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CNN - Foreclosures plunge 27% - biggest drop on record!

Discussion in 'Political Discussion' started by PatriotsReign, Mar 10, 2011.

  1. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    Please consider this article as just more evidence that our media (and our gov't) continue to slant economic news in an overly positive light.

    Despite the headline "Foreclosures plunge 27% - biggest drop on record", if one reads the actual article, all it does is discuss how bad the housing market truly is and how the foreclosure numbers are misleading. It says that banks are just slowing the process down to make sure they have the proper documents.

    But for those who just glance at the headline, at least they'll get a nice glow from a false sense of hope...

    Foreclosure filings plunge 27% compared to last February - Mar. 10, 2011

    "That was the biggest year-over-year decline the company has ever recorded. But the improvement may be exaggerated, according to RealtyTrac CEO James Saccacio, who traced some of the decline to the fallout over robo-signing issues.

    The foreclosure fall flew in the face of other housing market reports that made it clear that housing is far from being out of the woods. S&P/Case-Shiller reported that prices are going down, and Zillow, the real estate website, said nearly 30% of borrowers with mortgages owe more than their homes are worth."


    For those who have the stomach to watch/listen to an interview with Michael Feder, you can easily understand the bleak picture that is our housing market.

    Excerpts:

    "We are terribly concerned with what is ultimately the pain that has to be taken. The number could approach aggregate mortgages 5 or 6 trillion dollars. The question is how much of that is overhang and how much of it has to be written off."

    "NAR says based on inventory and absorption rates we have little over 8 months supply. The reality which you add up all the houses for sale, houses vacant not yet on the market, houses underwater, seriously delinquent, in foreclosure, almost in foreclosure, the number is closer to 60 months, 5 years"

    "Who is going to absorb the foreclosed homes?"


    Feder Interview on Housing - Video - Bloomberg
     
    Last edited: Mar 10, 2011
  2. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

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    ...meanwhile, also consider the fact that nobody has been buying since at least 08, although those tepid sales are measured against the top of a bubble. Devil's advocate position. While liquidity is creeping back in you still need way better credit to borrow - way better than you've needed in decades.

    So here we are with the overhang, and nobody wants to lend, but are grudgingly allowing for the lending to resume as public money is pumped back into the public's hands through stimulus measures. Unemployed guy has a check, grocery driver guy keeps his job, store assistant manager makes enough money to go from renting to buying, and if he isn't still waiting for prices to plummet again, 1 more unit goes off the market.

    Question - what does a foreclosure moratorium do to the markets? That is, other than how much you and I and everybody would hate being the good people who pay their mortgage while the other guy skates?

    Just in market terms without thinking psychologically or morally... then we can go back and factor in the effects of moral hazard, because I don't just disregard that.

    So again, in market terms -- what if we have a moratorium on foreclosures for, let's say, 3 years? (Or a tightening on requirements, similar to the tightening up of the bad paperwork that people are finding they can't use to evict delinquent borrowers?)

    PFnV
     
  3. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    All great questions! And as you know, nothing in economics happens in a vacuum. It's a "ying & yang" thing from top to bottom.

    Putting a moratorium on foreclosures could result in any or all of the following:

    -The economy continues to stagnate
    -Housing unit inventory falls
    -Home prices rise or stay flat
    -People stop paying their mortgage. Especially those who are deep under water
    -Home builders slowly begin to build again (due to slowly diminishing supply)

    And I could add to the above list, but those are the obvious results.

    The catch here PFiVA is, we'd all know the moratorium would come to an end in 3 years. And we also know, when the 3 years is over, prices will fall and fall fast.

    None of the above results of a moratorium would put people back to work. And we have to acknowledge that the #1 contributor to unemployment AND our economic recession is our depressed real estate market.

    After all, it is "THE REASON" we are where we are today. Nothing affects our economy like home sales. People buy funiture and appliances, drapes, rugs, new floors, paint, paint brushes, drop cloths, ladders, "Welcome Home" signs and cute little napkins to go on the new dining room set...hey, maybe even a pool table...I think you get the picture here.

    But a moratorium isn't going to stimulate home SALES, change the unemployment picture or even drive the economy back into prosperity. It would just slow things down, which may even be worse than allowing foreclosures to continue.

    On another note. Lets say Schiller is right about home prices falling another 15-30%. I was one of those who actually did purchase a home in 2010. Would I stay in my home if it's value dropped $60-$90k? Would that be the "moral" thing to do?

