Upcoming Foreclosures - What is causing so many foreclosures in todays real estate industry?

What is causing so many foreclosures in todays real estate industry?

My mom is a realtor in the Bay area and she hasn't been selling houses lately and now it is causing us to move to a smaller house. We used to be very rich and had a 4,500 sq foot home but now we live in a really small home because of nobody buying any houses...What is causing all these foreclosures and why isn't anybody buying homes lately? does the war and president bush have anything to do with this? and when are things going to get better? next year?

Public Comments

sub prime loans
your mom should be able to answer that since she is a realtor
loans to people that could afford them
when interest rates are low a lot of people buy. rates are getting higher and mortgages costs are going up.
Idiots buying houses they couldn't afford with no money down and mortgages with very low starting interest rates that have now skyrocketed.
and gas prices...gotta have gas to go to work.
A lot of it has to do with variable rate mortgages. People bought houses they normally couldn't afford, but bought them with very low interest rates. But, since they were variable rate, they went up, and now people can't afford the payments. I'm getting into real estate now. But, instead of just being an agent, I'm looking to work all sides of the market. Since there are a lot of foreclosures, look at short sales. Or wholesaling, or investing (buy low now, sell high later!)
people buying things that they can ill afford. tb
People signed short term adjustable rate mortgages with low payments for the first couple of years with the understanding they should improve their credit and refinance into a better rate fixed loan. A lot of people didn't do that. The payments start rising very quickly along with the interest rate. That screws up the credit even worse so they get stuck with that loan. Can't pay the high payments and pretty soon, the bank takes the house back. Very sad, but most knew it was going to happen if they didn't refinance in time. Now a lot of people of nervous about the housing market scare. The market in some areas is getting flooded with foreclosures decreasing house values. Supply and demand.
Some say it is an impending recession, but the fact is, in my view, that the housing market had a very good ride for a while, and that as everything, the market has cooled down. In the past year, it seems a number of people used their home equity as a way to finance debt (namely borrowed against their properties to pay credit card bills) and so now the economy has a huge number of delinquent bills that are not going to be paid any time soon unfortunately. Hope this helps and that your new place, although smaller, may be nice enough to keep you positive for 2008.
Why would anyone (without 7 children, need that big of a house?!)
Much of the problem is caused by defaults on loans that should never have been issued in the first place. In some areas, high unemployment has also contributed to the problems.
The reason for all of the foreclosures is that people took out mortgages that sounded good at the time - 3% - 5% interest, but that were not locked in at that rate or that had penalties for locking in. Now the rate is 7% - 9% and there mortgage payments have doubled and tripled. No one wants to buy a new house if they can't sale there old house. Or if they can't aford to pay for the house they are currently living in.
Mortgage companies were getting "creative" with their financing and were getting people approved for loans that had a adjustable rate that at the time made it affordable but then when the rate adjusted they ended up with a payment that they couldn't afford. So many are defaulting on their loans and going into foreclosure. Obviously that is only one reason for the sorry shape of our Real Estate market. Another would be the rising price of Gas and the war in Iraq. People aren't spending as much money and with the stock market bouncing up and down its safer to wait for a better time to buy. Things will turn around but for now we are on the downside of the hill.
There are a number of reasons, but this is the one I hear about the most often: People with suspect credit were buying houses they normally couldn't afford because they got a low 'adjustable' mortgage rate for 2-3 years. After the 2-3 years, the interest rate would go up, making the home no longer affordable. These people could not refinance because all of the lenders that would give them money 2-3 years ago all went out of business because they lent money to people with suspect credit that could not pay them back. It ended up having a snowball effect on the market. Your Mom should be able to give you more details and more reasons if she is a real estate agent.
The forclosures are caused by banks who were lending to anyone over the past few years. They were lending to people with poor credit and not verifying income and instead doing stated income loans (loans where people say they are making so much but do not have to provide proof). They were giving out ARM loans, which is an adjustable rate. So say someone got a loan for $300,000 with a rate of 6.75% and their payment was $2200 per month. Then when their loan rate adjusted they were given an interest rate of for example, 8.9% which caused their payment ot go up to $3400 a month or they had to refinance, but they can't refinance because there credit is bad and can not prove their income so they are stuck and cant afford to make the payment and it usually ends in foreclsoure. Not many people are buying homes, because there are so many home son the market and they want to get a good deal so they are waiting for a while till housing prices drop more. In addition, economically times are tough for the middle class people who just don't have the extra money for investments. And with stricter lending policies, people can no longer get approved for additonal mortgage loans that they may have been able to get in previous years.
