The mortgage industry is a partial contributor to the economic and financial mess we're in. This mess is getting ready to continue for another round of: foreclosures, lay offs, delinquencies, and bankruptcies and the mortgage industry is going to help do it all again.
We are gearing up up for another round of foreclosures with almost 350,000 option-ARM borrowers who owe more than when they first bought their homes thanks to unpaid interest accumulating. The first wave of these exotic loans, which allowed homebuyers to come to closing with little cash, are getting ready for a five year reset. At that time they become standard, amortizing loans, where originally borrowers were able to choose monthly, how much to pay: interest and principal, interest only, or a minimum amount less than the interest due.
This means another group of borrowers are being poised to pay some big home payments. A $400,000 home for example can see the mortgage payment jump from $1,287 to $2,593.
This resetting of loans with the already current amount of loans facing foreclosure is a cocktail for disaster. As of the latest report from the Mortgage Bankers Association, 9.64% of all mortgage loans were delinquent during the third quarter. That represents 4.5 million borrowers and is an increase from 9.24% in the prior three months.
The delinquency rate includes all mortgage loans in foreclosure are at least one payment behind and the amount of delinquencies is the highest ever recorded in the MBA delinquency survey.
Although, there are very limited attempts being made to help homeowners and I do say limited because only a handful of homeowners are receiving permanent loan modifications under the current Obama administration's foreclosure prevention plan.
According to Freddie Mac fewer than 5% percent of modifications on loans owned or guaranteed by the mortgage giant were converted to long-term adjustments as of September 30.
Taking a longer range look, the Congressional Oversight Panel reported that as of September 1 the figures are even lower. Only 1.26% of all trial adjustments were made permanent after three months.
As is if foreclosures were not bad enough bankruptcies have spiked 33%. The number of bankruptcies for the third quarter have soared to the highest level since since 2005.
"The spike in bankruptcy filings for both consumers and businesses reflect the continuing effects of today's weak economy," said ABI executive director Samuel Gerdano. "With unemployment surpassing 10% and credit to businesses remaining tight, consumers and businesses are increasingly turning to the financial relief of bankruptcy."
In the midst of all this going on there have been reports of that the recession ended last summer.
"Despite the recession ending in mid-summer, the decline in mortgage performance continues, said Jay Brinkman, MBA's chief economists. "Job losses continue to increase and drive up delinquencies and foreclosures because mortgages are paid with paychecks, not percentage point increases in GDP."
I know we will get get out from under this financial rock, we always do, but seems like nothing is working. Nothing is improving and that we are ready to go down the tubes all over again.
So what is the answer? Are you sick of the economy? Are afraid you are going to lose your home and your job?
Maybe it is time for extreme measures because extreme problems call for extreme measures.
I am familiar with the Peter Finch's Oscar winning performance in Network and his famous speech, "I am as mad as hell and I'm not going to take this anymore," but in watching the scene today I never realized that back in 1976, the same situations were going on. Watch this scene and see if you don't think the same.
If you are like me and feel there has been no improvement. That we are about to be punched in the gut again before we have a chance to get back up. Then maybe we need to take a stand like Howard Beale says and all of us go outside and yell, "I'm as mad as hell and I'm not going to take it anymore," and do something about this financial disaster before it takes us down again.
We are gearing up up for another round of foreclosures with almost 350,000 option-ARM borrowers who owe more than when they first bought their homes thanks to unpaid interest accumulating. The first wave of these exotic loans, which allowed homebuyers to come to closing with little cash, are getting ready for a five year reset. At that time they become standard, amortizing loans, where originally borrowers were able to choose monthly, how much to pay: interest and principal, interest only, or a minimum amount less than the interest due.
This means another group of borrowers are being poised to pay some big home payments. A $400,000 home for example can see the mortgage payment jump from $1,287 to $2,593.
This resetting of loans with the already current amount of loans facing foreclosure is a cocktail for disaster. As of the latest report from the Mortgage Bankers Association, 9.64% of all mortgage loans were delinquent during the third quarter. That represents 4.5 million borrowers and is an increase from 9.24% in the prior three months.
The delinquency rate includes all mortgage loans in foreclosure are at least one payment behind and the amount of delinquencies is the highest ever recorded in the MBA delinquency survey.
Although, there are very limited attempts being made to help homeowners and I do say limited because only a handful of homeowners are receiving permanent loan modifications under the current Obama administration's foreclosure prevention plan.
According to Freddie Mac fewer than 5% percent of modifications on loans owned or guaranteed by the mortgage giant were converted to long-term adjustments as of September 30.
Taking a longer range look, the Congressional Oversight Panel reported that as of September 1 the figures are even lower. Only 1.26% of all trial adjustments were made permanent after three months.
As is if foreclosures were not bad enough bankruptcies have spiked 33%. The number of bankruptcies for the third quarter have soared to the highest level since since 2005.
"The spike in bankruptcy filings for both consumers and businesses reflect the continuing effects of today's weak economy," said ABI executive director Samuel Gerdano. "With unemployment surpassing 10% and credit to businesses remaining tight, consumers and businesses are increasingly turning to the financial relief of bankruptcy."
In the midst of all this going on there have been reports of that the recession ended last summer.
"Despite the recession ending in mid-summer, the decline in mortgage performance continues, said Jay Brinkman, MBA's chief economists. "Job losses continue to increase and drive up delinquencies and foreclosures because mortgages are paid with paychecks, not percentage point increases in GDP."
I know we will get get out from under this financial rock, we always do, but seems like nothing is working. Nothing is improving and that we are ready to go down the tubes all over again.
So what is the answer? Are you sick of the economy? Are afraid you are going to lose your home and your job?
Maybe it is time for extreme measures because extreme problems call for extreme measures.
I am familiar with the Peter Finch's Oscar winning performance in Network and his famous speech, "I am as mad as hell and I'm not going to take this anymore," but in watching the scene today I never realized that back in 1976, the same situations were going on. Watch this scene and see if you don't think the same.
If you are like me and feel there has been no improvement. That we are about to be punched in the gut again before we have a chance to get back up. Then maybe we need to take a stand like Howard Beale says and all of us go outside and yell, "I'm as mad as hell and I'm not going to take it anymore," and do something about this financial disaster before it takes us down again.
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