Huizencrisis in Amerika : De rauwe werkelijkheid

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A tipping point? "Foreclose me ... I'll save money"
LATimes

A homeowner who can't sell his house tells the L.A.Times, "Foreclose me. ... I'll live in the house for free for 12 months, and I'll save my money and I'll move on."

Banks and lenders fear this kind of thinking -- that walking away from a house could be the smart economic move -- appears to be on the rise. Wachovia, in a conference call yesterday, warned investors that increasing numbers of homeowners are walking away from their homes by choice: "... people that have otherwise had the capacity to pay, but have basically just decided not to because they feel like they've lost equity, value in their properties..."

Calculated Risk notes this is "one of the greatest fears for lenders ... that it will become socially acceptable for upside down middle class Americans to walk away from their homes."

A commenter on L.A. Land this morning writes, "I am one of these people. My condo has dropped in value from $520K in 5/06 when I bought it to $350K now. My ARM payment will probably go up $900 per month in June.

"Despite all this, I would be willing to stay if the bank would refi the loans to a 30 year fixed, but since I'm not a 'hardship' case they'd apparently rather foreclose. I guess the only way I could qualify for loan mitigation is to get my boss to fire me, stop making payments, and wreck my credit. In fact, my bank won't even talk to me until I miss a couple of payments.

"I have purchased a cheaper place in a nearby area now, while my credit is good, and will stop making payments on house #1 after house #2 closes. I know the foreclosure will be on my credit for 7 years, but I will have saved a lot of money.

"I realize I agreed to the deal when I signed the mortgage papers, but I am within my rights to walk away from a bad deal and suffer the consequences, just as many corporations write down billions of dollars of debt, lose money for their shareholders, and lay off people as a result of their bad decisions.

"I don't really understand why people view a business decision by a homeowner as a terrible moral lapse. However, when large lending institutions, with access to more sophisticated information than any consumer could imagine, make mistakes affecting thousands of people worldwide, they are not excoriated and vilified with the same righteous zeal."

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globaleconomicanalysis.blogspot
Changing Social Attitudes At Forefront Of Crisis

Changing Social Attitudes About Debt have clearly moved to the forefront of the housing crisis. Even those who can afford to pay are walking away with no regrets. And with people walking away in mass, Banks Attempt To Freeze Balance Sheets is destined to fail.

This is what happens when you give people free money. Unfortunately, Bernanke, Congress, and Paulson are intent on giving away more free money to fix the problem. On the surface this might appear inflationary. However, credit destruction and bank impairments are happening far faster than Bernanke and Congress are acting.

Welcome to Deflation American Style. At the current rate of progression, Deflation American Style figures to be far worse than anything Japan ever saw.

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Op donderdag 31 januari 2008 07:45 schreef Papierversnipperaar het volgende:

[..]

Gewoon verstandig zakendoen. Het is toch niet illegaal? Dan pak je de mogelijkheid met het minste verlies.

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Op donderdag 31 januari 2008 08:01 schreef Papierversnipperaar het volgende:

[..]

Het is verboden om er achter te komen dat je te weinig geld hebt om je verplichtingen na te kunnen komen? Dus al die mensen die in Nederland in de schuldhulpverlening zitten moeten naar de gevangenis?

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S&P voorziet subprime-verliezen tot boven USD 265 mrd
Beurs
(tbm) - Amsterdam (BETTEN FINANCIAL NEWS) - Kredietbeoordeelaar Standard & Poor's verwacht dat de verliezen van financiele instellingen op investeringen gerelateerd aan de Amerikaanse markt voor risicovolle hypotheken mogelijk op kunnen lopen tot meer dan USD 265 miljard. Dat heeft het Amerikaanse kredietratingsbureau donderdag bekendgemaakt.

Hoewel de grote zakenbanken als Citigroup en Merrill Lynch momenteel verantwoordelijk zijn voor het grootste deel van de huidige USD 90 miljard aan afschrijvingen, zal de volgende ronde van afschrijvingen volgens S&P komen van de kleinere financiele instellingen in Europa, Azie en de Verenigde Staten.

Woensdag werden de ratings voor USD 534 miljard aan obligaties en schuldverplichtingen met onderpand, de zogenoemde CDO's, gerelateerd aan risicovolle hypotheken door S&P verlaagd of onder review geplaatst. Deze verlaging of review van de ratings door S&P zal volgens marktpartijen leiden tot verdere afschrijvingen op hypotheekgerelateerde investeringen door financiele instellingen.

