The Housing Bubble

The San Francisco Chronicle reports from California. “Beaming with pride, Johnnie Pitts stacked up piles of legal documents on his living room floor the Wednesday before Christmas. The San Francisco Muni driver had just returned from having his signature notarized on agreements that permanently modify his once-exorbitant mortgage to a reasonable interest rate, allowing him to keep the three-bedroom bungalow on Oakland’s MacArthur Boulevard.”

“Pitts started off financially unsophisticated, but he now shows a shrewd grasp of how the system works. ‘If you think your house is all yours, just miss a payment or property tax bill, and you’ll find out who it really belongs to,’ he said. ‘We’re not homeowners; we’re renting from the banks and investors.’”

“Earlier this year when he realized his mortgage was slated to reset to well over $4,000 a month - the same as his take-home pay - Pitts started speed-dialing his loan servicer, banking giant Chase, asking for a loan modification.”

“At the same time, he boosted his income by racking up overtime - an extra 10-hour day every week - to catch up on some missed mortgage payments and property taxes. ‘My family and co-workers said, ‘Why don’t you just do a short sale?’ but this is my house. This is the major purchase of my life,’ he said.”

“Pitts’ monthly mortgage will now be just shy of $2,800. Property taxes and insurance add another $700 a month. The $3,500 monthly total is still quite steep for a man whose base income is about $4,000 a month, although he can earn another $1,000 or so through overtime.”

“Does Pitt really want to continue working six days a week to keep a house that is now valued at about $330,000 - $100,000 less than he paid for it? He insists that he does.”

“‘When it comes to renting, it’s just cash in the trash,’ he said. ‘You can’t win no way when you’re renting.’”

“‘I’m going to modify my lifestyle,’ he said. ‘I shop at the dollar store; I buy in bulk and on sale. If push comes to shove, I may have to get a roommate.’”

“How will he celebrate his birthday this year? ‘I’ll be working, the same as on Christmas,’ he said. ‘It’s time and a half on the holidays. I’ll take the money. Renters have a different mentality; they can party.’”

“Jeff Hahn let out a small sigh when a reporter called to tell him that his Fairfield house had been sold at a foreclosure auction two days earlier. ‘So that’s it,’ he said.”

“Hahn and his wife walked away from the house this summer because the $5,000 monthly payments were as much as their take-home pay. They put it on the market and moved to Los Angeles, where Hahn had a good job lined up.”

“They started off listing it for sale at $575,000, then dropped the price steadily over several months without attracting any buyers.”

“‘The last time I talked to our Realtor, her best advice was to try to sell it for around $350,000 to $400,000,’ Hahn said. ‘I’ve talked to friends who still live up there; there are six or seven houses just like mine for sale in my neighborhood from people in foreclosure.’”

“Hahn bought the four-bedroom Colonial in 2004 for $495,000. He later took out a home equity loan to help finance his business of importing high-end auto parts. His adjustable-rate mortgage jumped from $2,200 a month to $3,700 last September.”

“The couple used credit cards to make the mortgage payments while they tried to refinance. In March, the Hahns finally were approved for a refinance at $570,000 with an interest rate of 10.5 percent. But they never made a payment.”

“Jeff Hahn said they accepted the pricey loan because they were desperate to salvage their credit rating and hoped to sell the house quickly. As they rebuild their lives in Southern California, the financial reverberations of losing the house linger, through credit-card debt and lower credit scores.”

“‘We literally are living paycheck to paycheck,’ Hahn said.”

“During the months of struggling to keep up with their mortgage payments, they ran up more than $16,000 in credit-card debt, Hahn said. Once they stopped paying the mortgage, his credit score plummeted from 710 to 490.”

“Tom Kelly, a spokesman for Chase, which was the servicer on Hahn’s loan, said the property reverted to Chase at the Dec. 17 foreclosure auction for $474,750 - far less than the $570,000 loan balance and the unpaid fees and penalties.”

“Lenders generally set minimum bids at foreclosure auctions equal to the amount of outstanding debt. Kelly said he was not certain why it went for a lesser amount, but said he could speculate that ‘given the problems with home prices, now the bank is happy to get less than (is owed) and walk away.’”

“Kelly said the Hahns’ case was straightforward because they made no payments after refinancing and had only minimal contacts with Chase. ‘If a person has never made a mortgage payment, that’s very clear-cut that we’ve seen no good faith effort from that person,’ he said.”

