Delivering a ridiculous level of vacuous hyperbole, Thursday's CBS Evening News greeted reports of a 0.83 percent 4th quarter foreclosure rate with just under 6 percent of mortgages more than a month past due as proof “the American dream” is “slipping away” since “foreclosures are spreading like cancer.” Those may indeed be unusually high levels, but the American dream is hardly “slipping away” when 99.17 percent are not in foreclosure and 94.18 percent are paying on time or nearly on time.
Anchor Katie Couric at the top of the March 6 CBS Evening News, with "Foreclosure Crisis" on screen:
Good evening, everyone. It's one of the worst things that can happen to a family, but it's happening to more and more in this country. They're losing their homes to foreclosure. The mortgage industry reported today that the foreclosure rate in the final quarter of 2007 hit an all-time high [0.83%]. And the government says, that for the first time ever, lenders own a greater percentage of the average home than the homeowner does. Anthony Mason now on the American dream that's slipping away.
Mason began his lead story:
From the Bronx to Boston to St. Paul -- foreclosures are spreading like cancer. In Minnesota, legislators aren't waiting for outside help. They've introduced legislation to require lenders to defer foreclosures on sub-prime loans for a year...Across the country, the delinquency rate for all mortgages -- those are payments more than a month past due -- has soared to nearly 6 percent [5.82%], the worst since 1985....
—Brent Baker is Vice President for Research and Publications at the Media Research Center
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CBS's business manual
March 6, 2008 - 20:14 ET by c5thenUntil a Democrat is in the Whitehouse, the economy WILL BE portrayed as awful, terrible, and getting worse.
The day that "politician" became a career choice is the day we started losing the Republic. Let's get it back! Alan Keyes '08.
Home Owners - 30% Have No Mortgage
March 7, 2008 - 01:31 ET by zeestephenThe MSM always leaves out one critical data point on foreclosures and delinquencies.
30% of homes have no mortgage.
Thus, just 0.58% of all American homes are in foreclosure.
Just 4.2% are more than one month delinquent.
Those are not good numbers, but they do add perspective.
Also, the owner-lender equity percentage is not especially meaningful.
A huge oversupply of homes has caused home values to drop sharply for two years, thus robbing home owners of equity. This is a one of a kind event. In the 1930's home prices fell because of world wide deflation, not because of oversupply.
this 'hype' is also popping
March 6, 2008 - 20:16 ET by crsheddthis 'hype' is also popping up on drudge. i hit a link on drudge and found this:
http://apnews.myway.com/article/20080306/D8V82V580.html
(so what if the american dream is now owned more by the lender than the borrower)
getting real tired of these libs not crowing about this great economy we have going on here. now even drudge is suckered into this b.s. if it wasn't for newsbusters, i would think maybe there was something to worry about.
crshedd, out to coddle and baby failure (as usual)
March 7, 2008 - 03:40 ET by Unsaneso what if the american dream is now owned more by the lender than the borrower Well, if the borrower would stop being a dumbass and overextending himself, of his own freewill, maybe that wouldn't be the case!!! If You Can't Afford It, Don't Buy It.
Way too many people want to feel sorry for those who routinely screw up of their own freewill, and get into the business of coddling failure.
But then, I AM posting to a committed Socialist who sees taking his next breath as a great strain that is too much to bear, if a government Nanny isn't showing him HOW to breathe.
Res tantum valet quantum vendi potest.
so what if the american
March 7, 2008 - 07:04 ET by motherbeltso what if the american dream is now owned more by the lender than the borrower
Exactly.
Sheesh! What universe are these people living in???? That's what happens when you buy a house!! Especially a first house!
What do these people expect??? Do they think families can save up enough of a down payment to only mortgage half the cost of the house?
American families have bought houses with 10% down (zero on VA loans) for years! All of a sudden NOW this is a "tragedy" that shouldn't be happening???
