Yes, the Mortgage Meltdown IS your Problem
Sure it’s fun to sit there all smug and superior and think “why didn’t that stupid shit read the fine print?” or “I’m not gonna bail out some greedy irresponsible $#!%&*$#& who bought a house he couldn’t afford.”
The foreclosure tsunami has been wrecking neighborhoods all across the country. And it isn’t just happening in “bad” neighborhoods. Mass foreclosures are having a domino effect in middle class and upscale neighborhoods as well.
Abandoned houses are a target for vandalism. In some cases thieves are stealing all the copper wiring, copper plumbing fixtures and aluminum siding from empty houses.
These empty buildings are also a magnet for prostitution, drug dealing and gang activities. Even without these new additions to the neighborhood, your own property values will go into freefall if there are too many foreclosures nearby. You weren’t thinking of selling were you?
According to one calculation, every 1% increase in foreclosures will produce a 2.23% increase in violent crime. (The linked article has a .pdf link giving the details.)
According to this report, about three percent of all homeowners will enter the foreclosure process by the end of 2009. And forty-three percent of all homeowners will feel the ripple effect of these foreclosures.
A favorite conservative mantra is “a rising tide lifts all boats.” And now we’re seeing the flip side of this.
It comes down to a matter of priorities. If you’re gung ho about property values AND you go ballistic at the thought of somebody getting “something for nothing,” you have a choice to make. You could let the foreclosure crisis ruin your own life, just so you can keep thinking “Yeah, that serves those lazy bastards right. That’ll fix ‘em!” Or you could have that rising tide lift (or at least maintain) your own property values, even if it means fuming and pulling your hair out because somewhere, some lazy worthless parasite is getting a handout.
There’ve been a lot of anecdotes about neighbors ganging up on one homeowner who doesn’t mow his lawn or has a disabled vehicle parked out front. “He’s bringing down property values!” With cognitive dissonance being such a popular affliction, there are probably millions of homeowners who are simultaneously 1) going apeshit because somebody down the street has a car up on blocks; and 2) thinking to themselves “Mortgage crisis? Not my problem.”
cross-posted at Bring It On!
Labels: foreclosure tsunami, foreclosures crime vandalism, mortgage meltdown
posted by Tom Harper @ 2:22 PM
16 Comments:
The mortgage crisis in this country has many sides as you've pointed out. I'm a real estate broker who happens to handle a lot of foreclosure properties right now. There are those out there who probably don't deserve one nickel from anyone. There are also financial institutions that, if they tried working with most of these people, they could stave off a lot of this mess.
You have to deal with the predatory lending practices that our government has turned a blind eye to for years. They offered 100% financing to people with marginal credit, promising them they could repair their credit and get better rates in a year or two. Then to sweeten the pot, they throw out a teaser rate several points below conventional mortgage rates. That fine print? Well, they just gloss over that one - yeah it will reset in a year or two, but by then you'll be ready to refinance to better rates. Most of those type of clients were first time home buyers who didn't understand the full import of what they were being sold. What should have happened was most of these folks should have gotten financial counselling, repaired their credit and THEN gone house hunting. That didn't happen.
And remember how the banks were going to work with clients on loss mitigation and refi them so they could stay in their homes? By and large, that's not happening either. So, we have an industry that won't clean up its act, a government that won't regulate their practices and a whole lot of homeless people who no one wants to help because they got their own dumb asses in this mess.
And every day I get in the car and I go see another beaten up, empty house that looks as shattered as the dreams that once lived in it.
Rockync: Whew! Good description. I can tell you've had a lot more experience and contact with all sides of this mess than I have. It's hard to find one person or group to point the finger at; everyone's guilty and everybody loses.
I tend to put the most blame on the mortgage companies who are so anxious to get customers at any cost. They're too much like those credit card merchants who send out billions of already-approved credit cards and then complain about all those deadbeats declaring bankruptcy.
But at the same time, people need to be less gullible and pay attention to what they're signing. And government needs to play a role here. It shouldn't be legal to pull the rug out from under somebody just because he didn't catch the meaning of that legalese clause on page 58 of that 70-page contract.
its really a mess now, things have to be changed or else the near future will be hard to predict!!!!!!!!!
Nice summary by rockync for us non-industry types. And you hit the nail on the head, Tom, all parties should be dealing with this, but in reality, it's - again - not the big companies. They get the massive assistance while the ones at the bottom don't.
Hey, if you go into credit card debt through foolishness and not something catastrophic, fine, but the laws keep on getting rewritten to cut those people some slack while the companies get more and more slack every time.
LOL, Tom! My, I did go on a rant! You summed it up very well. And I also believe there is enough blame to go around. I'm no proponent of further governement interference in our lives, but seeing as the financial institutions have proven themselves unwilling/unable to police their own industry, at the very least, the feds should set some perimeters.
Now, people who have been caught up in this mess can cry foul but if there is a bailout of sorts then they also have a responsibility to work with financial advisors and get themselves on track. And if they are going to lose their home, no matter how bitter they are, tearing up the place, removing fixtures, letting trash pile up IN the house and allowing animals to relieve themselves indoors does not speak very highly of them. You wouldn't believe what I've seen. There are others who have left the place immaculate and those are the ones I feel sorry for and wish they could have been helped.
