85,000 homes lost to foreclosure in October

[Amerigo Vespucci]

Source: CNN

NEW YORK (CNNMoney.com) -- As government and industry scrambled to stem the housing crisis, another 84,868 homes were lost to foreclosure in October, according to a report released Thursday.

Last month 279,561 struggling borrowers received foreclosure filings, including default notices, notices of auction sales and bank repossessions, according to RealtyTrac, an online marketplace for foreclosures. That's a 5% increase from September, and up 25% from October 2007.

"October marks the 34th consecutive month where U.S. foreclosure activity has increased compared to the prior year," said James J. Saccacio, chief executive officer of RealtyTrac, in a statement.

A total of 936,439 homes have been lost to foreclosure since the housing crisis hit in August, 2007.

Read more: http://money.cnn.com/2008/11/13/real_estate/foreclosures_october/index.htm?postversion=2008111303

[Newsjock]

1. The homes aren't 'lost'

They're still sitting where they sat last month, except that now they don't have any people in them, and they no longer house residents contributing to the local economy.

How, exactly, does that situation benefit anyone?

[slackmaster]

3. Every one of those "lost" homes will become a bargain home to another family

It will take some time, but for every sad foreclosure story comes a happy outcome for someone else.

[customerserviceguy]

14. And when those families

buy those homes for bargain basement prices, it lowers the "comparables" for all the other homes in the neighborhood. When those folks go to refinance their adjustible rate mortgages, they find they owe more than the home is worth, and the refi becomes impossible. Same thing if those neighbors need to move because of job losses.

So, until we hit the absolute bottom on this, sad outcomes will outnumber happy ones. And nobody knows where that bottom is.

[FreeStateDemocrat]

19. Don't bet on it, the rich will be picking over the remains and stealing the bargins for investments.

[Raster]

2. Ah yes...the BANKS and other financial institutions that hold the paper on

mortgages THEY wrote, now own the properties. And because of the joy and beauty:sarcasm: of the way interest and loan costs are amortized, the poor folks that paid for several years--or more--on their foreclosed homes will get nothing.

Yes, my heart really goes out to the banks. You buy a house and over the course of a 30-year mortgage, you've actually paid for the house several times.

The entire financial system of this country is rotten to the core. It is gamed to favor the rich and richer. The rest of us? Just hosts for financial parasites.

[slackmaster]

4. The people who paid interest for several years had the pleasure of owning a home for a while

They could just as easily have spent the money on rent and ended up owning nothing.

You buy a house and over the course of a 30-year mortgage, you've actually paid for the house several times.

You can offset that somewhat by refinancing with a shorter-term loan at a time when rates are low.

[Trajan]

5. You can also offset it ...

By having the guts to legislate fair loan terms that favor citizens instead of rapacious lenders ....

[slackmaster]

7. I think better financial education for young people would alleviate much of the problem

If more people had the skills to identify and avoid bad deals, rapacious lenders would have fewer potential victims.

[Raster]

9. I think financial education is a lovely idea. So is changing the structure so a loan does not end

up costing several times the original purchase price. You misunderstand me. I don't want to fix a fucked up system. I want to banish it. I want a new, fairer system that favors the person buying the home, NOT THE LENDER.

And while I am at it, I want the same financial consideration for renters. Tax breaks, deductions, the WHOLE FUCKING BALL OF WAX.

[WriteDown]

12. It almost never does...

You generally roughly pay twice the purchase price of a property over 30 years. Please tell us your "fairer" system.

[customerserviceguy]

15. That's true

unless we're talking about ultra-low interest rates (probably way under one percent) over thirty years, you're going to pay more in interest for a home than the amount originally borrowed. It's just arithmetic, and cannot be legislated away.

[Raster]

16. Well, depends if the goal to put people into homes or profit off of putting people into homes.

I favor a NOT FOR PROFIT enterprise that seeks to put people into homes without charging outlandish interest rates. I also favor loaning people funds NOT FOR PROFIT to begin new businesses. I'm sure mortgage companies and other parasitical financial institutions don't like my suggestions. Too fucking bad.

[WriteDown]

17. Its called public housing...

Not necessarily a good idea.

[Raster]

18. And why is public housing "not necessarily a good idea"? Would you prefer people homeless?

And no not at all what I am talking about. I'm saying an entity that loans people money to buy their own homes and does so at extremely low rates, without compounding interest. A NOT FOR PROFIT financial enterprise whose prime directive is to do good by humanity, not good by investors.

