Equity Loans and Refinances Caused More than Half of Foreclosures

[lawrocket 3]

At least locally in Fresno.

http://www.fresnobee.com/business/story/411548.html

While this is by no means "definitive" it does fit with what I myself have seen in the people I have spoken to.

Quote

Fresno Association of Realtors sampled 350 of the more than 600 cases in which lenders obtained houses through foreclosure in the fourth quarter of 2007. In 51% of those cases, homeowners had refinanced their loans -- sometimes multiple times -- or borrowed up to $250,000 against their equity, or both.

Quote

The findings are significant because they show that many families used their house as an ATM, said Don Scordino, association president. The average family refinanced or took cash out twice before losing the house, the study found.

"A new kind of currency was created" during the boom years, Scordino said. "People spent a lot of money they didn't earn."

Quote

Higher-income households often used the extra money for vacations, cars and real estate, and lower-income families used it to stay afloat -- sometimes trying to save the very house they were borrowing against, said David Mendoza, executive director of the Fresno Housing Resource Center at Fresno's Manchester Center, a nonprofit counseling service for home buyers.

My comments? People find a way to put themselves WAY over their heads.

This is not entirely an issue of unsuspecting people looking for the American dream and finding a nightmare. Rather, this is more about people using their houses, as the article says, as an ATM.

I suspect that this is an issue in a number of places, as well. Not just here in Fresno. Big money meaning big spending.

All of it borrowed money.

My wife is hotter than your wife.

[shropshire 0]

I've just been listening (on the radio) about some of the problems that America has encountered (caused?) w.r.t NiNja loans (No Income, No job or Assets) - who the F*ck thought that that was going to be a good idea - and loads od stupid U.K banks bought into it and stuffed up big time....

America sneezes and the world catches a cold ... again.

(.)Y(.)
Chivalry is not dead; it only sleeps for want of work to do. - Jerome K Jerome

[SkyDekker 1,465]

The US Government is essentially doing the same thing on a much larger scale as what the people in Fresno were doing with their houses.

[lawrocket 3]

Quote

The US Government is essentially doing the same thing on a much larger scale as what the people in Fresno were doing with their houses.

I know! And people want more government oversight!

My wife is hotter than your wife.

[piper17 1]

Wasn't it the Congress that got all over banks that wouldn't give mortgage loans to people who were poor credit risks? Accused them of "redlining", discrimination, etc?

So, Congress forces banks to lend money to people who probably couldn't afford the mortgage payments and then gets on the banks for lending money to people who couldn't afford to repay.

More government oversight anyone?

"A man can never have too much red wine, too many books, or too much ammunition"...Rudyard Kipling

[Andy9o8 3]

You're misstating what redlining is, and what Congress did about it.

Redlining is when a bank routinely denies loans to applicants who live in predominantly minority neighborhoods, but otherwise meet credit criteria, when the evidence (bank loan records) shows that the same bank routinely grants loans to applicants who meet the same credit criteria, but live in predominantly white neighborhoods. Congress recognized the practice for what it is: a thinly-veiled form of racial discrimination, and passed laws to prohibit the practice.

[Gawain 0]

You mean people in California found a way to squeeze blood from a turnip with their hyper-inflated properties and the bubble burst?

Say it ain't so!



What's worse, is I bet few of those that borrowed a cool quarter-mil on top of their existing mortgage have nothing to show for it.

Time to throw a garage sale.

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[chinagirl 0]

Is anyone really surprised this would happen? Sad to say but there are many people who do not take repaying a loan seriously. They are given a credit card with a defined interest rate in which they agreed to, jack up the cards, refuse to pay for it, and cry to the government that the credit card industry is ripping them off....Now it's the mortgage industry that is the monster.

When will people stop crying to the government to solve their own financial problems?!??!

~Built for Abuse
www.skydivethefarm.com

[airdvr 210]

It's all part of the cycle. It's happened before and it'll happen again. Just like the market. People bought homes at ridiculous prices betting that the real estate market would continue to increase. Oops. Banks loaned money on over-inflated appraisals. Oops.