Do 2 "Mortgage-Scam" ... giving loans 2 easy ; not stable income 4 some ppl.; Rushing into buying when u do not have a back-up plan; adjustable-rates; Baloon-mortgages; loosing jobs; divorce; deth of a partner; sikness;....2 "MANY"... 2 enumerate......
A lot of people were qualifying for loans they couldn't afford by getting artificially low introductory interest rates. When the interest rates increased to the scheduled percentage...What do you know? The people still couldn't afford the house. This has caused fewer people who can afford or have the credit to buy houses; which makes houses sell more slowly. This makes prices go down and the people living in those houses can't afford to take the loss by selling their homes. Now, they can't buy a new house either. Sorry about the hard times. Hope at least it's a learning experience for you.
I am a Realtor as well as your mom. I live in the Miami area and this is the city that is number one in a bad market. Down here there is way to much inventory, builders built faster than people bought. Prices increased to levels that are out of reality, especially on the beach. In addition banks loaned money to unqualified buyers. Investors purchased with not enough money to carry the properties, which has caused so many foreclosures. That is some of the problems. We should see a recovery by 2009.
Some people make their living by providing mortgages to borrowers. Mortgages can be sold to other banks, and they found a way to group many bad mortgages together to make them look attractive to international investors. Initially, it was very profitable but as it turned out, so many people were not able to keep up with the balloon payments and defaulted on their loans. It became a world problem. Too many people have to leave the homes that they cannot afford. Many more homes are available on the market, and so the prices of homes are now falling. People who own homes don't want to sell at these lower prices. The mortgage market needs regulation.
It is not just subprime loans... this is a media lie...it is also those with high ficos and income that have lost the income or never had it and used programs geared to the self employed and investors. These programs were interest only or 2- 5 year fixed. Now that it is time for the rate to adjust the borrower's financial and credit situation has changed and they can't afford the home anymore. Therefore, sellers are not placing homes on the market due to a lack of buyers.
hmmm 1) builders build faster than population grows 2) Prices reflect new construction is luxury, "step-up" houses rather than starter homes 3) people no longer have access to easy credit due to overextension in the credit markets/general wall street tomfoolery 4) transportation costs (aka gasoline) doubled in past 3 years from ~1.60/g to ~3.20/g 5) other commodities such as copper, wheat, soybeans and corn have more than doubled in that period of time, pushing up the price of the basics 6) collapsing dollar has made imported prodcuts more expensive 7) recent runup in housing value reflected speculation oin a commodity rather than fundamentals (i.e, you need a place to live so you buy a house) 8) mortgages taken out in past 5 years have been heavily weighted toward adjustable rates, currently LIBOR is on the way up as global inflation picks up, all those Adjustables are based off the LIBOR rate. 9) no shame in bankruptcy or bad credit. 30 years ago it would have been anathema but now its no big deal, or so many think In other words, people are broke and they cant afford what they have never mind buy something bigger
The high rate of forclosures is due to several different things happening all at once. Here are just a few: 1. Mortgage lenders created new ways of lending to those people who would not have (and probably should not have) been able to qualify for a typical home loan. These "special program" loans had much higher interest rates than normal. 2. People wanted to own a bigger, better, more expensive house than they could afford, and so they opted for ARM's or Adjustable rate mortgages, that started at very low interest rates. This meant that people paid lower monthly payments initially, hoping that as the rate increased over time, so would their income, and their ability to repay it (a very bad idea, since noone can predict the future) 3. The economy changed, rates went up faster and higher than people expected, and then so of course did their payments (which of course were more than they could afford, that's why they were using an ARM) 4. Very large financial institutions bought up these funny-money mortgages (see item 1) hoping to cash in on their higher interest returns. When things turned worse economically, and interest rates went up, all of these thing came back to haunt us and the market collapsed. That's the root reason of why your mom isn't selling houses as fast as she used to. The good news is, these thing always have a way of turning around to the positive again. Just be patient. Things will get better for you and your mom in time.