“After his story was told in The Chronicle, Jeff Hahn said he briefly became a ‘poster child’ for foreclosures - appearing on radio shows, getting a call from People magazine. But the couple also was the target of some vitriol by readers on The Chronicle’s Web site. For that reason, they declined to be photographed.”

“‘The number of hate comments we got just floored me,’ Jeff Hahn said. ‘This wasn’t something we chose to have happen to us. I just don’t get how these people can judge me like this and think we completely took advantage of the system. The system took advantage of us. We’re the ones losing our house; we won’t be able to rebound from this.’”

The Lompoc Record. “Arguably the most talked-about issue in 2007 on the Central Coast - indeed, throughout the state and the nation - was housing, particularly the downward spiral of prices and sales.”

“A complex mixture of factors squeezed local real estate, driving home prices down and leaving a glut of new and existing homes on the market as foreclosures rose amid the subprime mortgage debacle.”

“In San Luis Obispo County, a median-priced home cost $454,840 in November. That was down 17.1 percent from the median price in October and 14.6 percent from November 2006, when the price was $532,890, and well below the record $605,158 set in November 2005.”

“The association said November 2007 sales in San Luis Obispo County fell 17.7 percent from October’s level and 28.7 percent from November 2006.”

“In mid-October, a total of 756 existing single-family homes and condominiums were on the market in the Santa Maria-Orcutt area, according to the Santa Maria Association of Realtors. Particularly troubling was the fact that nearly 16 percent of those - or 118 homes - had been lost to foreclosure.”

The Tribune. “The North County median declined to $469,000 from $490,000, a 4.3 percent decrease. In December, the county median was $472,500, down from $529,000 the same month a year ago.”

“‘If you stand back and look at the market, there’s still job growth, attractive interest rates and unemployment is low,’ said Jim Liptak of Country Real Estate in Paso Robles and president-elect of the California Association of Realtors. ‘But you’re still seeing great difficulty in the market, a lot of it caused by the (subprime) mortgage crisis.’”

“Liptak said the housing slump actually started in 2005, the same time record numbers of people jumped into real estate. The oversupply of housing and agents were two things that ‘created almost the perfect storm.’”

“‘Right now, the number of (annual) transactions an agent is doing in California is on average under four. In 2004-05, that figure was 12 to 14,’ Liptak said.”

“There will be winners and losers in the next year, said Kirk Lesh, real estate economist with the UCSB Economic Forecast Project.”

“Renters, for instance, may find that it’s just as costly to rent than to buy, spurring some people to jump into the market, he said. ‘Of course, on the other side of the coin, if you wanted to sell a home now and move, you may not get as much money as you wanted.’”

“Some San Luis Obispo County lenders found that the steady business they enjoyed during the real estate boom had slowed.”

“‘Lenders couldn’t keep doing 100 percent financing and assume that one day (home) values are not going to come down,’ said Leslie VandeWalle, a mortgage broker in San Luis Obispo.”

“‘There are certain people who are doing well, but no one is doing really well in this market,’ said Kyle Allen, a mortgage loan consultant.”

“In November, for example, there were 1,023 trust deeds recorded (includes sales, refinances, home equity loans and construction loans), down from more than an average of 2,000 during the year-earlier period, according to county records.”

“VandeWalle’s firm, which specializes in more traditional loans, started noticing a change when fewer clients sought her services in the latter half of the year. La Casa had been doing about 10 loans every month. Now, they have about four or five, she said.”

“‘We were totally dead for a while,’ she said. ‘We had three months with no escrow closings. Now, now we’re back working again, but loans are harder to make.’”

“In a recent California Association of Mortgage Brokers survey, 41 percent of members said they expected lending standards to further constrict in 2008. In today’s market, potential borrowers with credit scores of less than 680 may find that it’s more difficult or expensive than for borrowers with scores greater than 680.”

“It’s becoming more common for borrowers to provide paychecks, tax returns and bank statements to qualify for a loan. With jumbo loans, potential buyers are asked for 10 percent or more.”

“‘People come to us for loans now that there’s not necessarily a loan product for,’ said Michael Hahlbeck, VP of Mariner Mortgage in Arroyo Grande. ‘I had a client six months ago who could have easily gotten a loan and deserves one. She has good credit and adequate income, but she’s young and has no money for a down payment. She wanted 100 percent financing and would be a success story with it. It bothers me because it would have been a good opportunity for her.’”