    I don't know, but let's ask ourselves what our banks did when the RE market crashed.

    WOW!! They didn't lose much because WE bailed them out! So it's us (and I think you agree) who's left holding the bag. And I'll tell right now, if my home drops 25%, I think I'll just walk away and buy another house for way less money. You may ask, "how will you do that when your credit will be in the tank?". Well, I'm already discussing buying a home with my parents (with an in-law) in the near future. They currently live in a "Cape-style" home and my siblings & I prefer they move into a one-story home to avoid going up & down stairs. But it's their choice and they have already said they want to do it. So we'll buy a home and put it under their names if we have to.

    Would I be/feel irresponsible for doing that? Not in the least. As a matter of fact, I think it would be "the right thing to do"

    P.S. I would like to read your opinions on how our economy and our people would benefit from a 3-year moratorium on foreclosures. How would it help the real estate market, consumer spending, unemployment and ultimately, our economy?
     
    Last edited: Mar 10, 2011
  4. Mrs.PatsFanInVa

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    #24 Jersey

    Good, PR, you do that. And forgive me if I hope your parents end up in a nursing home and all of their assets, including "your house" get eaten in nursing home care - because you can't do both things you've said you're going to do....one of which being, as you've told us previously, having your parents put their home and everything else they own in their children's names before the Medicaid "look back," period and now this, buy a home for yourself and put it in your parent's names.

    And you can call me nitpicky all you want but I'll tell you right now, I don't judge you any less harshly than you judge anyone poorer than you who scams the system by going to an ER without insurance or collecting food stamps while working a "cash only" job.

    One scam at the taxpayer's expense is no different than any other scam at the taxpayer's expense - the only thing that separates them from you is necessity vs greed.
     
  5. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    Tisk, tisk, tisk now MrsP:nono:

    You're misrepresenting me here, so I need to set you straight.

    The FACT that my parents decided to put their money in their children's names has NOTHING TO DO WITH ME.

    My father's parents did the same thing for him and his siblings, so if you want to "RANT & RAVE", which you are, then aim it in my elderly parents' direction, not mine.

    But my, how I do love your spunk!;)

    By the way, my parents will sell me "Our" house shortly after we move in. There are ways around everything MrsP...just ask our wealthy class! At least I have the $8K from my "first time home-buyers stimulus" so I can pay for our closing costs!
     
    Last edited: Mar 10, 2011
  6. The Brandon Five

    The Brandon Five Experienced Starter w/First Big Contract

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    #75 Jersey

    Part of the reason that credit is tight is because of newfound aversion to lending risk (now that they can't pass it on to third-party rubes). A moratorium on foreclosures will raise the cost of borrowing (more risk to the lender) and make available credit even tighter (investors/lenders worry about return OF their principal as well as return ON principal).
     
  7. The Brandon Five

    The Brandon Five Experienced Starter w/First Big Contract

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    #75 Jersey

    The transfer of assets might have had "nothing to do with you" (really, no paperwork?), but if they enter a nursing home you should rightfully use those funds to pay for their care and not pass it on to your fellow citizens (or more to the point, not pass it on to the next generation who have enough cleaning up to do).
     
  8. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    No, I personally did not engage in any "paperwork", but my sister did.

    God only knows if my parents will need to be put into a nursing home or not. But based upon your logic, the average middle-class family shouldn't inherit anything from their parents if their assets need to be used to pay for nursing home costs, but at the same time, those who are WEALTHY can leave their assets to their children because, well, I guess it's because they're wealthy, right?

    Using your and MrsP's logic, very few lower middle-class parents would be able to leave anything for their children or loved ones. In my opinion, it is FAR more important for middle class parents to be able to pass something on their children than it is for those that are wealthy. That isn't acceptable to me, but maybe it is to you.

    Let's say that parents of a typical lower to moderate middle class family has $200,000 dollars in assets that they want to leave to their children. The fact that they are able to do this gives them both a sense of pride and peace. They have 4 children, none of whom are financially secure and are scrambling to save enough money so they don'thave to retire in poverty. In this example, both parents need nursing home care and all of that is wiped out, leaving nothing for their children.

    While the family 2 towns over have amassed over $2 million in saving and will be able to leave over 90% of it to their children despite the fact that all of their children are very wealthy as well.

    If you can rationalize that for me, I'd love to read it. I'll allow you to state your case.

    If your rationale is, "Hey, life isn't always fair", then don't waste our time.
     
