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Foreclosure news, from CNNMoney:
"220,000 homes were lost to bank repossessions in the second quarter, according to a housing market report Friday issued by RealtyTrac. That's nearly triple the number from the same period in 2007.
A total of 739,714 foreclosure filings were recorded during that three-month period, up 14% from the first quarter, and 121% from the same period in 2007. That means that one of every 171 U.S. households received a filing, which include notices of default, auction sale notices and bank repossessions.
'Most areas of the country are seeing at least some increase in foreclosure activity,' said James Saccadic, CEO of RealtyTrac, an online marketer of foreclosed homes. 'Forty-eight of 50 states and 95 out of the nation's 100 largest metro areas experienced year-over-year increases in foreclosure activity.'"
42 comments:
Followup from a previous post regarding the builder lowering the price of a house in Herndon from $900k to $750k and threatening to take it off the market and renting it. Appears it has gone under contract.
"Shamrock said...
Followup from a previous post regarding the builder lowering the price of a house in Herndon from $900k to $750k and threatening to take it off the market and renting it. Appears it has gone under contract."
Shamrock, out of curiosity, was it just one home that the developer was trying to rent, or a bunch in that price category? I assumed earlier it was a bunch, in which case the rent threat was a bluff because he would be out of covenant with his lender.
However, if it really was just one home, I could see a developer renting it and turning it into phantom inventory.
Thanks for the link on the foreclosures this quarter. That's almost unfathomable. 1 in 171 households in the entire US recieved some type of foreclosure notice just in this past quarter. Wow. That's a whole lot of hurt. How does that compare to the percent of households that usually have their house on the market?
Problem with foreclosures right now and why they continue to go up is that most people who are getting foreclosed on right now are more than capable of making their mortgage payments, their just choosing not to. Ive talked with a few different realtors (ones that I actually know and trust) and they are saying that people just see this foreclosure crisis as a way to get out of their own bad mortgage. A lot of these people now see that they owe $200,000 more on their house than its worth and make the decision to stop making payments in order to get out. They realize that their credit score will take a hit for about 7 years, but the truth is that in about 3 years they will be able to get approved for another loan and purchase the same house for $200,000 less than they owed on their foreclosure.
Crt, the builder is Doll Homes, and it looks like they built a cluster of 6 single family houses in downtown herndon, this being the 2nd last to sell(if it closes). It looks like they got $900k+ for the other essentially identical models. I think they also have a dozen or two townhouses in various stages of completion in the same general location. Based on their website this might be the only activity for the entire company.
Shamrock - Thanks. These guys are small but probably still big enough that the rent idea was a bluff.
Cara - regarding homes in foreclosure vs houses on the market, I heard this AM that nationally, about 1/2 the existing inventory is either foreclosures, short sales or REO's...Unbelievable.
I am already a homeowner - but, if I wasn't, I'd look closely at some of the sub-100k stuff in Manassas - if only for the $7,500 rebate in the housing bill.
Interestingly enough - I clicked on some of the 75-100k top haircut listings shown on the front page here - and a handful of them in this price range (where you get the top benefit of the credit, as I believe it tops out at 10% of purchase price OR $7,500k - which ever is less) and a lot were now shown as unavailable.
So - I wonder if there's already a mini-run for sub-100k houses on account of the tax credit.
Divot-- This has been discussed a lot on Calculated Risk. There are several problems with this 'people who have the means to pay are just walking away' story. One is that it's all anecdotal-- and the sources are generally mortgage industry insiders who have every reason to deflect blame from themselves by creating a 'ruthless borrower' strawman.
To the extent that these stories come from individuals themselves, you have to consider their credibility from another perspective: going through foreclosure is a major psychological blow for most people. Presenting themselves as having made a conscious decision to 'walk', on the other hand, gives them back a sense of choice and personal power. Just exactly what is the debt to income ratio of these people who are 'choosing' to walk? I think it's very unlikely to be within the traditional prudent limits. The higher it is, the less likely the person is going to be able to sustain it over the long term. And in what sense are you really 'choosing' to default if you can't really afford your payments?
crt said:
I heard this AM that nationally, about 1/2 the existing inventory is either foreclosures, short sales or REO's...Unbelievable.
Its already 40% of sales in SoCal and there is such a backlog in foreclosures that people get to live rent free for years before the banks get around to them! Anyone who thinks this will only last a year or less more is fooling themselves.
