The U.S. Housing Crisis: Where are home loans underwater?

[T-325]

This Zillow report looks at Local Home Delinquency, Underwater Rates for homeowners.

The real estate values in The Villages have held up better than my hometown in the Boston area!

US Housing Crisis - Negative Equity Infographic - Zillow (http://www.zillow.com/visuals/negative-equity/#10/28.9252/-82.0047)

Be down on November 12th for a Lifestyle vist...:a040:

[Bay Kid]

I have been in the real estate business on the Chesapeake Bay for 38 years. This has been the worst I have ever seen. So many bank owned properties. This hardly ever happened until 3-4 years ago. Why would banks loan money to people that they know couldn't pay? On the good side sales are up and prices are level.

[JP]

I have been in the real estate business on the Chesapeake Bay for 38 years. This has been the worst I have ever seen. So many bank owned properties. This hardly ever happened until 3-4 years ago. Why would banks loan money to people that they know couldn't pay? On the good side sales are up and prices are level.

It was all about our "friendly" government wanting everyone to own a house even if they couldn't afford it.

This whole economic collapse was because of this.

[Lark7]

I have been in the real estate business on the Chesapeake Bay for 38 years. This has been the worst I have ever seen. So many bank owned properties. This hardly ever happened until 3-4 years ago. Why would banks loan money to people that they know couldn't pay? On the good side sales are up and prices are level.

There was so much political pressure on FNMA and FHLMC to fund loans which an otherwise prudent lender would not have made to customers. Labeled the CRA program and other smaller programs, regulatory pressure on banking institutions was very intense.

Unfortunately, taxpayers have and will continue to fund the losses from these programs.

[downeaster]

There are plenty to blame for the crisis. The Fed's involvement has already been alluded to. There were also the banks wanting business, mortgage brokers wanting commissions,real estate brokers wanting sales and the buyer wanting to buy.

I know of numerous situations where the buyer had no business even thinking about supporting a mortgage. They borrowed privately to make a minimum down payment. They inflated their earnings and hid there debts. The real estate people, mortgage brokers, and banks chose to look too look the other way.

It was a run away train heading for disaster.

[Irishmen]

If anybody listened to a speech by Obama a few weeks back, sounds like the lending practices which led to the crisis a coming back again.

[graciegirl]

If anybody listened to a speech by Obama a few weeks back, sounds like the lending practices which led to the crisis a coming back again.

That SCARES me. I am a moderate in most things but boy I am a fiscal conservative. Do without until you can afford it .

[Villageswimmer]

That SCARES me. I am a moderate in most things but boy I am a fiscal conservative. Do without until you can afford it .

Couldn't agree more, GG.:agree

[gomoho]

All those others helped it along, but the bottom line was lack of PERSONAL RESPONSIBILITY.

[downeaster]

All those others helped it along, but the bottom line was lack of PERSONAL RESPONSIBILITY.

Absolutely!

[jblum315]

It had nothing to do with our government. It was the greedy banking system that did us in.

[gomoho]

It had nothing to do with our government. It was the greedy banking system that did us in.

Have to disagree - the government was providing incentives for the banks to make loans.

[perrjojo]

[QUOTE=gomoho;737519]Have to disagree - the government was providing incentives for the banks to make loans.[/QUOTE

I'm with you. In fact the government DEMANDED that these loans be made. Sorry bankers and mortgage companies hate foreclosures. No one makes money on a foreclosure unless it's a "flipper".

[Lark7]

It had nothing to do with our government. It was the greedy banking system that did us in.

Have to also respectfully disagree. The government created the guidelines and policies under their socially driven "everyone is entitled to own a home" programs. The banks and mortgage companies delivered loans to the secondary market through the FHLMC and FNMA conduits.

I have personally witnessed Federal examiners criticize banking institutions for not having made certain loans under the governmental policies. Safety and soundness were tossed in the wind so as to rationalize an otherwise poor loan.

And yes, it ultimately reflects an absence of personal responsibility.

[The Buckeyes]

Getting back to underwater...we sold a condo in Myrtle Beach in 2007. As I was surfing today I noticed that the condo we sold was up for sale. Upon looking at the pictures only the rug and flooring is original. The owner completely remodeled and refurnished the entire thing. Probably 15-20K in improvements and to my surprise it is listed at a price 100K below what we sold it for. I guess we got out at the right time.

