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The "current market" has plunged downward in some areas by 40%. That means sellers have to come up with $10s of thousands just to pay off their mortgage in addition to whatever they can sell for. I was talking to a financial analyst at one of the Wall Street ratings agencies, who said the term being thrown around her office is "Death Spiral." There has never been anything like this, and it is far from bottom yet. I know one person who was forced to move and was happy to find a renter for $900 a month of her $1400 a month mortgage/tax/insurance/homeowners' association fees. That was 18 months ago, and now the owner, on the advice of a bankruptcy atty., is just going to walk away from the property. If the mortgage holder wants to avoid the $50,000 cost of foreclosure, the owner will offer to trade title just to walk away (a short sale). The atty. said in some areas of the country, the banks are not even pursuing foreclosures. I guess it's because it would cost the banks $50,000 to foreclose and then the bank would have title to a worthless and depreciating house.
There have been threads on DU reflecting what has happened in many areas, from suburbs of Cleveland to ground zero for the housing bust in Ft. Myers, FL. When there are multiple empty and abandoned homes/condo/townhouse units in any neighborhood, no one will buy there. Yards are overgrown, vandalism is unchecked, etc. And I'm talking about homes with purchase prices of $200,000 and up. Prospective buyers rightly anticipate that prices will continue to plunge, sucking in those remaining homeowners who got traditional fixed rate mortgages, but are forced to sell due to retirement, illness, death of the family member living in the house, etc., and forcing more into foreclosures when they can't find a buyer.
Local governments in some areas have begun to hire people to mow lawns in some of the higher end housing areas in desperate hopes to keep the markets from completely dying, because then there are no property taxes to be collected from these properties.
Recent court cases have thrown out attempts to foreclose because the in the bundling, reselling, and sale of "slivers" of bundled mortgages, the financial institutions have not bothered to execute the necessary legal documents re who owns what portion of what mortgages.
I helped my elderly Mom sell her home about 4 years ago, and that money financed her assisted living/nursing home stay until her death. It was lucky timing. Some elderly cannot stay in their homes because they need personal care. But if their only asset is their home, and they cannot sell it - the ownership will keep them for qualifying for Medicaid necessary to pay for nursing home care.
Very tough times for many, many people.
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