A Vacation From Economic Reality
Readers discussed the holidays and the housing bubble. “Three months ago everyone in my extended family up north was talking about coming down to LA for some warmth and sunshine, disneyland, and broadway show. About two weeks ago their plans all fell apart and now we’ll only have local family at our dinner. Only one brother was willing to admit his cancellation was due to financial duress, but I know that my mother has lost big bucks in her stock accounts and my older brother has said his practice barely cashflows.”
“I predict light traffic at the airports and on the freeways over the holiday season and that warm tourist destinations worldwide will go unvisited by those north of the 40th parallel.”
Another said, “My wife and I were just discussing the downturn and how in the last 12 months months we’ve purchased: a new laptop, a used car, all kinds of baby stuff, furniture, took a cruise.”
“We’re very, very frugal, and this was an aberrant year, so we’re thinking that this is way worse than we imagined. We didn’t buy a house though!”
A reply. “Well, with no home purchase closing costs and that big commission due a mortgage broker you certainly had the dough in your pocket for all the other stuff. And just think about all your friends with mortgage notes who are gonna get their yearly notices for payment of higher property tax escrows for the coming year due to the collapse of commercial assessments.”
“Ho! Ho! Ho! Merry XMAS!”
One had this, “I had two get towed off Interstate 26 going into Columbia because of a car issue. (car is 8 years old). The tow truck driver strikes up a conversation that he was retired for two years but went back to work part time. He indicated he had lost $150,000 in the stock market and was very disappointed. I wanted to cheer him up so I said, ‘Well at least you did not get into real estate.’ He replied that he had bought a condo in Daytona a few years ago.”
“It will be a difficult holiday season for conversation.”
To which one posted, “I’ve been saying ‘Well, as long as you didn’t buy or HELOC real estate in the past five years, you’ll probably be fine.’”
“Trouble is, EVERY person I know (besides myself) has bought or HELOCed in the past five years. Seriously. Maybe I need to meet new people.”
The North County Times. “Barratt American, a large, private builder based in Carlsbad, might soon be forced to file for Chapter 11 bankruptcy protection because of a loss in funding from its lender, said Michael Pattinson, president of the company. So far, 11 Barratt American projects around the region have fallen into foreclosure.”
“Pattinson said much of the fault lies with banks unwilling to lend money despite capital infusions from the federal government. ‘Until the banks do their jobs, the economy is going to deteriorate and everybody is going to have a miserable Christmas,’ he said.”
The Record Searchlight. “Calls to the National Foundation for Credit Counseling’s Locator Line have been setting records with each passing week. What’s more, consumers taking the NFCC’s Mortgage Realty CheckSM, are up 33 percent for the year. ‘Unfortunately, we have people who are beginning their 2008 shopping season who are still paying for 2007,’ said NFCC spokeswoman Gail Cunningham. ‘The minute you make that purchase, the interest starts accruing.’”
The News Herald. “Gov. Charlie Crist has kicked off the holiday season with a proposed gift to distressed homeowners: placing a moratorium on foreclosures through the first of the year. The governor called it an act of ‘compassion.’ But it could just as easily be seen as a vacation from economic reality.”
“If a lender believes an owner can make payments on the property after the first of the year then he is more likely to hold off on foreclosure anyway.”
“That mostly leaves the worst cases, the owners who simply can’t make payments in six weeks or six months. Freezing their foreclosures gives them a break they don’t deserve and prevents the lender from being able to recoup his investment. Also, it threatens to create a logjam of foreclosed homes that will be released all at once when the freeze is lifted, flooding the market at a time when it can’t handle more excess housing inventory.”
The Miami New Times. “Two months ago, Cassy (not her real name) was homeless, out in the rain with her four kids. Now she has a three-bedroom, two-bathroom, sky-blue house on a tree-lined street in Miami’s Buena Vista neighborhood. She takes warm showers, cooks vegan dinners, and watches the news on a small, fuzzy TV screen. The only catch: The house isn’t hers. Cassy is a squatter and, at any moment, could be arrested for trespassing, even burglary.”
“Not everybody in Miami-Dade County is crying over this year’s 40,342 foreclosed properties. Cassy is part of a small, well-executed movement by activists at Take Back the Land to relocate homeless families into empty houses and abandoned government-owned buildings.”
“‘We could virtually empty the streets and shelters simply by filling the vacant houses,’ director Max Rameau says. ‘Homes should go to people, not kept empty so banks can cash in.’”
The East Valley Tribune. “For Darrell Logan, 2008 has been the most difficult year of his life. An unyielding series of financial setbacks have culminated in the Queen Creek homeowner, along with his wife, Donnique, and their four children, falling behind on their mortgage and hoping that their lender, Washington Mutual, will give them a break and not rush them into foreclosure.”
“Things were going well for the Logans when they moved from Compton, Calif., in July 2007 and purchased their Queen Creek home in October 2007. They also owned a home in Compton and chose to rent it after they left. ‘(The tenants) were doing OK with the payments in the second half of 2007, but, starting in January, they just weren’t making payments consistently and then they stopped paying,’ Darrell Logan said. ‘So we basically had to use our savings to make up for the payment. Even when they were making payments, we still had to pay $500 extra to make up what they weren’t paying in rent, so that put us in a bind.’”
“Donnique Logan then lost her job with the school district while pregnant with their fourth child. ‘At the same time, we’re paying lawyers to evict these people out of our house … and they just got out of the house on Nov. 12, but the house then foreclosed on Nov. 12. So it just hasn’t been a good year at all,’ Darrell Logan said.”
“All across the East Valley, distressed homeowners are on the verge of losing their homes, and there are already roughly 40,000 foreclosed homes in Maricopa County.”
The Gazette. “Colorado Springs homeowner and artist T. Benton Brooks isn’t in foreclosure — yet. He’s missed two mortgage payments, but is determined to avoid losing the west-side rancher he’s owned for 18 years. At a time when record numbers of people have fallen into foreclosure in the Colorado Springs area, Brooks believes he’s exactly the type of troubled homeowner that lawmakers, housing advocacy groups and consumer counseling agencies want to help. But after nearly six weeks of phone calls and faxes, Brooks has more questions than answers.”
“Brooks, a California native who moved to the Springs in 1978, admits he’s made poor choices. As a car salesman years ago, he took out cash advances on credit cards during lean months — effectively borrowing money at hefty interest rates. Multiple refinancings to fund home improvements early on, and to pay off credit cards in later years, left him owing $260,000 on a home he estimates is worth $180,000. He filed for bankruptcy in 2007.”
“Afterward, he was allowed to stay in his house as long as he made his combined $2,115 a month in first and second mortgage payments. In past years as a cars salesman, he never sold fewer than 12 cars a month; now, he’s struggling to sell seven or eight. He missed $1,425 payments in August and September on his first mortgage, and a $690 payment on his second mortgage in November.”
“‘I know I’m a culprit,’ said Brooks, who added that his financial troubles are of his own making. ‘But I’m also a victim.’”