    Last edited: Mar 10, 2011
  9. Mrs.PatsFanInVa

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    #24 Jersey

    I wonder what it does to a person's feeling of "pride and peace" to know that they are spending their dying days on welfare - usually a principal of life that they've lived their whole lifetime trying to avoid?

    I wonder what it does to their "pride" to know that a large majority of taxpayers think they (and their children) are deadbeats and welfare-cheats?

    What a very peaceful knowledge to spend your last years thinking about......

    Interesting that you think it's ok for you to do because those you so admire, the wealthy, also find legal loopholes to slip through. Why is it you do not admire the welfare mother who has one more child so that her welfare check increases, too? After all, you're all living off the legitimate taxpayer's dollar. You've all scammed the system. What's the difference between the three, PR? The degree of magnitude?

    Besides which, you're ragging on us for the wrong thing. We've never said we think it's ok for the wealthy to escape paying their fair share so any comparison you're trying to make is moot. We've been consistant in saying that the $2million dollar family ought to pay taxes on their inheritance just as we're saying that all people are responsible 100% for their own care before leaving an inheritance.

    You can rationalize it all you want - they don't call it "hiding your assets" for nothing. People who do it are cheating those who do not. It's that simple.

    And you may insist all you want that "you" had nothing to do with your parent's decision to hide their's - but there's no way in hell you can deny that your "plan" to walk away from your own mortgage with the express intention of buying a home in someone else's name, knowing that they are going to "gift" you the house is still immoral, unethical and illegal.
     
  10. chicowalker

    chicowalker Pro Bowl Player

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    PR, why should the taxpayers take care of your parents' nursing costs -- isn't that basically a subsidy for you and your siblings?

    Are there other expenses that people should be able to put onto the rest of the public, or is a nursing home the only one?

    (I'm now wondering -- arer you opposed to universal healthcare? because if you are, the 2 positions would seem contradicory, at least on the surface)

    Now, I agree with you that the wealthy (we don't need to get into how to define that) should pay more than 10% on what they inherit-- but that's a different issue.

    (btw, please don't take any of this personally -- it just happens to be the example you brought up here)
     
  11. Real World

    Real World Moderator Staff Member

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    The problem I have with confiscating someone's assets to pay for care is this. Just this week this foreign elderly couple who came here about 5 years ago from Eastern Europe, informed me that they will be moving out next month. I've discussed this couple a few times in here already. Nice people for the most part, but prime time examples of what's wrong in this country. This couple came here because their kids emigrated here years ago, and petitioned for them. They arrived elderly, and have never worked a day in this country, or paid a penny of tax into the system they currenty consume from. Once they were "legal", or given keys to the candy store, they recieved a subsidized apartment, a check from the gubmit, free Mass Health, and all the other assorted freebies like fuel assistance, food stamps, etc. that us taxpayers pay for. Anyhow, this week they came in to inform me that they will be moving to a different subsidized unit, only now a 2 bedroom. They are an elderly couple mind you. So I asked them how they were given a 2 bedroom as a married couple, as this is against HUD overhousing codes, and the guy gives me a few winks with the associated hand motions and says "doctor make paper". So apparently they used some medical excuse to say that the two of them need to sleep in separate rooms at night. Talk about a joke, and talk about fraud. My point here is that why should PR's parents, or any couple that has worked their entire life, and amassed some small pool of assets (a house, maybe a $50k nest egg) be forced to pay for their elderly care, when leaches like these foreign scumsuckers from Eastern Europe, who've never paid a penny into the system, are able to come here and live those years for free? How is that fair? So PR's parents need to hand the gubmit the $200-300k in assets they've busted their arse for their entire life, so they can pay for these loser leaches from a foreign country, to comfortably retire in ours. Screw that.



    A moratorium on foreclosers is an awful idea for a number of reasons. First of all, the best approach is to let the market correct itself naturally. Any artificial measures intended to alter that do more harm than good long term. Also, a mortatorium (unless I'm wrong about how it would work) would mean that either a bank sits on a property for 3 years, or lets someone live there mortgage free for that same period. Since we all know that "free" is a relative term, who's going to foot the bill for that 3 year period? Someone has got to pay, or carry the debt. Worse, why would anyone underwater, struggling to pay, or who overpaid and invested little in their property upfront bother to pay their mortgage once a moratorium is put in place? Think about it. You put zero to little down on your home, you paid maybe 40-50% above it's true value, and the bank can't foreclose on you for 3 years. Why would you pay? From a financial perspective my advice to people in such a situation would be not to.

