27% of Homes Underwater on Mortgages

[boedicca]

I'm putting this in Politics because this situation was manufactured by our government.

Some time ago, I made a comment in a thread that the results of government policies (taxes, entitlement burdens, inflation) have resulted in a massive transfer of virtually all wealth creation by the middle class since WWII to the cronies of the ruling elite.

Nothing exemplifies this con game better than the fact that 27% of homeowners in the U.S. are underwater on their mortgages.

27%.

And why? The government fueled speculative housing inflation on the pretext of making home ownership "affordable". As the proof is in the pudding, 27% of homeowners being underwater proves what an epic fail such social engineering do gooder programs are in terms of their stated purpose.

Of course, the stated purpose is sheep's clothing to transfer income and wealth from those who have earned to the politically connected.

ObamaCare will be even worse if we dont' kill it.

The number of U.S. homes worth less than their outstanding mortgage jumped in the fourth quarter as prices fell and lenders seized fewer properties from delinquent borrowers, according to Zillow Inc.

About 15.7 million homeowners had negative equity, also known as being underwater, at the end of the year, up from 13.9 million in the previous three months, the Seattle-based real estate information company said in a report today. The total represented 27 percent of mortgaged single-family homes, the highest in Zillow data dating to the first quarter of 2009.

Home prices are declining as foreclosed properties sell at discounts and unemployment at 9 percent limits buyer demand. Values will fall as much as 5 percent this year, putting more homeowners underwater, before finding a floor as the economy improves, said Stan Humphries, Zillow’s chief economist.

“These seem like fairly grim numbers,” Humphries said in a telephone interview. “We’re still expecting a bottom in home values later this year. And this, if anything, makes me a bit more confident because I’m seeing very large corrections now, which means the market can start to repair itself.” ...

Home-Price Drop Leaves 27% of U.S. Owners Underwater on Loans, Zillow Says - Bloomberg

 

[Wry Catcher]

Speculation by the private sector had nothing to do with the housing crisis? Failure to even set minimum standards in providing loans had nothing to do with the crisis? Fact, the government did not force the lenders to loan and bundle the mortagages and in that way 'ponzi' the liability.
Many hard working Americans lost their jobs do to the Great Recession, and in so doing could not pay their mortgage. What did the banksters do? They created a crisis by their collective greed and the house of cards began to fall.
REO's exist in all markets and still the banks don't get it. Where I do blame the government is in the bailout. Homeowners in trouble were ignored so the cancer spread, entire neighborhoods - nearly everyone in the US is infected - and still the power elites don't get it.
Now short sales are common, and when that fails the former home owner sees his home go to foreclosure. The speculators are out in force at every courthouse sale, and conspire to keep the bids low. This maybe the second greatest redistribution of the wealth of our nation in its history (remember the land stolen from Native Americans).

 

[boedicca]

Cause and effect.

The speculation was ENABLED BY THE GOVERNMENT by using tax payer money to derisk no doc / no down payment loans. Without such loans, speculators would not have been able to bid up prices without ponying up some of their own money.

And the Native American nonsense is not even worthy of a response.

 

[RDD_1210]

I love the tie-in to "Obamacare". Nice reach.

 

[boedicca]

It's only a reach to those who don't understand the way the world works.

 

[Wry Catcher]

Cause and effect.

The speculation was ENABLED BY THE GOVERNMENT by using tax payer money to derisk no doc / no down payment loans. Without such loans, speculators would not have been able to bid up prices without ponying up some of their own money.

And the Native American nonsense is not even worthy of a response.

The goal by the government under both Republican and Democratic leadership was to increase home ownership. It backfired because of greed.
Real estate agents and mortgage brokers conspired with lenders in obtaining loans by ignoring any standards and sometimes not requiring any skin in the game because no matter how toxic the loan they knew it would soon be sold.
Prospective home buyers were assured the home would increase in value and balloon payments due in five years could be satisfied by a refi or a profitable sale of the home.
This is a case of malfeasance by the government (for failure to regulate) and misfeasance by the agents and banksters who personally profited by deception.
Of course this may have been the first domino, for Americans have long lived by the refi. Need a vacation, a new car, some fun money? Go get a home equity loan.
Other homeowners lost their job and couldn't pay the mortgage. It was and remains a perfect storm.
I don't have a solution, but pointing partisan fingers at anyone or any institution is disengenuous and a callous disregard for those caught up in the crisis.
Much like denying broken treaties and the slaughter of a native people. But that is to be expected from callous conservatives.

 

[8537]

Cause and effect.