Got Popcorn?
Neil
They realize that their credit score will take a hit for about 7 years, but the truth is that in about 3 years they will be able to get approved for another loan and purchase the same house for $200,000 less than they owed on their foreclosure.
Why wait three years. If you have good credit and money for a decent down payment the better approach is:
1) Buy new house - a similar house for $200K less than you owe, or a better house for the same price.
2) Stop making payments on old house and let mortgage holder foreclose.
Your credit is still shot, but you don't have to wait to buy a new house - you already bought it before you trashed your credit. And you're $200K or so ahead. You've successfully extracted you're negative equity and turned it over to the bank.
(I wonder how long until a few desperate realtors start pushing "Negative Equity Extraction" sales.)
As a child I lived through foreclosure and would like to share some facts as I remember them (I was 12 and it was mid-80s).
1: The bank took the house within 4-6 months and there were a LOT of foreclosures at the time.
2: It took longer than 7 years for parents' credit score to improve and Dad put 20% down when he purchased again AND had a higher interest rate (8 years later).
3: This impacted my ability to get student loans but we were poor enough that I got grants and went to a cheap school...
From a recent Washington Post article:
"In Prince George's County, one in 163 households received some type of foreclosure filing in May, according to RealtyTrac, which tracks foreclosure trends. In Prince William County, the numbers were even more staggering with one in every 92 receiving a default or foreclosure notice."
from
Calling on Gospel to Call Off Debt
As Financial Crisis Grows, Many Turn to Church for Help
By Ovetta Wiggins
Washington Post Staff Writer
Sunday, July 20, 2008; Page A01
Is the Prince William County rate a national record?
"Tabitha said...
Is the Prince William County rate a national record?"
Amazingly, its not even close. Last fall Stockton CA had a rate of 1 in every 33 households in foreclosure. Keep in mind too, this data is 8 months old, its almost certainly gotten worse since then
http://www.realtytrac.com/ContentManagement/pressrelease.aspx?ChannelID=9&ItemID=3609&accnt=64847
For this area PWC is certainly #1, but on the national scene, my guess is it would have a tough time cracking the top 20.
Incidentally, this is how the whole area stacks up re: foreclosures per household, from best to worst:
#1 Arlington 1/1,216
#2 Alexandria 1/1,108
#3 Montgomery 1/890*
#4 DC 1/775
#5 PG 1/725*
#6 Fairfax 1/331
#7 Loudon 1/197
#8 PWC 1/111
* A new Maryland law had a 90 day freeze on all foreclosures. Expect these Mont & PG rates to jump up significantly in the next few months.
>Problem with foreclosures right now and why they continue to go up is that most people who are getting foreclosed on right now are more than capable of making their mortgage payments, their just choosing not to.<
The number of foreclosures is staggering. I was shocked by the latest numbers. It's as if the market has become as irrational and self-destructive as it did during the worse excesses of the bubble.
I think these people walking away from their homes who can still afford them are going to have serious regrets. It's not just your credit score that will tank, but a lot of employers look at credit, financial history (especially for clearance jobs) and this will not look good.
Their ability to rent is going to suffer and when they start getting credit again for car loans and other things, they will pay dearly for it.
Of all the terrible things that can visit us in life, being stuck in an overprice home is not the worse thing.
I think we are just seeing the extent of the excesses of the bubble.
People just weren't thinking. They were buying houses far above their ability to pay and hoping that appreciation would bail them out.
kob, I have a very good friend out here in PWC who just so happened to buy at the height of the market. They refinanced a little later to pay off student loans, so then they owed over half a million dollars on a tidy, pretty, little house with a tiny back yard, no garage.
The house is worth about half that now, and their neighborhood is absolutely choked with foreclosures, so much so that 5000sqft loaded houses are selling for the upper $300s/lower $400s. Then their ARM reset before they expected it to, and their payments jumped.
They are still in their house. More than half of their monthly income goes to a mortgage payment that is almost completely interest. They have four little kids. She's working from home now.
They have no hope for deliverance, but they see value in suffering, and accept that this is the way things have to be.
I cannot help but contrast that with the hundreds of houses I have seen go vacant because the owners paid outrageous prices they could not afford in the first place, or decided they could not stomach to keep paying.
Then again, what kind of anguish must it be to watch so much of your income go to a bank, never to be seen again? How trapped must you feel?