Come on, Get real, for crying out loud!!!
OK, then, let's get a law passed that people can't mortgage more than half the selling price of a house. Just attempting to pass such a law would produce outrage by the very same people, that Americans are being deprived of the American dream, because no one can do that!!
Sometimes in real life
March 6, 2008 - 20:23 ET by ThalpySometimes in real life employers can't afford to pay their employees for doing sub-prime work. Loans that were made without sound fiscal judgement and houses that were purchased that cost far more than people could hope to pay involved banking and personal judgements. None of us got to vote on these decisions,so therefore we should not be involved in the bail-out, but we are involved because everything will cost more-including loans.
I'm sorry, just not responsible. There are consequences for everything except socialism. This isn't a no-fault life.
»→ Thalpy
March 6, 2008 - 20:28 ET by Cool ArrowA perfect analogy is those "rent to own" furniture and wheel stores where you pay weekly.
Those houses going back were primarily "Nothing Down" so they were Rent to Own.
It's not that hard to walk out on a rental unit.
♣ a seal
6% Delinquency Is a Crisis - These are Mortgages Not Credit Card
March 6, 2008 - 20:35 ET by blogonatorThese numbers are hugely bad and it is a crisis. The problem is that at these levels, if they are sustained for even a little while, a lot of banks will go insolvent and require FDIC receivership. Likewise, mortgage interest rates will have to rise considerably making the problem worse.
Default rates on mortgages aren't figured the same way for banks and rates as they are for the common person's mind. 6% delinquency may seem low and 0.83% foreclosures may seem low, but they are a huge crisis. The reason is that banks' loan loss reserves and mortgage interest rates assume much lower default rates.
If banks quadrupled loan loss reserves and capital and conforming mortgage rates rose to about 9% or 10%, then yes, I'd say the system is in balance. But with rates at 6.5% or so and bank loan loss reserves too low for these loan losses, we're on the cusp of a huge catastrophe.
Americans are so heavily in debt that rates heading back up to even 8.5% (an historically mild conforming loan rate) would cause a meltdown.
This is going to be very, very hard to get out of and because all central bankers are cowards, we can expect that instead of home prices falling 50%, they will fall 25% and the price of everything else will rise about 35% over the next two to three years.
»→ Yup
March 6, 2008 - 20:37 ET by Cool ArrowAnd my kids can afford to move up.
♣ a seal
Baloney, Salami, Pastrami
March 6, 2008 - 21:19 ET by JayTeeLet's see some Stats....15 yr loan on $170,000 house, at 7%, at say, 1700 a month payments......then at the mid-point of the loan after 7.5 years means you paid $153,000 on a 170,000 Loan, with about a 100,000 balance after 7.5 years.
So if you Foreclose on the House, the bank has had the "Victim" almost pay the full price of the house, and the Poor banker ends up with a foreclosure on a $200,000 home with a 100,000 equity. Not too bad, for a Repo.....you made money for a few years, and you get to sell it again at a Profit.
Throw in some 30 year loans, do the same figuring, and it gets slightly worse for the poor poor Bankers.
Throw in some ARM loans and ballon notes, and the Bank ends up with gettng payments equivalent to making an Interest only loan before the Foreclosure. Which translates to banks owning Real estate at market value, not much of a money maker, but you did have Income and Collateral was returned....and if houses had not been increasing at 5% or better the last 10 years, I might begin to feel sorry for the banks making ARM loans.
But 15 yr and 30 yr mortgages are making money for the Banks and leaving them Equity. ARM loans were not around very much prior to 1990, and then they Exploded on the Market. Now, banks have started exploding along with the Dummies that took out the Loans. Gee, 50 years of money making Mortgage History got ignored for a better mouse trap.
If people had ignored Calif./East Coast homes with 1200 sq. Ft and $700,000 price tags, we wouldn't be in this soup of broken ARMS.