[wendyquat]

I'm certain it came from the government. I was in Real Estate during this time and got a call one day from a friend of mine who was a mortgage officer with a local bank. She asked if our office had a minority client with POOR credit that we could send her as she needed one more before the end of the month. I told her I was working with a non-minority couple with NO credit as they had just recently married. Both were teachers so they had good jobs but limited funds for down payment. She said she was sorry but the FNMA guidelines were very specific and it MUST be a minority with POOR credit for a no downpayment loan at 105% of appraised value! And you know the rest of the story!

[donb9006]

The banks own the government, they had the government "demand" they make loans that the government guaranteed, allowing the banks to privatize profits and socialize losses. The fed is buying up the bad mortgages to the tune of $45 billion a month.

[gjbl8114]

all those others helped it along, but the bottom line was lack of personal responsibility.

no, the bottom line was and still is greed!!!

[rubicon]

The genesis for this calamity began in the Carter Administration with the Investment Act progressed through the Clinton and Bush I & II eras. Fannie and Freddie were the conduits and the underwriting criteria went out the window. The government was throwing some much money around that Hedge Funds created CDO packaging mortgages. if you recall you never could keep track of who was holding your mortgage.

This musical chairs with mortgages affected the business I was in so I paid particular attention. I knew way back when these games began that it was bad news because it was not stable. Guys like Paulson bet against the viability of the mortgage market. You would have thought that the government would have picked up on that and especially the Federal Reserve.

The government failed and taxpayers paid the penalties . This sort of thing is still continuing with mortgages, credit rebates tax credits etc.
for example farmers keep buying farm equipment because of tax credits even if they don't need new equipment the government offer is too good to turn down

The federal government is not a good steward of taxpayer money because they don't have to pay the bill when it comes due.
and when they need more money they just raise taxes.

There is a small segment of society that needs assistance such as the truly disabled and as a taxpayer I gladly share some of my earnings for their care but the bag grab is not well defined nor regulated and that is why a surfer who is quite capable of working just lives on the beach and lives well

[graciegirl]

no, the bottom line was and still is greed!!!

No. This is economics pure and simple pitted against a very unfortunate but misplaced sympathy to granting loans to people who could not, would not, should not, can not and did not afford them.

When most of us were buying our first home, you HAD to have 20% down in your hand and it had to be your money, not given to you or borrowed before you could present yourself at a bank or lending institution to borrow money for a home. You then had to show that you had paid your bills on time and had little if any outstanding debt.

You didn't just stand there and say " I want a house like other people, loan me money."

That is where the government stepped in and made it possible to grant loans to people who had lack of funds, no down payment and who were then allowed to buy homes that were too expensive.

They moved into the neighborhoods all over this country and failed to meet their financial responsibilities and walked away from them and devalued every home in this country for the rest of us who had been careful and sacrificed and responsible.

Now those will say that these people lost their jobs, they had illness, they lacked ability to do this or that, but responsible people buy less than they can afford, have a contingency plan like savings to weather a not too big financial storm and don't feather the nest they couldn't afford with stuff they couldn't afford and drive two cars they couldn't afford. etc. etc. etc.

There are exceptions to every rule but the mess was caused mostly by the government enabling people to overstep their ability to pay for the home they "wanted".

[donb9006]

No. This is economics pure and simple pitted against a very unfortunate but misplaced sympathy to granting loans to people who could not, would not, should not, can not and did not afford them.

When most of us were buying our first home, you HAD to have 20% down in your hand and it had to be your money, not given to you or borrowed before you could present yourself at a bank or lending institution to borrow money for a home. You then had to show that you had paid your bills on time and had little if any outstanding debt.

You didn't just stand there and say " I want a house like other people, loan me money."

That is where the government stepped in and made it possible to grant loans to people who had lack of funds, no down payment and who were then allowed to buy homes that were too expensive.

They moved into the neighborhoods all over this country and failed to meet their financial responsibilities and walked away from them and devalued every home in this country for the rest of us who had been careful and sacrificed and responsible.

Now those will say that these people lost their jobs, they had illness, they lacked ability to do this or that, but responsible people buy less than they can afford, have a contingency plan like savings to weather a not too big financial storm and don't feather the nest they couldn't afford with stuff they couldn't afford and drive two cars they couldn't afford. etc. etc. etc.

There are exceptions to every rule but the mess was caused mostly by the government enabling people to overstep their ability to pay for the home they "wanted".