People bought homes they couldn't afford and now they are being thrown out of them. Be glad you still have a place to live. It could be much worse.
da market
When the housing market was good (when you were rich from your mom selling homes) buyers were buying homes with adjustable low interest rates. Now these adjustable rates are adjusting and resetting higher than what they were. This is causing their interest rates to rise and that causes mortgage payments to rise. Know mortgage payments are rising and people can't afford them thus causing foreclosures. People today are still buying homes but with so much inventory and a wide verity of homes to choose from not all homes are getting bought. In today's market even though possible it is difficult to obtain a 100% loan for a home. Back when your mom was selling alot of homes a 100% loan was very easy to obtain just by stating what your income is and stating what your assets are. All you need was a good credit history.
People can't afford to buy. It's only going to get worse if we continue on this corporate road we've been on. The middle class is being squeezed out. If it keeps up, there will only be the rich and the poor. Too many people are hung up on things. The important things are food, shelter, clothing, transportation, utilities, and misc. household items. All the extras are just things we want, not things we need. We just get in over our heads over things, pure and simple.
Okay. I am going to keep this short, but this being a complex issue, it won't be a short answer. Toward the end of the 90s, the economy was starting to stall. The South East Asian Financial Crisis was just fixing itself and the Congress just finished giving $1 Trillion in bailouts to various Hedge Funds and Investment Banks. As we headed 2000, the economy was in a known gray area, and when we had the Internet Bubble popping AND the 9/11 attacks, our economy was heading into a nose dive and fast. So Al Greenspan, the then Fed Chairman, incrementally started lowering the Federal Funds rate until it hit a historic, all-time low of 1%. This naturally made home mortgage rates the lowest in history, hovering around 4.5% (insane to say the least). So, what we saw was a massive push on the part of speculators hedging the housing bubble to pop and then we had house-flippers (a major culprit) increasing their involvement. So, when you have a house-flipper buying a house, and then a few weeks later selling it for a profit, this sends a signal to the market that there is a huge demand for homes, when in fact there is NOT. The monthly MBA (mortgage brokerage applications) report coming out shows only numbers of people, NOT their intensions. So, this sends a signal to the home builders that X amount of people are looking for homes, when in reality its not that many since some of them only want to actually LIVE in the house. So we have tons of homes being built, with not an actual number of people looking to live in them. Then we have the simple economics of the massively low Fed Fund rate. Simple economics states that if risk is not properly priced into a security or into the market, the investor and the consumer will not act responsibly. With these historic low figures, people got into home loans they never should have been in because of the teaser rates that attracted them. Now, these people are largely to blame and more importantly, they failed to take into consideration the actual impact the teaser rate reseting would have on their monthly payments. Most of them assumed they would likely resell it for a profit, which never happened since the housing bubble popped. Now, there are many investors who saw this coming. Mainly because the actually inflation being measured was purposefully not counting home prices, largely due to speculators. The reality is, inflation in home prices was hovering between 8-10%, which means we were set for a massive correction since there is no means of sustaining these prices. The bulk of these foreclosures therefore are coming from people that should never have been in the market to begin with. This is just the foreclosure issue and not the credit issue, which is tied together. This has nothing to do with the Democrats or Republicans, or the President. This is also an international issue, since the credit crisis that stemmed from these foreclosures had investors in Europe, the UK, Canada, and S.E. Asia. Now we are seeing houses dropping in value, some as high as 30% in some areas. This is ABSOLUTELY going to continue until the beginning of '09. The inflationary pressure placed on this market has shot the prices up with no substantial foundation for so long that this correction (likely the worst in history, but definitely in the past 20 years) will follow the normal 18 month course that corrections of this magnitude warrants. I hope this helped. Its a huge issue and if you have any further questions, I would love to explain it in greater detail for you, just send me a message with any specifics.
