i_am_the_swammi Posted May 28, 2009 Share Posted May 28, 2009 A whopping number. But what I found interesting was that a large number of them are borrowers with good credit & with fixed-rate loans.....not "deadbets" (as they are often referred to here) who were dumb/greedy and took out ridiculous ARMs....just good people who likely lost jobs. I don't agree with all the policies regarding who is getting bailed-out, but hard-working families who did everything right but got caught up in massive layoffs are at the top of my list of those I don't mind lending a helping hand to. 12 pct. are behind on mortgage or in foreclosure Buzz Up Send 8 mins ago NEW YORK – An industry report shows that a record 12 percent of homeowners with a mortgage are behind on their payments or in foreclosure as the housing crisis spreads to borrowers with good credit. The Mortgage Bankers Association said Thursday the foreclosure rate on prime fixed-rate loans doubled in the last year, and now represents the largest share of new foreclosures. Nearly 6 percent of fixed-rate mortgages to borrowers with good credit were in the foreclosure process. At the same time, almost half of all adjustable-rate loans to borrowers with shaky credit were past due or in foreclosure. California, Nevada, Arizona and Florida accounted for 46 percent of new foreclosures in the country. . Quote Link to comment Share on other sites More sharing options...
wirehairman Posted May 28, 2009 Share Posted May 28, 2009 Nearly 6 percent of fixed-rate mortgages to borrowers with good credit were in the foreclosure process. At the same time, almost half of all adjustable-rate loans to borrowers with shaky credit were past due or in foreclosure. 6% vs. 50% is a pretty significant difference. I wonder how those percentages translate to actual numbers of mortgages. Quote Link to comment Share on other sites More sharing options...
Kid Cid Posted May 28, 2009 Share Posted May 28, 2009 I don't find this especially surprising. I know a lot of people in this area have played the "flip a house" scheme to get into a McMansion at the very limit of their available credit thinking that this was a good investment strategy. I suspect you all know someone like this, being house bound by their payments thinking that in two to three years they'll get raises to give them some breathing room or worse off, have a child that they didn't budget for. Yes, if someone in this situation got laid off then they could easily get themselves in a bind. Of course, I don't have much sympathy as it was greed that got them there in the first place. Your house is not the place to make a risky investment. But hey, what do I know? I've only been laid off since October and haven't missed any payments or been late on anything and still have enough savings to survive another couple of years if I had to. What kind of get rich scheme is that? Quote Link to comment Share on other sites More sharing options...
i_am_the_swammi Posted May 28, 2009 Author Share Posted May 28, 2009 6% vs. 50% is a pretty significant difference. I wonder how those percentages translate to actual numbers of mortgages. 1 in 8 mortgages (12%) to all borrowers with all types of loans are late or in forclosure. 1 in 16 mortages (6%) to borrowers with good credit are in foreclosure. I would have guessed those with historically good credit with fixed-mortgages (as a percentage of the whole) would have been much lower....1-2% at most. 6%, to me, is shockingly high. Quote Link to comment Share on other sites More sharing options...
wirehairman Posted May 28, 2009 Share Posted May 28, 2009 1 in 8 mortgages (12%) to all borrowers with all types of loans are late or in forclosure. 1 in 16 mortages (6%) to borrowers with good credit are in foreclosure. I would have guessed those with historically good credit with fixed-mortgages (as a percentage of the whole) would have been much lower....1-2% at most. 6%, to me, is shockingly high. I understand changing a percentage to a ratio but was more interested in knowing if we're discussing 5,000 vs 50,000 vs 500,000 vs a higher number of mortgages that are behind or in foreclosure. Quote Link to comment Share on other sites More sharing options...
millerx Posted May 29, 2009 Share Posted May 29, 2009 I don't find this especially surprising. I know a lot of people in this area have played the "flip a house" scheme to get into a McMansion at the very limit of their available credit thinking that this was a good investment strategy. I suspect you all know someone like this, being house bound by their payments thinking that in two to three years they'll get raises to give them some breathing room or worse off, have a child that they didn't budget for. Yes, if someone in this situation got laid off then they could easily get themselves in a bind. Of course, I don't have much sympathy as it was greed that got them there in the first place. Your house is not the place to make a risky investment. But hey, what do I know? I've only been laid off since October and haven't missed any payments or been late on anything and still have enough savings to survive another couple of years if I had to. What kind of get rich scheme is that? What about those people that used the very limit of their available credit (as you say) to make sure they were in a good school district for their kids sake, because our government doesn't allow for school choice and forces families to deal with some school districts that don't have to improve due to competition? Quote Link to comment Share on other sites More sharing options...