Not exactly
March 7, 2008 - 09:33 ET by Oscar GoldmanBanks and mortgage companies have something called a "reserve requirement." Every person who has a checking, savings, CD, or other deposit at a bank is a creditor to the bank. The bank uses our money to make loans. The bank loans more money than is on deposit. The amount the bank can lend in excess of deposits is based on this reserve requirement. The bank must borrow from the Federal Reserve or other sources (i.e., subprime investors) to make those loans that exceed the amount on deposit. Therefore, the bank has a borrowing cost. The interest collected on loans is not pure profit.
Our economy is in trouble, but the media and other liberal institutions lay blame solely on President Bush and Republican policies. Neither are to blame. Congress' is insatiable appetite for spending to buy votes is one of many factors contributing to our economic woes. Much of that blame rests with the American public and its desire for government entitlements and "pork" projects in their communities. The American public is also to blame for spending more than they can afford. Those in default and face foreclosure only have themselves to blame in 9 out of 10 cases. They simply spent more than they could afford - kind of like Congress!
ARMs are not bad thing when interest rates are high, but a very poor choice when interest rates are low. Any one who bought a home when the fed discount rate was 1% and mortgage rates varied between 5.125% and 6.25% should not have been taking out an ARM expecting interest rates to DROP.
I know someone who financed a $1 million dollar condominum in 1979 at 16%!!!! He had an ARM and was very happy as interest rates fell through the 1980s.
Easy credit is like an all-you-can-eat buffet. It's there, but no one is to blame but oneself for overeating.
OK!
March 6, 2008 - 20:50 ET by okiehawk44Guess I'm just getting old, but remind me again why the Democrats solution (for everything) is to raise taxes?
Spreading like Cancer is right . . . Couric logic
March 6, 2008 - 20:51 ET by JayTeeI'd like to see some REAL reporting, instead of talking like some Led Zeplin tune "We're BAD, We're NATIONWIDE" on the Foreclosure problem. How about Subtracting the Insane California Market along with . .say... Las Vegas, New York, and throw out some DC area stats, and then give us some Nationwide Statistics of the Real U.S. Housing Market.
One size fits all is weak reporting, and if the Iraq War was going badly we wouldn't even be hearing about this less than 1% foreclosure problem. . . It would be shoved aside in favor of BDS and the War is going badly.
Katie better worry about the MSM foreclosing on her stupid buns, and she better take out a 2nd Mortgage on her house to get those Pelosi Eyes redone by a good plastic Surgeon.
Uh...Ooops...I thought I was on the Left side of Kos there for a moment...sorry....Uhhhh, Katie your eyes are OK...uhhh, aren't they ?
Wrong "Z" there, JayTee
March 6, 2008 - 22:36 ET by Scout FinchI believe that's ZZ Top, not Led Zeppelin.
American Dreaming?
March 6, 2008 - 20:52 ET by CobraManI don't know about home foreclosures here in Minneapolis as I haven't seen any, but I have seen a lot of the Condos that were built, and in some cases still being built, and which are not being sold. I've even seen a few around my neighborhood that started construction only to have that construction halted before the project was completed. I don't think that's due to sub-prime lending as people who buy Condos generally are not sub-prime candidates.
I believe that this whole "crisis" is due to the developers and bankers who set some seriously unrealistic goals over the last ten years or so and now are paying the price. They over-supplied the market and now demand is down due to the fact that most people already have the homes they want with mortgages they can afford.
There's a question that hasn't been asked by the MSM: Are more people homeless today or are they just not buying new homes as often as they did 5, 10, or 15 years ago? If the homeless rate isn't rising with the foreclosure rates then there really isn't a problem for the general population, just for developers and the bankers that back them.
The mortgage "crises" was caused by government.
March 6, 2008 - 22:01 ET by R D HelmIt was not caused by unscrupulous lenders or crooked developers.