The Voice of San Diego. “Where 2006 launched with some optimists downplaying signs of trouble in the county’s housing market, the tenor of real estate shifted to leave such voices in the minority by last New Year’s Eve. And then 2007 proved, from start to finish, a year of slump.”

“‘The problem with the market is, prices got bid up to exceptionally high levels, and this is the back end of that,’ said Chris Thornberg, an economist with Beacon Economics. ‘What we’re seeing is a market in the painful throes of a downturn.’”

“‘I think that basically, this snapshot in time — it’s a real period of unknown,’ said Gary London, a local real estate analyst. ‘We can speculate — ‘this was worse, that was worse’ — but this is just in real uncharted territory.’”

“In 2007, buyers were scared, scarce or both. The number of homes sold each month hit decade lows, month after month. ‘If you look at two houses for sale in the same neighborhood, they’re in competition for the same buyer,’ said Mark Goldman, a local mortgage consultant and broker.”

“When sales activity picked up, it was usually due to an increase in the number of homes sold as repossessed properties or as short sales. And where there were buyers, they paid less for homes than they did last year.”

“Local market consultant Dan Holbrook…recently switched his business from focusing mostly on making mortgages to negotiating short sales and bank-owned deals.”

“‘We, in order to get through this, need to get creative,’ he said. ‘The distressed market is the market. And I’m focused on the distress. I’m almost a distressed real estate evangelist.’”

Some housing bubble news from Wall Street and Washington. Associated Press, “The National Association of Realtors reported Monday that…over the last 12 months, however, existing home sales have plunged 20 percent, underscoring the troubles in the housing sector. Home prices continued to sink. The median price of a home sold last month was $210,200. That marked a 3.3 percent drop from a year ago. It was the fifth biggest annual decline on record.”

“The inventory of unsold homes in November was 4.27 million homes. At the current sales pace it would take 10.3 months to exhaust that overhang. ‘Inventory is still high and further reduction in prices may be required in some areas to induce buyers back into the market,’ said the association’s chief economist, Lawrence Yun.”

“Regionally, existing-home sales in the West are 25.0 percent below a year ago. In the Midwest, existing-home salesare 16.9 percent below November 2006. Existing-home sales in the South are 19.4 percent below a year ago. Existing-home sales in the Northeast are 19.4 percent below November 2006.”

From MarketWatch. “Sales of existing homes are down 31% from the peak of 7.21 million two years ago.”

“Homebuilder M/I Homes Inc. said it will take charges of about $80 million in the fourth quarter on the sale of 3,700 lots and expects further impairment charges related to its inventory during the quarter.”

“As part of the sales, M/I Homes also sold all its current lots in the West Palm Beach, Fla. area and is completely exiting development in the market.”

From Bloomberg. “London Scottish Bank Plc, the U.K. lender to customers with poor credit histories, fell the most in a decade in London trading after saying it will take a charge of as much as 22 million pounds ($44 million) to cover losses.”

“London Scottish said in a separate statement it had ’strengthened’ its lending criteria for new mortgage business.”

“Defaults on privately insured U.S. mortgages rose 35 percent in November to a record, an industry report today showed, adding to evidence the U.S. housing slump is deepening.”

“The number of insured borrowers falling more than 60 days late on payments jumped to 61,033 last month from 45,325 in November 2006, according to the Mortgage Insurance Companies of America. The missed payments, often a prelude to foreclosure, represented a 2.9 percent increase from October.”

“Australian mortgage-backed bond sales fell to the lowest in three years as the fallout from the U.S. housing recession cut demand for the assets in the second half of the year.”

“Sales of bonds backed by Australian home loans plunged 87 percent in the last six months to A$5.9 billion ($5.2 billion), from a record high of A$44.4 billion in the first half of the year, according to Deutsche Bank AG.”

“Yield premiums continued to increase, leading Sydney-based Bluestone Group Ltd., a non-bank lender, to pay a record high 108 basis points on A$400 million of top-rated debt Dec. 7, more than five times what it paid to raise funds in March.”

From BBC News. “After previous financial disasters caused by excessive bank lending, regulators developed rules to limit how many loans a bank could have on its balance sheet. But, across America, banks were lending far more than that 10 to 1 ratio.”

“How had they managed to do it? The first technique banks used to circumvent regulators’ rules is known as ’securitisation’ - a way of a bank getting loans it had already made off its balance sheet. They did this by selling their loans off to pension funds, insurance companies, even to other banks around the world.”