The speculation was ENABLED BY THE GOVERNMENT by using tax payer money to derisk no doc / no down payment loans. Without such loans, speculators would not have been able to bid up prices without ponying up some of their own money.

And the Native American nonsense is not even worthy of a response.

Taxpayer money was not used to de-risk no doc/no downpayment loans. That was entirely the creation of the private sector mortgage industry.

in fact, no doc/ no downpayment loans weren't conforming and could not be sold to the GSE's.

 

[RDD_1210]

It's only a reach to those who don't understand the way the world works.

At least you admit it.

 

[GHook93]

There are a ton of culprits, so pointing the finger at one is ignorant. It definitely started with "do-gooder liberals" in the government trying to get everyone a loan via the Community Reinvestment Act was the Cataylus that started the downhill spiral to the hell we are in now!


Jimmy Carter - The "Brain's" behind the Community Reinvestment Act, but it didn't get off the ground because Regan stopped it.

Dodds, Frank and Clinton - The 3 Dimocrats that pushed the CRA onto America. Requiring home lenders to provide a certain percentage of their loans to lower ethalon/income levels people.

Fannie Mae and Freddie Mac - They created an artifical secondary market in which lenders could make fortunes on origination, but instantly get rid of the risk by sending them to FM & FM the Quasi-Government Organization. I mean a Janitor with a 700 score could get a Stated no money down $500K home! Make the money up front, sell them to FM & FM (sometimes at the closing) and take no risks.

The Subprime Giant - Ameriquest, New Century, Full Spectrum Lending, Long Beach etc. all made enormous short-term profits by making the worst and most predator loans the world has ever seen. With these early returns, many big lenders got jealous and followed suit, meaning BOA, Wells Fargo, Citi, Household Lending, Countrywide, Wachovia made toxic stupid loans.

Wall Street - Wall Street sold packaged these toxic loans slapped a Triple A rating and sold them killing any investment portfolio they touched

LENDERS - They were forced to do loans to lower income people (or lose tax benefits, incentives and make them uncompetitive), but they should have tossed out the risk matrix, give liar (stated) loans, give 100% finance like it was candy etc.

Mortgage Brokers - They only went off the underwritting guidelines that the lenders gave. But many of them didn't very shady things. Stated incomes that were well off. Tossed out pay stubs if they didn't make enough and stated higher incomes. Used predatory tactics to push loans on people. Pushed the highly flawed subprime philosophy onto people (use the equity in your home to pay off unsecured debt - meaning have a higher loan payment and rate in order to pay off credit card or installment debt).

Clinton - For making student loans nondischargable, which lead to the highest increase in school tuition increases in US history. Tuition skyrocketed out of most Americans reach without student loans, which crippled the student once he got out of college!

Bush - Regardless of numerous economist, signs (foreclosures hit record hits well before the bubble burst and well before the economic collaspe), yet Bush did nothing, because low unemployment and the good economy during Bush's mid-years was built off of an artificial housing market.

Consumers - They need to take some blame. If you make $3K after taxes don't take on a mortgage that $2,500 a month!

Liberals - Because all your anti-business, pro-Union, pro-entitlement spending, pro-taxation, antienergy policies have sent business overseas, creating a lower paying service base instead of the manufacturing base.

 

[mdn2000]

The government orchestrated the housing bubble, the government is just to greedy, where was the regualtion and oversight of the appraisers which over valued these homes. The California goverment says nothing because they collect taxes based on the value of the house, everyone was more than happy to see prices rise.

So the prices falls, what happens, the government gives trillions to banks to hold on to the homes, not to foreclose and sell, the government gives trillions so that the banks hold the homes, as long as they are no resold they retain there current value, and are taxed at a higher rate.

Hopefully everyone makes more money and will by over priced homes so that government can spend, spend, and spend.

Higher taxes on higher priced homes. Maybe if they gave out loans for fifty years we could buy real expensive million dollar homes and get taxed at a greater rate.

Housing should take a dump, there should never of been a bailout of anyone.

500,000 dollar for a home, my freind the painter bought one, even took out a 100k home equity loan. Bought a bunch of toys and went on a vacation.

The economy of the last 20 years has been a house of cards, nothing more.

 

[NYcarbineer]

Interesting that during 2 wars that weren't paid for, among other things that weren't paid for, because Bush and the GOP thought that running up debt was a worthy by-product of putting more spending money in the hands of the American people,

the American people took their borrowed 'riches' and went out and ran up housing prices through the roof, wildly overpaying for homes, leading to a massive overvaluation of real estate.

 

[NYcarbineer]

The government orchestrated the housing bubble, the government is just to greedy, where was the regualtion and oversight of the appraisers which over valued these homes. The California goverment says nothing because they collect taxes based on the value of the house, everyone was more than happy to see prices rise.