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abc

More than two million housing foreclosures were filed in the US last year and new figures show home prices in ten major American cities fell by a record 8.4 per cent last year, suggesting the housing slump is worsening.

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Troubled homeowners: Can't pay? Just walk away
More and more borrowers are watching their house values sink while the cost of their loans skyrockets. What to do? Skip out on the mortgage all together.

Bron : CNN-money


NEW YORK (CNNMoney.com) -- Mortgage payments are set to jump. Home prices have plunged. "I'm outta here."

Homeowners are abandoning their homes and, more importantly, their mortgages, rather than trying to keep up with rising payments on deteriorating assets. So many people are handing their keys back to lenders that a new term has been coined for it: jingle mail.

"I stopped paying my mortgage in October, after shelling out about $70,000 in interest [over 15 months]," said one borrower, David, who doesn't want his last name used. "Now, I'm just waiting for the default notice."

The Los Angeles-based writer bought two properties in Hancock Park, west of downtown, using no-down, interest-only mortgages in 2006. He paid just over $1 million for both.

David had planned to sell them quickly but got caught in the slump. Soon his interest rate will jump by a few points, and his payments will go up by several hundred dollars a month for each place. He figures his properties have fallen in value by at least $60,000 each.
Tell us what you think: When is it ok to walk away?

Current lending practices have created an environment where a measure as extreme as abandoning a home actually makes sense to some people.

Many buyers put little or no money down, so they don't have much invested in them. That leaves them with little incentive to keep making payments when a home's market value dips below the balance of the mortgage.

The most serious consequence is a tremendous hit to credit scores. For some, that's better than throwing away money they'll never recover by selling their home.

And while a mortgage default can savage a person's credit record, trying to pay off a loan they can't afford could be worse for borrowers if it leads to bankruptcy, said Craig Watts, a spokesman for the credit reporting firm Fair Isaac.

Credit scores are hurt much more by missing multiple payments - on credit cards, cars and so on - than by a single foreclosure.

"The time it takes to regain your credit score [after foreclosure] can be shorter than after bankruptcy," said Watts.

It typically takes three years of a spotless payment record after a bankruptcy before credit scores recover enough for someone to think about buying a home again, he said. After abandoning a mortgage, a person may be able to buy a new house in two years or less.

And now skipping out on a home is easier, thanks to the Mortgage Debt Relief Act of 2007. Previously, if a bank sold a foreclosed home for less than the mortgage balance and it forgave the difference, the borrower had to pay tax on that difference as if it were income. Now the IRS will ignore it.

"That's going to help a lot of people," said Mike Gray, a San Jose accountant who runs the web site Realestatetaxletter.com.
Most middle class still can't buy a house

The trend of walking away is most pronounced among real estate investors, according to Jay Brinkman, an economist with the Mortgage Bankers Association (MBA).

But families are doing it too. "If they have to stretch to make mortgage payments for a home that will not recover its value, then yes, they may walk away," he said.

Often they chose hybrid adjustable rate mortgages (ARMs) that came with low initial payments. After a few years, interest rates on these loans reset higher. But buyers thought they could count on the increased value of their homes to refinance into affordable, fixed-rate loans.

Now, that may not be possible. Take Susan (not her real name), a client of HouseBuyerNetwork.com, which specializes in arranging short sales. A short sale is when a bank agrees to accept the sale price paid for a home - even if it is less than the outstanding mortgage on it - as payment in full. An owner might sell a house with a $200,000 mortgage for $180,000, and then the bank forgives the difference.

HouseBuyerNetwork.com CEO Duane LeGate says that Susan's two-bedroom condo in Sonoma County is worth $340,000, but the mortgage balance is $380,000. She can't refinance and it's difficult to sell.

She's still trying for a short sale but, said LeGate, "She'll almost certainly end up walking away."

Beyond anecdotes, some statistics indicate that hard-pressed owners are deliberately courting foreclosure. An analysis by the consumer credit rating agency Experian last spring found that many borrowers were choosing to pay off credit card and other consumer debt before making mortgage payments. They were electing to put their mortgage at risk rather than their credit cards or auto loans.

