Welcome to ASFN Fan Forums! We're glad to have you here. Please feel free to browse the forum. We'd like to invite you to join our community; doing so will enable you to view additional forums and post with our other members.
Registered Members don't see these ads. Register now it's free!
South Florida's booming mortgage foreclosure scene
NOt good.
Quote:
By Paul Owers and Georgia East | South Florida Sun-Sentinel
February 25, 2008
South Florida's housing troubles are playing out in dramatic fashion along the 7900 block of Ramona Street in Miramar. Since last year, nine of the 37 homes on the tree-lined street have slipped into some stage of foreclosure.
"It's really, really quiet now," said Maria Dennett, 53, who moved here 17 years ago. "Really, really quiet."
The housing slump and foreclosure crisis are having a devastating effect on many neighborhoods across the region. Neighbors are left to look out at weeds and overgrown shrubs, at least until lenders unload the foreclosed homes at a loss, potentially reducing nearby property values. In other cases, residents are being hit with higher homeowners association fees to make up for those who are not paying.
"As defaults mount, the pain spreads," said Mike Larson, a housing analyst with Weiss Research in Jupiter. "Nobody wins in foreclosure. Not the lender, not the borrower and, unfortunately, not the neighbors, either."
The number of homeowners facing foreclosure more than tripled in South Florida last year, many becoming overwhelmed when their adjustable-rate mortgages reset much higher.
Luz Soto, who has lived on Ramona Street for 2 1/2 years with her husband and two teenage children, worries about her family's future.
Soto, a first-grade teacher who moved to Miramar from Hialeah, bought her three-bedroom, two-bathroom house for $280,000 with an interest-only loan. She had hoped to refinance by the time the interest rate rose, but the housing slump is putting a crimp in that plan. Her monthly payments jumped from $1,800 to $2,500.
Worse yet, her payments could increase by another $700 this year, Soto said. If things don't improve, Soto said her family may have to consider leaving Florida.
"This has been so stressful," she said. "I'm just running into a brick wall."
Miramar officials are getting more calls about dirty, mosquito-filled pools and overgrown lawns at foreclosed properties. The city can't recoup the costs of mowing and maintenance, so code-enforcement officers concentrate on the most serious cases that endanger public health and safety, said Julie Fear, Miramar's supervisor of code compliance.
"We've been trying to keep up," she said. "But it has been quite the trick. It's not getting any better."
The foreclosures on Ramona Street, south of Pembroke Road, have "stuck out like a sore thumb," Fear said. The middle-class neighborhood has turned transient, and residents say they have noticed more break-ins and late-night moving vans pulling up to foreclosed homes.
Ramona's mostly single-story concrete and wood-frame houses were built in the 1960s. The homes, featuring circular driveways and fruit trees in the front yards, rose in value during the boom years to $250,000 or more. But prices are falling to less than $200,000 as the foreclosures mount and the real estate slump worsens.
Caribbean immigrants and Hispanics, particularly from Miami-Dade County, have settled on and near Ramona Street in recent years. The area in east Miramar is one of the older sections of the city, in contrast to the rows of manicured homes with barrel-tile roofs that sprouted west of Interstate 75 during the 2000-to-2005 housing boom.Coldwell Banker agent Stu Pall in Plantation has a foreclosure listing on the street for $199,900, while other houses there are advertised for even less.
"A lot of people want to live on Ramona and the neighboring streets," Pall said. "I'm getting numerous calls. It's because of the price. The only houses that are really moving now are the ones at $200,000 and under."
Last year, Miramar started a foreclosure prevention program that allows the city to lend as much as $10,000 to a property owner facing foreclosure because of unforeseen circumstances, such as a job loss, death of a spouse or divorce.
But city officials say many of the homeowners who want the help can't qualify because their hardship is linked to increases in their adjustable-rate mortgages. That's not considered an unforeseen circumstance.