The federal government decided back in 1977 (Google ACORN) to force lenders to give mortgage loans to people who were unqualified. Those lenders who did not "play along" were threatened with all kinds of unpleasantness. The redlining "scandal" of a few years ago only served to deepen the problem further.
Now the same government that caused this hideous problem to begin with thinks it can "fix" it buy forcing the deferrment of foreclosures, which will essentially destroy the mortgage industry in this country.
Care to guess what the government will try to do once that happens?
Theme for Election '08: I want my mommy!
RD... I tend to blame
March 6, 2008 - 22:14 ET by Clear thinkerRD...
I tend to blame people that had no idea what they were getting into when they got sold on an ARM loan. I'm one of those few people that won't sign a thing unless I understand every detail on the agreement I'm signing. This has two advantages. The first being... I understand what I'm getting into. The second being... it really pisses off sales people, especially car salesmen.
At some point people have to take responsibility for their own stupidity.
"Abstain from McCain"
There really is nothing
March 6, 2008 - 22:40 ET by SmartypantsThere really is nothing fundamentally wrong with ARM loans. This "crisis" has given a bad reputation to a legitimate option for responsible people. ARM's are the right option for someone who buys a new house with the full intention of only living there for a set time. For instance, a new couple buying a starter house who plan to "move up" within five years, would be well-suited to a 5 year ARM. There is no real reason to pay for the unneeded "security" of a 30 year rate when you only intend to live in a house for 5 years. The problem, of course, is that you need to buy a house you can afford in the first place and build enough of a cushion into your payment so that you can afford to make the payment if your rate jumps one time. We have gotten many ARM mortgages over the years, and they have saved us thousands of dollars in interest costs.
The federal government
March 7, 2008 - 07:18 ET by motherbeltThe federal government decided back in 1977 (Google ACORN) to force
lenders to give mortgage loans to people who were unqualified. Those
lenders who did not "play along" were threatened with all kinds of
unpleasantness. -RD Helm
BINGO!
And now their method of fixing it is to forbid those lenders from foreclosing and getting even some of their money back.
Haven't these idiot learned from 50 years of watching Communism at work, that you can't regulate a free market and expect success?
Ct, I agree to a point.
March 8, 2008 - 00:48 ET by R D HelmAnd from what I have seen, approx. 70% of the loan applicants chasing after sub-prime motgages, and who are now facing foreclosure, lied on their loan applications.
Yet, the same government that made this possible, if not mandatory, (and I have friends in the industry that have told me that the lenders had to maintain a quota that was government enforced) is now claiming it can "fix" this.
No way. I think they should let the chips fall where they may, and make this a life-altering learning experience for the idiots among us.
20% down should be the rule.
Theme for Election '08: I want my mommy!
In today's NY Times there
March 6, 2008 - 22:58 ET by motherbeltIn today's NY Times there is an editorial which has this:
For those who owe more on their mortgages than their houses are worth, rate adjustments may not be the best medicine.
In a speech on Tuesday, Federal Reserve Chairman Ben Bernanke recommended reductions in principal for such borrowers as a possibly “more effective means of avoiding delinquency and foreclosure.” (emphasis mine)
OK, some financial wiz out there: What does that mean? There is no explanation.
I don't know, Motherbelt
March 7, 2008 - 08:54 ET by Mica the MagnificentBut as long as the 'reductions in principal' comment doesn't mean my taxes are going to pay down the principal of someone else's mortgage, I don't really care what he meant.
Hasn't that been the NYT's
March 7, 2008 - 09:01 ET by JerryHasn't that been the NYT's problem for a while now, a "Reduction in Principle".
When asked if he went to war with Iraq to derail the impeachment vote: “I don’t think any serious person would believe that any President would do such a thing." - President Clinton (Dec 1998).
mb
March 7, 2008 - 09:11 ET by candanceLet me break it down for you:
-You lend someone 100K for a house.
-After paying you back perhaps 15K they decide to have the property value double checked.