Similarly, Richard DeKaser, chief economist for National City Corp., (NCC, Fortune 500) notes that while all credit metrics are deteriorating, mortgage delinquencies are rising disproportionately. "That makes sense if people are choosing to walk away," he said.

And now reports are emerging of homeowners skipping out on mortgages even though they can still afford to pay them.

Wachovia (WB, Fortune 500) CEO Ken Thompson described these people on an earnings call last month."[These are] people that have otherwise had the capacity to pay, but have basically just decided not to, because they feel like they've lost equity, value in their properties."

Lenders are afraid that borrowers may find it's worth the hit to their credit scores, if they can drastically reduce their housing expenses. Someone with good credit and a $600,000 home in a town with cratering real estate prices could buy a similar house nearby for $450,000, and then let the other $600,000 mortgage go into foreclosure.

The stage is set for this kind of thing particularly in California, where huge numbers of buyers used low or no-down deals to buy homes. The trend has even spawned at least one new business, San Diego-based YouWalkAway.com, which for a fee of $1,000 purports to guide clients through the process of ditching their mortgages. It launched in early January, and says it has already signed up 180 clients.

California is a bit of a safe haven for these borrowers, since banks that repossess and then sell a foreclosed property for less than the mortgage that was owed on it cannot come after borrowers for the difference - as long as it's the initial mortgage, one that has not been refinanced. So if a borrower owes $200,000 and the bank sells the house for $170,000, the borrower comes out of it debt-free.

And for many homeowners, the prospect of becoming debt-free is growing increasingly alluring.

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More in foreclosure choose to walk away

Bron : SFGate

Foreclosure used to be a last resort, something that hard-pressed homeowners would scrimp and plead to avoid. But as the subprime lending crisis sweeps up millions of borrowers nationwide, some are deliberately choosing foreclosure as an early option.

As their home values tumble and their mortgages rise, these "walk away homeowners" decide to cede their houses to their lenders.

"It's throwing good money away after bad" to pay an escalating mortgage on a home that's plunging in value, said Army Sgt. 1st Class Nicklaus Skaggs of Vacaville. He and his wife, Tishara, stopped paying their mortgage in February. They signed up with a new company called You Walk Away to help guide them through the multi-month foreclosure process.

The couple paid $455,000 for their Vacaville home almost three years ago, shortly after Nicklaus Skaggs returned from a year in Iraq. Now the home's value has dropped to $290,000. Their adjustable-rate mortgage, which started at about $3,000 a month, has reset twice, climbing to about $4,000.

They have no regrets about their decision.

"I feel like the pressure has lifted off my shoulders; before I was trapped," said Nicklaus Skaggs, 40, an earnest man who plans to retire from the Army in two years, after completing 20 years of service.

"If we keep paying the mortgage, we would really sink ourselves," added Tishara Skaggs, 35, who was an Army specialist driving heavy-wheel trucks until her lupus led to a medical discharge in 2002. The Skaggses have two daughters, Tabitha, 7, and Madisyn, 6 months.

No skin in the game

Walk-aways represent a profound shift in American attitudes toward homeownership - a shift that may have begun with the no-money-down subprime loans. People who don't have "skin in the game" - their own cash on the line - feel less attachment to their homes. People who bought homes expecting rapid appreciation may be quicker to dump them when they don't perform as expected.

The walk-away phenomenon is common enough that mailing in one's keys to the lender has earned its own nickname: jingle mail.

In California, purchase mortgages on residences are "nonrecourse," which means lenders cannot pursue foreclosed homeowners for additional money.

It is clear that many borrowers cede their homes without asking their lender for a break. More than half of foreclosures involve people who never spoke to their bank, studies show.

Housing counseling agencies said they would never advise clients to surrender to foreclosure without exploring other options.

"It never makes sense to literally just walk away," said Martin Eichner, director of the HUD program at Project Sentinel in Sunnyvale. "Even if you're hopelessly underwater, you should at least try to negotiate a short sale or deed in lieu of foreclosure where you give it back voluntarily. The worst thing to do is to let it go to foreclosure because it goes on your credit report as a black mark that follows you for years to come."

But some financial experts, such as "mad man of Wall Street" Jim Cramer, say walking away makes economic sense.