Tabitha,
Sounds like your friends are the perfect candidates for the bailout. Here's hoping they qualify and that there bank is smart enough to let them do it.
cara said "Sounds like your friends are the perfect candidates for the bailout. Here's hoping they qualify and that there bank is smart enough to let them do it"
Pardon my language . . . but WHAT THE HELL!!!
This infuriates me so much, I don't know where to begin.
I moved here in 2005 to start a full-time job, I was getting married in 4 months, good job, etc. I rented a room those four months from a good friend of mine, who had recently bought a condo in Centreville for 310k. I knew he wasn't making more than 60k but hey its his money. He tried in vain those 4 months to convince me to buy. I told him he was nuts, look at your payments, etc, etc, etc.
I on the other hand scrimped and saved like a miser. After 3 full years I have enough for a 20% down payment on the price range I'm looking for. Shoot, I could put down >50% in the price range I'm looking for (which is 2-3x my income). I have a newborn son, and still I scrimp and save.
So now your telling me that the person who was FOOLISH and irresponsible should get a piece of MY TAXPAYER dollars.
HEY WHERE THE HELL IS MY PIECE OF THE PIE. I didn't take part in the craziness, I saved, I didn't take on more than I could handle, I did everything the right way, but yet they "deserve" to be bailed-out.
I'm sorry, I have absolutely no sympathy for people like this. They might be a great family, and it sucks that it happens to them. But I have something to say about it.
If you did your DAMN finances it wouldn't be happening to you. Where is your 6-month savings, why did you take on a loan that was going to reset? Why were you not smart enough to realize when it resets??? No my bet is you knew the payments were low, you knew it was going to reset, you just figured that at 25% YOY, you'd make out like a bandit in 2 years. So now you are sucking off the public tit, my blasted hard-earned tax dollars b/c you were either greedy or couldn't keep track of your own damn money! So tell you what, when you get that bailout why don't you just fork over some of it to me . . . b/c that is what you should do b/c otherwise you are just stealing money from me!
Tell you what cara, if you "feel" so much for these people, why don't you take $500 out of your own damn pockets every month and give it to them to help make their payments. Oh you doth protest, they get your damn hands out of my pockets!
If you want to help them, set up a charity, that way you don't STEAL money from me to give to them.
Fiscal responsibility is completely dead in this country. If you fall on hard times, were stupid, irresponsible, financially incompetent, it's okay b/c you can just steal money from everyone else to make up for it.
Bailing out these people and the thousands of others like them isn't going to help them.
Most people learn by one of two methods, they either learn b/c they did something stupid and have to reap the HARSH effects of it, or they learn from others who were stupid and reaped the HARSH effects.
By bailing them out at taxpayer expense teaches the public three things.
#1) It's okay to be fiscally stupid and to not take personal responsibility b/c someone will bail you out.
#2) Others see that they have been bail-out so they continue to make stupid mistakes
#3) The hard working that don't make stupid a#@ mistakes like me, say what the hell, why not make the stupid mistakes b/c someone else will pay for it.
There used to be a time when taking personal responsibility actually meant something. One of my favorite scenes is in "The Cinderella Man", Braddock refuses and refuses to take welfare. Finally at his wits end, he takes it. Once he is back on his feet, he goes to the welfare office and PAYS IT BACK. Fat chance of that happening today, it's all what more can I get from the government, soon we'll all be welfare, with those who resist being sucked dry by the bloodsuckers.
I will agree this particular family has more guts then those who simply don't want to pay.
I do wonder how long it will be before something unexpected happens, car breaks down, major house repairs, etc. If you're living on the edge you can be assured that it won't be too long until you're over the edge.
I'm all for the government's help on this one.
GTE,
I can see where you are coming from and applaud your personal approach. But here's my take.
The foreclosure rate is taking down other parts of the economy and is killing jobs. A lot of innocent people are being hurt. This is way beyond housing.
Anyone who opposes this ought to also oppose the mortgage interest deduction. That's a taxpayer subsidy and if you are a renter it's a really galling. So let's kill that.
Let's end government back flood insurance and any kind of disaster help for people who choose to live near the ocean. Why should my taxpayers pay for their dumb decisions?
In fact, if we are going to end government help for people whose behavior has gotten them in trouble, then there's probably a whole long list of government subsidies that ought to be killed as well.