"Unfortunately, this program is having a limited impact right now," said Gus Zambrano, Miramar's economic development and revitalization director. "These are tax dollars, and we have to be very cognizant in how they're spent."
He said the push now is to educate future homeowners about the dangers of adjustable-rate loans and subprime mortgages, which feature higher rates.
"It's a big problem and on the news every day," Zambrano said. "Banks were taking a lot of risks because they could. It was a frenzy, almost like a drunken stupor. Nobody was saying, 'Stop it,' at the time."
Database Editor John Maines and Database Specialist Ryan McNeill contributed to this report.
Florida is ground zero for the sub-prime lending mess. That state has about 15 micro-markets -- it's hard to analyze the area as a whole state -- but most of those micro-markets will take longer than the rest of the country to recover. They will take the brunt of it, but the good news for Florida (like Arizona, California, and Nevada): People in other states still want to live and work there.
The housing market in some areas in Florida have started to rebound. Sarasota (near Tampa Bay) has already leveled out and prices have begun increasing again. It should take at least another 5 years for the rest of Florida to level out and start climbing once more.
Nevada was the first state to get hit hard by the foreclosure bug and it is also the first state climbing out of it. Just one big cycle.
Lost in all of this is Arizona and Nevada are typically in the top 5 in the country for foreclosures every year. Cheap land + flucuating job market + massive growth + 30 years of cavalier lending practices = people buying homes who should be renting below their income level and saving money.
Lost in all of this is Arizona and Nevada are typically in the top 5 in the country for foreclosures every year. Cheap land + flucuating job market + massive growth + 30 years of cavalier lending practices = people buying homes who should be renting below their income level and saving money.
Also people tend to forget that the foreclosure rate in Nevada is about 98% Vegas.
The Reno/Tahoe area is affected but nowhere near the same way Vegas is.
__________________ "I carry a gun because a cop is too heavy".
My wife and I keep up with the trends around Oregon and are always in the market for another house. When we were hunting for our 2nd as the boom had died down here, 80% of the houses we viewed (About 150 over a one year period) were for sale because of divorce. Most of those owed more than the current value of the home because they had the house less than 2 years, or took out a 2nd mortgage/loan based on the value at the time for upgrades or just to keep up. So the price drop seemed to cause as many or more problems as these interest jumping loans.
In talking to these folks, one thing really stood out to me. Many of these couples bought their home when they had two incomes, and then wanted to start a family so one of them left their job as a child came into the picture. I don't get how they thought they could afford a home and starting a family on one income when they needed two to buy the place.
When my father had his own business he was always complaining about young folks expecting to start out at the top these days. That many seem to have this expectation of high salary right out of the gate rather than working their way up like he had too. During our conversations with these people I was almost always left remembering his words. Why did these people think they needed it all just because someone would give them a loan they couldn't afford?
My wife and I keep up with the trends around Oregon and are always in the market for another house. When we were hunting for our 2nd as the boom had died down here, 80% of the houses we viewed (About 150 over a one year period) were for sale because of divorce. Most of those owed more than the current value of the home because they had the house less than 2 years, or took out a 2nd mortgage/loan based on the value at the time for upgrades or just to keep up. So the price drop seemed to cause as many or more problems as these interest jumping loans.
In talking to these folks, one thing really stood out to me. Many of these couples bought their home when they had two incomes, and then wanted to start a family so one of them left their job as a child came into the picture. I don't get how they thought they could afford a home and starting a family on one income when they needed two to buy the place.
When my father had his own business he was always complaining about young folks expecting to start out at the top these days. That many seem to have this expectation of high salary right out of the gate rather than working their way up like he had too. During our conversations with these people I was almost always left remembering his words. Why did these people think they needed it all just because someone would give them a loan they couldn't afford?
I'd add in the demand for larger homes. Used to be a 2500 sq.ft. house was considered large. Now everyone wants 3000-3500 sf. even though 2500 is plenty of house.