"When your house drops 20 percent in value ... it's better to walk away, even if you're wealthy," he said on TheStreet.com TV last summer. "Because you don't want to lose your credit card and you don't want to lose your car. Your house is the one thing that's fungible. It's smart to walk away."

New company offers help

You Walk Away (youwalkaway.com), based in San Diego, began in January to assist homeowners who want to let their homes go into foreclosure.

"What if you could live payment free for up to 8 months or more and walk away without owing a penny?" its Web site asks prospective customers. "Unshackle yourself today from a losing investment and use our proven method to Walk Away."

While going into foreclosure is free - you just stop paying your mortgage - Jon Maddox, co-founder and senior advocate at You Walk Away, said the company provides emotional, practical and legal advice that makes the process more palatable.

Customers pay $995 for an advocate to answer questions via phone and e-mail, a letter to their lender to stop dunning phone calls, consultations with a real estate attorney and a CPA, and assistance cleaning up their credit after foreclosure.

You Walk Away has served slightly more than 500 people in its 2 1/2 months of operation, Maddox said.

Maddox said 70 percent of his customers are financially floundering, while 30 percent made an economic decision to walk away.

"They don't care about their house anymore," he sad. "It's a big weight around their neck. They're trying to get out of it and get their heads above water again. They're paying too much for the title of homeowner."

You Walk Away operates in California, Nevada, Arizona, Washington, Oregon, Colorado and Florida and is working to set up services for six other states. Maddox said the 13-employee staff will triple within a few months.

What about downsides?

Foreclosure carries a range of financial negatives, but some are not as drastic as people imagine. Homeowners do not have to declare bankruptcy in a foreclosure (although some people do so because it temporarily halts the process, giving them more time in their homes.)

An oft-cited fact is that a foreclosure stays on one's credit report for seven years. Many people assume they could not buy another house during that time.

But even the company that crunches numbers to produce credit scores says a foreclosure is not that devastating.

Jennifer Crawford, senior director of product support for Fair Isaac Corp. in San Rafael, said she would tell a homeowner being foreclosed upon: "All is not lost for the long term. Do not panic. You can absolutely take a structured approach to getting back in good credit standing. All other things being equal, in one or two years you can quickly build back up your credit standing."

The three major credit bureaus all use Fair Isaac's algorithms to calculate credit scores.

While a foreclosure does stay on a credit report for seven years, its impact declines over time, Crawford said.

"Let's take a scenario where you have a foreclosure but every other aspect of your credit profile is current - you've made all payments and have no other derogatories," she said. "If that is the situation, probably within a couple of years, you could be back in the high 600s or low 700s" - considered good credit scores.

Crawford said the impact of other steps short of foreclosure - missing payments, arranging a short sale, or returning the house as a deed in lieu of foreclosure - all depends on whether and how the lender reports them to the credit bureaus.

Tax consequences are another downside. Ordinarily, "canceled debt" such as a foreclosed mortgage is taxed as income. However, a law passed late last year mitigates this at the federal level until 2009.

Playing hardball with the bank

Some homeowners are sufficiently savvy - and brash - to try to turn the housing meltdown to their advantage.

A Discovery Bay man who asked not to be identified said he is "upside down" on his house by about $260,000. Instead of bemoaning the situation, he plans to capitalize on it.

"I refinanced a couple of years ago and pulled out $100,000 and put in a fabulous pool," he said. "Now I've got this fabulous pool and fabulous house, but it's not worth anything. Why shouldn't I be building equity over the next four to five years instead of playing catch-up?"

The man said he has not made a mortgage payment for five months.

"I'm playing the bank game," he said. "I'm playing chicken with them. I already got them to agree to put (the unpaid) payments on the tail end of the loan. What I'm really pushing them to do is to (adjust my mortgage) for the current market value and write off the rest. I'd love (to have it) lopped down to a $450,000 basis rather than $710,000."

If the bank won't negotiate, he'll walk away, the man said.

That kind of story sends chills down bankers' spines. To date, most loan modifications have involved freezing interest rates or repayment plans for arrears.

But no less an authority than Ben Bernanke, the chairman of the Federal Reserve, is now urging lenders to reduce mortgage principals so homeowners won't walk away.

"Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure," he said in a speech this month.

