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| It's simple math. Why can't the banks figure it out ? Every time a house is repossessed it is a double edged sword. A consumer is removed from the housing market, for at least seven years. An under-priced house is added to an already saturated market. Lowering the price of houses WILL NOT increase demand, when there is a 10% unemployment rate and banks make it difficult to qualify for a loan. When the unemployed get a job, they have a short-term employment history and will not qualify for a mortgage. The housing market is at a nine year low. That means that nearly everyone who has purchased a house, in the past nine years, is under-water. When your house is financially under-water, it is impossible to upgrade or take advantage of the current market conditions. If you can't sell, you can't buy. I figure it will take a minimum of ten years for the housing market to recover. (How many people are locked out of the market for seven years ?) The more houses that are repossessed, the longer the recovery will take.  | |
 DSL987
join:2000-03-22
Helotes, TX
1 edit | If the Government had stayed out of the housing market and let it free fall instead of trying to prop it up, it would already be recovering by now, instead of slowly going down for years. | |
 dogmaXYZPremium
join:2002-08-15
Boulder City, NV
kudos:1 | reply to Waterbug
said by Waterbug:When your house is financially under-water, it is impossible to upgrade or take advantage of the current market conditions. If you can't sell, you can't buy.
Why do you feel this way? Who told you this? | |
horsemouthPlease Clarify My CSPPremium
join:2002-03-13
canada | Is this a IMF trick question. Honest that is life for most people. Sucks but that is just the way it is. | |
| reply to dogma
said by dogma:said by Waterbug:When your house is financially under-water, it is impossible to upgrade or take advantage of the current market conditions. If you can't sell, you can't buy.
Why do you feel this way? Who told you this? Nearly everyone starts out in a "starter home". The buy less house than they would ultimately like to own, on the prospect that they will build up some equity, to use to buy a bigger/better house. If you never build that equity, you never upgrade. If it costs you money to move out of your old home, it decreases the money that you have to put down on a new home, even if you are fortunate enough to have saved up a new home fund. | | |
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dogmaXYZPremium
join:2002-08-15
Boulder City, NV
kudos:1 | Yep, most people have done it that way. As long as the RE market, as you state, rises over time relative to inflation.
But what happens when that process, or better yet, that ecosystem is no longer viable? What happens when the RE values no longer rise relative to overall inflation? (see graphs above) It is my feeling that, that party is over, never to return in our lifetimes.
My point is that the seemingly status quo, tried and true method of "financing the American dream", was never absolute. Thus one really can't apply the word "impossible" to that equation. Or better put, the concept of perpetually leveraging into a bigger, better, MacMansion home that will make us happy and validate our personal self-worth is a worthless bill of goods we have all been sold. IMO.
My parents, and all of my contemporaries parents (I'm 52) still live in the first homes they purchased back in the early 1960's. It is only in the past 30 years, with 3 successive housing bubbles, have people begun thinking that a house was somehow more than ... a house. It became some high-finance investment vehicle that also doubled as some mutated social statement.
I would submit that the assumption of ones house being financially underwater (worth less than is what is owed) is not related at all with the owners ability to upgrade or purchase other property. Usually the issue is the owner simply doesn't earn enough income and therefore can't afford to. Moreover, buying into the hype that ones house and all the material crap inside is somehow a representation of ones success is how we all got into this mess in the first place. Many feel entitled to maintain our addiction to ever-increasing personal debt that continues building a one-sided bridge to that carrot of consumption.
It's not the banks fault. We should stop treating the banks as some deity that we must all kneel down before and beg them to pity us.
Can't they figure it out? Oh, They have.. When will we figure it out??
Take it from me, one who spent the majority of his adult life chasing that bullshit American pipe-dream, only to realize a big fancy house on a big plot of land brings one nothing but a big price to pay. I say spend 5-7 years (yes years, for those that are instant gratification challenged), live like a hermit, live like a pauper, live with momma and daddy, save every penny one possibly can. Then if one has $25K, $50K, $100K, whatever ... they purchase a house cash.
That $50K free and clear house, a true performing asset for the rest of ones lives, will be worth more both economically and in terms of personal satisfaction and gratification, than the majority of American clowns that try to service oppressive mortgages and credit card debt to say they own a fancy house.
Let 'um miss three payments and let's see who really owns the house. | |
 OmegaDisplaced OhioanPremium
join:2002-07-30
Cheyenne, WY | reply to Waterbug
So what do you propose? Letting people stay in their houses even if they can't pay for them? Once people figure that out, everyone that is not concerned with moving ever again will stop paying for their house.
When one purchases things they cannot pay for, there are consequences.
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What smells like blue? | |
| said by Omega:So what do you propose? Letting people stay in their houses even if they can't pay for them? Once people figure that out, everyone that is not concerned with moving ever again will stop paying for their house.
When one purchases things they cannot pay for, there are consequences.
Many many people bought houses that they could afford, at the time they bought them, but do to loss of jobs or other hardships cannot afford them now. In the past, if you had been in the house for several years, you could sell it and get out from under it. Housing prices are at a nine year low, so in the current situation, people who have been in a home for as much as nine years cannot get out from under them. If your house is underwater or even worse if you don't have 20% equity, the banks will not even talk to you about a refi. A refi could be interest only, variable rate, 5 /10 year balloon or any other number of options, that could prevent an immediate foreclosure. Yes, those are shitty financing options, but are better than a foreclosure. | |
dogmaXYZPremium
join:2002-08-15
Boulder City, NV
kudos:1 | said by Waterbug:Yes, those are shitty financing options, but are better than a foreclosure.