“The banks’ loans should have been hard to sell because they were low quality - since they were issued with no questions asked, there was little assurance they could be repaid.”

“But the banks had an answer to that. To make their risky loans appear attractive to buyers, banks used complex financial engineering to repackage them so they looked super-safe and paid returns well above what equivalent super-safe investments offered.”

“Even savvy Wall Street veteran and billionaire Wilbur Ross could not figure out what was happening.”

“‘What they were fundamentally doing was taking a $100 pile of low quality securities and creating something they could sell to investors for $103,’ he says. ‘So there was an alchemy - making more price than there was value.’”

The Orange County Register. “What became a global financial crisis had roots in Orange County. Securitization of mortgages wasn’t invented here. Fannie Mae had been doing that for decades with conventional mortgages. And subprime lending – previously known as ‘hard money’ or C and D lending to people with subprime credit – had a long history.”

“But until the 1990s, subprime lenders like Long Beach Savings could only resell their mortgages to private investors willing to take bigger risks for higher returns. Once Wall Street began issuing public securities, the lenders’ capital grew exponentially.”

“A clear plastic plaque on William Komperda’s desk memorializes a 1990 deal that helped launch the made-in-Orange County subprime lending bonanza. Dated June 28, 1990, the plaque commemorates $70,732,555 of bonds underwritten by Komperda’s Connecticut-based firm, Greenwich Capital.”

“It was the first time his client, Long Beach Savings F.S.B., publicly placed securities backed by subprime mortgages. ‘We thought it was just a niche market,’ Komperda said of the initial securities offering. ‘It grew beyond what we imagined.’”

“By 2005, the peak year of subprime mortgage securities offerings, Wall Street sold $508 billion worth of the issues, according to Inside Mortgage Finance. Investors around the world purchased the securities, a boom that went bust this year.”

The Wall Street Journal. “During the housing boom, the subprime industry succeeded at more than just writing mortgages. It also shot down efforts by some states to curtail risky lending to borrowers with spotty credit.”

“Ameriquest Mortgage Co., until recently one of the nation’s largest subprime lenders, was at the center of those battles. Working with a husband-and-wife team of Washington lobbyists, it handed out more than $20 million in political donations and played a big role in persuading legislators in New Jersey and Georgia to relax tough new laws.”

“Those victories, in turn, helped blunt efforts by other states to crack down on reckless lending, critics of the industry contend.”

“Executives at Ameriquest, based in Orange, Calif., acknowledge that the company lobbied heavily against state lending restrictions, but say that other subprime lenders did so as well. In fact, a host of subprime lenders and banking trade groups, including Citigroup Inc., Wells Fargo & Co., Countrywide Financial Corp. and the Mortgage Bankers Association, spent heavily on lobbying and political giving.”

“Federal lawmakers didn’t pose much of a threat to the subprime industry in recent years. Members of Congress received at least $645,000 in donations from Ameriquest and large sums from other big subprime lenders, Federal Election Commission records indicate. They debated new oversight of the industry, but took no action.”

From Reuters. “Merrill Lynch & Co is in talks with Chinese and Middle Eastern sovereign wealth funds that could lead to the sale of another big stake in the U.S. bank, British newspaper The Observer reported, citing sources in London and New York.”

“New Chief Executive John Thain has been trying to bolster the company’s capital amid huge subprime mortgage losses. ”

“‘The multi-billion cash injection from Singapore’s Temasek TEM.UL was not enough and Thain is taking calls from a host of other potential saviors, which are understood to include sovereign fund investors from the Gulf and China,’ the newspaper quoted a US observer as saying.”

“A source told the Observer: ‘Thain is desperately seeking an additional infusion of foreign capital to bolster Merrill’s balance sheet. It could be done by selling shares or other assets to raise cash.’”

Dow Jones Newswires. “Some of the world’s biggest banks are increasingly turning to governments in Asia and the Middle East for cash to fill gaping holes left by mortgage-related write-downs.”

“The Observer quoted Sanford Bernstein analyst Brad Hintz saying Thain is seeking capital from foreign investors to offset a large fourth-quarter write- down. The newspaper reported Thain and other Merrill executives plan to work through the New Year holiday on strategies to save the bank if the credit crunch worsens further.”

“A possible merger with another banking group has not been ruled out but was seen as an ‘extreme scenario,’ according to the report.”