-The local government says the property is only worth 60K.
-The government forces you to renegotiate a deal for 45K.
-Even if that person falls back in their payments, you are forbidden to seize the property.
-All you can do is pray for the borrower to make some payments and hope the interest is enough to show you a profit.
If we keep going down the path we're on, we'll see a repeat of 1929 when the banks begin running out of cash.
Thanks, candance, but I
March 7, 2008 - 09:30 ET by motherbeltThanks, candance, but I still don't get it. How does the govrernment "force" you to renegotiate a deal?
I guess in spite of my coffee, I'm still not cranking on all cylinders this AM...probably 'cause my heat is on the fritz, and it's chilly in here!
motherbelt
March 7, 2008 - 10:45 ET by candanceThe government is basically going behind the lenders' backs and telling you "don't worry about the landlord - pay 45K and we'll declare the contract paid in full."
Then if the lender tries to collect more, you simply take them to court with proof that the house was paid off and their hands are legally tied.
No Katie...
March 7, 2008 - 00:52 ET by BarkerThe only thing 'slipping away' is your credibility and your ratings. And that goes for all the MSM.
action
March 7, 2008 - 08:34 ET by mom_roxThat's Rob Reiner in the background cueing the violin music.
A government that robs Peter to pay Paul can always depend on the support of Paul.
- George Bernard Shaw, 1944
Funny, we never heard a
March 7, 2008 - 08:51 ET by JerryFunny, we never heard a peep out of Katie as home sales were breaking records year after year. Uh, that would be "American Dreams", Katie, being realized by millions who did not share the dream before.
Well, I guess Katie has her own problems. I wonder if she had to default on that loan she had to take out to buy her van.
When asked if he went to war with Iraq to derail the impeachment vote: “I don’t think any serious person would believe that any President would do such a thing." - President Clinton (Dec 1998).
Well, I guess Katie has
March 7, 2008 - 09:27 ET by motherbeltWell, I guess Katie has her own problems. I wonder if she had to default on that loan she had to take out to buy her van.
You got that wrong, Jerry. She actually said she had to "take out a loan" to fill that minivan with GAS!
I think Katie needs a raise, don't you?
/sarc off
Katie can relate to this, too, motherbelt.
March 7, 2008 - 09:39 ET by Mica the MagnificentWe had to kick him out of the club, poor fellow. He was down to his last million. - Thurston Howell III
LOL! I'm reminded of Mrs.
March 7, 2008 - 09:49 ET by motherbeltLOL! I'm reminded of Mrs. Obama's claim that they would have really been burdened by student loan debts if Barack hadn't written two books.
That's right, Michelle...complain about a burden you "could" have had, but don't. We'd be poor if we didn't have all this money!!
You're right MB, it was for
March 7, 2008 - 09:56 ET by JerryYou're right MB, it was for the gas!
Well, I for one am ready to stand in the breach and start a "Give Katie Gas" fund. I'm making the first contribution right now.... placing plastic bag over hind quarters.... a little pressure from the abdominal muscles... aaahhhh.... seal the bag.... uhh, anyone know Katie's address?
When asked if he went to war with Iraq to derail the impeachment vote: “I don’t think any serious person would believe that any President would do such a thing." - President Clinton (Dec 1998).
We here at CBS suggest the following solution:
March 7, 2008 - 09:29 ET by YahooWatcherA government bailout to help the 1 to 2% of fools in over the heads, many of whom are just speculators anyways. This bailout will of course be paid by the American taxpayer who has never missed a payment on their mortgage. It will also keep Citibank afloat so it's a win-win for everybody except the middle class.
Sure, just because these
March 7, 2008 - 09:33 ET by motherbeltSure, just because these people bought houses they can no longer afford, that shouldn't mean they can't keep them.
I am so sick of this! Every time we turn around, someone's irresponsibility is rewarded by shielding them from the consequences and making someone else pay.