Not deadbeats

From their online research, the Skaggses know that bloggers have a lot of vitriol for walk-away borrowers, calling them irresponsible and worse. The couple say they have always paid their bills on time and feel they were given poor advice about both their mortgage and the housing market. Now they are in limbo, living among unpacked boxes. They returned a few months ago from a temporary posting to Fort Bliss, Texas, and stopped unpacking when they realized how high their mortgage would soar. They tried to contact their lender for a loan modification, but found the experience frustrating and their lender unresponsive.

Nicklaus Skaggs will be redeployed this summer, possibly to Iraq again. After he retires from the Army, they hope to buy a house in his hometown of Louisville, Ky. In preparation for that shift, he's studying for a bachelor's degree via correspondence school and then plans to pursue an MBA.

With no housing expenses during the eight-month-plus foreclosure process, they can save for a down payment, they said. Since so many people are now swept up in foreclosures, they hope that lenders will extend some grace to people like them, they said.

"In the long run, I think this is the best financial solution," Nicklaus Skaggs said. "I have to do what's right for my family. I don't care if someone judges me. I certainly wouldn't put my family in a position to lose $150,000 if I can help it."

Default rates in Bay Area

Foreclosure rates around the Bay Area vary tremendously. Cities such as San Francisco have few foreclosures, while outlying parts of Contra Costa and Solano counties are heavily impacted.

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Searching for Plan B

Bron : economist.com

As America's mortgage mess worsens, radical solutions are gaining appeal

WITH brick-fronted townhouses and old-fashioned street lamps, Faulkner's Landing in Ashburn is one of hundreds of new developments that sprouted across the farmlands of northern Virginia during America's housing boom. Less than three years old, these houses originally sold for around $550,000, but are now worth some 40% less that that. Foreclosures are rising. For owners who put little or no money down, points out Danilo Bogdanovic, a local estate agent, it is often not worth paying a mortgage far greater than the value of the house.

As America's house prices slide, fears are growing that more people will post the keys to their lender and walk away. The practice, already common among speculative buyers, has a nickname, “jingle mail”. For a fee, websites such as youwalkaway.com, explain what to do. Laws on repossession differ by state. But thanks to high legal costs, mortgage firms have historically not chased borrowers even when the law allows it.

It is easy to paint grim scenarios. Repossessions are soaring, up 90% from a year ago according to RealtyTrac, a seller of foreclosure statistics. According to the S&P Case-Shiller index, average house prices fell by 9% in 2007 (see chart), and the pace of decline is accelerating. Mark Zandi of Moody's Economy.com reckons that 8.8m mortgage-holders, 17% of the total, have home loans that are greater than the value of the house. If house prices fall by another 10%, as he expects, Mr Zandi expects almost 14m mortgages to be underwater in a year's time.

Given that the typical mortgage is worth $225,000, over $3 trillion of debt would be affected. Since the costs of foreclosure can eat up 25% or more of the value of a loan, the losses could be enormous if a large fraction of these borrowers walk away. Nouriel Roubini, one of Wall Street's most pessimistic seers, worries that the “forthcoming jingle-mail tsunami” could spawn $1 trillion-2 trillion of financial losses, creating a systemic banking crisis.

Experience from previous regional housing busts suggests most people with negative equity do not simply walk away from their houses. But much about today's situation is unprecedented—particularly the high initial loan-to-value ratios. On February 27th Fannie Mae, the government-backed mortgage giant, announced an unexpectedly big loss of $3.55 billion for the fourth quarter of 2007 because of increased foreclosures.

Until recently, Washington's main fear was that foreclosures would soar as the low initial interest rates on some 2m adjustable subprime mortgages reset. In December 2007, to great fanfare, the Bush Treasury cajoled the mortgage industry into promising a (voluntary) temporary rate-freeze for certain groups of borrowers. So far, these efforts have yielded little. But thanks to big rate cuts by the Federal Reserve, resets are becoming less of a problem. One analysis suggests that the typical reset now involves a jump in monthly payments of just over 10%, compared with 25-30% six months ago.

But even as resets become less painful, analysts are realising that they are not the main cause of foreclosure. An influential study from the Federal Reserve Bank of Boston points to falling house prices, and the resultant negative equity, as a far bigger trigger. Stemming foreclosures, points out Paul Willen, an author of the study, will depend on reducing the size of mortgages relative to the value of a house.

