Despite the frenzied, headline hyperbole to the contrary.
Most of the AP wire stories trumpet the news "Foreclosures Surge 48% in May" - "One in Every 483 U.S. Households Received a Foreclosure Filing." Call chicken little, too!
One in 483. In other words, two-tenths of one percent of all home owners received a foreclosure notice in May, 2008. Two-tenths of one percent. This is not the unsuspecting masses being tossed out into the street by evil bankers. Most of those foreclosures are taking place in California & Florida - the second home / vacation home capitals of the nation.
There's no 'crisis' here, people, but there are predictable market forces at work which bring about such corrections. Sad for those losing a home, true, but stuff happens. Usually bad decisions about bad finances.
Rick Sharga, RealtyTrac's vice president of marketing, said foreclosures are unlikely to peak until sometime this fall, as more loans made to borrowers with poor credit records reset at higher levels. "I don't think we've seen the high point," he said.
About 50 to 60 percent of borrowers who receive foreclosure filings are likely to lose their homes, Sharga said. The rest are likely to be able to sell or refinance.
That works out to one tenth of one percent who will lose ownership of a home.
Again, there's no 'crisis' here, but there are consequences to bad decisions about bad finances - from both ends of the equations - where short-sighted, greedy lenders of dubious reputation loaned money to unqualified, ill-prepared people, with inadequate finances eager for the American dream. They were lured by promises of 'no money down' and 'low rates' (which ballooned exponentially to unmanageable monthly amounts). Many of these unqualified, ill-prepared people simply became no more than glorified renters with no more equity in 'their property' than a renter has in an apartment. In short, when bad financial times hit, they walked, and left the financial mess for someone else to clean up.
Unfortunately, that means the American tax payer - you & me - is forced to bail out these greedy, short-sighted, and over-edumacated Wall Street Bankers who threw caution (and common sense) out the window when, starting in the late nineteen nineties, they saw more dollars signs than stop signs in the mortgage industry.
The worst result from all this fall-out simply means more gub'mint regulation, oversight, and meddling by congress critters into the private dealings between adults who should know better (but don't).
The best result is a (less than free) market course correction to pop the over inflated realty speculations balloon, and usher in a buyer's market which will ultimately benefit those well prepared and financially able prospective buyers to obtain and hold onto the American dream of home ownership.
