WSJ: Number of 'Workouts' on the Rise
July 21, 2005, Wall Street Journal — Typically, mortgage delinquencies and foreclosures result from an unexpected financial crisis a job loss or medical illness that leaves homeowners unable to pay the bills. But now experts are warning that homeowners who thanks to low rates have taken on more debt than they should have, face a…
July 21, 2005, Wall Street Journal — Typically, mortgage delinquencies and foreclosures result from an unexpected financial crisis a job loss or medical illness that leaves homeowners unable to pay the bills. But now experts are warning that homeowners who thanks to low rates have taken on more debt than they should have, face a growing risk of mortgage delinquencies and foreclosures. Indeed, the first signs of it are starting to emerge. The number of homeowners seeking loan workouts reached 89,741 in the first quarter of 2005, compared with 155,495 for all of 2004, according to the U.S. Department of Housing and Urban Development. Last month, Standard & Poor’s Ratings Services in New York said the risk of defaults is growing on certain adjustable-rate mortgages. These loans initially can lower monthly mortgage payments, allowing some buyers to purchase homes they otherwise couldn’t afford. Some borrowers may face increases in their monthly payments of 50% to 90% when the low-rate period ends, S&P warned, and homeowners who haven’t planned carefully, or whose income proves insufficient, may default. “With some of the very unique and potentially risky loan products out there now, and the very high rate at which they’re being used, it could turn into the full employment act for loan workout specialists,” says Laurie Maggiano, deputy director of the office of single family asset management at HUD.
Workouts to Prevent Foreclosures [Wall Street Journal]
I think I do have a right to be mad. When the government has too swoop and bail out all the defaulters and broken mortage companies someone’s going to have to pay for it.
And that means me and you. The taxpayers of America. It also makes me mad that hard working people are being preyed upon by scumbags promoting these “creative” mortages. Most people don’t understand the risk.
I don’t want to pay for other people’s stupidity.
Scotty is *not* right to be mad– because nobody’s hurting him– and anon.s “hell no” about feeling sorry for the people who lose their shirts on ARMs is indicative of a bad case of bad juju. Umm.. there’s nothing to feel sorry for here, YET, becuase nobody’s suffering any pain except in your sadistic imagination of the future.
The assumption you’re making is that a) the prices are inflated beyond what they “should” be–whatever that is, b) that this is the fault of people who take out ARMS– so they deserve the comeuppance that you hope they’ll get.
My feeling is: If people manage to buy nicer houses than it looks like they can afford, and they like their houses, can’t we just be happy for them?? let’s just hope that we all get so lucky.
Scott is right to be mad. The people who are goiing in over their heads are making things worse for everyone else who would have bought by driving up prices beyond reason. Do I feel sorry for them? Hell no. They made the decision to do what they had to do. They always could have rented like the more sensible middle and lower income folks, since it is much cheaper and less risk of going into debt.
With housing prices rising rapidly, there are a lot of people who believe they need to buy now before the dream of homeownership is forever out of their grasp. These people are stretching on the hope that their incomes will go up in the future to help pay for the rising cost of their mortgage. Many are middle and lower income people using no downpayment mortgages because they don’t have downpayments. In rising markets like this, people get into trouble for all kinds of reasons, not just because they are greedy speculators. Have a heart Scotty.
i hate it when people– like scotty– get all nasty about other people’s problems. do you really want to see people losing their houses? can’t we all just get along?
Sour grapes Scotty, perchance?
It serves people right for thinking that real estate prices will always go up. And that the future will always be better.
Can’t wait to clear out all the ARMists and get valuations back to something sensible.
Even the oh so (not) sagacious Alan Greenspan is talking up the rising risks.