King 5 News comes at us with some quotes from real people in King County that are part of the ever-increasing group undergoing foreclosure:
Sofia DeLeon says she went for an adjustable rate mortgage, but when rates were adjusted, she couldn’t keep up.“It was scary, you know, and I felt really, really ashamed. I looked at myself as a failure,” she said. “I’m not really astute at these things, so I was just anxious to get a house… to get my own house, so I probably didn’t look.”
I wouldn’t say that people going through foreclosure are a failure, just that they let themselves get swept up in the mania. They didn’t take the time to learn about the repercussions of the dangerous loans they were peddled, but rather just took the real estate and mortgage “professionals’” word that they should do whatever it takes to get into a home.
Homeowner Nancy Wagner says the fear of foreclosure is incredibly stressful.“You wonder what’s going to happen. Are we going to be out on the street… looking for a homeless shelter or something?” she asked.
“When those loans are what’s called re-cast, and their payments go up 10 to 50 percent, those folks have no hope of being able to pay them,” said Jane Withers, ACORN Housing.
An advocacy group called ACORN Housing says predatory lending three to four years ago is largely to blame.
I’ve never heard of a renter’s payments suddenly jumping up by 50 percent, leaving them wondering if they’ll be “looking for a homeless shelter.” And while “predatory lending” certainly has a good share of the blame, the willing consumers should not be given a free pass. I do feel bad for anyone that loses “their” house in foreclosure, but that doesn’t mean that people who dove head first into suicide loans get a free pass to escape the consequences of their hasty decision.
(Lori Matsukawa, King 5 News, 06.20.2007)
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32 responses so far ↓
1
b
// Jun 21, 2007 at 10:52 am
The Tim said: “’I’ve never heard of a renter’s payments suddenly jumping up by 50 percent”
Don’t give them any ideas! I can see it now, Adjustable Rate Leases for your apartment. Starts with a teaser rent of $199/month, then shoots up from there. Rent now or be priced out forever. They aren’t making any more homeless shelters, you know.
2
David
// Jun 21, 2007 at 11:08 am
Actually, I have heard of people’s rent rising that much or more. I really wouldn’t say that renting provides more security over the size of your monthly payment; when the term of your lease expires, there’s no guarantee.
3
CCG
// Jun 21, 2007 at 11:14 am
‘“You wonder what’s going to happen. Are we going to be out on the street… looking for a homeless shelter or something?” she asked.’
If you rent, the terrorists win!
4
nitsuj
// Jun 21, 2007 at 11:20 am
Call me heartless, but I don’t feel bad for people that lose their house to foreclosure due to “predatory lending”. Take responsibility for yourself and do your research before jumping into something.
5
softwarengineer
// Jun 21, 2007 at 11:24 am
I HEARD SOMETHING FUNNY ON THE MSM CHANNEL 13 THIS MORNING
They said Seattle foreclosures were up 25% and there were evil investors grabbing up bargains.
What are they smoking? When they reported their Seattle home listing portion going up 12%, then its free enterprise and the American Way. Their GREED is good and our’s is EVIL?
6
Buceri
// Jun 21, 2007 at 11:30 am
We all have to remember the things we were hearing back then. Here in Tampa, RE pros were saying “I feel sorry for anyone that does not own yet”, “Hold on to your house, in 5 years you will be a millionaire”. “EVERYONE is moving to Florida”. By last summer, a condo conversion in my neighborhood was giving away a Mercedes Benz with any purchase. Today a year later, no more Mercedes; but the folks with the signs are still waving on the street with 85° temperature and 80% humidity. Anyway, a slight recovery here + a small “correction” in Seattle = my ticket back to the King/Sno area.
7
EconE
// Jun 21, 2007 at 11:41 am
Anyway to be able to suss out foreclosure activity in the Downtown condo arena?
8
deejayoh
// Jun 21, 2007 at 12:03 pm
I have noticed that the rate of NODs has slowed down over the past few weeks. I expect that within 90 days we’ll see the foreclosures slow as well.
Are we through this wave of resets?
9
Joel
// Jun 21, 2007 at 12:18 pm
Actually, I have heard of people’s rent rising that much or more. I really wouldn’t say that renting provides more security over the size of your monthly payment; when the term of your lease expires, there’s no guarantee.
Rents rising 50% or more sounds dubious, but even if it did happen you could just move to another place. Not that moving is easy, but when you “own” a home and you can’t afford the payments you can’t just move, especially when home values are tanking. That’s a big difference between renting and buying and why landlords don’t raise rents like crazy because they have to compete in a market where consumers have a choice and mobility.
10
wreckingbull
// Jun 21, 2007 at 12:55 pm
Very true Joel. I am downright giddy thinking about Ballard’s rental scene in about 4 months. The wave of supply is is coming fast! I have found that if your are a good tenant, your landlord will do just about anything to keep you, including financial incentives. I think the largest rent increase I have ever seen was 5% and that was years ago.
11
EconE
// Jun 21, 2007 at 1:00 pm
50% rent increases?!? LMFAO.
