Record 12% Behind on Mortgage Payments
 

So what are they gonna do, kick 12% of the population out of their houses?

By population, you mean 12% of those holding mortgages, which is substantially smaller in scope than 12% of the total population.

I hope so; I pay mine every month, they should pay theirs.

Yep.

You play to pay. You don't pay, you don't play.

Nice to see the simple answer crowd around as usual. Putting aside any compassion-based reasons to find a better solution than foreclosure and eviction, what do you think putting that many bad loans onto the banks' books will do to the banking system and economy? What do you think putting that many houses on the market will do to home values (YOUR home values)? What do you think having that many people displaced from neighborhoods will do to school systems and your taxes? What do you think having that many abandoned and boarded-up houses will do for petty crime and vandalism? Do you not think there is another way to salvage this situation without eliciting too many crybaby squeals of "It's not FAIR!!!"

No question that they SHOULD pay theirs. I'll bet all but a very tiny fraction wishes they COULD pay theirs.

1) Much of the "value" in real estate was artificially driven up by allowing unqualified buyers to enter the market, so those equity boost were as natural as Barry Bond's HR record.

2) The displaced owners, are they jobless too? If not, then the rental market will absorb as much as it can. Meanwhile, if the lenders don't want to become landlords, they will create the opportunities for those that want to.

You want to send your money their way, good for you. What is the difference between evicting them or letting them stay on if they cannot pay? I don't see it.

I have no sympathy for those who live above their means. I live in a very nice house because I pay my bills and I am frugal with my money. My house is a 3400 sq. ft. 2 story brick on an acre lot. I owe 49,000 on it and it's worth $250,000 not bad for a Drunk. I have made a lot of money in the last 25 years and speny MOST of it wisely. I guess what i'm saying is that WTF were these people thinking? A manager at McDonalds or whatever place think they could afford a $300,000 mortgage. I think the lenders should be put on the street as well as the bumbass borrowers. :(

There might be other alternatives. Some thoughts come to mind... Give them a few months with no payments, payments tacked on the back end with appropriate interest and penalties. Give them a few months with reduced payments, same deal... stick the difference on the back end. Renegotiate the loan with a 50 year term instead of 30 or whatever to reduce the payments. I'm sure there are many other ways.

I'll make some simple statements of my own now:
People living in homes are better for all of us than having more homeless people.
Foreclosed and vacant homes are bad for the economy, bad for neighborhoods, bad for neighbors, bad for the banks.
Things are not likely to improve quickly. Keeping families in their homes during this economic turmoil adds stability that is sorely needed.

Well stated man. I think that would work. :)

First of all, it's not about sympathy. It's about the economy. Let's say lot's of these homes are foreclosed. The people will have to live somewhere. They'll be living somewhere cheaper, and possibly with some kind of public assistance (you don't want that). Meanwhile, the banks will be taking a huge hit and there will be less money available to lend responsible people like you who need money for their businesses or to buy a car or for the new family to buy a house. Meanwhile, the glut of houses on the market will keep home prices in a tailspin, further feeding the foreclosure rate and hurting all you responsible homeowners who like having some equity in your homes. The glut of boarded up houses in some neighborhoods will devastate those communities with blight, crime, falling values, etc. I agree that there was tremendous excess in many areas of our society in recent years, and we are going through a correction. The correction should (IMO) be managed to reduce the pain and collateral damage. In my area, there were mortgage brokers on every corner convincing everyone to refinance, refinance, refinance... take money out, etc. Those people were a big part of the problem and have disappeared like phantoms. The other parts of the problem were the banks who approved the loans, and the homeowners who were duped and wrongly figured, "Everyone else is doing it, it must be OK. And the house IS worth 3 times what I paid for it... it'll keep going up!"

Now, neither you nor I know much about the people behind this 12% figure. Many of them, in fact possibly most of them, were probably responsible people with good jobs who paid their bills on time, lived within their means, and may have even had some money socked away for retirement. But the retirement money's gone, one or both of the earners got laid off, perhaps someone got sick and there's no more health insurance... I heard on the news that most of this wave of delinquencies is on "PRIME" mortgages, not the sub-primes we all heard about a while ago.

Job losses, health care bills, and adjustable interest rates that went up are the main causes of the high foreclosure rate. One pretty good idea that I heard about on PBS and that one community organizer in Massachusetts is helping people fight for is letting the banks foreclose and sell the house at current market value back to the original borrower, which they are reluctant to do because it rewards bad behavior they say. True, but that's rather hypocritical coming from the banks. And it would be a good solution to the foreclosure crisis. That and having govt-funded health care, which would stabilize everything.

Great! More handouts! Let's pay the banks not to fail! Let's pay the auto makers not to fail! Let's pay the mortgages of those who can't so they don't fail! Let's pay for everything! This is America; we're the richest country in the world and the government should pay for my health care, my credit card bills, my car notes, my house note, my business note, my payroll, my electric bill, everything!

Gov't funded health care - that's brilliant. They can't do Medicare, they can't do Medicaid, they can't do Social Security, they can't balance a budget, they can't do a defense or construction contract without going horrifically overbudget. Why in the world should they be given the chance to run health care?????????????

It's getting closer and closer to the day when I finally move away.

Where you gonna go? Texas is about as conservative as it gets.

