Despite the complete recovery of the American Economy — what, did you miss it? — a record 14% of households with mortgages are currently delinquent. That’s more than 7 million households. Another survey says 10% of all mortgages are in default, the highest percentage on record. Don’t worry, it gets worse.
New mortgage applications dropped to a 13-year low, which probably means the “demand” last year was just the new homebuyer/replacement homebuyer tax credits at work, as we all expected.
And new building permits fell by 13.5%, the lowest in a dismal chain of housing permit numbers since October of last year, when building permits were *also* at record lows. And 37% of new foreclosures are hitting “fixed-rate mortgages held by the safest borrowers.”
McClatchy News Services reports that everything is terrible:
Prime loans, those made to the safest borrowers with the highest credit scores, account for almost 66 percent of outstanding U.S. mortgages, so their rising foreclosure numbers are troubling.
“People with higher scores are defaulting at rates we have not seen in the past,” said Jay Brinkmann, the chief economist for the trade group.
The slide into foreclosure of the strongest borrowers is partly a function of the nation’s unemployment rate, which is now 9.9 percent. The Great Recession has mowed down white-collar and blue-collar workers alike.
Uhh. [New York Times]
{ 37 comments }
I know, we’ll blow up some school, and then, get this, we’ll plant another bomb so that when the ambulance comes to save everyone, they get blown up too. IT’LL WORK I TELL YA.
I wonder how many of those are people who are walking away from houses worth less than they owe. I know I’ve thought about it.
Everyone should walk away from their mortgages. Just to see what happens. It would be liberating, until, of course, Wall Street seizes control of the government, and hires Pinkertons to slaughter us all.
Needz moar tax cutz.
So, I guess now is the right time to join everybody else and strategically default on the crackerbox I’m underwater on?
How did you get that picture of my wife and me? By the way, that house is on the market and I’m giving it away for $325,000.
The other day I was reading about homeowner ethics compared to bank ethics when they walk away from debts. No comparison, homeowners feel guilt and/or remorse, banks are making “business decisions”.
The key to leverage is owing somebody a fuckton of money. A smart guy once said, “If I owe you a thousand dollars, that’s my problem. But if I owe you half a million dollars, that’s YOUR problem.” If you owe somebody huge cash, and you’re not afraid of them, you own them. This is why the mob kills people who default.
To test the leverage theory, I quit paying my mortgage in February. Worst case I could live here for free while they bang their fist on their chestplate and threaten to ruin my credit for a few months, then toss them the keys when the sheriff shows up to evict me.
But no! Once I went 30 days late, now they are totally kissing my ass! They now want to refinance my mortgage and drop the rate two points and even potentially lower the principal balance or extend the term, because they don’t want me to walk out of here. I, apparently, without intending to do so, have them by the balls.
Amusing side note: despite being 90 days in arrears on my mortgage, I received a new credit card from Capitol One yesterday.
Idiots.
Excuse me but the lady with the pants suit on the NAR commercial said the crisis is over
Is “ownership society” now in the same category with “democracy flourishing throughout the middle east”? Or is it simply too soon to tell? Dubya was a visionary, and the historians will judge him benevolent and wise…when they finish debating how they feel about George Washington, that is.
Jesus, all those loans in default…are we sure that there’s nothing else we can do to help the banks? Those (figuratively) poor institutions without anyone in the world but Congress to protect them?
And, according to the recent NY Times ad, builders are throwing up tons of NEW homes in Las Vegas and Phoenix, even though there are thousands of vacant properties rotting in the desert sun. Yeah, no way any of this will end badly.
[re=581513]Aflac Shrugged[/re]: Senator Rand Paul will give the banks back their red sharpies.
[re=581504]Oldskool[/re]: Once I got over my shame programming, it became obvious that bankruptcy is not only acceptable, but desirable, as often as the law will allow.
It’s not just the banks. Bankruptcy is a strategic move across the board.
K-Mart went bankrupt. Wrote off their debts and screwed everybody. Emerged from bankruptcy and bought Sears.
Delta Airlines and United Airlines now, pretty much, own most of the other airlines. Both saved from insolvency through bankruptcy.
General Motors posted “a profit” recently – because they wrote off most of their debts through bankruptcy and got a big fat gov’t loan (which they have since repaid).
So, the key to surviving is leverage, if you are too big to fail, you win.
[re=581526]Gun-toting Progressive[/re]: I can’t wait until they start selling houses on the QVC channel.
For all the Congressional expostulations of concern, the banks will not lift a bloodless finger to help anyone whose house is “underwater” (there’s not a single Bob Ballard fan at JP Morgan Chase). After the bubble exploded, this is 97 percent of all mortgage holders. By next year, the new national anthem will be, “Just Walk Away, Renee.”
