Foreclosures Must Be Averted for Sake of Economy

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The foreclosures/short sales, and REO I have been appraising in San Diego County, are mostly home/family ownership with most of the investors gone from 2007. It would be great if the Gov't did make a non-profit and directly re-wrote the loans, (sorry - you still need the appraisal - Federal Law), and this would stop the large number of family displacement and vacant homes. The gang members and other vagrants now know the codes to most of the boxes on the vacant homes and come in and destroy them, I can remember in the 90's how the vacant homes were set on fire - not to mention other crimes that happen in vacant homes in family areas, besides loss in equity and value - there are other costs of the crime not considered, and the numbers of homeless families is again rising. I hope Mr. Bernanke does something soon.....

Above Posted By: Mitzi appraiser | Wed, 7 May 2008 12:50:42 EST

As a loan officer in the mtg business for quite a long time, I have seen consumers credit go to "pot" over the years. We live in a time where everyone wants to keep up with the Jones' no matter if it means charging, charging, charging. As long as there were creditors to lend them money, they didn't care if they had pages of collections/repos/foreclosures, etc. When a little unexpected financial bump happens, people aren't capable of getting through it because they haven't budgeted for it. That's the secret to living better financially-live within your means and put money away for a rainy day. Unfortunately, we have many more rainy days ahead yet you still see people eating out daily, getting the morning latte and spending like there's no tomorrow. These are some of the same people who continue to gripe about their mortgage payments. It's about time that the slack consumer who hasn't made smart financing choices in the past start thinking about their future. Make a budget, stick to it and clean up your act consumers or it won't matter what the government does to mortgage laws. I talk to people daily who continue to not pay their obligations timely just like they did before the mortgage crisis. Some people will never learn.

Above Posted By: J | Wed, 7 May 2008 11:34:12 EST

I have been saying for months now. The FEDS must set strick interest rate guidlines based on the type of credit applied for. For example the FEDS lend monies @ 3% to Lenders. A 2% rate cap restriction on fixed and 2.5% cap on variable mortgage with NO POINT FEE allowed. This would still create a profit for the lenders and make it very affordable to the public. Imagine a 5% interest loan on your 1st mortgage. This would free up your other monies for retirement, education, and other more important needs. In addition to Mortgage Loans. I think that other rate caps on Auto, Education, 2nd Mortgage and other loan catagories should be lowered to no more then 7%. This is based on the FEDS lending monies to lenders @ 5% or lower. Why should the public let the Lenders profit off the hard earned labor of our citizens. I wish there was a NON PROFIT LENDER established by the government to provide Mortgage Loans. The idea is that the FEDS provide the initial funding to the NPL at 3% and the NPL provides 1st Mortgages to the Citizen @ 5% fixed for 30 years. If there is any profit after expense these funds could be returned to the FEDS. Just a thought.

Above Posted By: Douglas M. Thomson Sr. | Tue, 6 May 2008 11:30:09 EST

why doesnt the FHA and the federal government take the money they are giving to the banks and offer a govt. loan offering as many people as possible a 6% rate bnuying them out of their current mortgage. taking that money , paying off the old lender would generate capital, would help many borrowers many of which have second mortgages at higher rates, which would stimulate the economy. no appraisals, limit fees that could be charged, just a straight payoff to a low fixed rate would do more for this economy, helping people keep their homes, why not take all the money you are dumping into the financials and do direct loans to the consumer. this would solve liquidity problems for the financial institutions since their loans would be paid off, help consumers by frreing up more cash to stimulate the economy, and in my opinion fix the system, allow the financials to service the loans, keeping peoples jobs in the financial industry, reduce the foreclosure rate dramatically and make it easier if someone got in financial trouble to help them.

Above Posted By: dennis | Tue, 6 May 2008 10:39:12 EST

You are absolutely right Ken! That is what I believe. Most of this mess we are in probably has to do with people who purchased homes for a very short period thinking they were going to get rich and retire early, and they just kept buying another one, and another one, and another one until the house came aa-tumblin'-down. Not to mention getting stuck with adjustable rates on many vacant properties-probably the same in investor with 5 foreclosures-I'm with you. That is what greed does-it's blinds one's judgement. Eventually someone has to pay the price. In this case you and I are paying. Correcting Real Estate Crisis, Gouged Oil Prices, Misuse of Tax Dollars, Rising Health Care Cost, Financing War in Iraq. Weak American Dollar? You better believe it. The hole is quite deep. Keep the faith. Peace.

Above Posted By: John | Tue, 6 May 2008 09:48:54 EST

Responding to Mr.Ken's comments, I don't think people could by another home before foreclosure, and turn keys to the bank. I think all their record goes into the file and the bank will find that out and they will take away that house too. If they can not effort to pay for existing house how they could buy another house, and what basis? I think the best solution is what Mr. Ben Berneke is suggesting. I agree 100%. Thanks Mr.Berneke.

Above Posted By: MIR ALIKHAN | Tue, 6 May 2008 09:20:34 EST

I wonder how many foreclosures are due to people buying a second home on the cheap now then mailing in the keys to the house they are upside down on. UNless you need to sell your house now, being upside down is only a temporary, irrelevant position (unless you want to borrow against equity). How many foreclosures are due to people absolutely not being able to make the payments and how many are a business decision. Anyone with a fixed mortgage and steady earning ability should be fine unless they need to sell their house. I'd still love to see some analysis on why people are defaulting. Ratios of fixed versus variable or interest only, and how many bought another house immediately before or after foreclosure. What is the average mortgage payment hike for variable foreclures. I think until you truly understand why people are defaulting it will be hard to slow this trend.

Above Posted By: Ken | Tue, 6 May 2008 07:52:13 EST

Foreclosures Must Be Averted for Sake of Economy

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