Suresh: Yup, it's a mess all right. BTW, I'm not sure if you're spamming or if your blog got hijacked. When I brought up your blog I got redirected to a spam site.
Randal: That's the trouble, the banking industry tries to lump everybody into the deadbeat category. Somebody who bought a garage full of Porsches that they couldn't begin to afford, and somebody whose HMO "disqualified" them and now they're stuck with a $400,000 medical bill -- they're both just parasites looking for a handout.
Rockync: You're right, everybody -- individuals and large corporations -- wants to be bailed out but without taking any responsibility or being willing to change the behavior that led to their predicament.
I saw a cartoon a few days ago that showed a man drowning (representing the mortgage industry). He was yelling for help, and Uncle Sam was standing there with a rope. He threw out the rope, the mortgage industry grabbed ahold of it and got pulled in and rescued. Then Uncle Sam said "now in return, I might have to regulate you, just a little." And the mortgage industry yelled out "Communist!"
Good point. And if someone's house is in foreclosure and they sell it, it will sell lower than the usual house in the neighborhood, and thus make the "comps" go down, and thus your own property value declines.
Mauigirl: So true. To a large extent, we're all in this together, no matter how much Libertarians and "individual freedom" types try to deny it.
Thanks, rockync, for a great explanation of the problem. What a mess! Of course there needs to be some help for this. Too bad our government doesn't seem interested in people -- only in institutions! Sure, our banking structure is important, but it's people who are most important.
Another really awful thing that's happening is the abandonment of family pets. Sometimes they are just left to starve. People don't know what to do, and don't have many options for housing themselves, let alone their little four-legged hostages to fortune, so they just leave them. Where's the help for them?
Sorry for ranting -- it just needed to be said.
Anonymous: Thank you for your rant. Yes, the thousands of abandoned pets are a real tragedy. This is a whole issue in itself; I'm surprised animal-rights groups haven't gotten involved in this. Hopefully they will.
Tom and Anonymous: There was just an article in the Denver Post about the pets that get left behind. Sometimes people do the honorable thing and bring the pets to a shelter, but sometimes they leave them in the house, alone. And concerned neighbors call the cops and/or animal control, who break down the door and find a half-starved dog who's been gnawing on baseboard and cabinet trim, cats who have been chewing carpet and trying to lap water out of cut off faucets. And this is not happening just in the not-so-nice places, but even in half-million-dollar or more priced houses. These pets end up in shelters, or worse, in graves, at taxpayer and nonprofit expense. It is indeed ALL out problem.
Mile High Pixie: Yes, I've seen articles like that. It's a terrible problem. I can sympathize with someone who lost their house, but how can they just leave an animal locked in an empty house like that? Too many people think of their pets as just possessions, like a chair or a TV set.
Funny I use to rent to people. I had two different renters leave a pet behind. One was a cool dog that I kept and he is now part of family. The other was a cat. The cat was the biggest pain to get rid of it. Because they toss it outside every day and every night it would come to the door and meow to be let in. But I was stranger and it run off would not come in. Then 2 hours later it would come back. All friggin night long. I finally trapped it in a cage trap and took to the humane society.
I saw the housing booms I saw the people taking out the second mortages and 125% equity loans of their houses. What did they do bought toys, boats, 4 wheelers, jet skis, took vacations blew the money. Now they crying because they are getting kick out? The only way society is going to learn is not to bail anyone out. Sure the housing market will take a hit but it well come back based on reality with responsible people.
I think on the pets neighbors are just going to have to ask the people before they leave about the pets. Do something don't leave them starving in the house and don't dump them in the country take THEM to humane society. The one dumped in the country either starved to dead, get shot or form packs of feral dogs especially in the south this can be a problem.
Anonymous: That really sucks when pets get left behind like that.
As far as the type of people who are losing their homes, I'm sure there are as many different situations as there are people. Some people take out loans on houses and cars and boats they can't afford, with no intention of paying off their loans. Others become destitute because of a layoff or an illness. They can't all be lumped together into one category.
This is another example of those BullS*it conservative Social Darwin let the market decide philosophy that they never practiced. They tell you life's a risk and if you lose, you lose. They tell you read the fine print because "ignorance of the law is no excuse"
It would be fine if that's what they truly believed. Instead they Bail out the guys who are supposed to know better while leaving the suckered consumers high and dry.
Gee I would like it everytime I put a quarter in a slot machine and noting came out I could get reimbursed by the Government but that's not going to happen -
unless I have influence
This is what they did in the Saving's and Loan scandel.
This is what they are doing to pensions.
Hell this is how they handled the great depression.
People got smart enough to throw them out then
Lets hope they can do it again
Erik
Erik: Yup, it's all so transparent. Hopefully the public will smarten up one of these days. Enough of this shit where an individual needs to sink or swim on his own, but if it's a huge corporation, "oh, you poor poor baby, here's a little billion-dollar gift from the taxpayers, just to make you feel better."
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