1 in 10: U.S. Mortgage Delinquencies Reach a Record High — Going UP?

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Editor’s Note: While the media, Wall Street and government sources try to placate us, there are inescapable truths right now and inescapable consequences right around the corner. Other than people who own their home outright or who are relatively close to that point, nearly every homeowner in America has several problems: (1) title is clouded if they refinanced or purchased a home in the last 10 years unless their loan product was local and thus not securitized and (2) they are hopelessly lost in debt that was fabricated by the sellers of Wall Street loan products because whether they know it or not, their home is worth less right now than what they owe, especially after you take into consideration the costs of sale (brokerage commissions etc.) and costs of closing.

The future is even more bleak as prices continue to fall under pressure from an increasing number of homes in inventory. If we stopped building now it would probably take close to 10 years to sell all the houses that are actually in the pipeline. Many of them are not counted right now as “inventory” but they are there nonetheless. Prices will fall under even more pressure as an increasing number of people, their real income decreasing for the last 30 years, simply pick up sticks and leave the keys on the counter. They can rent or even own a home for far less than the payments being demanded on their existing home. In many cases it is a simple calculation of whether to take a “hit” on their FICO score or try to pay hundreds of thousands of dollars they might never recover. As stated, they can’t pay it anyway because median income is dropping. In other words inventory will increase just from voluntary abandonments. Just staying in the house a few months during the process of foreclosure and eviction can put some money back on the table for the homeowner who is already strapped whether payments are being made or not.

Housing prices are tied to median income more than anything else. Unemployment, underemployment, and decreasing wages —actual dollars as well as relative purchasing power is lowering REAL median income every month. Those FOR SALE signs and the prices being asked are not real. Sure some buyers might bite, but most are going to wait until there is some indication that we have hit bottom. So prices will come under increasing pressure from lower median income and an absence of buyers. Using Schiller’s inflation adjusted index, it is obvious when we are still 15%-25% from the bottom using today’s “asking” prices as the baseline.

So that house that the seller thinks is “worth” $300,000 because they bought it for $450,000 is actually only going to fetch perhaps $250,000, less expenses. In all probability the Seller does not have the resources to make up the difference between the actual net selling price or proceeds and the alleged amount due (ignoring the fact that the amount due has probably been paid several times over to the investors who advanced the money that went mostly into the pockets of the Wall Street masters of the universe and partly into the funding of the loan). The only options are short-sale with permission from an entity that does not have any authority to approve it, loan modification with principal reduction with the same authority problem, attack the pretender lenders using the tools provided here, or walk from the house and forget about the whole thing. It doesn’t take a rocket scientist to figure out what many people will elect out of those choices.

U.S. Mortgage Delinquencies Reach a Record High

Tags: borrower, delinquencies, foreclosure defense, foreclosure offense, home prices, LOAN MODIFICATION, median income, Mortgage, mortgage meltdown, Ny Times, securitization, short sales, voluntary abandonment
Posted in bubble, Corruption, Eviction, securities fraud |