Except for health care, I didn't say any of those things. With health care, it's not that simple. If the current system is so great, why do we have by far the highest health expenditure per capita in the world? Now, it's not higher quality or superior technology. It's mostly health insurance company profits (useless and expensive middle men), drug maker profits (that have a near monopoly on the US market) and to some extent the high cost of medical liability and medical schools. Medicare is actually a great program and you'd have a hard time finding anyone who uses it and hates it. The reason it's underfunded is because it covers the sickest and least profitable patients, the elderly, that the private insurance companies choose not to cover. And also because Americans generally like to have the cake and eat it too when it comes to govt services and taxes. If Medicare were expanded to cover everyone, we might be on to something. At least that's more or less how they successfully do it in most other developed countries, and it's cheaper overall. And people there can actually visit any doctor anywhere in the country, something that we really can't do with the typically small network of local doctors that are included in private insurance.

I know, it still seems like a really big number - too big to deal with effectively.

Why doesn't anybody ask the question: "how many loans in default are homesteads vs. speculators"?

With your logic, you would not want to have the cops arrest anyone in your neighborhood because it would get a bad reputation, so let them go....

A mortgage is a contract. Plain and simple. You put up collateral and if you default you give up that collateral. Doesn't matter how many homes around you are that way. Does it make a difference if you live in the country and nobody can see your house?

Murderers are executed for their crime, the hardship on their family is not considered. Only the hardship of the victim counts, and they can't talk anymore.

And the idea of boarded up houses everywhere is ludicrous.

The healthcare thing is really a scandal. But there are a lot of factors, and many are "our" fault:

1. People expect perfect outcomes, and they actually think everything can be fixed or cured. If they don't get what they want, they sue who they can sue. There have been no successful lawsuits brought against God or Fate, so "you get what you can from who you can get it from". And juries are very good at giving away OPM (Other People's Money) without realizing that they are the OP.

2. We are very good at causing our own problems with our own excess of eating, drinking, and smoking - and then expecting a "magic pill" from the drug store, $3.95, to cure the resulting problems.

Some are not:

1. The present insurance system is byzantine and is actually designed to be inefficient. It's basically organized crime, IMO. I have a very low opinion of government, and yet, I don't see how government could actually do worse.

2. The AMA has (a) restricted the number of doctors and (b) not permitted different "classes" of doctors in this country. I have wondered on occasion why it took a person with hundreds of thousands of dollars of education to tell me that I had a really bad cold (duh, no sh**, Sherlock), and then to write a prescription. The opposing argument "well, they might find something else" is bull, unless they can do it it in under about 3 minutes of examination and 3 minutes of conversation - which is about all you get with a doctor these days, unless you are a hypochondriac and/or if the magic pills you got last time didn't work. And yet - many doctors are going broke, between insurance premiums and low insurance payments. They have to shove lots of patients in and out the doors to just break even. So, where the heck is the money going? See (1).

3. Why is it that just about every damned drug that has been developed in the last 30 years causes more problems than they solve. At this point, I just don't take any at all. When they ask at the doctors' office during rare visits what medicines I'm "on", I tell them "none" - and they look at me like I'm Superman, a pathological liar, or just plain crazy.

This stuff needs to be scrutinized on a cost/benefit basis.

Basically, I'm very healthy, because I'm scared to death of getting sick!

The rate of people who are in 'healthy' mortgages (prime fixed rate to financially sound people) that are behind has doubled, as people are losing their jobs, taking pay cuts, etc..

That's the problem right there. When something as fundamental to our way of life as home ownership gets off the rails as badly as it has, it is no longer as "plain and simple" as you say.

Some of your analogies are just ludicrous. My logic has nothing to do with murderers and arrests of criminals.

I'm not sure I would say that home ownership is a fundamental thing to our way of life. But if you just let it go now, what do you do when things start to turn around? The banks will be way behind and they will have nothing to sell. Sometimes, it is better to just cut the losses and take what you can get instead of hoping that they get better and can make up what they should have paid, etc, etc.

Homeownership is the cornerstone of the middle class. Even before the rapid appreciation in real estate value over the last few decades the home represented the typical middle class families biggest asset. The equity contributed greatly to funding college educations and allowing a reasonable retirement lifestyle. I'm sure there are large macroeconomic aspects as well that I don't understand, regarding how mortgage payments affect banks and liquidity and availability of capital for business growth. Finally, there are the societal aspects... how pride of ownership builds stable neighborhoods and how desires for high property affect the quality of public education, etc.

Just like our other discussions on environmental issues, in today's world everything is intertwined. Everything bears on something else. Poke the system one place, there will be reactions rippling through many other places.

Just wait until the people who currently purchased the MacMansion of thier dreams (because it was affordable) and lose it because they can't afford to pay the taxes when the property values rise...

While what you describe may be discernable goals, they also have to be founded on economic reality, otherwise the "cornerstone" is made of styrofoam, not solid rock. Have we become a nation of get rich quick believers, seeking the rewards without doing much of the work? If so, and given the havoc foisted upon those that had the good sense not to engage in risky behavior, should there be no consequences to dissuade future bad behavior?

I agree completely with your styrofoam analogy. That's why I referenced the situation in historical terms. I also agree that there should be some mechanism to dissuade future bad behavior, but whatever it is should consider the overall impact... not cut off one's nose to spite the face. I'd think that it could be a mix of regulation to split up investment and banking once again, better control of the mortgage industry to prevent predatory lending practices and dangerous mortgage instruments, education of the consumer, and a mechanism that allows people to stay in their homes under a formula that has tough but livable consequences. And I don't believe that EVERYONE in trouble should be facilitated to stay in their homes. Speculators, people out to game the system, etc. should clearly simply lose. I believe that most of the people who got into trouble fell into two classes: Unsophisticated home (or condo) owners who got duped into bad refinancing deals (a lot of the subprime mortgages), and regular folks who have been hit hard by the recession (losing jobs etc.). The rest were opportunists who should take their lumps... except that the harm to the rest of us should be moderated at the same time.