So the prices falls, what happens, the government gives trillions to banks to hold on to the homes, not to foreclose and sell, the government gives trillions so that the banks hold the homes, as long as they are no resold they retain there current value, and are taxed at a higher rate.

Hopefully everyone makes more money and will by over priced homes so that government can spend, spend, and spend.

Higher taxes on higher priced homes. Maybe if they gave out loans for fifty years we could buy real expensive million dollar homes and get taxed at a greater rate.

Housing should take a dump, there should never of been a bailout of anyone.

500,000 dollar for a home, my freind the painter bought one, even took out a 100k home equity loan. Bought a bunch of toys and went on a vacation.The economy of the last 20 years has been a house of cards, nothing more.

The government MADE him do that? How?

 

[GHook93]

Interesting that during 2 wars that weren't paid for, among other things that weren't paid for, because Bush and the GOP thought that running up debt was a worthy by-product of putting more spending money in the hands of the American people,

the American people took their borrowed 'riches' and went out and ran up housing prices through the roof, wildly overpaying for homes, leading to a massive overvaluation of real estate.

The 2 wars had NOTHING whatsoever to do with the bubble bursting! The damaging effects were in place with the Clinton Presidency (the main culprit)!

 

[Truthmatters]

If the lending industry had no way to package off the bad loans and sell them there would have been no way for them to make money off the bad loans.

It was a lack of regulatory laws that caused this mess plain and simple.


Anyone who pretends it was anything else is a fool.

 

[dilloduck]

If the lending industry had no way to package off the bad loans and sell them there would have been no way for them to make money off the bad loans.

It was a lack of regulatory laws that caused this mess plain and simple.


Anyone who pretends it was anything else is a fool.

Not a really huge insight there TM. Strict regulation would stop anything. We would have Utopia but it would be pretty boring.

 

[California Girl]

Let's all ignore the pressure from Government and 'community' groups put on the banks to lend to people who could not afford to pay their loans. Let's pretend that didn't happen. Blame the banks.... that's the easy answer. It's not the right answer but it is the easy one.

 

[8537]

Let's all ignore the pressure from Government and 'community' groups put on the banks to lend to people who could not afford to pay their loans. Let's pretend that didn't happen. Blame the banks.... that's the easy answer. It's not the right answer but it is the easy one.

The largest portion - and most toxic portion- of subprime loans were not made by institutions that could face "pressure" from the government.

Those loans were made outside of the regulatory environment of depository institutions. Ya know why? Because the regulatory environment within depository institutions (and within those institutions wishing to sell their mortgages to the GSE's) prevented depository institutions from offering those loans.

 

[Truthmatters]

Once we had laws in place that kept this from happening.

They worked.

Then they ended them.

Then the market ate our shorts.

 

[Samson]

“These seem like fairly grim numbers,” Humphries said in a telephone interview. “We’re still expecting a bottom in home values later this year. And this, if anything, makes me a bit more confident because I’m seeing very large corrections now, which means the market can start to repair itself.” ...[/i]

Home-Price Drop Leaves 27% of U.S. Owners Underwater on Loans, Zillow Says - Bloomberg

Frankly, I don't think anyone needs to look into anything as abstract as the reason for the housing bust to see that Obamacare, like every other Centralized Government Construct (and I include NASA and the US Military), is going to be a bloated failure.

However, what is astonishing in light of the Government's inability to spend money wisely, is the cunning ways they have of justifying more spending (and of course, the need to collect more revenue). For example, if the housing bust was somehow planned, and it resulted in 27% of Americans being "Underwater on Mortgages," then where are state governments that depend on property taxes going to get revenue?

They have only one choice (all else; increasing state income taxes, or sales taxes, being incredibly unpopular); The states must receive a Federal Bailout, that will undoubtably be tied to Centralized social planning that may or may not have anything to do with the will of the citizens of the state.

 

[boedicca]

Cause and effect.

The speculation was ENABLED BY THE GOVERNMENT by using tax payer money to derisk no doc / no down payment loans. Without such loans, speculators would not have been able to bid up prices without ponying up some of their own money.

And the Native American nonsense is not even worthy of a response.

Taxpayer money was not used to de-risk no doc/no downpayment loans. That was entirely the creation of the private sector mortgage industry.

in fact, no doc/ no downpayment loans weren't conforming and could not be sold to the GSE's.

You are sorely misinformed.

Fannie Mae and Freddie Mac gobbled up a great many of these loans, and have received billions and billions of taxpayer dollars as the loans have gone bad.