    What would the intended result be from a moratorium? To control the amount of properties currently on the market, with the hope that a restriction in the supply of "available" homes would some energize an artificial market for demand? Well, if I'm a prospective buyer, wouldn't it be in my best interests to wait out the moratorium for what will be a total flood of homes once the moratorium is lifted? A flood that will likely result in an immediate crash in prices btw. The point is that a moratorium is a bad idea. Just let the market correct itself naturally. When you flood cheap money into a market, or beging to restrict it in a way outside the norm, in the hopes of shifting it one way or another, all you tend to do is make a bad situation worse.
     
  12. Mrs.PatsFanInVa

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    #24 Jersey

    So you are of the opinion that two wrongs make one a right?

    If you are opposed to your tax dollars going to support one person who's gaming the system, such as the elderly couple you are talking about, how are you not opposed to your tax dollars going to support someone else's "elderly couple," who has the money to pay for their own care but is refusing to do so?

    Why do you not want it to stop in both instances? You'd save twice the money in tax dollars if you were as outraged about one as you are about the other.
     
  13. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    I am very proud about one thing...my ability to get you "all riled up!";)

    I highly doubt my home will lose 25% of it's value...not not likely at all in my area of Massachusetts. Our values never dropped too much thus far and I'm not worried about them declining much further. My PLAN is to sell my house and buy one with them.

    I am doing this because I want my parents to feel safe & secure as they approach the end of their natural lives. I don't want them to be lonely and have to have their children "stop by the retirement home now & then". They have expressed a preference for home care if need be...and nursing care as a last resort.

    The biggest difference between a welfare person and me is that I've always worked for a living and pay a LOT of taxes.
     
    Last edited: Mar 10, 2011
  14. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    Thanks for getting back on topic RW!!

    I agree with your assessment of a moratorium on foreclosures. I too believe that interfering with prices and supply & demand aren't the way to go.

    Just look at what happened after the first time home buyers incentive ended for a glimpes of what's in store. Some markets will endure further price reductions and others won't. I'm fortunate to live in Massachusetts.
     
  15. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    RW already gave you his answer on this. The elderly couple never contributed a dime to the system and is getting far more than the average AMERICAN ever will.

    Can you understand that?

    When one works and contributes, works and contributes, works and contributes, works and contributes, works and contributes, works and contributes, works and contributes...all their lives, they deserve to at least leave their children what little they have saved.
     
    Last edited: Mar 10, 2011
  16. The Brandon Five

    The Brandon Five Experienced Starter w/First Big Contract

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    #75 Jersey

    The problem is that the rest of us pay into a system that does not assume a 100% poverty rate among the elderly. If that reality were reflected in the revenues that were paid in, the Medicare tax rate would be much higher than 2.9% (1.45% from the employee, 1.45% from the employer).

    The fact that your parents had assets to transfer means that they are not impoverished. If everyone did this Medicare would be bankrupt even sooner.
     
  17. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    I don't mind you commenting any way you choose....that's what this board is all about Chico.

    If you read my post yesterday on universal health care, you'll have your answer...but I'll help you out.

     
  18. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    My parents own a home worth about $250K and have a little over $100k left...We grew up in a 3 bedroom home (legally a 2 bedroom). My 2 brothers and I slept in the same room into our 20's. My father never made more than $35k in his life...he "retired" in 2002 at the age of 72.

    I'm at peace...all our family members are "contributors" not takers. We don't do anything illegal (even though MrsP believes I have!).
     
  19. Real World

    Real World Moderator Staff Member

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    Not at all. I'm merely calling it how I see it.

    Is the system being gamed, or is the system simply playing itself out as currently constituted? The only "gaming" this couple may be doing is being done with a doctor as an accessory. Which is the deal with being given a 2 bedroom apartment when they should absolutely only have a 1 bedroom. Outside of that, everything they've done is legitmate and legal. That's why I can't blame anyone who protects what they've worked hard for from the governments reach. Why should PR's parents lose anything they've earned, when these foreignors can just walk in and get everything for free? From a purely financial perspective, they'd be fools if they didn't protect their assets for their children.

    I'd love for it to stop, but when someone like me wants the border sealed, illegals deported, and immigration organized and controlled, I get called names like racist, and hear people talk about "compassion" and a "better life".
     
  20. Gainzo

    Gainzo In the Starting Line-Up

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    #11 Jersey

    Of course foreclosures are down as the banks have run out of people to foreclose on! That and the fact they now have to actually look at the paperwork before foreclosing.
     

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