GTE, I'd agree with what Kob said, but add that the bill as I understand it has a number of provisions to make it less likely that your tax dollars are going to be used at all. For one thing, it basically requires the lenders to take primary hit. And to be accepted into the program the borrower has to have income enough to support the loan (using pretty much traditional lending criteria).
To make sure that people don't enter the program just to get their principal written down so they can sell at a profit, they're going to have to share any eventual profits with the FHA (and they get nothing at all if they sell within-- I think it's a year).
Given these provisions, I'd argue that the 'foolish and irresponsible' people you're complaining of are either not going to qualify or are going to prefer to default. I'd also argue that there were a lot of people who bought at the peak of the bubble who were neither foolish nor irresponsible. They bought houses they could afford-- despite the lenders' 'qualifying' them for far more-- expecting to stay for at least 5 or 6 years. If we had not gotten into a crazy bubble, enabled by the government gutting long-standing regulations, there is no way they would be in trouble.
And if you think there's no benefit to you to trying to prevent a massive housing meltdown, think again. Even if your own job is entirely hermetically sealed against the larger economy, and you can be certain your income won't be effected by a major recession, when you're ready to buy, how are you going to find a neighborhood to live in that is insulated in the same way? Massive foreclosures can destabilize a nice, middle-class neighborhood faster than you would believe. And what about rents? The more people kicked out of their homes, the more upward pressure until you do buy-- and the greater the chance that you will be evicted due to a foreclosure on the main property.
In fact, if you want a real, innocent victim of all this, just look at the low-income people in Cleveland who lost their apartments, deposits and all their belongings when their rental was foreclosed on-- sending entire families into homeless shelters. Sorry, GTE-- to me that's a scandal-- hard working, poorly paid folks who lost everything-- not someone with a good job and savings who may have to wait a little longer than they wanted to buy the house they feel entitled to.
kob and sarah,
Look, I'm not opposed to people helping other people out, shoot I give 10-12% of my take home to charity.
Whenever big problems happen, there is always a human side to things.
I absolutely fully expect that b/c of this housing problem it will affect me, the economy, the US. My job is not completely insulated against this mess, no one's job is.
However, Sarah, there is no LONG-TERM benefit to me or to the entire economy by propping up an entire decade of mal-investment. Oh sure, we might get a short-term benefits, but over the long-term is is way more damaging (through much higher debt, taxes, and inflation) then letting it collapse.
There is ample evidence that the interventions by the Fed. Gov. in the 1930s prolonged the great depression.
This whole thinking of the fed. gov. "must" do "something" or everything with our society will go belly-up is the whole problem with our society. Government isn't the solution, it is the problem! This has and will continue to do much harm to our country.
Look, there is absolutely no guarantee in life, bad things happen all the time to good people, to entire towns, to entire countries. The best that one can do is to prepare ahead of time.
Let's take 2 different data-points.
Year Avg. Savings Avg. Debt
1920 ~1,000 ~4,000
2007 ~400 ~123,000
We live in completely different times, however there are a few things that you can draw from those 2 datapoints.
#1 Unless uncle sam wants to bailout out just about everyone we are in for some rough times
#2 Even if they do bail-out everyone, the only thing it will cause is inflation (possible hyper)
#3 Folks in 1920 were WAY more self-sufficient.
The avg. joe doesn't save today, doesn't gives a hooting hell about tomorrow, and sure as heck can't have a better future for tomorrow.
And sarah, if you bought in 2005 and did it right, with a 20% down 30-year fixed, at least 6 months of savings, didn't take a HELOC, planned to stay there 5+ years etc, you should be fine right now. Yes you overpayed, but if you have a job you should be alright. Even if you recently lost your job, the 6 months savings should carry you to the next job. Yes when you move you MIGHT take a hit . . . but life is not RISK-FREE. I say might b/c if you move you have to buy somewhere. If housing prices have gone down everywhere, unless you move into a bigger house or more expensive place, you shouldn't have a problem with the mortgage.
If you bought in 2005 at 300k (and can handle the mortgage), and sold in 5 years at 200k, you still owe 100k. Say you move to Texas and the place you look at in 2005 was going for 250k, well now it's at 165k. You sell in DC for 200k, buy in texas at 165k, put the 35k towards the rest of the mortgage and now the total is roughly 265k that you owe (that's taking an IO approach). . . which is only 6% higher than what you WOULD have owed if you bought the house in Tx in 2005. So you are hurt, but not that bad.