I'm still surprised that the median price of a home in some areas of Phoenix is 6-8 times the median household income. Here it is only 3-4 times. How did anyone afford to buy at those ratios?
__________________
5-11 with 'em. 5-11 without 'em.
I'm still surprised that the median price of a home in some areas of Phoenix is 6-8 times the median household income. Here it is only 3-4 times. How did anyone afford to buy at those ratios?
First, there's an unusual disparity of incomes in the Valley. The undocumenteds have skewed data, and they are very poor. As we're learning, they also manned as many as 20,000 low-wage jobs in Phoenix. There are good number of two-income homes exceeding $100K a year.
But the ratio that matters is debt-to-income, and since the majority of those home loans were conventional (insured by Fannie Mae and Freddie Mac), the loans had to be secured entirely by income and low interest. FNM and FHLMC have tighter d-2-l ratios than FHA or VA but higher sales price caps.
A 28/36 loan-to-debt ratio means the most a home with a $60,000 household would be allowed to spend on total housing costs (PITI + HOA) is $1,400 and housing + recurring debt (not including insurance) $1,800 mo. on a $5,000 mo. gross. Since most two-income houses have at least one car payment exceeding $300, credit card debt exceeding $100 min. mo., and probably more than one card, department store card, etc., the ONLY way those loans are being issued is if the interest starts out low enough to get those numbers into the ratio. So let's say we start you out at 3 percent with a massive adjustment in 12 to 36 mos., now you start off with a payment in your wheelhouse, even if you won't have paid a dime against the principle in that time period and the adjustment will be even higher monthly than if you had come in with a little money down and negotiated a moderate fixed rate.
There you go. Negative amortization in a nut shell. Puts people in great debt and upside down in their home loans. Do that 60,000 times in one market and see how fast you can kill the market when those loans come due.
Hey, but at least you followed the letter of the lending law.
First, there's an unusual disparity of incomes in the Valley. The undocumenteds have skewed data, and they are very poor. As we're learning, they also manned as many as 20,000 low-wage jobs in Phoenix. There are good number of two-income homes exceeding $100K a year.
But the ratio that matters is debt-to-income, and since the majority of those home loans were conventional (insured by Fannie Mae and Freddie Mac), the loans had to be secured entirely by income and low interest. FNM and FHLMC have tighter d-2-l ratios than FHA or VA but higher sales price caps.
A 28/36 loan-to-debt ratio means the most a home with a $60,000 household would be allowed to spend on total housing costs (PITI + HOA) is $1,400 and housing + recurring debt (not including insurance) $1,800 mo. on a $5,000 mo. gross. Since most two-income houses have at least one car payment exceeding $300, credit card debt exceeding $100 min. mo., and probably more than one card, department store card, etc., the ONLY way those loans are being issued is if the interest starts out low enough to get those numbers into the ratio. So let's say we start you out at 3 percent with a massive adjustment in 12 to 36 mos., now you start off with a payment in your wheelhouse, even if you won't have paid a dime against the principle in that time period and the adjustment will be even higher monthly than if you had come in with a little money down and negotiated a moderate fixed rate.
There you go. Negative amortization in a nut shell. Puts people in great debt and upside down in their home loans. Do that 60,000 times in one market and see how fast you can kill the market when those loans come due.
Hey, but at least you followed the letter of the lending law.
Thanks, I've been trying to understand how all those people could qualify for mortgages in California,Nevada and Arizona on homes that cost 2-4 times as much as in Texas.
Interest only loans are no big deal, as has been said many times you don't pay much principal the first 20 years on a conventional mortgage, it is the huge jump in interest rate that has caused the problem.
We've had to deal with payment increases in Texas for years because of our high property tax rates. Every year the tax appraisals increase so does your monthly payment. I assume that is the reason we didn't see as much of the housing boom and weird loans here. The lenders probably couldn't lower rates enough to offset the $1000s of dollars in annual property taxes.
