Saturday, March 17, 2007

'It's Better Not To Own A Home Than Lose It In Foreclosure'

From CBS 13 (also video):

Housing Market Facing Mortgage Meltdown

A national issue is really hitting California. 1 in 5 Californians don't put any money down when they buy a home. With the grim reality of what's going on in the mortgage industry, the option of "financing a home 100%" is going to get a lot harder, if not impossible.

When Kyle and Jennifer Finely bought their first home to start their family, they had no money for a down payment. Loans covered 100% of the purchase price.

"There was nothing else we could do," said Finley.

Now, many mortgage companies are taking away that option. Part of the plummet on Wall Street this week was investors who pulled out partially because they were fed up with losing money on high risk loans.

"There are going to be fewer player in the market which means less competition which means some people just won't be about to get 100-percent financing and those that do are going to pay a little more for it," said Pat Driver, loan officer.
...
With all the hysteria to jump into the housing market, many people have ended up in homes they can't afford to keep.

"It's better not to own a home than lose it in foreclosure," said Driver.

3 comments:

Sittin' Out This One said...

"There was nothing else we could do," said Finley.

Thats the statement that says it all. The mentality of having to buy a home, even if it means taking a toxic loan and getting in debt over their heads, is the big disconnect in this market. Finley has many better alternatives. How about renting for 1/2 the price and saving up for a downpayment? All these people thinking they must buy and pay $3,000 to $4,000 per month for a house, when they could rent for $1500 and save up $20,000 a year, are making terrible choices. The ability to budget, save, and invest is a good qualifier for home ownership. They are about to learn that lesson, along with Wall Street.

head attached said...

I agree, sittin.
Beyond this tragedy is another, however: home ownership is now not at all about owning the home free and clear, or even about approaching this relationship. I spoke this week with a young woman working on her doctorate, who thought perhaps one owned one's home after 30 or so years. But one couldn't be sure. So sad!
Who has masterminded this enslavement? How has it been engineered? How do we have it now that we require a worker class in China to be enslaved to fill our houses with stuff, while we ourselves are enslaved to the people who gave us the money to buy the house? How does this pass for economic sustainability, or for a working, productive economy? How do any of us sleep at night?

Cmyst said...

There have been many things which interfered with my sleep in the past few years, most of them revolving around my kids and grandkids and the world they are inheriting. It helped when I became more active in trying to change some of those things, largely because I wanted to be able to look my grandkids in the eye and tell them honestly that I had tried.

It concerns me very much that as a country we have become so dependent on foreign loans and foreign goods in order to maintain our lifestyle.
Meanwhile, corporations are not only outsourcing jobs to other countries but they are relocating to them. Patriotism and loyalty to one's country are evidently only important for the unwashed masses, who also can be counted on to protect corporate profits in the name of spreading democracy and freedom.

People will wake up when they can't afford to pay their cable bill,can't charge any more on their maxed out credit cards, have their cell phones disconnected, etc. Losing one's home is horrible, but it's only one symptom of a much more horrible and pervasive disease. Simplistically, all economies are based on encouraging people to "go shopping" but unless those same people are also producing something tangible and basic needs for food, clothing and local services are being met by local producers, it seems like a recipe for ultimate failure.