One approach under consideration in Congress is to adjust America's personal-bankruptcy law so that judges can “cram down” a mortgage to the market value of a house. Under current law, judges cannot reduce the debt on someone's main residence, though they can do so for holiday homes or investment properties. Proponents of the legislation reckon 600,000 people could avoid foreclosure if the rules were changed.

The mortgage industry is vehemently opposed. And many economists worry that allowing cram-downs will worsen the drought of credit in America's mortgage markets. Chris Mayer of Columbia Business School points out that some $750 billion of annual mortgage lending has dried up as the securitisation of subprime and jumbo loans has collapsed. Changing bankruptcy rules, he argues, would make matters worse by raising the cost and reducing the supply of mortgage credit. Several studies have shown that borrower-friendly laws lead to more restricted credit. However, a new paper by Adam Levitin of Georgetown University Law School and Joshua Goodman of Columbia University finds scant difference in interest rates on mortgages that can already be crammed down (such as holiday homes) and those that cannot.

Unsurprisingly, bankers are lobbying for a different approach, one where the government stems the foreclosure spiral (and limits losses) by buying and refinancing whole swathes of mortgages. One idea, championed by Chris Dodd, the chairman of the Senate Banking Committee, is to recreate a modern version of the Home Owners' Loan Corporation, a Depression-era institution that refinanced mortgages in the mid-1930s when almost half of all home loans were in default. Other proposals have similar aims. A government institution, such as the Federal Housing Administration (FHA), would buy mortgages at a discount and refinance them into new loans with a government guarantee. Credit risk for the refinanced mortgages would shift to Uncle Sam.

How much of a “bail-out” this implies depends on the discount at which the mortgages are bought and on their subsequent performance. Most proposals suggest using the market price; Mr Zandi wants the government to buy mortgages by auction. Some plans are ambitious: Alan Blinder of Princeton University foresees an institution that takes over between 1m and 2m loans, worth $200 billion-$400 billion. Other schemes are narrower. Democratic congressmen talk of an initial capitalisation of around $20 billion.

Another complementary idea, touted by the Office of Thrift Supervision (OTS), is to give mortgage lenders a share of the upside if properties appreciate. Under this scheme, the FHA would insure a new mortgage at a house's current value. The existing lender would get a “negative equity” claim for the difference between that and the original loan, which could be exercised if the house later sold at a higher price. Some proponents of bankruptcy reform want to attach similar provisions to the cram-down. But the details of any “shared appreciation” devices are tricky. If homeowners have little hope of building equity in their house, the incentive to default remains.

All told, all the plans are fraught with problems. Bankruptcy reform will help some of today's borrowers while hurting tomorrow's. Government refinancing potentially puts taxpayers' money at risk. For the moment, the Bush administration opposes both and pins its hopes on voluntary loan modifications. Public opinion is also against any “bail-out”. But the climate in Congress is shifting. As the housing market worsens, bigger government intervention is becoming ever more likely.

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De rauwe werkelijkheid van de kredietcrisis
Bron : AD

Het is moeilijk te geloven dat er ooit gezinnen waren die droomden van een huis op Brehl Avenue in Columbus.

De kredietcrisis slaat hard toe. FOTO AFP/TIMOTHY A. CLARY
De straat in de wijk Franklinton lijkt op een filmset van een donkere misdaadthriller.

Het merendeel van de woningen is dichtgespijkerd of half in elkaar gestort. Sommige huizen hebben oranje waarschuwingsstickers van de gezondheidsdienst op hun deur. Veranda’s liggen vol verrot kinderspeelgoed. Verderop, in North Linden, is de situatie al niet veel beter. Daar herhaalt zich het beeld van rijen verlaten woningen.

Hier is pijnlijk duidelijk wat de kredietcrisis behelst. Dit is geen verlaging van de rente door de Fed, hoge afschrijving van een bank of noodkrediet aan een financiële reus. Dit is de rauwe werkelijkheid.

,,De kredietcrisis heeft hier heel hard toegeslagen. En Ohio was al kwetsbaar omdat er zoveel banen zijn verdwenen. Ik heb de woningen onder mijn ogen zien vervallen. Dit is echt een enorme economische ramp,’’ zegt postbode Fred Wilson. Met pijn in het hart bezorgt hij dagelijks de aanmaningen bij gezinnen die hun hoofd toch al amper boven water kunnen houden. Elke week wordt zijn ronde weer een stukje kleiner. ,,Gezinnen trekken weg uit de wijk. Alle leven wordt uit deze buurten gezogen. Ik weet niet of het ooit nog goed komt met de steden in Ohio.’’

