Third Wave of Foreclosures

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HerefordSire

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Look out below....

As job losses rise, growing numbers of American homeowners with once solid credit are falling behind on their mortgages, amplifying a wave of foreclosures.

In the latest phase of the nation’s real estate disaster, the locus of trouble has shifted from subprime loans — those extended to home buyers with troubled credit — to the far more numerous prime loans issued to those with decent financial histories.

With many economists anticipating that the unemployment rate will rise into the double digits from its current 8.9 percent, foreclosures are expected to accelerate. That could exacerbate bank losses, adding pressure to the financial system and the broader economy.

“We’re about to have a big problem,” said Morris A. Davis, a real estate expert at the University of Wisconsin. “Foreclosures were bad last year? It’s going to get worse.”

Economists refer to the current surge of foreclosures as the third wave, distinct from the initial spike when speculators gave up property because of plunging real estate prices, and the secondary shock, when borrowers’ introductory interest rates expired and were reset higher.

“We’re right in the middle of this third wave, and it’s intensifying,” said Mark Zandi, chief economist at Moody’s Economy.com. “That loss of jobs and loss of overtime hours and being forced from a full-time to part-time job is resulting in defaults. They’re coast to coast.”

Those sliding into foreclosure today are more likely to be modest borrowers whose loans fit their income than the consumers of exotically lenient mortgages that formerly typified the crisis.

Economy.com expects that 60 percent of the mortgage defaults this year will be set off primarily by unemployment, up from 29 percent last year.

http://www.cnbc.com/id/30929084
 

RD-Sam

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But Obama said everything would be OK, he said he has everything under control and things are looking up! :lol2:
 
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HerefordSire

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RD-Sam":24jx858q said:
But Obama said everything would be OK, he said he has everything under control and things are looking up! :lol2:

I work for a top 250 US corp. We just removed my buddy with 28 years with the firm last week. These are not layoffs this time. Market on verge of crash because of the 10 year US treasury spread is too wide so expect money to close the gap to come from equities.
 
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HerefordSire

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TexasBred":99yiyqah said:
And we haven't even got to the commercial market yet.

The slowdown has gotten to commercial in a major league way....just not allot of defaults yet. There sure are allot of heads flying.
 

grannysoo

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HerefordSire":20jxkg9b said:
TexasBred":20jxkg9b said:
And we haven't even got to the commercial market yet.

The slowdown has gotten to commercial in a major league way....just not allot of defaults yet. There sure are allot of heads flying.

I think the whole lot of you just don't know what you're talking about. After all, in todays paper, we have an AP article out of Washington DC that states that most economists see recession ending by the end of this year. They state that things are soft, but stabilizing. In the same breath, they state that employment is going to continue to go up, business will stay cautious, and more bankruptcy will be coming.

So.... to all of you cowboys that know it all, you've got to learn to talk out of both sides of your mouth before I'm going to give you any credibility. Isn't that what they call "doublespeak"? :dunce:

Have you heard about the "phantom" properties that the banks have in inventory? Seems that they have tenants or whatever living in them, so they are not having to do the upkeep and it keeps the code departments off of them. The figure given on that was 1.9 million properties that the banks haven't foreclosed on YET, but are going to.

And as to commercial, look at all the empty slots in the malls and strips. It's only a matter of time before you're going to see a lot of problems and foreclosures there.

The fat lady has not even started warming up yet, much less sang. We've got a long way to go...
 

Lammie

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What kills me is that there is all kinds of empty retail space around here and yet we continue to build more! Two new strip malls here in Alvarado, half of that space, or more, vacant, and more coming in. Why can't those retailers take old space and reuse it? It must be cheaper and you are still employing people to do the work. Not all space would be usable like that but it has to be better than another vacant strip mall. Go to all that retail area where Fort Worth and Burleson meet and there's a LOT of empty space there. More coming.

Same thing with houses. People don't want to buy existing housing, they want to move off and build a new McMansion.

What we consider as a decent standard of living is just out of control. When I think of new houses that were built when I was a kid, well, no one would live in most of them now because they don't have a media room.

I do. It's called a living room. There's a television in there. Knock yourself out.
 
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HerefordSire

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grannysoo":qsiumad9 said:
HerefordSire":qsiumad9 said:
TexasBred":qsiumad9 said:
And we haven't even got to the commercial market yet.

The slowdown has gotten to commercial in a major league way....just not allot of defaults yet. There sure are allot of heads flying.

I think the whole lot of you just don't know what you're talking about. After all, in todays paper, we have an AP article out of Washington DC that states that most economists see recession ending by the end of this year. They state that things are soft, but stabilizing. In the same breath, they state that employment is going to continue to go up, business will stay cautious, and more bankruptcy will be coming.

So.... to all of you cowboys that know it all, you've got to learn to talk out of both sides of your mouth before I'm going to give you any credibility. Isn't that what they call "doublespeak"? :dunce:

Have you heard about the "phantom" properties that the banks have in inventory? Seems that they have tenants or whatever living in them, so they are not having to do the upkeep and it keeps the code departments off of them. The figure given on that was 1.9 million properties that the banks haven't foreclosed on YET, but are going to.

And as to commercial, look at all the empty slots in the malls and strips. It's only a matter of time before you're going to see a lot of problems and foreclosures there.

The fat lady has not even started warming up yet, much less sang. We've got a long way to go...

