Home
Cordova asked:
I am hearing it is becuase so many people are losing thier jobs. I am hearing it is because of sub-prime loans. Anyone close to the situation, real estate agent, mortgage folks and the like, please give me your take.
I am hearing it is becuase so many people are losing thier jobs. I am hearing it is because of sub-prime loans. Anyone close to the situation, real estate agent, mortgage folks and the like, please give me your take.
Tags: Jobs, Many People, Mortgage, Sub Prime Loans
July 28th, 2007 |
Tags: Jobs, Many People, Mortgage, Sub Prime Loans
July 29th, 2007 at 8:38 pm
over 400,000 in California, thats the largest amount of foreclosures by state
July 31st, 2007 at 3:31 pm
several places the ones you mentioned and the hybrid arms are resetting and these people just way over bought and since they had none of their own hard earned money in the home they are just walking away.
By Hybrid ARMS, these are loans that these people qualified to buy with what is negative amortization and the loans recast after 5 years. They were given options on how they could pay 4 different ways neg am, interest only, 30 year am.,and 15 year am. But these people chose not to even keep up with the interest in their notes and when these notes recast lets say the original was 100k now they owe 110k well if the home was sold at 100% loan on the purchase and now it is only worth with normal appreciation say103k they are now upside down on a home and they knew they were doing it to themselves all along but want to blame some one other than their own stupidity. So the foreclose and then that draws down the value in a neighborhood so the next person is stuck as well and that takes the value down as well and so on and so on. Yes when they purchased they had good intentions but there budgets were strapped as they bought more than they could afford so when given the option of what they would pay they chose the very least amount possible and said we will do better next month every month. Yes the subprime borrowers had something to do with it as they too over bought with the intentions of getting themselves more credit worthy but leopards do not change their spots and only 1 in 1000 mended their ways to become prime borrowers. The other sector in this was wall street as these were doing well and performing so they sold more and more of these types of securities and when that too fell apart look what has happened. To sum in all up it was GREED by every one involved that killed the golden goose since no one would stand up and say enough is enough. The last thing that did this was borrowers with zero savings in the bank to hold them over in tight times and we all have them so with nothing in the bank if there was a job loss or health problems they were 1 pay check away from being behind on every thing. The other thing in all of this and I see it all the time is instead of paying their mortgage on time and keeping a roof over their heads they will let it go deliquent in almost every case but pay the $800 car note and let the $600 house note go unpaid as stupid as that may sound ask any person who deals with credit files on a daily basis and you will see that I am spot on. The car is more immportant to them than having a place to lay your head at night and raise your family
I am a mortgage banker in TN & KY
August 1st, 2007 at 12:24 pm
The majority of foreclosures are coming from bad loans, ARMs and subprime loans. Of course there are some foreclosures because of job loss, relocation and such, but the majority are bad loans.
August 2nd, 2007 at 2:37 am
There are several sources:
1. Many Sub Prime Loans were 2-3 year arms that when adjusted increased payments by several hundred dollars.
2. There were many people who used stated income and lied about therir income and did not have the ability to pay, but were “fantasizing” about some random source of income appearing.
3. Many people used no doc loans and did not have the means to pay their mortgages.
4. Many people jumped on the investor bandwagon with no experience and when their tenants lost their jobs or couldn’t pay the rent for other reasons, the landlord lost the home.
5. Unemployment is pretty hiy and people are walking away from homes for lower costs areas or apartments.
6. Many people with traditional ARM’s had them adjust and although they weren’t as high as the sub prime increases, most of them were living check to check and couldnt afford even a $100 per month increase.
That is a good majority of it.
Hope that helps.