With all due respect; Bullshit.
I went through a foreclosure, and at the time I thought it was the end of the world. But it was the best thing that ever happened to me. It forced me off the debt teat. It forced me to realize the banks were not gods to bow down and brown nose to. It forced me to see how the banks were pimping my consumption-addicted ass like a common crack whore. It forced me to understand how ... and more importantly why, I should live within my means.
What I am not understanding here is your insistence of a totally false premise. That somehow, it's the lenders paternal responsibility to provide a warm and cozy layer of financial protection to adult individuals who are no longer able to service their contractual agreements. Agreements they signed that spelled out in no uncertain terms what would happen if they breached the terms of the contract by not paying ... irrespective of their circumstances.
From my POV, all of the statements and assumptions you made in your OP are simply way off target. | |
| said by dogma:What I am not understanding here is your insistence of a totally false premise. That somehow, it's the lenders paternal responsibility to provide a warm and cozy layer of financial protection to adult individuals who are no longer able to service their contractual agreements. Agreements they signed that spelled out in no uncertain terms what would happen if they breached the terms of the contract by not paying ... irrespective of their circumstances.
From my POV, all of the statements and assumptions you made in your OP are simply way off target.
Obviously, you are entitled to your POV, as I am mine. Your statement that you consider my statements and assumptions to be way off target, does not make that so, just as if you agreed with me would not make them any more factual. My contention is that irresponsible actions by the banks have put consumers into a financial situation beyond their control, but completely within the control of the banks. Case in point: I purchased a home over seven years ago. It was a modest house. $155,000 with 10% down, mortgage of about $140,000. Never missed a payment for seven years. Loan amount was down to about $131,000. Lost job and was unable to meet payments. Put house on market for nearly a year and dropped asking price to $145,000 (loan pay-off + realestate commission + closing cost). It would not sell at that price. Bank refused to refi, to lower payments, because I was delinquent and and did not have 20% equity.
It is the banks lending policies that have caused and perpetuated the housing crisis. If my home hadn't DECREASED in value, I would not have a crisis. The lending practices of the banks have caused homes to depreciate, not any actions on my part. Unfortunately, my foreclosure will further depress the housing market, making the situation even worse for my neighbors. But then, I guess that if their houses go into foreclosure, it's their fault and both I and the banks are COMPLETELY fault free.
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dogmaXYZPremium
join:2002-08-15
Boulder City, NV
kudos:1 | Believe me, I feel your pain. And we can agree to disagree here, which is why my post included IMO's and POV's.
Remember, it was the banks lending practices that caused your home to INCREASE in value as well. (I am assuming you bought about 2 years prior to the bubble peak, and your home value increased slightly for the first couple years) I don't remember a whole lot of people complaining that their home values were rising due to those evil banks.
I lost 10 years of my life coming to grips with my financial reality. Not only did I go through a foreclosure, but I owed well over $300K in other debt to boot. The house I got a mortgage on in September 1989 cost $263K. I put down $32,000 cash. After they evicted me, the house ultimately sold for $193K in 1993. Much like you I couldn't understand why lenders couldn't see the logic of allowing me to stay with a renegotiated arrangement considering they would be losing money as well.
But like Omega  correctly points out, if they did it for me, they would have to do it for everyone. Banks are not in the romper room child day care business. They loaned me money in good faith that I would pay it ALL back exactly as agreed. I signed a legally binding contract to that effect.
So no, it's not the banks fault that I ran into tough times. There was no tough-times clause in the contract. Sometimes they work with mortgage owners, sometimes they don't. The banks are free to do whatever they feel is in the best interest of their own business in order to mitigate losses. Just like I was free to enter into a contract that was really a bet on the future. It's their legal prerogative. They are not responsible for the value of anyone's home. They are only responsible to their shareholders (owners). | |
OmegaDisplaced OhioanPremium
join:2002-07-30
Cheyenne, WY | reply to Waterbug
I emphasize with your situation. I do have a question though. How did you manage to only pay off $14,000 on your home given that you had 7 years?
Yes, I realize there are fees.
Yes, I realize you have property tax & home insurnace possibly wrapped up in the monthly mortgage cost
Yes, I realize there is interest.
But, Your bought your home for well more than I did, thus one can assume that your monthly payment is more than mine.
I've paid off over $3000 of my $127,000 mortgage in under two years. This is principle only. I did some calculations, and even paying down the same monthly principle I am now, I still pass you after 7 years. I'm just confused on how you could still owe that much money after 7 years.
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What smells like blue? | |
| That amount also includes back payments and fees that I would have to pay to the bank, were I to find a buyer. Had to be 3 months in arrears, to even qualify for a short sale. (For which I found a pre-qualified buyer, that the bank approved, that backed out three days before closing). | |
DSL987
join:2000-03-22
Helotes, TX | reply to Omega
said by Omega:I emphasize with your situation. I do have a question though. How did you manage to only pay off $14,000 on your home given that you had 7 years?
I wondered the same thing, but maybe it was a 30 year note with high interest? | |
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