Foreclosures just keep on rising

This is good news. Maybe prices will return to normal (meaning early-mid 90's range) sooner rather than later. You sign the dotted line, pay or get foreclosed on.

As pointed out by others, I've noticed a conspicuous increase in the number of bitter posts in recent days. While I agree this is counterproductive, please realize this venting is part of the natural process people go through when faced with a tragic loss. Fellow students of psychology may recall the brilliant model introduced in the 1960's by Elisabeth Kübler-Ross which describes this phenomenon. It's called the “Five Stages of Grief”:

1)Denial
2)Anger
3)Bargaining
4)Depression
5)Acceptance

Anybody care to guess which stage applies to to the angry posts on this blog (hint: not a trick question)?

45 percent of world's wealth destroyed. Private equity company Blackstone Group CEO Stephen Schwarzman said on Tuesday that up to 45 percent of the world's wealth has been destroyed by the global credit crisis. "Between 40 and 45 percent of the world's wealth has been destroyed in little less than a year and a half," Schwarzman told an audience at the Japan Society. "This is absolutely unprecedented in our lifetime."
If anyone still wants to be in a state of denial as to the present worth of Residential Real Estate, or how much prices will continue to fall, research the present state of International Banking sytem.

we haven't seen anything yet especially in Boston. I have a friend who hasn't made a mortgage payment in 11 months and the bank has not foreclosed on him.
I am certain there are many more of these out there. In CA many banks are not foreclosing because they want someone to stay in the house so it doesn't get trash for copper, toilets, other infrastructure, etc. It is much worse out there than the media indicates. Interesting article in the WSJ early this week about how banks are not foreclosing on many properties in the rust belt, because they do not
want to be held responsible for the property upkeep, which can lead to municipal fines...

I for one hope that President Obama's 275 Billion Plan fails horribly. I would like to see action taken to reduce the foreclosures due to layoffs only. I can feel for those people in dire situations beyond their control, but to save the irresponsible buyers is just irresponsible on the government's part. Now to everyone who things I am republican, i would like to say I am neither. I voted on a 3rd party, which i suggest everyone to consider. I am in my late 20's, and I am a social democrat, financial conservative, and the actions that our government has been taking over the past half a year is 90% terrible.

I would like to start a family soon, and this involved buying a house myself, but if the government props up the housing marker, what hope is there for everyone in my situation. The 8000 dollar "stimulus" is a complete waste, and from talking with people my age, this is not even close to a carrot to draw us into buying. We are smart enough to know the housing market is overpriced, and until this is resolved, the hopes for a bounceback is nil.

I speak because i am not only concerned with my parents wellbeing, but also, i am concerned about my children's wellbeing as well. Keep piling on this debt, and soon other nations will want their debts repaid, and I am scared of that day.

All the bailouts, moratoriums, etc. are just delaying the Day of Reckoning. That's because these so called solutions don't address the problems - the problems being inflated home prices, massive debt levels, and an economy based upon borrowing and consumption, instead of savings and productions.

I will not hold my breath that the government changes course and institutes solutions that address the core problems. Rather, we will continue to speed down the path that lead us over the cliff, the cliff being the destruction of the dollar. And that's when the real collapse happens - when the world loses faith in the US fiat currency (many of us lost faith in the dollar years ago).

All these plans to "stabilize" the housing market will do nothing more but lengthen the time it take to hit bottom and thus increase the overall pain. The government can't artificially inflate home prices forever. Keeping people in homes they can't afford is equally as stupid. Prices have to fall to where people can afford to buy and investors see favorable deals.

@CambridgeLandlord, your take is correct.

However, a lot of people railing against the "bailout" don't understand it and don't know what's in it. Letting Freddie and Fannie do more refis makes complete sense--it's actually fiscally prudent because the refis recover more money than they would get in a foreclosure, and the homeowner is still on the hook for the whole mortgage. The other part of the package--the buydowns of mortgage payments--won't help people who are completely over the heads; it's not designed to.

The bottom line is, even if the government could design a package to stop the decline in home prices, this one isn't remotely big enough to even try.

Oh, and Scott: If you're looking to back up your prediction that these moratoria only delay the inevitable, you don't have to look far. Remember, MA just got through its own foreclosure moratorium, which reduced foreclosures for three months and then sent them skyrocketing up again. These things don't work and just clog up the natural process of the market.

