3 Million More on the Brink of Foreclosure

Aug 1, 2012

Seniors Leading the New Wave of Foreclosures

Editor’s Comment: I think the figure is closer to 10 million, but I went with the title of the article by Mandi Woodruff on Business Insider. Unless the mortgages are corrected to reality in the marketplace instead of the fiction that prevailed when they were defectively “originated”, households are going to be doubling and tripling up because nobody is going to keep paying on a mortgage debt that they know was already paid off by bailout, insurance and credit default swaps. The creditor is only entitled to one payment. The Banks are holding those payments and claiming it as their own when at no time did they ever fund or buy a mortgage loan. This is crazy.

Another reason is that nobody is going to pay on a loan, even if it was real, where the principal balance is twice the value of the property. If you owned stock in a company where the CEO did that, you’d want him fired, claiming that he is depleting and diluting the assets of the company. Why does any other principle apply to reduction of principal? This is crazy.

And a third reason out of many more is that seniors were lured into these nutty mortgages and trusted the liars who sold them these loan products only to find themselves with payments they cannot afford on their fixed incomes — in homes they already were living without debt or with very little. Whether you want to call that moral hazard, or theft or bad judgment on the borrower’s part the facts are that millions of these people are going to be forced to walk away from their homes abandoning them to the completely bogus foreclosure process. And the fact is that the more foreclosures we have, the worse the economy is going to be.

Unless unemployment goes down and median income goes up, the problems are only going to get worse. It really is that simple. If people don’t have the money, they can’t afford to pay. Tens of millions of Americans have now depleted all their savings, retirement funds and credit. Where do you think the money is going to come from to buy goods and services? Perhaps the Moon. We haven;t securitized that yet, at least not that I know about.

NIGHTMARE ON MAIN STREET

BY MANDI WOODRUFF, WWW.BUSINESS INSIDER.COM

As many as 3 million American seniors, arguably the most vulnerable consumers in the country, are on the brink of losing their home, according to a recent AARP study.

In its report “Nightmare on Main Street,” the group looked at the mortgage crisis’ effect on the over-50 sect for the first time. As the title suggests, the outlook is far from bright.

Americans over the age of 50 accounted for 3.5 million underwater home loans as of December 2011––about 16 percent of all loans issued to that age group.

“The homeownership experience has changed from the American dream to the American nightmare for millions of older homeowners,” the report says. “The collapse of the housing market that began in 2006 continues to be reflected in rising numbers of mortgage delinquencies and foreclosures.”

Between 2007 and 2011, 1.5 million older Americans lost their homes to foreclosure during the mortgage crisis, while the foreclosure rate for homeowners over age 50 ballooned from from 0.3 percent in 2007 to 2.9 percent in 201. For those with seriously delinquent loans – those in foreclosure or more than 90 days past due, the percentage went from from 1.1 percent in 2007 to 6.0 percent in 2011.

And the older the homeowner, the more susceptible to foreclosure they are, the report shows, with the biggest jump in mortgage debt occurring in those over age 75.

“The collapse of the housing market has been especially painful for older homeowners,” said Debra Whitman, AARP Executive Vice President for Policy. “Older homeowners often rely on their home equity to finance their needs in retirement – things like health care, home maintenance and other unexpected needs. The fact that so many older Americans have no equity at all is troubling.”

The group pins most of the blame on public policy programs it says have been “inadequate” in helping older consumers out of unhealthy mortgage situations.

Posted in bubble, Corruption, Eviction, securities fraud |