Franklinton en North Linden zijn slechts twee van de vele wijken in de VS waar de Amerikaanse hypotheekcrisis diepe sociale wonden heeft achtergelaten. Alleen al in de acht grote steden van Ohio staan op dit moment 25.000 huizen leeg, omdat de bewoners hun maandlasten niet meer konden betalen of omdat speculanten hun investeringen lieten verpieteren toen de huizenmarkt instortte. Vorig jaar betaalden gemeenten zo’n 63 miljoen dollar aan sloopkosten, schoonmaak, onderhoud en extra politie-inzet in de wijken. Criminaliteitscijfers schoten omhoog omdat drugsdealers en gangs konden kiezen uit een ruime selectie dichtgetimmerde krotten om hun zaken te doen. De achterblijvers in de wijken moeten lijdzaam toezien hoe de buurt aftakelt. Voor velen is hun droomhuis verworden tot een financiële muizenval omdat het veel minder waard is dan het aankoopbedrag. Hun rest niets anders dan een gevecht tegen de verpaupering.

,,Dit is de absolute onderkant,’’ zegt bewoner Bill Stone met een weids gebaar langs de huizen op

Brehl Avenue. De veteraan kan zich nog herinneren dat zijn straat een gezellige gezinswijk was, waar kinderen speelden in keurige tuinen met frisse witte hekjes. ,,De buurt was prachtig,’’ droomt hij weg. ,,Iedereen maakte een praatje met elkaar op de veranda. Het was echt een hechte gemeenschap.’’

Tegenwoordig is de straat onleefbaar, zegt Stone. ,,Het is een spookwijk. Op elke hoek worden drugs gedeald, er lopen ratten door mijn huis en er gaat geen avond voorbij of er is wel ergens een politie-inval. Het is een schande dat wij in een land als Amerika zo moeten wonen.’’

Stone wijst de regering Bush aan als de schuldige voor de economische malaise in de VS. ,,Wij spelen over de hele wereld politieagentje en vertellen iedereen hoe ze moeten leven. Maar ondertussen zorgt de regering niet voor haar eigen burgers. Als we de miljarden voor de Irakoorlog hadden uitgegeven in eigen land, zaten we nu niet zo in de problemen.’’

George, een huisbaas die zijn achternaam niet wil noemen, heeft bepaald geen medelijden met de slachtoffers van de kredietcrisis. ,,Veel mensen hebben gewoon te hoge leningen afgesloten. En toen ook nog eens de prijzen van benzine en levensonderhoud omhoog gingen, bleek dat ze hun maandlasten niet meer konden betalen. Ja zeg, er is ook zoiets als eigen verantwoordelijkheid.’’ Bill Stone kruist ondertussen de dagen op zijn kalender af. Nog een paar weken en dan laadt ook hij zijn auto vol om voorgoed de wijk te verlaten. ,,Ik ga naar Florida. Financieel zal het er niet veel beter op worden. Maar het is er in elk geval lekker warm.’’

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Op dinsdag 18 maart 2008 20:00 schreef gronk het volgende:

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http://econvideo.blogspot.com/

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Disappearing now: $6 trillion in housing wealth

A Washington think tank is warning that housing prices are falling at an accelerating level, destroying wealth at a pace that will cost the average homeowner $85,000 in lost wealth this year alone.

The projections by the Center for Economic and Policy Research are based on the numbers in Tuesday's Case-Shiller home price index, which showed accelerating price declines in most big cities.

The annual rate of price decline over the last quarter was 24.9% in the 20-city index and 25.8% in the 10-city index," the center said in its Housing Market Monitor today. "At this rate of price decline, the excesses of the housing bubble will have largely disappeared by the end of the year. At the same time, the price decline implies an incredibly rapid loss of wealth. In real terms, the rate of price decline in the 20-city index would imply a loss of almost $6 trillion in real housing wealth over the course of the year, an average of $85,000 per homeowner."