muck Posted May 29, 2009 Share Posted May 29, 2009 As a self-employed guy, I would NOT be surprised in the least to find out that a host of the people who are behind on their mortgages are self-employed people (or people who work in a small firm (i.e., <10 employees)) who make up a disproportionate portion of those who are late. Most small businesses simply don't have a wide margin of error ... so, when times are pretty good, a small business owner will (maybe) buy a slightly bigger house than they would have normally and hired an additional person (or two) ... and then, when it gets tight again, they quit taking a salary in order to keep the extra person (or two) around for a bit ... until they can't and these people get canned ... but, by then, the self-employed person may still not be able to take a full paycheck ... I'm sure that Twiley (and others) can back me up with this ... there are periods where you're able to take some really nice $$s out of your business, and other times where you may (literally) go months without getting paid anything at all (but your employees and vendors continue to get paid on time). So, I can see how these people may be letting their personal credit go in the tank right now in order to try to keep their businesses afloat. Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted May 29, 2009 Share Posted May 29, 2009 As a self-employed guy, I would NOT be surprised in the least to find out that a host of the people who are behind on their mortgages are self-employed people (or people who work in a small firm (i.e., <10 employees)) who make up a disproportionate portion of those who are late. Most small businesses simply don't have a wide margin of error ... so, when times are pretty good, a small business owner will (maybe) buy a slightly bigger house than they would have normally and hired an additional person (or two) ... and then, when it gets tight again, they quit taking a salary in order to keep the extra person (or two) around for a bit ... until they can't and these people get canned ... but, by then, the self-employed person may still not be able to take a full paycheck ... I'm sure that Twiley (and others) can back me up with this ... there are periods where you're able to take some really nice $$s out of your business, and other times where you may (literally) go months without getting paid anything at all (but your employees and vendors continue to get paid on time). So, I can see how these people may be letting their personal credit go in the tank right now in order to try to keep their businesses afloat. i see this all the time in my biz. people were buying things like crazy back in the dot.com madness. then it crashed and our biz dried up for a few years. people had to liquidate boats, condos, sports cars, etc. i believe being self employed, you can not live on your past year's earnings. you have to discount what you make in case things do get tight. imo Quote Link to comment Share on other sites More sharing options...
WaterMan Posted May 29, 2009 Share Posted May 29, 2009 A whopping number. But what I found interesting was that a large number of them are borrowers with good credit & with fixed-rate loans.....not "deadbets" (as they are often referred to here) who were dumb/greedy and took out ridiculous ARMs....just good people who likely lost jobs. I don't agree with all the policies regarding who is getting bailed-out, but hard-working families who did everything right but got caught up in massive layoffs are at the top of my list of those I don't mind lending a helping hand to. 12 pct. are behind on mortgage or in foreclosure Buzz Up Send 8 mins ago NEW YORK – An industry report shows that a record 12 percent of homeowners with a mortgage are behind on their payments or in foreclosure as the housing crisis spreads to borrowers with good credit. The Mortgage Bankers Association said Thursday the foreclosure rate on prime fixed-rate loans doubled in the last year, and now represents the largest share of new foreclosures. Nearly 6 percent of fixed-rate mortgages to borrowers with good credit were in the foreclosure process. At the same time, almost half of all adjustable-rate loans to borrowers with shaky credit were past due or in foreclosure. California, Nevada, Arizona and Florida accounted for 46 percent of new foreclosures in the country. . And here I thought we were in this mess because of the deadbeats who hated Bush. Quote Link to comment Share on other sites More sharing options...
Kid Cid Posted May 29, 2009 Share Posted May 29, 2009 What about those people that used the very limit of their available credit (as you say) to make sure they were in a good school district for their kids sake, because our government doesn't allow for school choice and forces families to deal with some school districts that don't have to improve due to competition? Let me see...I bought my home in what is listed as one of the top 5 school districts in the country (depending on who you ask) and I paid 250K for my home. Yet, the majority of the homes in the area are all in new developments with 500K price tags. So, I don't think that people had to stretch to the edge of their budget just to get into a good school district. They need to be smart about their home purchases. Now that's kind of a blanket statement and obviously not all situations are the same. However, I think that while the school system is a driver for many people, I also think that making gravy on the home price was a bigger driver in a lot of cases. Quote Link to comment Share on other sites More sharing options...
twiley Posted May 30, 2009 Share Posted May 30, 2009 As a self-employed guy, I would NOT be surprised in the least to find out that a host of the people who are behind on their mortgages are self-employed people (or people who work in a small firm (i.e., <10 employees)) who make up a disproportionate portion of those who are late. Most small businesses simply don't have a wide margin of error ... so, when times are pretty good, a small business owner will (maybe) buy a slightly bigger house than they would have normally and hired an additional person (or two) ... and then, when it gets tight again, they quit taking a salary in order to keep the extra person (or two) around for a bit ... until they can't and these people get canned ... but, by then, the self-employed person may still not be able to take a full paycheck ... I'm sure that Twiley (and others) can back me up with this ... there are periods where you're able to take some really nice $$s out of your business, and other times where you may (literally) go months without getting paid anything at all (but your employees and vendors continue to get paid on time). So, I can see how these people may be letting their personal credit go in the tank right now in order to try to keep their businesses afloat. You pretty much nailed it. Quote Link to comment Share on other sites More sharing options...
