Homeowners stuck as lenders cinch standards

[dogday]

Edward Booker is one of nearly 3 million homeowners with adjustable-rate mortgages who've had trouble paying their bills. And, like Booker, many of them won't be able to refinance their loans once the interest rates start rising. At that point, they'll have to tighten their belts, sell their homes or lose them through foreclosure.

This month, the mortgage payment on Booker's Chicago home rose $200, to about $1,300. It'll go up again in September. He wants to refinance, but he fell behind on payments after his wife died of cancer in 2005, so no lender wants to take the risk.

"I'm just trying to hold onto my house until I can figure out something else to do," says Booker, 58, a former rail-car inspector who's on disability.

Since the start of the year, more lenders have been shutting their doors to people such as Booker, just as those homeowners' interest rates are rising. They're slashing the "Bad credit? No problem" types of loan programs, known as subprime, that helped fuel the housing boom. And they're raising the bar for homeowners and first-time buyers to qualify for new loans

http://www.usatoday.com/money/economy/housing/2007-03-04-mortgages-1a-usat_N.htm

[Coexist]

1. ... here we go.

its gonna get ugly.

[dogday]

3. And so it begins

That which was predicted... I feel so bad for these people....

[Virginia Dare]

2. The landslide of foreclosures is due to start later this year...

when the ARM's are due for their correction, about the time the Fed will raise interest rates. Recession, here we come!

[soothsayer]

4. And China owns a bunch of those mortgages! here comes the

foreign takeover. very clever of 'em.

[A HERETIC I AM]

10. You seem to think China is going to gain title of those properties, soothsayer

They don't "own" the mortgages. If they own ANYTHING they own what are known as "Collateralized Mortgage Obligation" or CMO bonds.

If you buy CMO bonds and the overlying mortgages default, YOU DON'T TAKE TITLE OF THE PROPERTIES.

It doesn't work that way.

[Sadie5]

5. It has already started

With those who work in mortgage lending jobs. My daughter works for a mortgage company in Florida and said that two people have already been let go and there will be more job loss because they are only giving loans to those with top notch credit.So not only will their be loan defaults there will be job loss associated with the lending business.

[salin]

7. a $200 payment climbs to $1300 and set to climb again?

Outrageous. I have fully grasped the ARM mechanisms - but just the thought that my payments could baloon so much and so fast would have kept me away from such a mortgage. I have to guess that most folks were not fully aware of the risks when signing on the bottom line.

[Dhalgren]

11. I think that the article said it went up $200 to $1300, but that is bad enough...

[crikkett]

14. no no no. The 1100 payment rose 200, to a total of 1300

and is set to rise again.

[salin]

17. Thanks - I really read that incorrectly...

it seemed very absurd.

[Bitwit1234]

6. And because the know they can get it...

Rent is going up and up and up. Fifteen years ago I lived in an apartment in Maryland and the rent was reasonable. Every year it was raised about 15-20 dollars. Reasonable also, as heating cost and water rates were rising. Then a new manager took over. Since he got a precentage of the rent he started to raise the rent 100 a month. In three years the rent for a two bedroom apartment went up from 650 dollars a month to 900 dollars. Since there was no rent control, renters were told it could be raised to whatever the market allowed. Do you think that was fair. We moved to a different state where prices were more reasonable.

[Donnachaidh]

8. why is ANYONE surprised?

The government ALLOWS banks free rein, with NO recourse to anyone. Credit Card rates today would have been considered usurious and been prosecuted under the RICO act just 25 years ago. Now that is ALLOWED.

Anyone who doesn't think these people with questionable credit weren't set up from the git go hasn't been paying attention.

Lock them into adjustable rates, then refuse to allow them to re-finance into a mortgage that is more humane? What are you crazy? Banks DO this all the time. It's the *American way of business*. They are not in business to help ANYONE out.

Do they care if they ruin people's lives? Hell no! The only people who get good rates are the people who do NOT need them.

:grr:

[OrangeCountyDemocrat]

9. Sad Situation

While I do feel for the people in these situations, they never should have bought a house or gotten a loan in the first place.

It's truly unfortunate since they were probably conned into applying for the loan, and told how important it was for them to own a house in the rising market. It was not their fault.

But the bottom line is that too many people own property now that should be renting, and it is part of the reason for the super high prices for real estate. If people want prices to decline, some of the suspects are going to have to get weeded out. It just has to happen to at least temporarily cure the system of it's ills.

[Extend a Hand]

12. 31 subprime lenders have bankrupted or closed since the first of the year

Aaron Krowne is keeping track on his lender implode-o-meter site.

http://ml-implode.com/

7 of the 25 largest subprime lenders in the country have closed several are being investigated for fraudulent practices.
http://www.autodogmatic.com/forum/viewtopic.php?t=133
http://forum.themarkettraders.com/read-m/71/3023/3023#msg-3023

[trumad]

16. Great site---thanks for posting it.

[AndyA]

13. It was bound to happen sooner or later.

And just in time for thousands of pissed off former homeowners to vote the idiots that allowed this to happen out of office in 2008.

[bleedingheart]

15. Adjustable Rate Mortgage are and have been a bad idea for a long time

it makes me sick to see people lose everything...

Granted there are folks out there that lived large...but a lot of people used ARM's to buy small little houses too...and they get screwed too.

[acmavm]

18. This is just so disgustingly immoral. It may not be illegal, but

it sure is immoral.

Ian Hunter sure knows what he was singing about (all those years ago). Little did he know how bad it would get...

Apathy 83

<snip>

No more gardens for the gardenless - no more - havens for the havenless
No more helpers for the helplessness - no more - somethings for a less
For the law is now the lawless
n the flaw is now the flawless
n the crime is now accepted
n the criminal respected
n now evil gets elected
n now sinful get selected
Heed a president proven rotten now officially forgotten

http://www.lyricsfreak.com/i/ian+hunter/apathy+83_20066510.html