[re=581536]Troubledog[/re]: And GM paid off its gov’t loan with money that the gov’t gave it to emerge from bankruptcy… so – that’s a win, right?
[re=581536]Troubledog[/re]: People forget, or never learned, that source of bankruptcy law is Article 1 of the Constitution. It’s fucking AMERICAN, grounded in the CONSTITUTION, to tell your creditors to eat a dick.
The good news is, it looks like my 15-year fixed 4.25% ReFi on my cave is going to go through.
Bad news is, we had to take out $20K of our equity to make the loan *large* enough to get the good rate.
Good news is, we’re also cutting 6 years off the life of our loan.
Bad news is, our monthly payment is going to be $40 higher.
Good news is, my wife will probably be getting a shiny new Prius.
Bad news is, gloating is unseemly, even in a caveman.
Clearly we need to eliminate income tax for the richest 2%.
Everyone should just stop paying their mortgages all at once. WTF are they going to do?
[re=581536]Troubledog[/re]: Delta Airlines and United Airlines now, pretty much, own most of the other airlines. Both saved from insolvency through bankruptcy.
Now that’s just a silly thing to say. Southwest, Alaska Air, American Airlines, Virgin, British and many dozens of other name-brand domestic and intl carriers would take exception to your statement.
OTOH, good luck on your refi! Hold out for the 4.25% rate, sounds like the good cards are in your hands, this time. From here on, it’s good news, apart from the fact that, like almost everybody else, you paid too much for your hovel.
[re=581536]Troubledog[/re]: Good for you — I hope it works out. The number of For Sale signs in my neighborhood has mushroomed, and while that happens in the spring normally, it seems like there are more now than usual. I have a feeling there are a lot of homeowners who bought at the top of the market here and are now trying to sell out of their precarious positions, and we’ll see a whole lot more walkaways in the next six months.
[re=581536]Troubledog[/re]:
Well stated, Sir!
The world economy will recover right after WWIII breaks out on the Korean Peninsula next week, now that the South has figured out that the North torpedoed their ship. Odd thing, though – that bit of news was all over the BBC this AM, but I don’t see much mention of it in the US press. Weird.
[re=581559]SayItWithWookies[/re]:
Don’t say that! I need my shack to appreciate so I can get rid of this goddamn PMI.
[re=581529]Ruhe[/re]: Bullshit. Senator Rand Paul will give them back their Debtor’s Prison.
I’ve got a house for sale in scenic Northern Idaho if anyone wants a mortgage to walk away from. Only minutes away from delightful Aryan Nation Country.
[re=581536]Troubledog[/re]: Donald Trump, also.
14% all of a sudden? SOMEONE’s got the market shorted.
Suddenly the old measure of 90 days late is 30 days late. As much a doomer as I am, I call bullshit.
[re=581619]natoslug[/re]: I used to think Idaho was the worst week I ever spent on vacation. But then I spent a week in Phoenix.
Lascauxcaveman
Excellent point. If it is good for corporate america to do this why shouldn’t individuals get rid of that guilt and begin making “sound business decisions.” Sounds very American to me.
If only students weren’t strapped with debt (cannot get rid of that debt for a degree which could possibly be completely worthless in bankruptcy), then people could make a “sound business decision” about that useless and grossly overpriced degree.
[re=581552]Lascauxcaveman[/re]: hah, I can do better. Our mortgage is now lower than our average credit card bill. Of our monthly payment, $40 is interest. Funny, we also live in a cave. Perhaps that is the key to homeowner success.
I bought a house last year so I could take advantage of the new homebuyer tax credit. And I got a dog and couldn’t find a place to rent.
[re=581507]Troubledog[/re]: Are you blogging about this? Debtor > blogger > on local news > on Oprah > your own cable program. You’d have to put up with a lot of intense vitriol from the “I don’t exercise any personal responsibility but you should” crowd, but you could turn it into gold.
[re=581536]Troubledog[/re]: If faced with foreclosure, the bank has to provide the original documentation of the mortgage, if you request it.
Some of these mortgages have been bundled and sold so many times that no one knows where the paperwork is.
As far as bankruptcy, despite the stigma that is supposed to be associated with it, I personally know several people that file regularly, every seven years. And get to keep all their stuff.
[re=581554]BlueStateLiberal[/re]: This answer is, “fuck all.”
It would be the equivalent of the Babylonian Jubilee, an age-old practice where all debts across the board are forgiven, and everyone starts afresh.
[re=581579]Oblios Cap[/re]: FWIW, the North/South Korea situation was Item One on the overnight (midnight til dawn) CBS newscast.
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