Retrograde assault Posted May 30, 2009 Share Posted May 30, 2009 My home is paid for. Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted May 30, 2009 Share Posted May 30, 2009 I understand changing a percentage to a ratio but was more interested in knowing if we're discussing 5,000 vs 50,000 vs 500,000 vs a higher number of mortgages that are behind or in foreclosure. According to this, there are roughly 44 million mortgages in the US, thus it would translate to 5.5 million late or foreclosed (1 in 8) and nearly three million (1 in 16) "good credit" mortgages in foreclosure. Quote Link to comment Share on other sites More sharing options...
wirehairman Posted May 30, 2009 Share Posted May 30, 2009 According to this, there are roughly 44 million mortgages in the US, thus it would translate to 5.5 million late or foreclosed (1 in 8) and nearly three million (1 in 16) "good credit" mortgages in foreclosure. From your link: (44.4 million mortgages total) x (12% late or in foreclosure) = 5.33 million total mortgages late or in foreclosuer (44.4 million mortgages total) x (91% "not at risk") x (6% late or in foreclosure) = 2.20 million "not at risk" mortgages late or in foreclosure Thus 3.13 million "at risk" mortgages are late or in foreclosure. This represents 58.7% of the late/in foreclosure mortgages from only 9% of the total number of mortgages. I guess that's why they were classified as "at risk" in the first place. Quote Link to comment Share on other sites More sharing options...
detlef Posted May 30, 2009 Share Posted May 30, 2009 As a self-employed guy, I would NOT be surprised in the least to find out that a host of the people who are behind on their mortgages are self-employed people (or people who work in a small firm (i.e., <10 employees)) who make up a disproportionate portion of those who are late. Most small businesses simply don't have a wide margin of error ... so, when times are pretty good, a small business owner will (maybe) buy a slightly bigger house than they would have normally and hired an additional person (or two) ... and then, when it gets tight again, they quit taking a salary in order to keep the extra person (or two) around for a bit ... until they can't and these people get canned ... but, by then, the self-employed person may still not be able to take a full paycheck ... I'm sure that Twiley (and others) can back me up with this ... there are periods where you're able to take some really nice $$s out of your business, and other times where you may (literally) go months without getting paid anything at all (but your employees and vendors continue to get paid on time). So, I can see how these people may be letting their personal credit go in the tank right now in order to try to keep their businesses afloat. I'll second that reality at least the part about having to go for stretches without a paycheck. My wife and I never bought up, however, even when our income created a situation where our mortgage was less than 10% of our pre-tax income. Pretty happy about that since my wife got laid-off earlier this year. It's been 3 months now and we've still got plenty of reserves. That we only need to scratch a $1200 check each month for our mortgage sure helps that a lot. It doesn't surprise me at all that people in Cali make up a large number of those. When we left, our friends were buying homes they could barely afford because that's all there was. When your mortgage is 35-40% of your pretax and tax takes another 1/3 or so, well that doesn't leave much wiggle room. And these people certainly fit under the 6% that had good credit, etc. None the less, they still had no business being in those loans. Hell, we were at a place where we could have likely gotten into something where our payments would have been closer to 25% and I had the luxury of working few enough hours and having enough construction experience that we could have taken on a fixer upper, but it still didn't seem worth it. So glad we moved when we did. Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted May 30, 2009 Share Posted May 30, 2009 From your link: (44.4 million mortgages total) x (12% late or in foreclosure) = 5.33 million total mortgages late or in foreclosuer (44.4 million mortgages total) x (91% "not at risk") x (6% late or in foreclosure) = 2.20 million "not at risk" mortgages late or in foreclosure Thus 3.13 million "at risk" mortgages are late or in foreclosure. This represents 58.7% of the late/in foreclosure mortgages from only 9% of the total number of mortgages. I guess that's why they were classified as "at risk" in the first place. Thanks, I was too lazy to do anything other than some quick mental arithmetic. Quote Link to comment Share on other sites More sharing options...
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