Mar212012
America Underwater
The housing bubble has many lessons to teach us. I have written on the subject for five years now in hopes that people can learn from the successes and failures of those impacted by the housing bubble. Someone recently posted a link in the thoughtful remarks to a website devoted to those who are underwater. It’s a chance for people to share their stories. As you might imagine, this is a giant pity party and a support group for housing bubble losers. Below is a selection of stories as well as some others I have collected over the years.
Personal stories from America Underwater
Tell me, what have you learned from these people?
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FHA new rules requires collection debts of greater than $1,000 to be paid
by Mike at Orange County Housing News
I don’t know what is the percentage of potential FHA borrowers that have uncollected accounts of greater $1,000. That’s one piece of information I don’t have. However, these collection debt must be paid before you can qualify for an FHA loan.
MORE
Big demand-destruction problems ahead for the sector —– as time is passing, more and more people have come to discover that housing has simply become a conduit for wage earners to subsidize income/capital gains for insider speculators who’re allowed to game-the-system.
The people signing up for loan modifications will be underwater forever.
GSEs Complete Nearly 1.1M Mods but Number of Mods Still Declining
Since the September 2008 conservatorship, Fannie Mae and Freddie Mac have completed nearly 1.1 million loan modifications, according to the FHFA’s fourth quarter 2011 Foreclosure Prevention and Refinance report. Overall, the GSEs have completed more than 2.1 million foreclosure prevention actions since the same time period.
“Data from the Office of the Comptroller of the Currency show that in the two years ending in the third quarter of 2011, modifications on Fannie Mae and Freddie Mac loans accounted for 40 percent of all loan modifications,” said General Counsel for the FHFA Alfred M. Pollard in a written testimony before congressmen Monday.
For just the 2011 fourth quarter, about 71,100 loan modifications were completed, compared to about 83,500 in the third quarter.
Pollard said a contributing factor to the decline in modifications seen may be that the initial backlog of eligible borrowers in 2009 has been addressed to some extent, and added the GSEs offer substantial incentive payments to servicers to encourage them to meet timelines for modifications.
Also, in terms of delinquency, Pollard said the GSEs own or guarantee about 60 percent of all mortgages, but account for roughly 29 percent of the seriously delinquent loans.
Foreclosure prevention numbers
-About half of all borrowers who received a modification in the fourth quarter saw their monthly payments reduced by over 30 percent.
-About one-third of modified loans also included principal forbearance.
-A higher percentage of loans modified through HAMP stayed current compared to non-HAMP modifications. For Fannie Mae HAMP mods during the third quarter, 86 percent stayed current compared to 80 percent of non-HAMP mods three months after getting modified. After 6 months in the second quarter, 81 percent of Fannie Mae HAMP mods stayed current compared to 71 percent of non-HAMP mods. After 9 months in the first quarter, 77 percent of HAMP mods stayed current compared to 68 percent of non-HAMP mods.
-For Freddie Mac modifications, 87 percent of HAMP mods stayed current after 3 months compared to 79 percent of non-HAMP mods. After 6 months, 84 percent of HAMP mods stayed current compared to 71 of non-HAMP mods. After 9 months, 80 percent of HAMP mods stayed current compared to 66 percent of non-HAMP mods.
-HARP refinances increased 10 percent in the fourth quarter.
-The total number of home retention actions (repayment and forbearance plans and mods) for the GSEs during the fourth quarter was 120,698, a decrease compared to the third quarter when there were 140,258 actions. For the year 2011, there were 540,352 actions, compared to 832,309 for 2010.
-Short sales and deeds-in-lieu of foreclosure increased 13 percent to 34,895 in the fourth quarter. For the entire year of 2011, there were 125,468 short sales and deeds-in-lieu, compared to 113,996 in 2010.
-Third-party and foreclosure sales saw a slight increase while foreclosure starts decreased in the fourth quarter.
-REO inventory declined for the fifth consecutive quarter as more properties were disposed of than acquired in the fourth quarter.
Hey IR fun photos and comments.
We should start an alternative series of photos of renters complaining over their unfair treatment, asking why we have to pay for bailouts of banks and homedebtors, etc… If you start something I’ll make a submission!
I like that idea. A series of cartoons showing the plight of renters would be a valuable addition to the housing bubble story.
Paging all market participants: top is in?
Evidently, ‘Goldman’ is ready to book profits (wants to sell you some stocks they’ve been accumulating/holding from the latest fed-sponsored equities melt-up which began when Operation Twist commenced last Oct).
”Stocks Offer Best Opportunity in a Lifetime” –Goldman Sachs
http://www.cnbc.com/id/46808343
Muppets….