I remember when I re-fied my home in 2000 to lower my payment. The bank said it needed to appraise at XX and guess what...it appraised at XX...to the dime. Then they tried to give me all this extra money that would have made the payment the same as it was before. Glad I didn't take the bait. Many do.

The problem I have with the whole deal is the gov't involvement at all. It's obviuosly an election year tactic.

Please don't dent the planet.

Destinations by Roxanne

[piper17 1]

Quote

You're misstating what redlining is, and what Congress did about it.

Redlining is when a bank routinely denies loans to applicants who live in predominantly minority neighborhoods, but otherwise meet credit criteria, when the evidence (bank loan records) shows that the same bank routinely grants loans to applicants who meet the same credit criteria, but live in predominantly white neighborhoods. Congress recognized the practice for what it is: a thinly-veiled form of racial discrimination, and passed laws to prohibit the practice.

I said that the banks were accused of this. I don't believe in the current situation that this is actually occurred. They denied loans to those who were not capable of repaying them. They were accused of redlining when, in fact, they were actually making sound lending decisions. The results speak for themselves. People got loans who couldn't repay them.

"A man can never have too much red wine, too many books, or too much ammunition"...Rudyard Kipling

[pirana 0]

I saw another hyperbolic article in the NYT, yesterday or today. They were going on about people in crisis - - the only thing is that the crisis they were referring to is people who owe more than their house is worth.

No other problem; they have jobs, are not behind, and are making their payments. But they are asking for "assistance" because IF they wanted to move they could not sell their house for what they owe. How is that a crisis? And why should there be any government (taxpayer) bailout.

The average consumer has become a toddler when it comes to financial responsibility.

" . . . the lust for power can be just as completely satisfied by suggesting people into loving their servitude as by flogging them and kicking them into obedience." -- Aldous Huxley

[jcd11235 0]

Quote

The results speak for themselves.

Yes, they do. If anti-relining legislation is the cause of the problem, then the mortgages that people are unable to pay should be predominantly in minority neighborhoods. If that's not the case, and it doesn't appear to be, then the anti-redlining legislation is not a primary contributor.

Math tutoring available. Only $6! per hour! First lesson: Factorials!

[billvon 3,132]

>Sad to say but there are many people who do not take repaying a loan seriously.

Yep. As Dekker mentioned, we now have the example set by the US government - and sadly a lot of people are following it.

>When will people stop crying to the government to solve their own financial problems?

Perhaps when the government starts solving its own. But maybe not - once you have an entitlement culture it's hard to break out of it.

[jcd11235 0]

Quote

>When will people stop crying to the government to solve their own financial problems?

Perhaps when the government starts solving its own. But maybe not - once you have an entitlement culture it's hard to break out of it.

Or perhaps when people realize that they are their government, and begin to actively participate in that government. Democracy doesn't work if the citizens are generally apathetic about government. When was the last time we had more than 90% of qualified citizens register and turn out to vote? 80%? 70%? 60%? 50%?

Of the people that do vote, how many are informed about the issues and candidates they are voting on?

We live in a democracy representative republic. If the government is a problem, then the people are the underlying problem.

Math tutoring available. Only $6! per hour! First lesson: Factorials!

[countzero 7]

i think the fault lies with both sides.

on 1 you have people who make poor decisions with money and are financially irresponsible that apply for these loans.

on the other you have lenders who adjust thier loan criteria because to them- the more loans they make the higher thier profits are.

diamonds are a dawgs best friend

[lawrocket 3]

Exactly. There's plenty of blame to spread everywhere.

But I object to people pinning the blame soley on the borrowers or industry or government. Maybe, at most, 10 percent is to be reasonably blamed on the government. The other 90 percent can be pretty much equally spread.

My wife is hotter than your wife.

[billvon 3,132]

>Or perhaps when people realize that they are their government, and
>begin to actively participate in that government.

That may be part of the problem, actually. They figure they're part of the government, so why not act like the government, who keeps increasing spending, increasing cash rebates ($1200!) and decreasing taxes. Why can't they apply that to mortgages? When someone comes along and tells them that they can get a new mortgage that

a) will reduce their payments
b) will give them cash money and
c) will let them get a bigger house

they may just assume that what works for the US will work for them.