So if you bought at the peak and could afford the payments then, you can afford them now and you will be able to afford them in the future.
It is not the governments responsibility to backstop financial stupidity! The government is there to protect rights! You have the right to be stupid, it should protect that right!
I mean think about it . . . lance might be eligible for the bailout . .. lance!!!
In addition, at what point does it become the governments responsibility to bail me out. So if there is a small boom/bubble in the rock collecting market, and a few hundred people put their entire life savings into rock-collecting, then they go belly-up, why doesn't the gov. bail me out. At what point does the fallout of bad investments become the purview of the government to fix? How does one determine justly that one person deserves a bailout over another?
Kob, you're absolutely right, there are a lot of things we should get rid of. Look at how the list has grown over time, flood, mortgage deduction, etc. etc. etc.
Now that the precedence for this is set . . . what is and will be next.
In the actual monetary aspect about it. Where does the gov. get all the money to solve these problems? Taxes? Hardly, it runs massive deficits every year.
THEY PRINT THE MONEY, which causes inflation. So everyone can pat themselves on the backs saying yeah its so great the gov. is helping, then they can whine and moan about how inflation is killing them.
Higher gas prices, food prices, etc. it's not just b/c of supply/demand its b/c the US dollar is becoming worthless, b/c the gov. is printing so much of it to bail-out housing.
We can't even have a recession in this country, the gov. tries to do everything to prevent it!
Because of our lack of personal, corporate, and governmental responsibility, the entire system will come crashing down.
I know that my line of thinking is extremely difficult to comprehend here in DC, most people can't conceive of a different world where the people want gov. off their backs and out of their pockets.
Try getting out into the country sometime, that attitude is still there in some measure. With this bill, we are making the small-town farmer in Iowa (which I don't agree with farm subsidies either), or the Montana folks pay for through either higher taxes, or higher inflation (stealth taxes) for the stupidity of others.
Right is right, and wrong is wrong. It is morally wrong (REGARDLESS of the economic consequences) to FORCIBLY take the income of one man and give it to another. Whether that is done through the income tax and housing bailouts, inflation, or at gunpoint and thieves. Forcibly taking one man's property or the fruits of his labor without provocation is wrong, regardless of the consequences. The needs of the many do not outweigh the needs or rights of the one.
As a side note, do you know the beginning of the fall of the Roman Republic all started with a land bill, yes a land bill.
"Sorry, GTE-- to me that's a scandal-- hard working, poorly paid folks who lost everything-- not someone with a good job and savings who may have to wait a little longer than they wanted to buy the house they feel entitled to"
oh and sarah,
excuse me you need to look up the definition of the word entitled, b/c you definitely have the definition bassackwards.
I didn't come from a rich family (my dad's been bankrupt like 3 times), no one paid for my education, I went to some poedunk, poor, junky, messed up high school. 165 freshman started out with me, only 83 graduated. I was one of maybe 8-10 that went to a 4 year college starting out. I was smart, but oh boy did I take it on the chin in MS/HS for being smart, lets just say in today's world, I could have had some kids easily kicked out and had restraining orders.
When I graduated, I told my parents I didn't want them to pay for a dime of my expenses afterward. The only thing I've ever taken from the gov. was student loans (which I am dutifully paying back). I knew I was smart, but I went to college and found out I wasn't that smart. However I graduated with a higher GPA than 90% of my classmates, I wasn't smarter than they were, I just worked my butt off harder then them. That hard work paid off in a good paying job.
The word entitled isn't in my vocabulary. Everything I have in my life, I have worked for. No one has given it too me, and I sure don't feel entitled to it. I do know I have EARNED it through my hard work.
Entitled is when you expect ME to pay for your CRAP!
And I don't buy your Cleveland story, it's a red herring. After renting for 3 years, I find it very hard to believe that story.
By law, you have to give 30 days notice. The only people who can actually evict you are the police. Threatening letters, etc. don't work. You MUST receive an eviction notice, and then only the police can actually evict you. If you never received the notice you can easily go to court and the judge will give you the time to move . . . generally 15-30 days. Unless the renters were late on their rental payments, they cannot seize their property. If they do try to seize their property, prosecute those who took it. The place can't foreclose today and tomorrow people are out on the street. They have to have 30 days notice.
Now this doesn't mean the slumlords don't put pressure on them to move ASAP. I've dealt with them and yes you get real scared, but if you look up the law and know the law and go according to the law you will be fine, they can't touch you.