The best time to buy would have been exactly 3 years ago in March 2009, you would have doubled your money and then some in all major indices. Seems like GS is a little tardy with their “all in” call. Those bozos are probably so delusional that they really think most muppets are that stupid and will bring all their money to the casino.
As usual, read between the lines for any of these garbage press releases.
A fiduciary duty[1] is the highest standard of care at either equity or law. A fiduciary (abbreviation fid) is expected to be extremely loyal to the person to whom he owes the duty (the “principal”): he must not put his personal interests before the duty, and must not profit from his position as a fiduciary, unless the principal consents.
http://en.wikipedia.org/wiki/Fiduciary
The existence of “America Underwater” reflects three trends – the “I’m a Victim” mindset if anything bad happens, the “Real Estate Always Goes Up” mindset, and the belief that buying a home is a virtuous choice which somehow merits societal approval and assistance.
“I own a home, therefore I am a better person than a renter” is a subtle but pervasive idea in our society. I don’t fully understand it…but there it is. A homeowner who loses money on his home purchase is somehow more worthy than a renter whose rent increases to where he or she cannot afford it.
Your thoughtful remarks are right on.
“the belief that buying a home is a virtuous choice which somehow merits societal approval and assistance.”
“I own a home, therefore I am a better person than a renter”
The two statements above together combine to say homeowners deserve bailouts and renters deserve to pay for it.
Loanowners for the most part, don’t feel superior to renters they just don’t think about renters. Have you ever bothered explaining yourself to the bum on the corner. He may envious of your great life, but you just don’t think about him even though he may rightfully or wrongly complain you are getting more benefits than he.
Renters are like kids with older brothers and sisters that have the “younger sibling” syndrome, a kind of envy. Renters are always angling for what they didn’t get and how no one is paying attention to them. Though psychology teaches us this behavior is normal, I would say that renters should realize how lucky they are.
Before I defaulted, I was envious of renters and their ability to pick up and move at the drop of a dime. I resented my ever-increasing property taxes, water bills and utilities. I resented homeowners insurance that I was bound to pay, as well as PMI.
I resented the 22 years of interest payments that went to my 30-year loan. I resented the upkeep and maintenance I had to perform after getting up early every morning in the winter shoveling snow, or in the summer to see about some kind of bullshit or another. As the former CEO of BP said, “I want my LIFE BACK!”
When I was in business as a landlord I was envious of the slumlord who owned his rental free and clear and collected his cash without incident. I was envious of my section 8 tenants who had 95% their rent paid for them via my taxes and refused to pay their $30 per month portion.
I resented the shithead gang bangers who moved across the street, who could sling weed for a few hours and have the rest of their day free to inseminate and impregate stupid hood rats with their doomed offspring.
I was envious of how I had to go to work all everyday and they got to lay around and smoke that weed and play videogames all day. Shit, I NEED TO GET TO THE 3RD LEVEL OF HALO TOO, AND MY DAMN JOB IS GETITNG IN THE WAY!
Lawmakers are advocates of bailouts for loan owners not because it is the altruistic thing to do, but because it will gain them votes and prevent walkaways en masse.
These homewoner bailouts are necessary for the survival of our housing-produced moneytary system. How else are you gonna keep everyone else paying for an asset that has lost all it equitable value?
Banks know this and only begrudginly agreed to remods when they realized that many would just say “fuck it” and walk away. Loanowners a still trapped. Hocus Pocus You Don’t Owe Us, (well, you owe us) loan mods will not change this.
So renters, as you can see, like many renters we loan owners have this envy. It felt like a situation I was in at the age of 16. I had a girlfriend named Honey Potts, who was giving out that “stanky stuff” from both drawer legs.
However, she refused to give me any. I felt like I was financing all comers big and small if you know what I mean. Fed up, I told her I thought that I deserved some trim. She told me that she was glad that I asked and that since she and I had been together, I had all the trim that I needed————in the palm of my hand. I was pissed.
Now I am married so I take the direct approach. Hell, just yesterday I felt that since I had washed a cup, I DESERVED more trim from my wife. So I told her “listen up ya big dummy, if you know what’s good for you, you better fuckin’ hurry up and give me some trim. And I ain’t bullshittin’.”
I re-learned a valuable lesson last night. What I GOT was a kick in the balls, 3 cracked ribs, and a fractured orbital lobe. See, GET and DERSERVE. GET and DESERVE……
So you renters relax, and feel lucky you are not locked in for 30 years paying 3X the value for a depreciating and still falling asset.
But if I could get someone to pay me 30K dollars for a car that I paid 10K for, and is now worth 4K, I would say that person’s virtuous choice to offer me such a great bailout and is worthy of my approval and my assistance.
