Michigan Foreclosure Crisis Continuing

The foreclosure crisis in Michigan continues. In fact, all of America is under water, shown by the fact that American homeowners are now $745 billion underwater on their mortgages.

Michigan foreclosure leads the way.  In the USA, over 2.8 million homes foreclosed in 2009, millions of homes lost.

The trend?  Bound to get even worse.  Record high default rate now, as over 13.1% of homeowners are behind on their mortgage payments.

Why?  More ARMs (Adjustable Rate Mortgages) resetting this year and next, with teaser rates ending, payments will increase, more people fall behind, more, mortgage defaults
Not to mention the interest only mortgages, which are prime or Alt-A, not sub-prime, which switch over to an amortized payment,  over $47 billion in the next year, more than $80 billion in the next two years.

Mortgage payments will go up 15%, more if interest rates go higher.  And there’s no room for rates to go lower.

The Michigan foreclosure rate will continue to be worse than the national average, as we are still losing jobs, going on six consecutive years.

It takes people with jobs to buy homes, and we are losing them.

And over 60% of the modifications actually agreed to by our mortgage company friends since October 1, 2008, are in default.

Government’s solution?  Hey, if we pay the banks some of their losses, maybe they will finally start to write down principal balances.

Only 21,000 of the loans modified in the third quarter of 2009 included principal writedowns, or deferrals.

My guess, more deferrals than actual writedowns.  One reason, investors are suing when principal is written off.

What good does a deferral do for the homeowner?

My favorite quote in the linked to Business Week story;  “Mark Zandi, the chief economist for Moody’s Economy.com, who has testified before Congress on housing issues, proposes that banks receive a federal match of $1 for every $2 in principal reductions they offer to homeowners who were victims of predatory lending practices.”

So, let’s get this straight, mortgage company breaks the law, lends money it should not, probably cheating the homeowner.

Homeowner now stuck in home worth less then is owed, with unaffordable payments.

Remedy?

Another bailout for the crooked mortgage companies.

Well, they did spend enough of their ill gotten gains to buy both political parties, as each has supported TARP and further bailouts that have insulated the mortgage and banking companies from the consequences of their own actions, at the expense of you and me, the taxpayer.

I say, let them eat cake!

Or something!

Just not an open credit line to the U. S. Treasury.

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