If the slumlords put pressure on them and they moved before they had it, that is definitely unfortunate, however one must wonder if they aren't willing to fight something that they must feel is obviously wrong and against the law . . . .
If the rental place forecloses and they do get kicked out . . . so what . . . I've moved 4 times in the last 3 years . . . it's a hassle and a pain, but not the end of the world. In fact, it's more of a pain in the neck trying to find a place that DOESN'T have income restrictions!
So I call BS on your heart-wrenching sad story.
The New Deal prolonged the Depression? My parents, who lived through it, would strongly disagree. Particularly my mother, whose own father died of stress-related illness as a result of being the only employed member of his extended family. If the New Deal had arrived a little earlier he might not have driven himself to an early grave trying to keep all his brothers' and sisters' farms out of foreclosure.
As to my 'bogus' story, here are a few links on the Cleveland situation:
From the Plain Dealer:
Beverly Ramsey, 51, is relatively lucky, as the "luck" of foreclosure goes.
She knows that the house she's renting in Cleveland is being foreclosed on and that she has to find a new place to live.
But other renters may not have a clue about a pending foreclosure until the eviction notice arrives. Then they've got only three days to clear out and get new housing.
From an earlier AP story:
As executive director of the Northeast Ohio Coalition for the Homeless, Brian Davis sees daily how the foreclosure crisis is poking holes in the nation's social fabric. Cleveland's school district said it has seen a 43 percent increase in homeless children since last year.
Davis has seen a 30 percent increase in calls to a telephone help line from people seeking housing help, and a 39 percent jump from people needing food. He said renters are vulnerable.
"These are people who are caught off guard, who were not a party to the foreclosure," Davis said. "They're living in a duplex or multifamily property, then the owner gets foreclosed on and they're the last to hear, and they're winding up in a shelter."
Here's the Bill Moyers report on Cleveland.
I have rented for a long time and the reporter has clearly got his facts wrong if he is reporting that they have only 3 days from time of notice. Maybe 100 years ago that was the case, but today any state that I know of gives you 30 days! They cannot throw you out on the street! Know the law! The reporter looks like he has a BS story to tug at the heart strings.
Please point me to the law that says they have at most 3 days to move and I will gladly back down. Just b/c a house goes into foreclosure doesn't nullify your rental contract! You do have legal recourse in the courts if they try and pull a fast one!
As far as people living in homeless shelters, if they have a job and income it doesn't pass the smell test. There is plenty of housing in this country. Normal housing vacancy rates are ~1% . . . it's at almost 3% right now, 200% above normal! There is not a lack of housing, even if they get evicted there is plenty of housing for rent, anyone with a internet connection can see that! Shoot, I'm temporarily in DC for the summer, I found out on a Thurs. (2 days before I was scheduled to leave) the place I was going to rent was unavailable. I found a place the next evening!
No more likely, they lost their job and couldn't make rent payments . . . and this is a news story b/c??? That's why you save, for those time when you lose you job!
And trust me slumlords know the law, if you play hardball with them, they will back down. I just did that 5 months ago and got my entire deposit back that they were trying to stiff me . . . basically I told them I was going to sue in small-claims court and they were going to pick up any travel expenses.
As for the GD . . . look, I've studied that period of time long and hard. Most people believe FDR was the greatest hero . . . never mind the fact that he was the closest we've ever come to a dictator in this country.
Let's see, executive order of confiscation of private citizen's gold (illegal), banking holiday (illegal), passage of New Deal programs-most of which were declared unconstitutional by the Supreme Court. Since he didn't like their decisions, he told them to either vote his way or he would sign an executive order expanding the court from 9 to 12 judges, thus ensuring passage of his acts passed by Congress. Needless to say they went along with him after that. Even though no law was against it he broke with tradition, and was elected 4 times, served for 14 years!!
There is a lot wrong with this country, but I am thankful we have yet to repeat that nightmare, although I fear we are about to.
He is lauded as a hero and a savior, nevermind the situation only got worse during his tenure.
And yes there IS plenty of evidence that the government meddling prolonged the GD. What the truth is vs. what we have been taught or what people want the truth to be or want to remember it as are widely different.
Many people have a really poor grasp of basic economic principles, primarily b/c they were never taught them. . . but don't take my word for it.
http://mises.org/rothbard/agd.pdf
That a link to "America's Great Depression" by economist Murray Rothbard. It's a complete book, you can download it and read it for free. It's about 400 pages long. If you really want to understand that time period, I would suggest that as a good starter.