Our economy is heading straight into a recession. With the war onset, people are concerned with what is going to happen. Also, there is only one person supporting their families. NOt to mention the fact, that fuel prices are increasing, which is increasing the costs of many other things. But there is no cost of living raise(at least where I'm at). There has however been a 7% raise to lawmakers of my state, who already make 6digit incomes already. I just dont understand it. But the housing market is going to continue to dive until there is more overall stability in the economy, and we quit pissing off other countries. Oh yeah, I forgot that our dollar is worthless these days, ( which may not directly be related to the housing market, bu is an indication of how crappy our economy is)
I am a real estate agent and there is one word that is causing it. APPRECIATION The house values are not going up ie: appreciating You can read about all the reasons causing it but to sum it all up in one word its lack of appreciation. See...if there was APPRECIATION then values would go up If there was Appreciation then people could refinance If there was appreciation then people would have desire to buy something that is increasing in value not decreasing. Once we see APPRECIATION all these problems will be solved. Mark my word, watch the news, check out the numbers and when houses start appreciating again the market will pick up again.
Interest rates went up, and that made housing payments to go up. Some people couldn't afford to pay more, so they lost their houses. It's not related to the war or Bush. The problem was caused by some people buying houses that they could barely afford, so that if the payment went up, they wouldn't be able to afford it. And the mortgage companies are also partly to blame, because they shouldn't have given people those loans in the first place if they weren't going to be able to repay them.
Because of the easy qualify, no down payment loans, taken by anxious people desperate to get in on a market that was spiraling higher and higher. Encouraged by sometimes predatory lenders and real estate agents. It was often said that if one Realtor said no, another would find a way to say yes. Same with lenders. Granted, sub prime mortgages are getting hit hard, but they are failing because so many were after the quick sale, the fast bonus and biggest paycheck, and the American dream. People were blind to the possibility of failure, because real estate was the "sure thing" and they couldn't possibly lose, and now lenders had more money to give, at higher interests rates and using interest only ARMs. Many went in with good intentions, just not the best financial planning; often with a high debt to income ratio, thinking they could refinance, or flip and sell and come out ahead. And they did this with the blessing of the Realtor and the lender. All three are culpable.
WELL PEOPLE NEED TO PROTECT THEMSELVES TODAY WITH A PLAN B LIKE ROBERT KOWASISKI AND DONALD TRUMP DO IN RICH DAD POOR DAD THE BOOK TALKS ABOUT WHAT IS A GREAT INCOME SOURCE AND MY PLAN B IS NETWORK MARKETING SO I WILL HAVE A SECOND SCORCE OF INCOME FOR MY FAMILY TO PASS DOWN TO MY FAMILY AND ARBONNE SELLING THE BEST SKIN CARE IN THE WORLD HAS ALOWED ME TO DO THIS ARBONNE IS AHEAD OF THE DSA AND WE HAVE THE TOP SKINCARE THAT PEOPLE WANT BECAUSE WE ARE FORMULATED IN SWERTHLAND BY THE TOP SKIN CARE CHEMIST IN THE WORLD AND MADE HERE IN THE UNITED STATES IN CALIFORNIA AND HAS GIVEN FAMILY A HUGE INCOME SO THEY DON'T HAVE TO GIVE UP WHAT THEY HAVE TODAY WE ARE PURE SAFE SWISS AND BOTANICAL AND WE HAVE PROVEN RESULTS SO SHOW MOM MY WEBSITE AND TELL HER THIS COULD BE HER PLAN B TO SAVE THE FAMILY HOME AND BRING HER INCOME BACK TO WHERE IT NEEDS TO BE AND IT IS ALSO THE GREATEST JOB IN THE WORLD PUTTING THESE PRODUCTS LIKE OUR RE9 ANTI-AGING ON WOMENS SKIN TO HELP THEM KEEP THEIR LOOKS BECAUSE WE REALLY DO WORK WITH THE TECHNOLOGY WE HAVE IN OUR INGREDIENTS NO ONE CAN OR WILL EVER COME CLOSE TO US. SO HERE IS MY WEBSITE HTTP//:WWW.BEAUTIFULSKINSTARTSHERE.MYARBONNE.COM AND YOUR WELCOME FOR A PLAN B FOR YOUR FAMILY THE NETWORKING WAY PLEASE FEEL FREE TO CONTACT ME AT ANYTIME OR JUST CLICK ON MY PROFILE OR 360