I'm a so-so student of economic history, but I'd have to bet that, even adjusted for inflation, the only time that many Americans have lost that much wealth in a short period of time would have been during the Great Depression. I'm not even sure it happened during the Depression. (I understand: This hasn't happened yet; it's only a prediction.)

Repeating again: The CEPR says prices are falling so rapidly that the bubble will be gone by the end of 2008, but the loss of housing wealth will be massive.

quote:

Amerikaan verliest tien huizen

Telegraaf
LOS ANGELES - Ooit mocht de Amerikaan Shawn Forgaard zich de trotse bezitter van tien huizen noemen. Een bewoonde hij, met de overige negen speculeerde hij op een verdere stijging van de huizenprijzen.

De hypotheekcrisis die de Verenigde Staten sinds vorig jaar in de greep houdt, heeft van de 37-jarige Forgaard echter een arm man man gemaakt. De huizenprijzen kelderden zo hard, dat banken waarschijnlijk al zijn huizen zullen verkopen. De Californiër, een projectmanager bij een softwarebedrijf, kan de hypotheeklasten niet meer opbrengen. De schulden zijn zo hoog opgelopen dat hij zelfs met vrouw en zijn pasgeboren zoontje zijn eigen huis moet verlaten.

Forgaard financierde zijn vastgoedprojecten met 800.000 dollar aan aandelenopties. Hij koos daarbij met goedkeuring van zijn banken voor een constructie waarbij de aflossingen lager zouden zijn dan de rentelasten. Dit hoefde een niet al te groot probleem te zijn als de huizenprijzen zouden blijven stijgen, maar met een daling van 40 procent had hij geen rekening gehouden, zo zei hij tegen persbureau Reuters. „Ik wist dat ik op een tijdbom zat, maar ik dacht dat ik over genoeg kapitaal beschikte om de storm te weerstaan en de huizen kon herfinancieren.”

Forgaard vertoeft sinds 2000 in een mooi stulpje in Santa Cruz, bij het strand. In 2004 speculeerde hij voor het eerst met een huis in North Las Vegas, waarna investeringen in onder meer Phoenix en Palm Springs volgden. Allemaal plekken waar de huizenprijzen omhoog waren geschoten, maar waar nu ook de grootste klappen vallen.

Spijt heeft Forgaard echter niet. „Op het eerste gezicht lijkt het een totale verwoesting, maar het omgekeerde geldt juist. Ik ben ervan overtuigd dat we hier veel rijker uitkomen.”

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Getting Paid To Walk Away
housingdoom.com

It apparently isn’t just homeowners walking away from their homes. Now squatters are moving into foreclosure properties- and making a quick buck while they are at it:

Squatters are moving into foreclosed homes and posing as tenants so they can live in comfort until the bank either goes through the eviction process or bribes them to leave.

In a process known as “cash for key,” the squatters call the bank and boldly ask for money in order to move.

"There are people who move in and know exactly who to contact and say, ‘If you want this house, why don’t you come out here and offer me cash,’" says Detective Erin Camphouse of the Los Angeles Police Department’s Real Estate Fraud Unit.

"It’s just cheaper for the banks to do that rather than going into the courts," she says. "The squatters are getting sophisticated and turning it on these banks who own the properties."

Who says you can’t make money in real estate these days?

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S&P Slashes $34 Billion in ALT-A Securities. ALT-A…The Next ‘Crisis’
mrmortgage.ml
Posted on May 28th, 2008 in Uncategorized

I have written enough about ALT-A to fill a phone book, so at the bottom of this post is the story summarized by Bloomberg. ALT-A is where the real disaster in the bubble states like CA will come from.

The ALT-A crisis may make the subprime crisis look like a bump in the road when all is said and done.This story is really picking up steam lately, but it seems like as with the suprime crisis at the beginning, the mainstream media and definitely Washington is not giving this much attention. In my opinion, the ALT-A space collapsing could cause much larger crisis for the broader economy because ALT-A loans cut across all socio-economic boundaries and were used most heavily in in the nation’s most affluent cities/regions.

If you watch the video I did last month called ‘ALT-A Disaster Looming, Know the Facts’ I go over the loan characteristics of the ALT-A universe and while much is identical to subprime, the borrower class has an average credit score over 700!

Many said a year ago+ when New Century collapsed that they were the ‘canary in the coal mine’. I have always said ‘the entire subprime sector is the canary in the coal mine’.