And anything that takes people of the streets and puts a roof over their heads is far better than the alternative, including "public housing." Why should the right to be able to sleep warmly, safely be something only the wealthy are entitled to?

[WriteDown]

23. Easy.....

Generally crime ridden and horrible places to live. I lived in NY in the 70's when they tried what was called scatter siting(at least I think that was the name) where they placed public housing into affluent areas. Talk about a disaster.

The reason that mortgages are structured the way they are is because the lender is at extreme risk when they first lend the money. A lender generally loses about 40% of their investment through foreclosure so they try to collect the interest up front.

[AndyTiedye]

11. This Crash Fooled a Lot of the Experts

I don't think any amount of "financial education" would have been much help to home buyers over the past few years.

They should have rented, you say? Good luck with that.

Most of the renters I know got forced out as their buildings were converted into condos and sold for millions.

[Trajan]

13. I think everybody could agree that 'more education' is good ..

Whether we are speaking of financial matters or volleyball ...

I would think that taking out the 'rapacious lenders' would also be a worthy goal ... To institute the 'rule of law' in a lawless land should be just as attractive as universal education ...

Yours is almost a 'blame the victim' mentality ...

Frankly: I believe if workers had received decent wage hikes during the years of great profits, like they should have been, then far more would still be able to pay their mortgages ....

[Sen. Walter Sobchak]

20. I worked on countless consumer bankruptcies

and I think financial illiteracy is one of the most serious problems facing American consumers - I saw very few cases of people who were willfully reckless - but the number of bankruptcies that were a result of just being a financial retard were unbelievable.

People who were university educated, people who were responsible in every other aspect of their lives just didn't understand the rock bottom basics of the financial world.

You would not believe how many people don't even know what their approximate after-tax income is,

[slackmaster]

21. I consider myself moderately savvy with money, but I totally fail when I try to impart wisdom

Especially to people who are still in school and have never worked or run their own household budget.

I remember my mom, who is a veritable wizard, trying to nurture my knowledge of fianancial matters. She did OK but experience has been a much better teacher for me.

There are some people who have a knack for it, and on the other end are those who will not learn no matter how many mistakes they make.

[WriteDown]

6. Amortization is a derivative formula....

Not too complicated. What would you suggest? Also, if you buy a house for say 200K and then only make 6 months of payments, how much do the banks lose? You act like its all wins for them.

[superconnected]

8. Well that certianly was some bailout.

[Raster]

10. Yes, and look at all the POSITIVE benefits!

:sarcasm:

[wartrace]

22. We need to revert back to the way it was in the 70's-80's.

Fixed rate loans only. Payments not to exceed 28% of your gross income AND total debt payments not to exceed 38% of your gross. Full documentation of income.

No more arm's, no more liar loans, no more "creative financing. Either you qualify or you don't.

[slackmaster]

24. I worked for a bank from 1983 - 1990

There were indeed adjustable rate mortgages early in the 1980s; they were generally called "variable rate" instruments.

There were also lots of balloon payment loans in those days. Many people got screwed on them when the principle came due and they had to refinance in a world of astronomically high rates.

Payments not to exceed 28% of your gross income AND total debt payments not to exceed 38% of your gross. Full documentation of income.

You do have that part right. Another factor I remember was housing costs not exceeding 22% of your after-tax income.

Underwriting standards were very strict and were enforced, except for people like US Attorney General Edwin Meese who was a "special" customer of the institution I worked for. He got very special treatment.

[wartrace]

25. Didn't the arms back them have caps on them?

They also had caps on how much per year they could adjust. I have no clue how it works now. They should have to qualify at the cap rate for an arm.

[onager]

26. Still the rule at my bank (Credit Union)

I like the CU attitude. They are not (quite) banks, since they are owned by the customers, basically.

It does mostly 20% down, 30/15-year fixed-rate mortgages. The rules about ARMs are strict with no fudging on income etc. And the borrower knows exactly when and by how much the payments will increase.

It never offered all the other exciting "mortgage products" that caused this mess. If you wanted a Home Equity loan, you had to have real equity in the place, not BS equity. i.e., you had to have lived in the place for several years and built up the equity. Not be taking advantage of a temporary spike in home values.

A few months ago when the bank failures started, I got an email from my CU reiterating all this.

I may be liberal socially, but when it comes to money I'm probably somewhere to the right of Mr. Scrooge.

[sarcasmo]

27. Kick, to keep this story on the main page.