__________________
5-11 with 'em. 5-11 without 'em.
We've had to deal with payment increases in Texas for years because of our high property tax rates. Every year the tax appraisals increase so does your monthly payment. I assume that is the reason we didn't see as much of the housing boom and weird loans here. The lenders probably couldn't lower rates enough to offset the $1000s of dollars in annual property taxes.
Arizona and Nevada have loose banking/lending laws. There are financial groups in California and Oregon who incorporate first in Arizona because they'd rather be sued here than in those states. Texas has tight lending laws. Or had. Some of them were changed in 2003 (specifically line of credit secured by equity) to respond to the growing refi industry. Texas isn't in horrible shape compared to other states, but sheer numbers, I'm betting there's more Texans hurting because of sub-prime mess than all of Arizona.
Arizona and Nevada have loose banking/lending laws. There are financial groups in California and Oregon who incorporate first in Arizona because they'd rather be sued here than in those states. Texas has tight lending laws. Or had. Some of them were changed in 2003 (specifically line of credit secured by equity) to respond to the growing refi industry. Texas isn't in horrible shape compared to other states, but sheer numbers, I'm betting there's more Texans hurting because of sub-prime mess than all of Arizona.
That would be true as Texas had more than twice as many foreclosure listings as Arizona in 2007. But then Texas has 4 times the population. Interestingly Texas foreclosures fell 4.57% in 2007 compared to 2006.
__________________
5-11 with 'em. 5-11 without 'em.
The Crash That's Coming: More Bubbles Are Turning "There Will be Blood" From Fiction To Prophecy February 26, 2008 By Danny Schechter
Now that that this year's Oscars are history, imagine if you will, an awards ceremony honoring not the best of the best but the worst of the worst, not just spinoffs like the "Razzies" (the Golden Razberries) for movies. Who should we single out as the biggest slime balls and sleazoids who caused the most damage to our society in the year gone by?
Can you envision an Academy Award like statuette to "honor" the people we should be despising the most?
The political among us will immediately visualize potential awardees among our own devil incarnates. On the liberal left, perhaps it would be that dick Cheney or even Bill O' Reilly; on the right that ever evil Bubbaman, Bill Clinton, or the liberal media's NY Times might be pounced on by the "wingers," like red meat, at least before the recalls.
Others would conjure up offending glitterati, easy targets like Paris Hilton or Lindsey Lohan, and others among the most photographed famous for being famous non-functionals among us.
We all have our personal top ten lists of the big enchiladas we love to hate. Bashing Bush, as a recreational sport is fading across the spectrum, as his approval ratings continue to fall and his "power" is seen more and more as a joke.
My guess is that few among us would know who to name among the real decision makers, the truly powerful-financiers, traders, corporate honchos-who have taken our once prospering economy and flushed it down the toilet. Why not honor the investment banker who lost the most, the predatory lender who stole the most, and the regulators who were asleep at the switch. If we can't put Wall Street on Trial, we can at least shame the masters of the universe with scorn and satire.
For reasons that have everything to do with proclivities of our press, our distracted culture, and the persistence of traditions among the politically active, most of us think that the White House is the only epicenter for change. We focus on political change and ignore the economic interests and wheeler/dealers who that set the parameters -and limits---for what politicians can accomplish.
Look around. Check out your rising credit card bills with their ever rising fees and interest. Inflation is driving prices up, not only at the pump but at grocery stores and shopping centers. Jobs are harder than ever to find in part because of outsourcing and layoffs, in part because a decline in investments in industries that hire and pay well. Travel abroad and you'll weep at how little your dollars can buy.
While economists worry about "staving off" a recession, some parts of the country are already -wash my mouth out with soap for saying this---in a depression. (Analysts at investment banks say the recession is here!) Please forgive my use of "the 'D word" even if economists are looking back to 1933 to come up with ideas for how to stem the free fall in housing values. Already, Former Treasury Secretary says this may be the "worst crisis in housing finance since the Depression."