It IS greed Gracie, the banks knew they could make money ORIGINATING and then selling mortgages to investors. With the government they have in their pocket, they expanded the pool of homeowners to cover just about anyone. Remember the NINJA loans? (No Income No Job or Assets) "Their" government guaranteed the mortgages giving them a AAA rating and relieving the banks from responsibility for them. The government (Fed) is now spending $45 billion every month buying the worthless mortgages from the banks at 100 cents on the dollar. The banks win and "we" lose. The appearance of stupidity and ineptitude are just that...appearances. They KNOW what they're doing...oh how they know what they're doing...

[graciegirl]

It IS greed Gracie, the banks knew they could make money ORIGINATING and then selling mortgages to investors. With the government they have in their pocket, they expanded the pool of homeowners to cover just about anyone. Remember the NINJA loans? (No Income No Job or Assets) "Their" government guaranteed the mortgages giving them a AAA rating and relieving the banks from responsibility for them. The government (Fed) is now spending $45 billion every month buying the worthless mortgages from the banks at 100 cents on the dollar. The banks win and "we" lose. The appearance of stupidity and ineptitude are just that...appearances. They KNOW what they're doing...oh how they know what they're doing...

You do not see this mess caused by people who should not have been granted loans? Not in ANY WAY? The government who allowed these loans to happen by GIVING people the down payment? The misplaced do gooders who voted for this?

[George Bieniaszek]

I read somewhere that around 40% of the homes purchased in TV are not financed but bought with cash so the possibility of homes being underwater here is much lower than outside "The Bubble".

Unfortunately, many people a few years ago were grasping at the American Dream of home ownership when the financially were not ready or capable to assume the debt. Banks and other lending institutions made it very easy with zero down payments figuring that the housing industry would continue appreciating in value every year. The market suffered a correction, just like Wall Street does from time to time, and jobs disappeared at the same time. Unfortunately, many families were caught.

[Bay Kid]

The guidelines for banks, according to a banking friend, is to make x amount of low income loans. They know they will never be paid.
In the 70's I sold several homes for an investor that bought wrecked homes from the government for 5K, spent 10K and I resold them for 25K. FMHA loans, .25 to $1.00 down payment and the loan included closing cost. Most of the homes were lived in for 6-8 months, torn to h___ and vacated, just to be resold to the investor for 5K AGAIN. I quit selling them. Such a waste. I learned if you get something for nothing you usually don't care.

[graciegirl]

The guidelines for banks, according to a banking friend, is to make x amount of low income loans. They know they will never be paid.
In the 70's I sold several homes for an investor that bought wrecked homes from the government for 5K, spent 10K and I resold them for 25K. FMHA loans, .25 to $1.00 down payment and the loan included closing cost. Most of the homes were lived in for 6-8 months, torn to h___ and vacated, just to be resold to the investor for 5K AGAIN. I quit selling them. Such a waste. I learned if you get something for nothing you usually don't care.

What is predatory lending? What is predatory borrowing? Who is responsible? What is Caveat Emptor?

I think home buying should be taught in high school and include all applicable factors. The course should show all hidden costs of buying homes, closing costs, taxes, upkeep, home insurance, portion of income to spend on home that is do-able with your income. Two incomes? Explanation of all kinds of loans. Pros and cons of balloon notes, conventional mortgages, thirty year fixed rate, etc. What does appraised value mean? How can that change? What is a credit rating, what is a good credit rating, how to get a good credit rating. What is high risk, medium risk and low risk to you? How much does rent cost? How much can you afford to pay for rent or a loan payment if you make x amount? What you must do or do without if you want this kind of home?

Everyone has to have a place to live. Call the course housing 101.

If a kid has parents who have not bought a home, this would be such a help.

[Villageswimmer]

What is predatory lending? What is predatory borrowing? Who is responsible? What is Caveat Emptor?

I think home buying should be taught in high school and include all applicable factors. The course should show all hidden costs of buying homes, closing costs, taxes, upkeep, portion of income to spend on home that is do-able with your income. Two incomes? Explanation of all kinds of loans. Pros and cons of balloon notes, conventional mortgages, thirty year fixed rate, etc. What does appraised value mean? How can that change? What is high risk, medium risk and low risk to you? How much does rent cost? How much can you afford to pay for rent or a loan payment if you make x amount? What you must do or do without if you want this kind of home?

Everyone has to have a place to live. Call the course housing 101.

If a kid has parents who have not bought a home, this would be such a help.