I am not sure what is going down. My firm is publicy traded and has increased the dividends for years and years and still expects to. However, something is different. Multi-year employees with allot of experience, many with 4 weeks paid vacation per year, are all of the sudden no longer employed here.
 
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HerefordSire

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Lammie":1cwe9sig said:
What kills me is that there is all kinds of empty retail space around here and yet we continue to build more! Two new strip malls here in Alvarado, half of that space, or more, vacant, and more coming in. Why can't those retailers take old space and reuse it? It must be cheaper and you are still employing people to do the work. Not all space would be usable like that but it has to be better than another vacant strip mall. Go to all that retail area where Fort Worth and Burleson meet and there's a LOT of empty space there. More coming.

Same thing with houses. People don't want to buy existing housing, they want to move off and build a new McMansion.

What we consider as a decent standard of living is just out of control. When I think of new houses that were built when I was a kid, well, no one would live in most of them now because they don't have a media room.

I do. It's called a living room. There's a television in there. Knock yourself out.

Just guessing....usually, statistics and demographics are good reasons why some spaces are not reused. On top of that, Texas is one of the most financially healthy states (oil and gas) and has allot of open area being the second largest state in the country.
 

MO_cows

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Well said, Lammie.

So many people are living way beyond their means on credit. Can I afford a $3000 flat screen tv? No, I don't have $3000. But wait, you say it's only $50 a month, why yes, I can afford that. And so on. There's a radio commercial for debt consolidation that runs all the time here, it says the average American family has over $20,000 in credit card debt. It makes me wonder how they sleep at night! :shock:

Everyone was pushing the envelope as hard as they could because you could have anything your heart desired on payments, and your house was going to double in value every 10 years and keep you solvent, and so on. And apparently the business world was over-extending itself just as badly if not worse. Well, now the bubble has burst.
 

Jogeephus

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MO_cows":2z5gxewn said:
Everyone was pushing the envelope as hard as they could because you could have anything your heart desired on payments, and your house was going to double in value every 10 years and keep you solvent, and so on. And apparently the business world was over-extending itself just as badly if not worse. Well, now the bubble has burst.

And fueling the wildfire is the tax code. How many people or businesses did you know that bought stuff just to keep from paying taxes? To me, this fuels irrational business decisions just to play with numbers to manipulate a tax return.
 

Ryder

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I am ot diagreeing with anything that has been said, but history shows that that things cycle up and down. Over and over.
Our brilliant leaders cannot stop these cycles, but they can and do make them worse by trying to tamper with them.
 

larryshoat

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Jogeephus":10bhdlqe said:
MO_cows":10bhdlqe said:
Everyone was pushing the envelope as hard as they could because you could have anything your heart desired on payments, and your house was going to double in value every 10 years and keep you solvent, and so on. And apparently the business world was over-extending itself just as badly if not worse. Well, now the bubble has burst.

And fueling the wildfire is the tax code. How many people or businesses did you know that bought stuff just to keep from paying taxes? To me, this fuels irrational business decisions just to play with numbers to manipulate a tax return.

That's exactly right, the tax code encourages debt. If a business needs equipment, it very hard to justify not updating that equipment, but rather mail off a check to the IRS. If the tax code were written to reward paying off debt, then more people would.

Larry
 

MO_cows

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I remember my great-uncle would get a new tractor or combine pretty often. He would buy his personal car used and then keep it for years and years, but he always had nice shiny farm equipment. Perhaps he wasn't just eccentric, he was adjusting his tax bill???

If it were suggested that we put the current tax code on the compost pile and implement a simple, no loophole low-percentage flat tax along with a federal sales tax, would that be too political and cause the thread to be locked? It's already drifted from the point HS was trying to make.........
 

Jogeephus

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In my opinion a flat tax would be good. What concerns me about today's economy is the unemployment rate. If I understand this correctly, unemployment benefits have an expiration date on them. When they expire, then I think we will see how bad things really are unless someone pulls off a hail mary and turns things around.
 

1982vett

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MO_cows":2t09shsy said:
If it were suggested that we put the current tax code on the compost pile and implement a simple, no loophole low-percentage flat tax along with a federal sales tax, would that be too political and cause the thread to be locked? It's already drifted from the point HS was trying to make.........
My thoughts on this is it probably would be well recieved if the government could be trusted. I think most realize that it wouldn't be long before that "low" tax rate would start creaping up and up. Then they would probably start tinkering with the amount of taxes paid on certain items purchased.

It is easier to keep the fox you know in the hen house instead of getting new ones you don't know.
 
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HerefordSire

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MO_cows":2jgxe5z5 said:
Well said, Lammie.

So many people are living way beyond their means on credit. Can I afford a $3000 flat screen tv? No, I don't have $3000. But wait, you say it's only $50 a month, why yes, I can afford that. And so on. There's a radio commercial for debt consolidation that runs all the time here, it says the average American family has over $20,000 in credit card debt. It makes me wonder how they sleep at night! :shock:

Everyone was pushing the envelope as hard as they could because you could have anything your heart desired on payments, and your house was going to double in value every 10 years and keep you solvent, and so on. And apparently the business world was over-extending itself just as badly if not worse. Well, now the bubble has burst.

I could be wrong but this is what I see. There are "haves" and "have nots". Of the "haves", there is new money and old money. The new money could be lottery winnings, oil and gas proceeds, or signing a new professional contract, etc. The old money is in the form of paper, or intangible assets, and inherited from generation to generation. This division involves control of politics and the media...so your statement above, although it may be correct, could be what the "haves" want you to think or do.
 

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