National Mortgage News. “One question some of you might be asking is this: if subprime volumes have screeched to a halt, what are all those traders on Wall Street doing? Good question. We’re told that come January there will be a wholesale shakeup at several firms.”

“Sources tell us that Deutsche Bank, Lehman Brothers and Merrill Lynch all are conducting reviews (or soon will) of their entire mortgage operations. As for where the most drastic changes might occur, Merrill Lynch might be a good bet.”

“An account executive there told us recently about conditions at Merrill’s First Franklin Financial Corp. He said many offices are not funding loans while awaiting training for Fannie Mae products.”

“‘So far, there’s been no training,’ he told us. The AE, requesting his name not be used, painted a bleak picture, saying business is so slow that employees pass the day playing Scrabble and PlayStation on the conference room projector screen.”

“He said FFFC AEs and executives keep asking Merrill why they can’t just originate loans and put them on the balance sheet of Merrill’s FDIC-insured bank. ‘We’re not getting any answers,’ he said.”

“The last word of the year: Mortgage executives, financial analysts, politicians, consumer advocates and journalists, to name but a few, are now analyzing just what went wrong in subprimeland. Readers of National Mortgage News and our affiliates already know the answer to the blame-game question of ‘Who did it?’”

“Mortgage bankers, brokers, Wall Street financiers, appraisers, underwriters, rating agencies, and yes, consumers, all played a starring role.”

A report from the Washington Post. “Even for people who have money, coming up with a down payment to buy a house has become a lot more challenging in recent months. Take Peter McGarvey, who in September found a house big enough to accommodate his family of four. A bidding war ensued over the 2,000-square-foot home, in Takoma Park, Md. He offered $710,000 and won.”

“Then came the hard part: making enough of a down payment to get a good rate on a loan and keep the monthly mortgage payments manageable. Because he had not yet sold the house he already owned, he had to cobble together a down payment from other sources.”

“”We have lots of equity in the house, and we have money saved up. Unfortunately, most of it is in retirement funds and mutual fund investments,’ McGarvey said.”

“Even over the summer, borrowers did not have to go to such lengths. That’s because it was easy to get a mortgage that required little or no money down. In fact, four out of 10 first-time buyers used no-money-down mortgages in 2005 and 2006, according to surveys by the National Association of Realtors.”

“The median down payment for first-time buyers in those years was 2 percent of the purchase price. But now that those loans are being blamed for a spike in foreclosures, many lenders are no longer offering them or have become pickier about who gets them.”

“That’s not to say that lenders are requiring down payments of 20 percent or more, which was the norm until the mid-1980s. ‘I don’t think we’re there yet,’ said Franco Terango, consumer real estate executive for the mid-Atlantic branch of Bank of America.”

“If all else fails, there are other creative ways to come up with down payments. Pull out that vintage Gucci purse and sell it on eBay. Sell your bike. Sell your car.”

“Some advisers and lenders said that if a prospective homeowner has to go to great lengths to come up with money, maybe it’s best to wait until he or she can save enough money the old-fashioned way. Or maybe buy a fixer-upper rather than a dream home.”

“‘It doesn’t have to be a McMansion,’ said said Heather Evans, vice president and wealth management adviser at Merrill Lynch in Tysons Corner, Va. ‘Homeownership should be within your budget.’”

The New York Times on New Jersey. “Meghan Werner has learned more than any teenager should about the consequences of the subprime mortgage debacle.”

“Her father, Philip Werner, a contractor, had struggled to find work, and like millions of Americans, he took out a high-interest mortgage that he could not afford.”

“He found the house in 1986. When he and his wife divorced in 2002, Werner sold the house to an investor for $170,000. ‘I had $35,000 left on the mortgage,’ he said.”

“He and his children stayed on as tenants. In 2005, when he was making a decent living, Werner repurchased the house for about $250,000. He said his divorce had left him with bad credit, but he found a loan for about $300,000 through an acquaintance who was a mortgage broker.”

“The loan, through New Century Financial, required no cash down payment and came with an 8 percent interest rate that adjusted to 11 percent, Werner said. Werner could afford the payments, but then lost his job.”

“For this family, a recent proposal by the Federal Reserve to restrict the granting of high-interest or exotic loans to borrowers with weak credit came too late. The proposal by the Federal Reserve would require lenders to verify the income and assets of borrowers.”

“Werner said he negotiated the loan over coffee at a diner, and that he never had to provide proof of his income. ‘It was a no-document loan,’ he said.”