Fear of economic collapse is replacing fear of terrorism. The real homeland insecurity these days is to be found among the two-to five million (yup, the number has been expanded) American families who are in danger of having their homes foreclosed. Add in all their tenants and their neighborhoods---because when one house goes, property values decline next door and the tax base quickly erodes.
California is among the hardest hit states, a reality not mentioned at the Academy awards, of course, probably because Beverly Hills and Manhattan real estate are not feeling the pain yet. Home ownership is part an industry that sells the American dream, and Hollywood is known as the Dream Factory. MArion Cotillard, the french actress who won for Best Actress said her award showed that "it is true there are angels in this city. " LA is known as the City of Angels,"
Oui, moi Cherie, mon amour, there are good guys but also bad institutions.
Very bad!
While she was having a beautiful emotional moment in front of a global audience, 650,000 foreclosed properties were for sale in California according to RealyTrac, the company that is tracking this slow-motion disaster. That was an increase of 177% over the year before. 9821 California homes went into foreclosure just this past January, says another research firm, representing about $8 billion in value. Over 25,000 homes are in pre-foreclosure in Los Angeles alone as of Oscar Sunday. Nationwide, 1.7 Million homes defaulted last year.
Most of these homes were owner -occupied, so we are not just talking about an abstraction but millions of real people, disrupted lives and dreams for families affecting schooling and even voting because most registrations are residential. This problem has been called a "50 State Katrina."
And most of these homeowners are likely in deep debt now that they can't use their homes as ATM machines to pay off their credit card bils. Even as credit cards are being talked about as the next bubble to burst, the Oscar telecast on ABC hyped credit cards as marketed by Master Card. They were a major advertiser among all the talk of the greater glory of American entertainment.
Priceless!
Many of our media outlets were themselves have taken in millions in ad revenues from ads for deceptive lenders and get rich quick schemes. The media has been encouraging Americans to shop till we drop and go more deeply into debt. Even a recent Superbowl broadcast ran cool but misleading ads by Ameriquest, a loan company that has since imploded along with credit card companies and mortgage hustlers. And now the Oscars lend their "credibility" to the plastic prison.
Many of those who borrowed themselves into a modern form of serfdom didn't realize how much they would have to pay. They are the new victims of downward mobility. No wonder most marriages break up under this kind of stress. Late night TV is filled with commercials for debt consolidation because these companies know how much anxiety and sleeplessness afflict those in debt. This is the pervasive personal nightmare that the media profits from. Maybe they should win one of our anti-Oscars.
Two years ago, I began researching a documentary IN DEBT WE TRUST (Indebtwetrust.com) to explain the growing debt burden that Americans are buried under. The film warned of the crisis to come and spotlighted subprime lending as one of its causes.
Few distributors were interested. The subject was considered "boring." When it came out last year, it was marginalized; now it is being hailed by some as prophetic. Initially a San Francisco newspaper dismissed it as "alarmist" but, later, one cable channel compared it to the movie Carrie suggesting this subject is even scarier. Many schools, organizations and community groups are now screening the DVD to spread awareness of the problem.
While we imagine the kind of awards show that might call more attention to the rogues and scammers in our midst, one of the world leading business newspapers, The Financial Times suggests that movies on this subject are welcome. In an editorial titled "CREDIT SQUEEZE - THE DISASTER MOVIE," the FT compared the credit "squeeze" to "the plot of a hundred disaster movies," writing, "the longer this goes on, the greater the risk to the real economy."
Sadly, it is still going on and deepening with no signs of abating.
"News Dissector" Danny Schechter blogs for Mediachannel.org, His film In Debt We Trust spawned the action website StopTheSqueeze.org. He's written a now book on the crisis called "We Are Screwed" looking for a publisher. Comments to Dissector@mediachannel.org
Cosmic Defender Champion!
Tetris Champion!
