis house, damn you!

Poor bastard.

Wednesday, October 25, 2006 4:11:48 PM

What happens after foreclosure? Is that bad for your credit?

borkafatty said...

4 times as many home foreclosures predicted
Heavy debt, housing slump could trap owners, lender says

Up to 4% of America's mortgaged homeowners might lose their homes to foreclosure in coming months, one of the nation's largest lenders predicted Monday, as those homeowners find themselves trapped by heavy debt and the housing slump.


http://tinyurl.com/yaabwx

Anonymous said...

"Geez - the damn mortgage document is in english (I think). Ignorance does not mean stupidity. Hire an attorney / advocate to explain it to you if you don't understand."

Lawyers cannot even understand these things.

Metroplexual said...

Thanks Keith! It sort shows where I am coming from. Btw, my brother-in-law played golf with Lareah 2 weeks ago and with someone from the Mortgage Banker Association that he used to work with. Lareah drank the kool aid.

Lawyers are in on the scam too said...

<"Geez - the damn mortgage document is in english (I think). Ignorance does not mean stupidity. Hire an attorney / advocate to explain it to you if you don't understand."

Lawyers cannot even understand these things.>

The funny part is thet the FBs did hire an attorney, paid for by their closing costs.

borkafatty said...

The funny part is thet the FBs did hire an attorney, paid for by their closing costs.

-----------------

I always thought a Lawyer for a FB was always paid for by the FB, out of pocket? Not sure it has been a long time, and things have changed obviously.

Anonymous said...

fundamental lack of self-control in this country (IMHO) and too much "keeping up with Joneses" attitude. too much equating self-worth with toys or bling owned. no one puts a gun to these idiots' temples and tells them to buy. they collectively "flopped it over a stump with the hope no one would come along and cut it off" and guess what? it's being chopped off! Deal with it pookie! Hopefully, they put it through a Cuisinart after it's been chopped off, bunch of igmos' getting a school of hard knocks economics lesson.

Anonymous said...

I can clearly relate to the video, as the wife seems to be the instigator of the stupidity. My wife is "depressed" because she can't have friends over. It bugs me every day, especially having to hear her sh*t--"you're the man, you should have gotten us into a house by now". Man, I try to show her the evidence of the bubble bursting, but I'm fighting thousand of years' worth of the nesting instinct developing. I swear I might get divorced if she doesn't clam up.

--Fed up in the Bay Area, CA (where NOBODY can afford a house without a no-interest loan)

LauraVella said...

"I belive in the coming years you will find that many wives were the cause of the crazy loans being done
once they go granite counter mad".

I agree. It's called - "If everyone is doing it, why can't we" syndrome. I really do believe the wife is responsible for diving families into this market. It's irrational behavior to the max.

Thought for the day: Just because everyone else is doing it, doesn't mean it's the right thing to do...

Anonymous said...

"especially having to hear her sh*t--"you're the man, you should have gotten us into a house by now". "

If my wife ever said that, Id get divorced faster than flies on sh*t, especially if she's sitting on the fat as* of hers and not working...

Anonymous said...

to last anon:

I should--but we've got kids man--

it's a rough time, whichever way you go...although there is a pretty cool website, I'm trying to remember the name, about the benefits of marrying foreign women. Maybe that's the way.

Anonymous said...

Mortgage brokers and realtors are not financially sophisticated people themselves.

The vast majority of mortgage brokers that I personally know are lucky if they have a college degree, and if they do it's an art degree.

Mortgage companies hired MANY good looking but uneducated women to push these loans on the uneducated masses.

Why? Because sex sells. A local mortgage company that just went under was chalk full of hotties pushing toxic loans.

Of course they all thought they were extremely intelligent because they deal with loans (albeit largly unregulated loans) and thought that housing only goes UP UP UP!!

At least they are good looking enough to find some man to leech off of in the down times.

Anonymous said...

Yeah I mmet them in the bars.They give great head.

Anonymous said...

"Suzanne said we can do this!"


Bwahahahahaha!!!!!


What a classic! That will definitely be included in the Housing Bubble coffee table book.

FlyingMonkeyWarrior said...

Nice Pics Kieth and Metro.

Anonymous said...

You'll be looking at 5 million, maybe 10 million or more foreclosures in this country post-bubble.
++++++++++++++++++++

Let's say three people will be affected from each foreclosure. That means from 15 to 30 millions suffering souls. Yikes!

autofx in Phx said...
This comment has been removed by a blog administrator.
Anonymous said...

In the beginning it was the forbidden fruit from the tree of life. Today, its granite countertops.
++++++++++++++++
Exactly. I've been having to hear ad nauseum from my sister about her ongoing problems with installing granite countertops in her kitchen and bathrooms. As if I care. Sheesh!

autofx in Phx said...

Pretty standard report these days, with the couple who "didn't understand" the mortgage they signed up for. Not sure if I believe that, but Americans are so financially ignorant, it could be true.
~
Of course it's true. Very few Americans think for themselves any more.