What a great idea! Practicality in education. Personal responsibility. Imagine that.

[ilovetv]

It IS greed Gracie, the banks knew they could make money ORIGINATING and then selling mortgages to investors. With the government they have in their pocket, they expanded the pool of homeowners to cover just about anyone. Remember the NINJA loans? (No Income No Job or Assets) "Their" government guaranteed the mortgages giving them a AAA rating and relieving the banks from responsibility for them. The government (Fed) is now spending $45 billion every month buying the worthless mortgages from the banks at 100 cents on the dollar. The banks win and "we" lose. The appearance of stupidity and ineptitude are just that...appearances. They KNOW what they're doing...oh how they know what they're doing...

Oh. And why is it not "GREED" on the part of the home BUYER, who covets a home he cannot afford and is priced $200,000 more than he really should be buying....does not have a down payment for....or has unsteady income, unstable job in a community whose city government is going bankrupt???????

I've met several couples in the last few years who said they were absolutely shocked at the mortgage amounts the lenders "qualified" them for......and they were mature and disciplined enough to say "No....we cannot afford that...we'll get one for $200,000 LESS than the 'qualified' amount".

Of course the lenders and investors were greedy. But so were the short-sighted, greedy, or ignorant home BUYERS who signed the mortgage papers without a gun to their head!

This shifting of personal responsibility onto the boogymen in banks and Wall St. is feeding a society of enablers and parasites. BOTH sides of the deals are responsible!

[jblum315]

Oh. And why is it not "GREED" on the part of the home BUYER, who covets a home he cannot afford and is priced $200,000 more than he really should be buying....does not have a down payment for....or has unsteady income, unstable job in a community whose city government is going bankrupt???????

I've met several couples in the last few years who said they were absolutely shocked at the mortgage amounts the lenders "qualified" them for......and they were mature and disciplined enough to say "No....we cannot afford that...we'll get one for $200,000 LESS than the 'qualified' amount".

Of course the lenders and investors were greedy. But so were the short-sighted, greedy, or ignorant home BUYERS who signed the mortgage papers without a gun to their head!

This shifting of personal responsibility onto the boogymen in banks and Wall St. is feeding a society of enablers and parasites. BOTH sides of the deals are responsible!

:agree::agree::agree::agree:

[donb9006]

Those people...NINJAs, shouldn't have gotten the loan...period. They shouldn't have been offered ANY loan.

But the BANKS, used their well placed "politicians" to get loans for all those people...the politicians mandated that a certain percentage MUST get a loan. That percentage of additional loans are all additional profit for the banks that they otherwise wouldn't have gotten because the borrower would have been turned away.

The banks make their "front end" origination fees (profit), and then pawn off the "worthless", yet AAA rated, mortgages to some greater fool to be stuck with a non-performing loan. They'll keep the good loans because the interest is "free money" for them. Look up fractional reserve banking for an eye opener.

Greedy banks had the standards lowered so people COULD get extravagant loans, which they couldn't pay off. But the banks had already made their profit from origination fees. The banks put the people in office who then write the laws the banks want.

Banks want EVERYONE to take out a loan! Especially a loan that's guaranteed by the government...they CAN'T lose!

Sure, you need "greedy" people who think they're getting something for nothing to make it work. But the real greed was started by the banks.

[ilovetv]

Those people...NINJAs, shouldn't have gotten the loan...period. They shouldn't have been offered ANY loan.

But the BANKS, used their well placed "politicians" to get loans for all those people...the politicians mandated that a certain percentage MUST get a loan. That percentage of additional loans are all additional profit for the banks that they otherwise wouldn't have gotten because the borrower would have been turned away.

The banks make their "front end" origination fees (profit), and then pawn off the "worthless", yet AAA rated, mortgages to some greater fool to be stuck with a non-performing loan. They'll keep the good loans because the interest is "free money" for them. Look up fractional reserve banking for an eye opener.

Greedy banks had the standards lowered so people COULD get extravagant loans, which they couldn't pay off. But the banks had already made their profit from origination fees. The banks put the people in office who then write the laws the banks want.

Banks want EVERYONE to take out a loan! Especially a loan that's guaranteed by the government...they CAN'T lose!

Sure, you need "greedy" people who think they're getting something for nothing to make it work. But the real greed was started by the banks.

Two words:

Buyer, beware!

[jblum315]

You don't get something for nothing. There is no free lunch. Etc., etc., etc.