From the article you posted:
"Over the past year and a half, we've noticed a significant increase in renters calling, saying, you know, that somebody's been looking at my house, I just received notice, someone knocked on my door and said, "We have to be out in 30 days." And we're getting about 100 to 200 calls a month now from renters that are faithfully paying their rent and their caught up in the foreclosure crisis. However you look at the problem, 30 days to get your belongings, find a new place, come up with security deposit, and get your life back in order, it's just not enough time."
If you are a renter, you sure as heck better know that you have at most 30 days . . .you signed the lease agreement with that stipulated on it! And trust me 30 days is plenty of time . . . I've done it multiple times. In fact, I've found that it's actually A LOT harder to find a place when you need to move in 3 months vs. 30 days.
Yes it is a pain in the neck, all you do for 30 days is look for housing, it is a traumatic experience, life changing etc . . . . . and your point is??? That is life, things happen, change, etc. . . . learn to adapt!
GTE-- I agree, a lot of people have a poor grasp of economic principles. Many of them are at Mises -- or CATO, or are, like Greenspan, Ayn Rand ideologues. By the way, in my mother doesn't have to rely on just her own bitter memories of the Depression. She also has a Ph.D. in economics.
One more thought, the idea of actually bailing out housing in reality destroys the same lower income hard-working people you are trying to protect. How???
Inflation (b/c the only way the bailout can work is either higher taxes or print more money . . . ala inflation), I just went to the grocery store it cost me $27 for the same stuff that I could buy 3 years ago for $15. That really helps the lower-income when they are scraping by and they just need to eat!
Her PhD is obviously not in the free-market vein of economics then.
She is more likely a Keynesian which was all the rage from the 20s to the 50s and which was pretty much debunked in the 70s-80s.
And I have a feeling we will see the Monetarists debunked in the next 30-40 years.
GTE - agreed on your take on FDR & the GD. Even worse than his meddling prolonging the GD, his complete disregard for the constitution makes the Bush administration look like angels.
Historians disagree on how close we were to having his "courtpacking" plan going through (i.e. changing the number of supreme court justices from 9 to 15, with him picking the new 6 to give him an overwhelming majority), but had that passed, we very well could be a banana republic by now.
kob said...
Anyone who opposes this ought to also oppose the mortgage interest deduction. That's a taxpayer subsidy and if you are a renter it's a really galling. So let's kill that.
Let's end government back flood insurance and any kind of disaster help for people who choose to live near the ocean. Why should my taxpayers pay for their dumb decisions?
In fact, if we are going to end government help for people whose behavior has gotten them in trouble, then there's probably a whole long list of government subsidies that ought to be killed as well.
I’m on board 100% kob. Imagine what that would do to the deficit. Imagine how much money that would inject into the economy (due to lower taxes). Imagine how lean and efficient the government could be.
I fear however that these subsidies have reached critical mass. The American public can’t imagine a life of self reliance. The housing bill is case in point.
Sarah said...
GTE, I'd agree with what Kob said, but add that the bill as I understand it has a number of provisions to make it less likely that your tax dollars are going to be used at all. For one thing, it basically requires the lenders to take primary hit. And to be accepted into the program the borrower has to have income enough to support the loan (using pretty much traditional lending criteria).
Provisions or no provisions, primary or secondary, housing bill or no housing bill, make no mistake, it’s the taxpayers that will pay for the housing debacle. The Government (and the voting public) has made it intrinsically so.
Sarah said...
And if you think there's no benefit to you to trying to prevent a massive housing meltdown, think again. Even if your own job is entirely hermetically sealed against the larger economy, and you can be certain your income won't be effected by a major recession, when you're ready to buy, how are you going to find a neighborhood to live in that is insulated in the same way? Massive foreclosures can destabilize a nice, middle-class neighborhood faster than you would believe. And what about rents? The more people kicked out of their homes, the more upward pressure until you do buy-- and the greater the chance that you will be evicted due to a foreclosure on the main property.
Prevent a massive housing meltdown? How can you prevent something that you’re right in the middle of? It’s too late to prevent a fire when the flames are lapping at the window curtains. Prevention would have been prudent years ago.
I for one am keeping an eye on those “destabilized” middle-class neighborhoods. Might have some good deals to be had.