Brad (#5) - unfortunately the government is currently concerned with the weatlh of the homeowners, and not potential buyers. Your wealth or lack thereof is your own business. Basically, that means you are a second class citizen when it comes to the official housing policy. Other categories of second class persons are those who sustained losses in the stock market and/or 401Ks. It is fashionable to say these days: "Yes, it is unfair, but fairness is not on the table anymore..."

Oh, and I am not a Republican either. I voted for Obama.

Marcus,
Then when do you expect RE prices to come back to normal levels? The current package seems to delay this process to some extend.

Reasons why the bottom isn't in for housing.
1 - President Barack "I Love Pork Laden Bills" Obama
notice his non public signing of the latest pork filled (or pc version earmark filled spending bill today). Dem's just cant resist stuffing them anymore.
2 - Tim Geithner's Plan (or lack of a plan) which we've been waiting for, hopefully the plan is good and it better be, or else we will continue to lose even more wealth in our 401k's. Maybe they'll be called 1k's in the near future when "The Plan" is released.
3 - Taxing plan is all over the place, With one hand taxes will be lowered but put back in other places with the other hand.
4 - Dems are on a spending spree it just sickens me.

Overall i wish the President had better plans and reduced govt spending but he has increased it. Now with talk of another Stimulas in the air because the first one wasnt, lets all pray that we get out of this

Brad,

I am just like you. I ma 28 married and I am waiting for houses to come down to make that next step (Children) but want a house first. I voted Libertarian (Bob Barr) we need a viable 3rd party.
The Govt is bailing out the Baby Boomer generation right now because they have done an abysmal job of saving, all their net worth was in their house. The Govt knows they are totally screwed. I am worried because they along with the AARP will SCREW us younger citizens.
I dont know how to make it in a world where the youth gets screwed every which way... We graduated with tons of debt from college, wages havent really grown for the avg worker in over 2 decades, Cant afford to start a family and own a home because the baby boomers went nuts thinking housing never goes down and then they proceed to pull out the equity of said homes and now cant or wont pay it back and they dont want to be foreclosed upon.... Obama and Pelosi are poison for the economy. not everyone is a teacher/cop/firefighter/nurse/union member... Yet they only talk to and try and help those people. WHy not help and develop policies that help all Americans.

People grossly overestimate the government's ability to intervene in the housing market. The amount of money needed to prop up prices is simply too great. There is no chance the government will succeed and everybody in Washington knows it.

But politicians are not known for letting the truth get in the way of a good story. They will promise to fix things. They will spend taxpayer money on pork-barrel projects disguised as “stimulus” for homeowners, banks, and the economy in general. They will talk a big game. But none of this will have any meaningful impact on the market. House prices will continue to fall until there is equilibrium. And it's a long way down before we get there...

News flash America: the government is not going to save you from yourselves!

Alex, in response to this... this is where the government has been, and will continue to fail the people of the United States. This is a government for the people, of the people, and by the people.... not the other way around. The government should not work to make the rich richer, or the poor poorer. They should have none, if any say in any of this. Fixing economies is not in the Constitution, and the fact that our government believes it is, is truly saddening and disheartening.

I recently read that until recently, the number one reason for foreclosure and/or bankruptcy has been due to medical situations and medical bills. That means that there are many situations like that still out there.
If someone who was responsible with their financial affairs throughout their lifetime is unemployed or out of cash due to a medical condition or no fault of their own how should their situation be handled?

The government's policies are merely "window dressing", an attempt to create the appearance of trying to do something about an inevitable, and needed market correction. They would accomplish more by counting the stars in the sky. The market will reach equilibrium whether the government intervenes or not. Frankly, it will probably go down in history as the greatest example of throwing good money after bad...

Sam (#15) - their situation should be handled by providing basic safety net to all in a form of universal health coverage and unemployment protections. That's what has been lacking. We have Democrats now. Let's see what happens. Spending on general welfare is perfectly constitutional.

In addition, there is and always has been bankruptcy system that allows sick or unemployed to discharge their debt and/or keep their homes. In fact, in this particular respect this Country's laws are far more humane than those of many other.

However, as an immigrant, a citizen, a bankruptcy professional, an Obama supporter, a recent home buyer, a new father, etc., etc., I am against giving taxpayer's money to the ones who voluntarily signed on the dotted line thereby contributing to the hardships of people like myself, Brad and Renting-in-Waltham here.