Just another benefit of being a “bare bones” minimalist. If my rent gets raised I can bounce out pretty "golly" easily. Hell…even when I sold my house, everything I needed fit in my car. CAR…not big ass SUV. Everything I brought with me here to Seattle fit in a carry-on bag on the plane with the exception of some audio gear. The few items of furniture I bought will just be donated to habitat for humanity or some other worthy organization. All I ever seem to need to replace is my subwoofer.
Desperate floplords are a dime a dozen here.
I follow rentals as closely as condos.
BWAHAHAHAHA.
12
uptown
// Jun 21, 2007 at 2:00 pm
Higher rents equals higher turnover; which costs the landlord more than they will make from a large or regular rent increases. People are very willing to double up if it will save them money, and a large house can hold several renters who would otherwise be renting several apartments individualy.
13
EconE
// Jun 21, 2007 at 2:05 pm
word!
hope I got that HTML right…hahaha….laugh all you want you guys….and then engineer me a rotary cellphone please.
14
The Tim
// Jun 21, 2007 at 2:25 pm
You didn’t quite get it right. Over in the forum, [i]text[/i] makes italic, but that’s not actually html, it’s a special code used on forums called “bbcode.” To get make text italic in html, replace the [ and ] with < and >. Or better yet, use <blockquote>text</blockquote> instead, which is what I edited your comment with above.
Oh and I agree, a rotary cellphone would be pretty sweet. I’ve wondered myself why no one has made one yet.
15
David
// Jun 21, 2007 at 2:26 pm
I agree that a 50% rent hike ridiculous. I just had my first rent increase (7%), but I met other people with much worse when I attended a first time homebuying class provided by the state. Granted, that’s probably the best place to find people that are stuck with an egregious rental increase. I wouldn’t say that moving on is really a fantastic option for everyone, however; I hate the packing, the hunting, the paperwork, and all the deposits. Anyway, that’s beside the point. I definitely feel compassion for people who believed in false promises provided by lenders. But I can see how it would be easy to be fooled by a smooth lender.
16
Ouch
// Jun 21, 2007 at 3:25 pm
I am vacationing in Southern CA and have been here for about a week. Tuesday I was at Knott’s Berry Farm with in-laws and their relatives. One gal from San Diego was taking the day off from her job “taking the keys away from homeowners” working for a reconveyance company.
Her employer does foreclosures over the entire Western US, including WA, CA, NV and HI. They only step in after the collection agencies have been unsuccessful, then her company takes the final legals steps to evict people from their residences. She said business was “very good.” She’s in her third year there and said they’ve had to hire a lot of new people to keep up with the foreclosures.
Most of the loans that are foreclosing were for purchases in the last couple of years, she said. She also said that a common occurance is for the tenant to receive the final eviction notice because the landlord had not paid the mortgage. Hmmm…
17
Schaum
// Jun 21, 2007 at 3:32 pm
After 3 yrs of renting a nice apartment in Kirkland, we’re finally up to the original price the landlady asked for. Our annual rent increases have averaged 1% per yr!
The inventory increase around here is beautiful. I already have my eye on some nice houses that are currently for sale, but will surely end up for rent when no one buys them!
18
Shawn
// Jun 21, 2007 at 6:51 pm
It is important to be clear on who is who. The buyers were not out to defraud, mislead, or basicly rip of anyone with these bad loads. The same cannot be said for the brokers and realtors. That said, yes some buyers have some responsibility, but they are the victims that were defrauded by a system that let the fraud exist to keep the bubble afloat.
19
Andrew
// Jun 21, 2007 at 8:38 pm
Come on Shawn, that’s a ridiculous statement - any time one is entering into the biggest purchase of one’s life, it’s imperative to understand what ALL of the ramifications are. If the fine type is too complicated, either don’t sign or engage an attorney. I have absolutely no sympathy for buyers now being aced out due to flex/gimmick loans re-setting their monthly payments. Isn’t anyone responsible for themselves anymore? If there’s been any predatory ‘anything’ out there, it’s the general public’s predatory herd-mentality: endlessly regurgitating so-called ‘universal truths’ such as “buy now or be sorry” - ridiculous. People need to learn to think for themselves.
Sorry, end of rant - just exasperated with the blame-gaming…
20
Alan
// Jun 21, 2007 at 9:00 pm
No! It is the fault of renters who didn’t buy and keep prices going up so that the owners could simply refinance to stay out of foreclosure.
The answer? Sue the renters! Expect to hear from their lawyers very soon.
21
Shawn
// Jun 21, 2007 at 10:47 pm
Andrew,
let me restate, who is who. One party was out rob a sap, the other was a sap chasing a media enduced desception. Further, imagine that you have maybe two years of high school. Smart people can imagine that less educated people will think the same as more educated people. Why does smoking rates drop as a person’s education level rises?
22
Shawn
// Jun 21, 2007 at 10:48 pm
should have been “Smart people should not imagine that less educated people will think the same as more educated people.”
23
Jay
// Jun 21, 2007 at 11:52 pm
Shawn,
Although many buyers weren’t out to defraud, you would likely be surpised at how many were. Far too many buyers mis-stated their incomes on loans and arranged for cash back on closing (undisclosed to the lenders). These buyers expected to be bailed out by rising property values and an eventual refi. This is fraud plain and simple. Many previously honest people did this becuause they saw that everyone else was doing it. Degredation of ethics is not immune to herd mentality. Most of these people knew exactly what they were doing. They KNEW they could not afford those homes so they deserve what they eventually get.