But people still have only themselves to blame. Public schools teach people to read, write and do math. They have the tools to READ the mortgage details, get an amortization table, do the math.

Oh no! That requires EFFORT and...~~tremble~~...THINKING! All I want is a big house and a Hummer to drive to Starbucks! Leave me aloooone!!!!

Anonymous said...

Anon 7:40:41 said,
“...the benefits of marrying foreign women. Maybe that's the way.”
------------------------
In 1995 I married a Russian woman after 2½ years of (pre-Internet) written correspondence. After graduating from school the following year, I wanted to pay off my student loans right away, but she pushed instead for buying a house. So we bought the house, and it turned out to be the right choice, because prices have soared since then.

But if that was the case today, no way!

If you think the perfect woman is waiting for you overseas, think again. Educate yourself before taking this route, watch out for scammers, and good luck.

But it all worked out for us, though.

a.creampuff said...

Wait a minute, or should I say "minit"? When I bought my first house, I was also ignorant. But without even trying, I learned the basic rules of thumb. I've been on the side of the naive, hornswoggled buyers, but I think I'm changing my mind. It really is not that hard to get a ballpark idea of what you can afford. If it's a falling down shack, then either figure out a way to earn more money or don't buy. And oh, for a frugal, or at least sensible woman. Yet we keep falling victim to looks, don't we?

Shakster said...

The builders in my area are really slowing.We all went home very early this morning.

Chris G said...

When the Internet finally came to the masses, I thought that the average American might be better educated about subjects they are not familiar with. I can say for certain that I was totally wrong.

Both sides are to blame, and I really hate people that prey on the naive and the less fortunate, but personal responsibility is in order. If your mortgage says the interest rate is 2.35%, like it did in that video, anyone could make a quick check to the Wells Fargo and Countrywide websites to find out that interest rate cannot possibly be a fixed rate for the life of the loan.

Those people said they were never informed that the rate could change. That's another way of saying, "We never asked if the rate could change." Hey folks, you're buying a house, not a TV. Before you talk to a lender, you might want to have a few questions ready beforehand. That's where that little Internet thing comes in handy, you morons.

Anonymous said...

I married a woman from a Third World country and she has no US friends. Good thing, too. All of her Russian friends are either poor or have no money. She bothered me about buying a house last year, but now she doesn't say anything since prices are going down.

Yes, women can spend too much money if you let them. Make sure she has a job. Then she can waste her own money.

Yeah, if you are careful and don't marry outside of your league, you can marry a foreign woman. Just steer clear of Moscow women as they are worse than the ones from SoCal.

Anonymous said...

:Yeah, if you are careful and don't marry outside of your league, you can marry a foreign woman.

I concur, I wish folks on the net would stop using "marry an intl woman" as a panacea for problems with American women. There are cultural differences and a host of issues which have to be dealt with and it doesn't always work out. Nonetheless, if done right, the chances are higher than 50% that you'll stay together and in better harmony than with a stateside skank.

Awaiting Bubble Rubble said...

'One auction in Naples, Florida, last weekend (45 homes starting at $1) shaved an average 35% off the 'Zestimate' price.'

Here in Westlake Village, CA there are quite a few properties on the market priced 20-30% below the 'zestimate' price and still not selling. Those zillow numbers are clearly out of whack. I just zillowed one in my neighborhood and a new feature of the site seems to be weekly change, which in this case as something like -$20,000 or about what I paid in rent this year.

wide-right said...

Personal Responsibility. End of story. This has little to do with a mort broker or a realtor. They just place orders. Nothing special.

..and the post of 10 million foreclosures in the US. Please explain the math to me.

awaiting bubble rubble said...

lauravella said, 'I really do believe the wife is responsible for diving families into this market. '

I divorced my wife in part because of such stupidity. The sad thing is that openly acknowledged that it meant working for an extra 20 years, but she wanted the trappings of status THAT badly!

Where do I meet women like you, lauravella?

Mammoth said...

I found mine in Russia, as I wrote above (as anon 1:23:46 AM). I went this route after years of being unable to find somebody here who valued family and the enjoyment of life itself, as opposed to someone who values money and material possessions above all else.

She is from a region ~250 miles east of Moscow. I learned to speak some Russian and went there twice before we were married. Met her family and learned a bit about the area where she was from so that I could better understand her background and thus what made her the person whom she is.

These days, most guys who are interested in an int’l woman will just pick a pretty face on the Internet, shoot a few emails back & forth, then fly over there to party & screw for a week. They don’t really get to know the woman, and both of them have fantasies and idealistic views of one another.

Two years later, when the stars in their eyes dissipate and reality takes hold, they both wake up and finally realize what they’ve done and where they’re at.

Then the test of the strength of their relationship begins.

-Mammoth

Anonymous said...