Sure, no one is immune from the economic factors of the housing bubble. However, there are those of us who have tried to mitigate the damage from such economic factors and thus far, no bill to reward the frugal, no public outcry (save the blogs) for the prudent, and as a matter of fact, some disdain for BH’s for describing the water. What have we learned here folks?
Pressure on rents? I do believe we’ve discussed the “pressure” of new rental inventory on the market due to those who can not sell. The real pressure on rent, like housing, is income. You can not rent for more than the market will bear. If there’s a massive injection of income to cover a run up in rents commensurate with the run up in housing, I’ll concede. In the mean time, those on the verge of foreclosure that do rent, when foreclosed upon, add yet another home to the inventory. One thing will happen with that foreclosed on home. It will sit until the bank adjusts the price according to fundamentals.
"gte811i said...
...Just b/c a house goes into foreclosure doesn't nullify your rental contract!..."
it does in Virginia, according to the Arlington social services landlord-tenant unit or whatever it's called.
GTE I applaud your posts. Finally someone who has their head on straight. I've spent the last year reading a ton on the housing/mortgage bust. It's unfortunate to see what has happened to America. I'm shocked at the stupidity of most Americans. They just want to borrow and borrow and borrow to fuel their gluttonous consumption. I don't get it. I really noticed this when I moved from PA to VA 3 years ago. My friedns don't believe me when I tell them I have enough savings to not work for 5 years if i had to. I don't understand the amount of people living on the edge from paycheck to paycheck. Very few people seem to have self discipline or a sense of responsibility for their own predicaments anymore. i don't want to bail these idiots out. !@#$ em! Let 'em rot!
mm,
We may have a disagreement over terminology. If I didn't phase it correctly, I was trying to say that even with a foreclosure, your lease contract is still a binding legal agreement-with stipulates with what will happen should either party choose to break the lease-and the law still applies (i.e. no one is above the law).
Regardless of the foreclosure, you must legally still be given 30 days notice! Maybe 100 years ago, renters could get thrown out on the street in a day, but it is not LEGAL today to do that.
So while your lease can be terminated, the bank can not legally tell you to leave tomorrow. In fact, legally you can sue the lessor (your original landlord) in small claims court for any damages or expenses incurred because he breached his end of the contract, i.e. foreclosure. Granted it may be a long time before you see that money, but it can stay on the books for a long time.
Many renters will not go through the hassle of suing in small claims court b/c of either ignorance of the law, hassle, time & effort, or whatever else.
I'm the type of person that if you wrong me, I will come after you like a pit-bull, no matter what the cost to me. To me the money is immaterial, right is right and wrong is wrong, it's the principle that matters not the money.
grumman,
thanks, I appreciate your comments. It actually continually amazes me how many people share many of my same views, yet all we seem to get in this world is more of the same crap.
rant on
In a certain recent political race, someone actually stood up for real change, not the "change" that some people spout, but honest to goodness, let's get back to the basics, reverse course change.
No matter how many people I talked to that shared my views and liked many of the ideas espoused by this person, the vast majority of them said "well, he can't win", and thus he never did.
Until elections stop becoming popularity contests and people actually start voting for the ideas not the person or the "charisma" we will never get back to the basics.
Hardly anyone I talk to, be it work, school, church, avg. joe on the street, really likes either choice . . . yet we will end up with one of them and get more of the same. No one wants to break the mold, step outside the box, and actually vote for real change.
rant off
gte811i said...
rant on
In a certain recent political race, someone actually stood up for real change, not the "change" that some people spout, but honest to goodness, let's get back to the basics, reverse course change.
No matter how many people I talked to that shared my views and liked many of the ideas espoused by this person, the vast majority of them said "well, he can't win", and thus he never did.
Continue rant
Same here. Folks that I talked to agreed with what the “other guy” was saying 100%. Right down the line, point by point in agreement. Especially “back to the basics”, “back on track” kind of stuff. Yea, it might not be pretty at the start, but in time we can straiten it out. But you guessed it, “can’t win and you’ll just be throwing your vote away”.
Well, I plan to write the guy in. Sure enough I get the “just throwing your vote away spiel”. So let me get this straight. You don’t like the other two opponents, you agree with what the third guy is saying but will not vote for him, and I’m throwing my vote away? I honestly can not wrap my brain around what kind of people we have become.
Unfathomable.
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