Under the new Obama Foreclosure & Housing Reform Plan, change will occur rather slowly because lenders must understand the new subsidies and incentives offered to lenders to modify loans. It could be months before lenders implemented the modification program, since they would have to train representatives and update internal procedures. While this training is going on numerous borrowers will be calling to see if their loans can be modified overwheliming the system even further. Furthermore it is estimated that only 17% of home owners in need will be helped by the plan. Consulting a legitimate and professional loan modification company, like Friendly Financial Services, provides assistance to a community in need by working diligently and effectively to modify their client’s loans. Every single case is treated as an urgent matter; the staff truly develops personal relationships with their clients throughout the modification process. Unfortunately, most companies entering into this field do not have the experience and knowledge needed to modify these files successfully. Modifications are very different than standard refinances and a lot more cost effective. We are an accredited business holding an “A” rating with the better business bureau and have a 98% success rate with our attorney, Robert V. Rossenwasser. Friendly Financial Services separates from the competition with a staff comprised of underwriters and processors who worked for lenders and have an insider understanding of what banks want to see in order to approve modifications.

David Camargo
Friendly Financial Services, LLC
1757 NE 162 St.
North Miami Beach, FL, 33162
786-629-6823 Direct
866-386-2444 x 460
305-328-4861 Fax

#8(Marcus), you make a good point and I was a little off. The government should do something to help people refinance that can afford it. Lots of people got 5/1 ARMs that reset to very unfavorable terms because everybody said, "you can always refinance in 5 years". Now that eligibility has tightened, it's impossible for such people to refinance. There's no point foreclosing on people that can afford 5.5% 30 year but can't get that loan. Loosing requirements for refinancing (not for home purchases) would probably save the tax payer some money and help some people keep their homes. In some ways, buy downs fit into that same group. It still stinks.

What I'm against is any measure to "stabilize" housing prices. In most areas they are simply higher then the market can bare. The sooner they fall to an affordable level, the sooner the recovery will begin and no government program has the power to do this. They can only slow it down and prolong our misery.

to 12. Who came up with this shtick:
"Baby Boomer generation right now because they have done an abysmal job of saving, all their net worth was in their house. The Govt knows they are totally screwed. I am worried because they along with the AARP will SCREW us younger citizens."
I find your comments insulting. Who are you to blame all your woes on Baby Boomers, aka your PARENTS!? How dare you say they did an abysmal job saving! I am sure if they had not had you to clothe, feed and educate, they would have done a much better job of saving.... and this is the thanks they get?? You are an ingrate who bites the hand that feeds it... simple as that! Judging by how self-centered you are, they should have spent a little less on you I think and made you work for what you got. Then perhaps you would have turned out a little less self-centered.

We are all in this together, and you need to pick up your share of the responsibility for this mess. Instead of wasting your energy feeling sorry for yourself, get busy and do something about the Federal Reserve and the usury , we now find ourselves in.

It is taught in Econ 101 (The Samuelson edition) that"Savings is the engine of investment.." It was not long ago that Americans were expected to save at least 10-15% downpayment to get a mortgage for the rest, and savings rates, typically 4%/annum were a further incentive to save. Right now, savers are paid virtually no interest- and yet, banks receiving a trillion dollars from these same people, and who charge 12-25% and more to them for their credit cards, got this money for 1%.
Bay State residents need to recognize usury when it stares them in the face and ask their exalted reps. such as Barney Frank, why Congress permits it.

Reasons why the bottom isn't in for housing.
1 - President Barack "I Love Pork Laden Bills" Obama
notice his non public signing of the latest pork filled (or pc version earmark filled spending bill today). Dem's just cant resist stuffing them anymore.

Really, Bill A, do you realize you're on the Internet, with the facts always just a mouseclick away? Earmarks make up 1% of the total spending bill, which has 4,000 fewer earmarks than in 2005, when Republicans ruled Congress. 40% of the earmarks come from Republicans. I mean, come on, this is embarrassing.

There are serious things to complain about regarding the government's handling of the crisis. Earmarks are just buffoonery.

These schemes to help people stay in their homes give rise to two questions:
First, how many people can actually be saved even with the good intentions of the government? Secondly, how many people actually WANT to be saved and would rather part company with their misery?