That reminds me, gotta go call Honey Potts.
I just don’t get these people complaining that they’re underwater on their mortgages. They always think that house prices always goes up, if the house prices goes down, they complain that they overpay, but are they complaining when the real estate going up? I don’t think so, I have friends and families that bought those houses during the bubble period and some did HELOC abuses. They live like there’s is no tomorrow. I envy them because they can go on vacation, buy expensive things, cars and remodeling their houses. I’m always thinking, how they can afford it. i was finishing my B.S. degree back then and in a hurry to finish so that I can buy a house too, good thing I didn’t. People always want to be rewarded with things and if they can’t get any rewards, they will start complaining. You will hear stories that the bank did this, the real estate did that, I didn’t know what I’m signing.. etc, etc. etc.,,, But at the end of the day, It is mostly you to be blame by buying houses that you can never afford. You should know yourself on how much can you afford. I’m still a renter up until now since the bubble burst and I personally doesn’t like it especially people I know earn less than half of what I earn and they buy those house. ( Not own it because bank still own it until you fully pay it). I don’t know if I’m stupid or responsible with my financial obligation but I will only buy a house if i know I can afford it. I don’t want to abuse the stupid system that if you took a loan to buy a house, you will be rewarded. Right now I’m renting a condo that has notice of default on it. My landlord didn’t even bother of telling since July’ 11. I just found out last January when the bank send a letter for the tenant. What sucks is, this guy is skimming the rent and still paying him. I’m obligated to pay the rent whoever owns it (landlord still own it) and he even told me that he will just let it go to foreclosure. What a dickhead. I cannot move easily because I have a family and I don’t want to move anymore until I buy a house. Why I cannot get my rent free if he’s not willing to pay for the mortgage anymore? Am I stupid or I’m just a responsible tenant who pay their dues. I’m fed up with the system right now that renter is treated like a shit and loan owners can do what they want to do, live free or SKIM money from renters!!!
The housing bubble episode has made it very clear who the “powers that be” will support when it comes down to owners and renters. Owning a home has always had some benefits, but there are clearly many gray area benefits that must now be taken into account when weighing homeownership (i.e. being allowed to squat for years, receiving principle reductions, loan mods, filling law suits, ability to skim rent, etc). These all suck if you are a responsible citizen; however, the government has made it very clear where they stand on the issue!
what it all boils down to: preserve the sacred tax-donkey at the expense of renters, savers and those on fixed incomes.
This giant “pity party” of a site displays this country’s spoiled, mollycoddled, entitled, morally bankrupt middle class in an extremely unflattering light.
Oh, yeah, there were a couple of people I empathized with, because they, alone out of the rest of the whiny crybabies, seemed to be not asking for sympathy nearly so much as just venting their frustration and anger at a system that punishes people for doing the right thing while coddling crooks and parasites. I liked these people, or at least what I saw of them, and I sympathize.
But these 2 or 3 were lost among all the whiners and beggars asking for “help” with, say, the house they paid $525K for but is now worth $265K less, or the second mortgage, or other avoidable trap they walked right into. Most people in this country can’t imagine being able to buy a $525K house to begin with! Many people who never participated in the mania are cooked all the same, pushed out of lower-middle-income jobs to low-wage jobs or unemployment, and are damn happy just to be able to pay rent on a crummy apt. in a worse neighborhood.. and they aren’t asking for help, only to please don’t inflate them out of their last meal and make them pay for crimes they didn’t commit.
The one that just KILLS me is the woman who built a new house for $338,000 in 2008 BEFORE getting her previous home sold, and ended up with two houses underwater that she cannot sell.
Did anyone ever tell her that it’s never a good idea to commit to a new home before you have the old one sold, even in a good market?
Or that someone who can afford to pay $338K for a house while owning another is not exactly a hardship case?
Do any of these people ever look around at the people who have much worse problems, problems they were perhaps born with or had inflicted on them through no fault of their own? Like the guy on $600 a month disability and in a wheelchair because he was shot and robbed? Or people who have been severely schizophrenic since the age of 5 and are living on the streets fishing for food in dumpsters, and don’t even know what side of town they’re on or how they got there?
Or just ordinary folks who never had any idea of owning a $300K or $500K house, and didn’t try to pretend they could, who’ve lost their jobs and futures because of these people and the banker scum who enabled them?
You’re right on with both your thoughtful remarks. It’s good to see you posting here, Laura.
These whiners make me sick. Dopes who had no business purchasing $300k+ liabilities. Not asset, liability. I hope these people are bankrupted forever.