24
Andrew
// Jun 22, 2007 at 12:44 am
Shawn,
I appreciate the exchange. But I’m having a hard time completely following your logic. Are you arguing that the majority of people either in the middle of an interest rate adjustment crisis or looking at one shortly, are all of a 2-years’ or less high school education? Doesn’t that sound like a bit of a stretch, even when simply repeated back to you? I’d be willing to bet that is an inaccurate assumption. Furthermore, as to this housing situation going on now, I’m of the impression that all strata of educational levels have been involved, but perhaps my impression is equally without foundation. But again, even with 2 years’ high school education, is it really asking too much for some common sense? I know a few individuals with that level of education whom might be offended by your perspective, which they would find to be patronizing.
25
EconE
// Jun 22, 2007 at 2:37 am
When I worked as a substitute teacher, I knew elementary school students that knew that lying was wrong.
26
arroyogrande
// Jun 22, 2007 at 8:48 am
“Are we through this wave of resets?”
Look at this chart, then decide. Looks like a world of hurt:
http://attheselevels.com/archives/678-The-Forgotten-Resets.html
The original Credit Suisse report (caution, PDF):
Mortgage Liquidity du Jour: Underestimated No More
http://www.billcara.com/CS%20Mar%2012%202007%20Mortgage%20and%20Housing.pdf
27
arroyogrande
// Jun 22, 2007 at 8:58 am
“The buyers were not out to defraud, mislead, or basicly rip of anyone with these bad loads.”
Yes, I’m sure that buyers never overstated their incomes, assets, or the intention to rent a house rather than live in it.
Oh wait, stated income/stated asset loans were actually called “liar’s loans” for some reason. Hmmmm….
And how many ‘investors’ stated that the house would be their primary residence in order to get a lower rate, even though they intended to rent it out from the get-go?
28
Joel
// Jun 22, 2007 at 10:12 am
Dr. Housing Bubble would also take issue with the assumption that it’s mostly the uneducated that make bad financial decisions. Apparently there was a study that showed that educated people were more likely to make stupid financial decisions (I’d like to see the actual study). Of course, the only stories of people losing their homes you’ll find in the mainstream media will be of poor uneducated folk just tryin’ to get by. They had one story on CNN a few days ago, where this lady who lived in her dream home (she had had a vision of the home before she bought it)for 17 years was getting evicted. The bulk of the story was about how it was her dream home and she was being kicked out and woe is me! Then at the end they mention that the cause of the problem was a loan she took out against the home despite being unemployed with no income for an appraised value that was highly inflated. I’m sure it’s the appraiser’s fault. Never mind that you shouldn’t get a loan for any amount if you don’t have any income. And it briefly mentioned something about forms indicating she made $85,000/yr, so she probably lied about her income. But it’s not her fault, she’s a victim!
29
deejayoh
// Jun 22, 2007 at 11:15 am
Arroyogrande -
Yeah - I’ve seen that chart. I even posted it in the forums! But the fact of the matter is, I don’t know what Seattle looks like relative to that picture. I do know Seattle has less sub-prime than average, and more alt-A… which shows up in the second wave of resets.
As I said - have been tracking this for Seattle and Snoho, and what I see is foreclosures continuing to trend up, but for the past couple weeks NODs have been trending down. Since NODs lead foreclosures, I am betting that foreclosures are going to be trending down in a few months. That definitely bucks the trend that the CS chart forecasts.
That’s the source of my “wave” question. I do
30
femto
// Jun 22, 2007 at 8:35 pm
Everything’s been done at least once folks…
http://www.sparkfun.com/commerce/present.php?p=Port-O-Rotary
31
Shawn
// Jun 23, 2007 at 4:01 pm
Andrew,
my argument is that it is easy for an educated person who is brilliant to look at someone who is less intelligent and say “look how dumb they were, I never would do that”. My argument further says that it is easy to do, but not kind. I liked that Tim was not taking that route and was being kinder towards the saps.
On the other point, I understand that some buyers fudged on thier loan paper work. To what end? To rob the bank? Or did they think that they were going to get a piece of the American pie by lying a little?
All I am arguing for is a bit of compassion and understanding for saps.
32
Jeff Van Nostran
// Jun 26, 2007 at 12:01 am
This is my first time reading through all of the discussions on this site; very interesting stuff. Thanks to everyone that has been posting.
One thing I have noticed is alot of talk about fast-talking, sleazeball lenders. I think many of you can benefit from knowing an honest and genuine mortgage professional that you can turn to for expert advice.
I work for American Home Mortgage, one of America’s top 10 mortgage banks. My goal is to help individuals and families achieve their long-term financial goals through mortgage financing. My website is http://www.americanhm.com/jeff.vannostran. I want you to know that my knowledge and expertise is available to you, free, at any time.
Take care everyone.
~Jeff Van Nostran
jeff.vannostran@americanhm.com
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