“Meghan visited the sheriff’s office with her father this month. A woman there told them they would have 10 days to buy back their home if it was sold to the bank. None of them believes they will be able to find the money.”

“‘I bought my first home when I was 25,’ Werner said. ‘What I’ve lost is not just the home and my dream. I’ve crushed my kids, and I’ve got (to) start over again. I’m not able to leave them anything.’”

The Boston Globe from Massachusetts. “Justin Moore had done his research when he set out to buy a condo. The 25-year-old said it even seemed easy when he got preapproved for a loan, found the perfect condo in Beacon Hill this fall, and readied for his December move.”

“But just one week before his scheduled closing, the mortgage company that for weeks had assured him he was all set told him there were problems. ‘They said they couldn’t fund a condo where all the units aren’t sold yet,’ said Moore, who was slated to put a 20 percent down payment on the first unit finished in the building. ‘Where is there a situation where all the units are sold?’”

“Those that remain in business are asking buyers to more completely document their incomes. They are charging higher interest rates to those whose credit scores were considered good just weeks ago, and demanding much bigger down payments, especially for homes in areas where property values are dropping.”

“The changes mean that buyers with credit scores below 680 could have to front 30 percent down or more to get market rates on a mortgage.”

“‘The industry has turned around and closed the door,’ said Brian Koss, managing partner at Mortgage Network Inc., headquartered in Danvers. ‘People were getting what they wanted, not what they needed.’”

“Some buyers have been able to get new loans under the old terms because mortgage companies are adopting these new lending standards at different times.”

“‘Most of our customers have been unscathed at this point,’ said Rosemary O’Neil, past president of the Massachusetts Mortgage Association. ‘But after the first of the year, that changes across the board.’”

“In January, most companies will have adopted new standards set by Fannie Mae and Freddie Mac, two government-sponsored enterprises that serve as the largest sources of funding for US home mortgages.”

“The new rules impose surcharges of 0.75 percent to 2 percent for many conventional borrowers who have credit scores below 680, and who don’t have at least 30 percent for a down payment.”

“Those in the industry worry many will be priced out of the market. O’Neil notes that about half her customers have credit scores less than 680. ‘It will definitely affect our business,’ she said.”

“And few buyers ever pay 30 percent down payments. ‘That’s pretty insane…not a lot of buyers will be able to do that,’ said Alex Coon, the Massachusetts market manager for online residential real estate brokerage Redfin. ‘It’s certainly not going to do any favors for the real estate market.’”

“Those changes take effect March 1, but mortgage companies that sell their loans will likely be using them earlier. Multifamily units and condo conversions also face more scrutiny.”

“Just before one recent closing, Coon said, one buyer was asked to track down his tax return from 2004. Another deal fell through the day before closing because the buyer lost the loan. ‘I’ve been doing this eight years and out of the eight years, mortgages had been one of the constants,’ Coon said. ‘It used to be everybody could get a loan for everything.’”

“This all comes at what otherwise should be a great time to be buying a home. Prices throughout the region have dropped, sometimes to below what sellers paid at the height of the Boston area boom. ‘The opportunity to buy right now is enormous,’ said Coon.”

“Left without a loan days before his scheduled move, Moore scrambled to find a new lender with help from his agent.”

“In three days, Moore was able to get a loan through Countrywide Financial and now is finally moving into the new home that at first, had seemed so easy to get.”

The Rutland Herald from Vermont. “Bankruptcies in Vermont are on the rise again, surging 40 percent in 2007, reflecting in part the mortgage crisis that has swept the country with its resulting foreclosures, according to several bankruptcy lawyers in the state.”

“‘We’ve got the wonderful joy of the adjustable rate mortgages and foreclosures having gone crazy,’ said Rebecca Rice of Cohen & Rice in Rutland.”

“White River Junction lawyer Michelle Kainen said she noticed the problem earlier this year. ‘I can tell you in the early part of the year that was almost exclusively driving every bankruptcy I filed,’ Kainen said. ‘I remember in January and February thinking what is going on in the world and why are all these people coming in here and losing their houses.’”

“In Chittenden County, Todd Taylor blames the subprime mortgage fiasco. ‘There’s a tremendous amount of foreclosures all over the place,’ Taylor said.”

“He recounted the story of one client whose adjustable rate mortgage ballooned from $1,000 to $1,400 a month and then jumped another couple of hundred of dollars six months later.”

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