>Democracy doesn't work if the citizens are generally apathetic about
>government.

It also doesn't work if everyone is gung-ho about voting, but not able to understand the issues.

>If the government is a problem, then the people are the underlying problem.

Agreed - that has always been true.

[TrophyHusband 0]

if people are being bailed out of their contracts, why can't my wife be bailed out of hers? we are losing money every year that she's in the air farce, the government needs to kick us the difference until she gets out. for that matter, why not let everyone out of contracts that they agreed to?

"Your scrotum is quite nice" - Skymama
www.kjandmegan.com

[DrewEckhardt 0]

Quote

if people are being bailed out of their contracts, why can't my wife be bailed out of hers? we are losing money every year that she's in the air farce, the government needs to kick us the difference until she gets out. for that matter, why not let everyone out of contracts that they agreed to?

Because that wouldn't be politically expedient. Only .16% of the population is potentially stuck with a bad active-duty military contract. Even including Reserve and National Guard members doesn't bump the number up past .5%. Few businesses have a vested financial interest in military service peoples' finances.

The worst markets have over 1% of their home owners in forclosure, everyone is worried about falling property values, and the big banking companies are loosing billions on their bad loans.

[TrophyHusband 0]

yeah, but a contract is a contract. if the lenders went against something that was in the contract, by all means make it right, but if they abided by their end, then everyone involved has to live with the consequences.

on a less antagonistic note, one could make the arguement that contracts in general should be looked at. when buying a car or a house, the average person can't really interpret all of the fine-print legaleze. one needs to hire a lawyer to really know what he's getting into. most of us don't do that, although it isn't a bad idea when it comes to something as big as a house.

"Your scrotum is quite nice" - Skymama
www.kjandmegan.com

[jcd11235 0]

Quote

>Or perhaps when people realize that they are their government, and
>begin to actively participate in that government.

That may be part of the problem, actually.

How can it be part of the problem if only a minority of qualified citizens participate in government? Until a large majority of qualified citizens actively participate in their government, it is literally impossible for such active participation to cause problems.

Quote

>Democracy doesn't work if the citizens are generally apathetic about
>government.

It also doesn't work if everyone is gung-ho about voting, but not able to understand the issues.

I agree, which is why I also asked:

Of the people that do vote, how many are informed about the issues and candidates they are voting on?

Math tutoring available. Only $6! per hour! First lesson: Factorials!

[kallend 2,184]

Quote

The worst markets have over 1% of their home owners in forclosure, everyone is worried about falling property values, and the big banking companies are loosing billions on their bad loans.

We can't have THAT!

...

The only sure way to survive a canopy collision is not to have one.

[mnealtx 0]

Quote

>Sad to say but there are many people who do not take repaying a loan seriously.

Yep. As Dekker mentioned, we now have the example set by the US government - and sadly a lot of people are following it.

>When will people stop crying to the government to solve their own financial problems?

Perhaps when the government starts solving its own. But maybe not - once you have an entitlement culture it's hard to break out of it.

Neither gov't spending money hand over fist NOR the entitlement culture are anything new... still amazes me that so many think that they're recent developments.

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[KidWicked 0]

Quote

if people are being bailed out of their contracts, why can't my wife be bailed out of hers? we are losing money every year that she's in the air farce,

Oops, shouldn't have joined the military.

Coreece: "You sound like some skinheads I know, but your prejudice is with Christians, not niggers..."

[kallend 2,184]

Quote

Quote

>Sad to say but there are many people who do not take repaying a loan seriously.

Yep. As Dekker mentioned, we now have the example set by the US government - and sadly a lot of people are following it.

>When will people stop crying to the government to solve their own financial problems?

Perhaps when the government starts solving its own. But maybe not - once you have an entitlement culture it's hard to break out of it.

Neither gov't spending money hand over fist NOR the entitlement culture are anything new... still amazes me that so many think that they're recent developments.

OPINION - I don't think Bush or the Congress care much about the people who are losing their homes because of bad choices. I think they are worried about their big contributors in the banking and property industries who are losing money.

...

The only sure way to survive a canopy collision is not to have one.