"Two years later, when the stars in their eyes dissipate and reality takes hold, they both wake up and finally realize what they’ve done and where they’re at.

Then the test of the strength of their relationship begins."

Personally, I think it's better to start with the first year or two as friends and then see what comes out of it than to 'fall in love' and go through the nirvana/crash that usually goes with it.

I think part of the reason why guys here "fall" so quickly is that the options stateside are so lame that anyone abroad with an appealing personality becomes the woman of one's dreams kinda in par with the Richard Dreyfus character in 'American Graffiti' to Suzanne Somers in the T-bird. (That movie was possibly the worst dating advice in history though the classic cars in it were amazing.)

All and all, that's American dating conditioning and needs to be overcome in order to find long term happiness. Realize, in general, int'l women are appealing in both looks and persona so unlike here, it's easier to probe inward and find out what that person really is on the inside kinda like a childhood female friend who you're never in lust with to start with. If you treat the situation as the dating scene ala USA, you'll generally feel that inhibition which prevents one from delving deeper into a partner's psyche which is why American marriages are built to fail in a real short while. Treat the process as getting to know an old friend and good things will emerge in the long haul.

Mammoth said...

As I wrote in my initial post (as anon 1:23:46 AM), we corresponded for 2½ years before meeting for the first time and were able to get to know one another on the inside first.

How many people out there have the patience for this? How about taking a year to get to know one another first? How about six months, then?

Instant gratification seems to be the rule of society these days. I want it NOW! Why do you think so many people are up to their eyeballs in debt today? The concept of living within one’s means has gone right out the window in this day & age of easy credit.

(And Keith, if you are reading this, well, this is what ties this subject to the financial & housing topic on your blog.)

Here is a quick litmus test for a guy who is looking for a decent woman:
When you first meet, does she ask you a question about your family and/or background BEFORE she asks, “What kind of work do you do (i.e. how much money do you make)?

-Mammoth

Anonymous said...

::When you first meet, does she ask you a question about your family and/or background BEFORE she asks, “What kind of work do you do (i.e. how much money do you make)?

Yeah, but then there are people who use ethnic stereotypes, etc to judge a person so that isn't always a great indicator either.

So if your granddad's Serbian and then she thinks that you hate Croats /catholics or whatever, that isn't a good way to start a friendship either. Or if your mom's Romanian, she might see you as a 'dirty gypsy', etc.

It's best to see who you are first (thoughts/ideas, feelings), background second, and then career aspirations as the icing on the cake.

Anonymous said...

darreningainesvillefl said...
This is how it went with that couple, Wife "honey our friends and everyone we know is buying a nice big house with those granite countertops and wood floors and we live in this little house and i can not invite anyone over and i feel so depressed". Husband (hunter-gatherer )"I must get my wife that house, must figure out a way, finds brochure at bank on option arm and sees he can make a $1700 payment and he really knows it could be a bad loan, but he sees his wife happy when he tells her she can buy that house and so he does loan and hopes to figure out later what to do about higher payment but forgets quickly as his friends come to parties hosted by the granite counter queen.
Oh well, better three years of happiness than a depressed wife.

------------------------

Coming soon: 90% divorce rate among FB homedebtors.

Anonymous said...

Anonymous said...
Report said that 39% of mortgages for the first half of 06 were exotic.

Insanity still goes on.

----------------

Makes sense. Dumb enough to buy now, dumb enough for suicide financing. They don't call them "the last suckers in" for nothing.

Anonymous said...

Anonymous said...
I can clearly relate to the video, as the wife seems to be the instigator of the stupidity. My wife is "depressed" because she can't have friends over. It bugs me every day, especially having to hear her sh*t--"you're the man, you should have gotten us into a house by now". Man, I try to show her the evidence of the bubble bursting, but I'm fighting thousand of years' worth of the nesting instinct developing. I swear I might get divorced if she doesn't clam up.

--Fed up in the Bay Area, CA (where NOBODY can afford a house without a no-interest loan)

---------------------

Somehow, it's hard to make much of an impression with facts and logic, analysis (rent vs. own), etc... The overwhelming majority in this society (especially the females) have been brainwashed to be good little consumer robots.

Anonymous said...

Has anyone considered the ramifications with Fannie Mae and Freddy Mac? How about all the "bundled" mortage based securities being sold (purchased by Freddie and Fanny who are now no longer govt regulated entities).

There has to be multi trillions in derivate paper built up along side the housing bubble.
In 1998 it was the collapse of LTCM which almost shook down this nations financial system. Will the crash of the housing bubble and all the derivatives built up as result which will finally do the job and kill the Floating exchage rate monetary system?

Lyndon124 said...

What about Fannie Mae and FreddieMac? What will happen to these institutions in a full blown real estate collapse? There has to be trillions of derivatives which were created and sold as the housing bubble grew to $15 trillion.

The real estate collapse could very well take down the US financial and monetary system.